Money Matters: For richer, for poorer

Question: My husband and I are constantly arguing about money, particularly on who should control the family’s finances. We are also at odds as to whether we should maintain just one account for our personal spending or maintain separate accounts. Can you give us direction?—Sent via “ask a friend, ask Efren” service on www.personalfinance.ph

Answer: Imagine a country with no constitution; it would be in utter chaos. And since the family is the basic unit of society, it too should have a constitution, more specifically a financial constitution. Furthermore, you and your husband should agree on the provisions of this financial constitution.

At RFP® Philippines, we teach that household finances can be run in the same manner as company finances. In a company, the board of directors sets the policies based on the by-laws and rules on corporate governance set out by the board itself. This board answers to the company’s shareholders.

In a household, husband and wife are the default members of the board.  As their children come of age, they can be included as observers and/or advisers. The financial constitution takes the place of by laws and rules on corporate governance.

The shareholders of the household are just the spouses.

In a company, policies set out by the board are executed by management, who are appointed based on their ability to perform specific functions.  The “C” levels of management in a company are the chief production officer, chief marketing officer, chief human resources officer and chief finance officer (CFO). The chief executive officer (CEO) coordinates and activities of the other “C” level officers, provides direction and is where the buck stops. Management reports to the board.

In a household, only the spouses can be appointed to the “C” levels of management. And in the typical Filipino family, the husband takes on the roles of chief production and marketing officer. The wife assumes the roles of chief human resources and finance officer.

Please note though that with the exception of the CEO, no “C” level management position is higher than the other. In fact, in households where both spouses work, husband and wife share in the duties and responsibilities of all of the “C” levels of management. Nevertheless, the role of CFO should ideally go to the person who has the know-how, discipline and patience required in financial planning, record-keeping, financial analysis and financial risk management. The CEO is the person who can direct the household, makes the ultimate decisions and is where the buck stops.

Ask your spouse who among the two of you is better in these areas.

As to whether husband and wife should keep separate accounts for their personal spending, consider how profits are booked in a corporation vs a household.

Revenues for a corporation come from its sale of goods and services. Deducted from revenues are operating expenses of the firm. Any excess is profits available first for reinvestment in the corporation to afford higher levels of dividends in the future and eventually for distribution as cash dividends to the shareholders.

In a household, revenues come from salary, professional fee, gross income from business and the like. Deducted from revenues are the household’s operating expenses, which include both fixed and variable operating expenses. Anything in excess would be profits available first for reinvestment in the household to afford higher standards of living in the future and eventually for distribution as cash dividends to the household’s shareholders.

In a household, the only two shareholders are entitled to a split of the household’s dividends. But this is only possible after the reinvestment requirements of the household are first met. If there is nothing left after reinvestment, then neither husband nor wife gets to enjoy any dividends.

On the other hand, if the household has already met its lifetime financial goals, all profits can be distributed to the household’s two shareholders. This is typically the case when husband and wife are nearing the end of their life.

Please note two things: 1) dividends to shareholders or household members are never paid out of debt but only from excess profits; and 2) it is only at the option of and not a requirement for either husband or wife to surrender his or her share in the dividends to the other or to their children.

To help you better in financial planning, please download Ya!man™, the country’s first personal finance mobile app. The Android version of Ya!man™ may be downloaded from Google Play. The app’s Symbian (40 or higher) OS may be downloaded from www.personalfinance.ph. The iOS version is coming very soon. Ya!man™ also comes with a feature where you can pose questions to a financial expert. And everything with Ya!man™ is absolutely FREE.

If you want to learn more about effective personal finance for couples, please visit www.personalfinance.ph. You may also want to attend EnRich™ on Aug. 3, our public training on personal finance. Details for EnRich™ may be found in the website.

Have a financial constitution. It will go a long way in fostering peace and harmony within the family.

Source: By Efren Ll. Cruz
Philippine Daily Inquirer

4:01 am | Wednesday, July 24th, 2013

OFWs, kin to get lessons on saving, investing, maximizing earnings

MANILA, Philippines—It’s the typical story of the overseas Filipino worker (OFW): The breadwinner toils for years overseas to give his or her family a better life but returns home—if at all—with little or no savings.

Hoping to break this cycle, international organizations on Thursday launched an initiative that aims to maximize the benefits of OFW remittances in their own home communities by teaching their families the value of saving and growing their loved ones’ hard-earned dollars.

Through funding from the European Union and the Swiss Agency for Development Cooperation, various agencies of the United Nations have partnered with the Commission on Filipinos Overseas (CFO) for the three-year initiative that aims to change the spending habits of remittance-dependent Filipino families through financial literacy training.

“They have nothing when they come back. That’s why they keep on going back to work [overseas] because they don’t have any savings to live on. That’s why financial literacy is very important,” said Secretary Imelda Nicolas, the CFO chair.

Nicolas noted how OFW families could be “too demanding” in terms of receiving a regular cash allowance and how migrant workers would splurge on their loved ones to make up for their absence.

“So financial education is very important for both the families and the migrants to also do budgeting, financial planning,” Nicolas told reporters after the project launch in Makati City on Thursday.

The Philippines is one of eight migrant source countries selected for the second phase of the $9.5-million (about P410 million) Joint Migration and Development Initiative Project, a global program that “reflects the acceptance of a strong nexus between migration and development.”

“Migration has been a tremendous success story, driving the economy and giving benefits to a country, although there are also some issues that need to be addressed,” said Hans Farnhammer, EU’s top development officer in Manila.

“The Philippines is one of the most suitable countries to upscale this migration and development initiative given its decentralized local governance, where Filipino migrants return to their hometowns when they retire from their work overseas,” said Swiss Ambassador to the Philippines Ivo Sieber.

The first phase of the project, implemented in 16 countries between 2008 and 2012, focused on migration and development initiatives through civil society organizations.

In the second phase, implementing agencies—the UN Development Program, International Organization on Migration, International Labor Organization, UN Women, UN Refugee Agency and UN Population Fund—target local development by funneling remittances to investment, instead of expenses.

Under the program, UN agencies and the CFO will work with local government units to institutionalize financial literacy programs and pass local legislation that would spur local development through migrant workers’ remittances.

Nicolas said experts will first hold a “training of trainors” for local government officials in three migrant-rich regions: Region I (Ilocos), Region IV-A (Calabarzon) and Region XI (Davao). Local governments will then be in charge of passing on the knowledge within their communities to the families of about 10.4 million Filipinos who work abroad.

The capacity-building effort will be provided with up to $1 million (P43 million) in the Philippines. Similar programs are expected to be implemented in other target countries, including Ecuador, El Salvador, Costa Rica, Morocco, Tunisia, Senegal and Nepal.

Source: By Tarra Quismundo

Philippine Daily Inquirer

6:43 am | Friday, October 11th, 2013

PH stock index further rises to 5,961.55

PSE index as of December 18, 2013, 3:46 PM.
Screengrab from http://www.pse.com.ph

MANILA, Philippines — After a rough start, local stocks picked up steam in afternoon trade to close higher for the fourth straight session in thin trade on Wednesday ahead of US Federal Reserve’s decision on the prospective tapering of monetary stimulus.

The local stock barometer added 32.56 points or 0.55 percent to close at 5,961.55, tracking Asian equities, which were mostly higher ahead of the conclusion of the US Federal Open Market Committee meeting.

The US central bank earlier hinted that it might begin a small tapering of monthly bond-buying operations very soon and such a “small” tapering has been discounted by the market, some dealers said.

Value turnover amounted to P6.84 billion but excluding block transactions, volume was thin at P4.46 billion.

There were 76 gainers versus 69 decliners while 45 stocks were unchanged.

By counter, the financial, holding firms, services and property counters firmed up while the industrial and mining/oil sub-indices slipped.

The day’s index outperformer was AGI (+6.12 percent). Bloomberry was likewise up by 3.73 percent while Metrobank gained 2.47 percent. ALI, AEV, ICTSI, DMCI, URC and PLDT went up by over 1 percent.

On the other hand, the day’s PSEi laggers were Jollibee and EDC, which both tumbled by over 3 percent while SMPH and MPI declined by over 2 percent.

Source: 6:41 pm | Wednesday, December 18th, 2013 / Philippine Daily Inquirer

He's back: Pacquiao batters Rios to win lopsided decision

Yahoo PH Sports - MACAU - NOVEMBER 24: Manny Pacquiao (R)
of the Philippines punches Brandon Rios of the U.S. during
their 'Clash in Cotai' WBO International Welterweight title fight
on November 24, 2013 in Macau. (Photo by Nicky Loh/Getty Images)

Manny Pacquiao turned back the hands of time with a virtuoso performance against Brandon Rios. Pacquiao dominated Rios from bell to bell en route to an easy unanimous decision victory. His comeback, Pacquiao hopes, will signify the comeback of his people, specifically those devastated by the recent typhoon.

“He’s not an easy opponent. He’s a good fighter, he’s a strong fighter,” Pacquiao said about his opponent to the wild cheers inside the Cotai Arena in Macau. “I considered this fight as one of the most difficult in my career.”

The judges thought it was easy for Pacquiao as they scored the fight 120-108, 119-109, and 118-110. Judges Lisa Giampa and Manfred Kuchler both gave Rios the eighth round, with the latter also giving him the third round.

“This is not about my comeback,” he said during the post-fight interview. “This is about my people’s comeback from a natural disaster and a natural tragedy.”

“I’m so happy,” Pacquiao shared. “Because my time is not over.”

The first telling blow Pacquiao landed was a lightning quick lead left. Pacquiao’s glove landed flush on Rios’ face and when he was ready to retaliate, Pacquiao was already long gone.

The moment dictated the entire tempo of the fight. Pacquiao flustered Rios with lead lefts and fast combinations while Rios could not do anything but shake his head and smile, trying to tell Pacquiao he was not hurt.

 

“I never got hurt, I never got stung,” Rios said at the post-fight press conference. “But he was quick. I did train for quickness but he was much quicker than my sparring partners.”

 

Rios admitted that as early as the third round, he already knew Pacquiao would be too fast for him. In an exclusive interview with Yahoo! Philippines, Rios admitted being frustrated. “I just wanted to land one big punch. I know that can change the fight,” he said. “But he was just too fast, man. He’s fast and awkward. He was coming from all angles.” 

 

With the win, Pacquiao is now the WBO international welterweight champion. He raised his record to 55 wins against five losses and two draws with 38 knockouts. Rios on the other hand suffered his second straight defeat against 31 wins.  

Pacquiao thoroughly outpunched the taller Rios, landing 281 out of 790 punches (36%) compared to 138 out of 502 for Rios (27%). 

“Manny was fast,” said Rios' trainer Robert Garcia. “We thought he was going to stand and exchange with us but he didn’t. Manny fought a good fight. But I’m proud of Brandon. He tried all he could.”

As the fight wore on, the story stayed the same. Pacquiao used his superior speed to score on Rios while the American tried to rough things up and goad the Filipino to brawl with him. Pacquiao, however, stuck to his game plan. He refused to get careless perhaps still thinking about his last fight against Juan Manuel Marquez.

“Manny Pacquiao is back,” announced Roach during the press conference after the fight. “But I really didn’t think he went anywhere.”

Source: By Carlo Pamintuan | Yahoo PH Sports

BSP sees pickup in economic activity

Economic activity is expected to get a boost
in the remaining weeks of the year
as the Christmas season fuels demand
for consumer goods.

Holiday season to fuel demand for many consumer goods

Economic activity is expected to get a boost in the remaining weeks of the year as the Christmas season fuels demand for consumer goods.

The Bangko Sentral ng Pilipinas (BSP) said retailers and wholesalers have started stocking up in anticipation of higher sales in December, which could offset a drop in demand coming from areas affected by Typhoon Yolanda.

“Domestic demand conditions remain fairly buoyant,” the BSP said in a statement on Thursday.

“Output expansion is expected to be sustained over the coming quarters with higher-frequency indicators of demand, including vehicle sales, energy sales and manufacturing output still growing robustly,” it said.

The BSP noted that the purchasing managers index (PMI), which serves as a reliable indicator for business activity, for the manufacturing sector remained above the 50-point threshold. Any PMI score above 50 indicates the expansion for a specific industry in the coming months.

Latest data showed the composite PMI for all domestic businesses stood at 57.7 points in August, slightly higher than the 57.3 points in June. For the manufacturing sector, the PMI was at 56.1 points, better than 55.3 points at the end of the first semester.

“Purchases of the retail and wholesale sector were in expansion mode in preparation for the Christmas season,” the BSP statement read.

The BSP likewise noted that seven of 11 leading economic indicators tracked by the central bank supported the expectation that business activity would continue to pick up. Among the indicators monitored by the BSP include the composite PMI, inflation, car and electricity sales, and remittances from overseas Filipino workers.

Source: By Paolo G. Montecillo / Philippine Daily Inquirer
3:40 am | Friday, November 22nd, 2013

Manila’s gaming push seen to boost tourism

Manila’s tourism market is taking a decided turn away from a vanilla offering to boost visitor numbers. This Southeast Asian casino dreamscape is setting up a battle between established gaming giants and independent operators in a high stakes contest.

Malaysia’s Resorts World integrated resort at Newport City was the first to break the ice with a mix of in-house hotel brands and one international managed property under Marriott.

Accommodation demand in the domestic and overseas corporate sector outpaced gaming-generated room nights.

According to hospitality consulting firm C9 Hotelworks, the current conundrum facing the sector is that a massive pipeline of incoming mega-hotel projects at Pagcor Entertainment City and Resorts World are likely to cannibalize the existing industry’s leading market source, which is domestically generated business.

A prime example of the trend has been demonstrated at the much-touted Solaire project, which has seen a strong shift away from gaming guests and is now tracking market share growth with MICE (meetings, incentives, conference and exhibitions) and corporate visitors becoming the dominant end users. This has resulted in downward pressure on room rates on the broader set of Manila Bay area hotels, the company said in its Manila Hotel Update.

C9’s managing director Bill Barnett said that “hotel gaming properties which have established connections to foreign visitors such as Resorts World in Malaysia and Singapore and the City of Dreams from Macau work in strong fundamentals.”

“They have a database of existing regional clients who have credit lines which can be extended to the new Philippine properties. Freestanding operations such as Solaire and the upcoming Okada project are likely to be challenged to draw overseas guests to their properties.”

In C9’s market analysis, perhaps the largest challenge for Manila to become competitive with the likes of Singapore and Macau is mainland China. Last year over 80 million Chinese travelers headed overseas and, by 2018 the number is estimated to rise to 400 million.

Source: Philippine Daily Inquirer

3:37 am | Friday, November 22nd, 2013

World Bank offers $500-M loan to PH

Fund for reconstruction of typhoon-hit areas

The World Bank is preparing a $500-million emergency loan to help the government’s reconstruction efforts in areas affected by Supertyphoon “Yolanda” earlier this month.

This is the latest in the flood of foreign aid coming into the Philippines in the last 10 days following the devastation of the strongest typhoon to ever hit land tore through parts of Visayas on Nov. 8.

The emergency loan from the World Bank matches a similar financing package announced by the Asian Development Bank (ADB), another multilateral lender, last week.

“In the aftermath of the typhoon, we have seen courageous efforts by the people of the Philippines to get back on their feet,” World Bank Group president Jim Yong Kim said in a statement. “We are committed to supporting the government in its effort to recover and rebuild, and to help Filipinos strengthen their resilience against increasingly frequent extreme weather events.”

On top of the half-a-billion-dollar loan, which is still being finalized, the bank said it was also ready to provide other forms of support, including a conditional cash transfer program that provides funds to poor families.

Its resources can also be directed to providing temporary shelters and to helping with debris clean-up, providing short-term jobs to poor families.

The lender said it was discussing with various government agencies on other ways it could help in reconstruction efforts. These departments and agencies include the departments of finance, social welfare and development and science and technology, as well as the Office of Civil Defense and the National Economic and Development Authority.

The bank said it would send a technical team this week to help the government assess the damage and gather information for a comprehensive reconstruction plan.

“Given the scale of this disaster, the country will need a long-term reconstruction plan. We can bring lessons learned from our work in reconstruction after disasters hit Aceh, Haiti and other areas that might be helpful in the Philippines,” World Bank vice president for East Asia Pacific Axel von Trotsenburg said.

“Remote sensing images are being obtained for use by the assessment team in geomapping activities to help determine the cost of the destruction,” he said.

Trotsenburg said the main focus of the reconstruction plan would be to provide technical assistance on disaster-resistant design options for housing, health facilities, schools and public markets that can withstand wind speeds of 250 to 280 kilometer an hour. These new structures should also be resistant to flood damage, he said.

Meanwhile, International Finance Corp. (IFC), the World Bank’s private investment arm, said it was also working with its client banks and financial institutions in the typhoon-affected areas to ensure risk share facilities and advisory services are extended to private sector banks in order to help small-and-medium enterprises recover.

“IFC is in discussions with international banks, rural banks and microfinance institutions to develop specific programs to help the private sector recover from the devastation,” IFC resident representative Jesse Ang said.

Source: By Paolo G. Montecillo / Philippine Daily Inquirer

11:20 pm | Monday, November 18th, 2013

PH seen to defy slowdown

Most emerging markets may not do as well, says think tank

The Philippines, considered to be Asia’s fastest-growing economy, may buck the growth downtrend seen for most developing countries in 2013, according to international think tank Oxford Analytica.

The Philippines may be one of the few countries to register growth faster than that reported in 2012 despite the lingering uncertainties in the global economy, Oxford Analytica said.

It described the Philippines, along with a few others, to be a “notable exception,” as growth of most emerging markets are likely to decelerate this year.

Average growth in 2013 looks set to be “lower than the 2012 rate of just below 5 percent, with few hot spots visible,” the think tank said in a report on economic growth projections.

The expansion rates of developing countries have been dampened this year by external problems, led by fiscal problems in the United States and relatively weak demand from Europe that could dampen exports revenues, it explained.

The expected tapering of the US Federal Reserve’s Quantitative Easing (QE) program also will adversely affect emerging markets.

“Recovering growth momentum may be a slow process, especially for those countries in need of capital inflows to boost funds for investment,” Oxford Analytica said.

The think tank’s projection for the Philippines bolstered claims of the government that the country’s favorable macroeconomic fundamentals would ease the effects of adverse economic developments abroad.

Arsenio Balisacan, director general of the National Economic and Development Authority, earlier explained that the country’s benign inflation would serve to attract more investments to the country.

Also, the country’s manageable budget deficit, would allow the government to pump-prime the economy if needed, Balisacan added.

Rising foreign exchange reserves may also make the peso less vulnerable to external shocks.

The Philippine economy expanded by 7.5 percent in the second quarter of the year, and an average of 7.6 percent in the first semester.

This made the country the fastest-growing economy in Asia, apart from China.

The growth rate this year was attributed to higher government spending on infrastructure, rising investments in the manufacturing sector, and household consumption.

But economists said that the Philippines continues to be saddled with the problem of “non-inclusive growth.”

The benefits of an expanding economy have yet to result in substantial poverty reduction, they explained.

An economic growth rate of at least 7 percent should be sustained over the long term so that the country can effectively reduce poverty incidence, the economists said.

The poverty rate in the country stood at 27.9 percent in the first semester of 2012, said to be one of the highest in Asia.

Source: By Michelle V. Remo / Philippine Daily Inquirer

3:22 am | Friday, November 8th, 2013

Power projects drive up 9-month investment pledges

BOI notes 25% jump in projects registered

The Board of Investments on Wednesday said it had approved P309.7 billion worth of investments from January to September this year, up by 25 percent from P248.2 billion a year ago.

The BOI’s investment registration performance was boosted by big power projects led by the P41.23-billion, 600 megawatt plant of GNPower Ltd. Co. in Mariveles, Bataan.

Of the total, local investors accounted for P258.7 billion in investments, a 12-percent increase from last year’s P230.5 billion. Foreign investors have pledged P51 billion, up by 185 percent from the P17.9 billion approved in the same period last year.

The United States topped the list of foreign investment sources, accounting for P41.7 billion, or 82 percent of the total foreign investment projects approved during the period. American firm GNPower’s P41.23-billion power project was the biggest project registered during the period.

South Korea contributed P2.26 billion, primarily from its P803 million capital in Mirae Asia Energy Corp.’s (MAEC) solar project in Ilocos Norte and the P284 million infusion in Daesang Ricor Corp.’s glucose syrup project in Cagayan de Oro City.

Australia invested P1.79 billion, mostly from Mindanao Mineral Processing and Refining Corp., which plans to invest P1.78 billion as an expanding export producer of gold bullion with other metal contents in its plant in Agusan del Sur.

The Netherlands committed P1.33 billion in investments through Philnewenergy Inc.’s solar power project in Davao del Sur.

Singapore contributed P492.1 million.

Another major energy project registered was the locally owned 400-MW coal plant of Pagbilao Energy Corp. worth P39.9 billion, followed by the P31.9-billion 405 MW coal plant of FDC Misamis Power Corp., another Filipino-owned company.

Joining the list are the coal-fired power project of San Miguel Consolidated Power Corp. in Malita, Davao del Sur (300 MW), worth P25.84 billion and SMC Consolidated Power Corp.’s coal-fired power plant  in Limay, Bataan (300 MW), worth P25.51 billion.

Both San Miguel Consolidated Power Corp. and the SMC Consolidated Power Corp. are 100-percent Filipino-owned and are controlled by one of the country’s biggest conglomerates, San Miguel Corp.

Trade Undersecretary and BOI managing head Adrian S. Cristobal Jr. said in a statement the said power projects were important in supporting the country’s rising power requirements.

The electricity, gas, steam and air-conditioning supply sector (e.g., power generating plants, renewable energy projects) got the largest share of investment commitments by sector at P250.69 billion, or 80 percent; followed by real estate activities, specifically the mass housing sub-sector, with P34.1 billion, or 11 percent share.

Visit our website at www.yourwiseinvestment.com for more information about investment.

Source: By Riza T. Olchondra | Philippine Daily Inquirer

3:51 am | Thursday, October 24th, 2013

PH to lead Asean-wide Ro-Ro connectivity

KUALA LUMPUR—The Philippines is all set to lead the Asean Ro-Ro Connectivity launch this month with the opening of the roll-on roll-off route to Indonesia, according to Asian Marine Transport Corp.

“It is confirmed that the launching of the Asean Ro-Ro Connectivity will be on Oct. 18,” the company said via e-mail.

The shipping firm is providing maritime services for the maiden route connecting Davao and General Santos City to Bitung City and Manado City in Indonesia, said Ernesto V. Tan, Asian Marine SVP and CFO.

Asian Marine will also serve the second route for Asean Ro-Ro connectivity, namely Philippines-China-Vietnam, which may be launched in 2015. The Philippine port is Batangas City, which will be connected to Humen town in China and Danang City in Vietnam.

Asian Marine will initially designate one vessel each for the Philippines-Indonesia and Philippines-China-Vietnam routes. The shipping firm may later add more to service growing traffic, Tan said.

Now that intra-Asean trade is expected to boom, the company may post a record revenue this year and next despite tight competition from other shipping firms and from airlines offering freight services, Tan said.

Asian Marine aims to breach the P1 billion mark in revenue this year, representing a 24-percent jump from 2012. For 2014, the company wants to generate P1.5 to P2 billion in revenue.

Growth will come from maximizing the use of the companies’ ships and an overall expansion of the freight business as Philippine industries expand, Tan said. The Philippine economy has been expanding more than 7 percent for the past 4 quarters. Recently, it beat expectations for the April-June period when it grew by 7.5 percent.

Asian Marine has 27 ships in its fleet, all of which can serve long-haul, rough-sea routes similar to those in the Black Sea and other parts of Northern Europe.

Your Wise Investment

Source: By Riza T. Olchondra | Philippine Daily Inquirer

2:54 am | Friday, September 27th, 2013