Thursday, December 20, 2007

How to Communicate with Family and Friends - Countries apart?

Most reading this will be well aware that you can keep in touch with Family and Friends, regardless of where they are, by using E-mail for one thing?.

Many will also have discovered Yahoo Messenger, with on-line 'Chatting', but now also supports Voice over the Internet.

Google Talk is another, with a similar competative offering,
(of which, I personally prefer, compared with Yahoo Messenger/Talk)

Download Google Talk and get:

  • Instant messaging
  • PC-to-PC voice calls
  • Gmail notifications
  • File transfers

Or connect to Google Talk on the web:
Launch Google Talk Gadget (No Download Required!)

Google Talk, is somehow less 'intrusive' than Yahoo Messenger (and has a better e-mail offering) in my opinion?

SKYPE, is a little bit different, and offers a wealth of features, with a convenient, easy to use interface.

It is probably this easy, convenient,and feature rich,
'User Interface', that has led to Skype becoming so 'popular'?

(Surprisingly so considering it is 'non-VoIP 'standards' conformant, thus Skype offering a 'proprietary' solution, that won't interwork with anyone else, with 'true' VoIP system/network - CUG - Skype only! ).

It's FREE to Download the Skype Software and install on your PC

You can chat away with free Skype-to-Skype calls and never worry about cost, time or distance.

  • Adding friends and family to your contact list is simple – search, select, ad
  • Calling is easy – select the Call Phones tab, enter a number and click the green button
  • Free video calls - see who you’re talking to for free.
  • Instant Message with anyone on your contact list or even use group chat to chat with up to a hundred people
  • Conference Call with up to nine other people

That 'ease of use' and 'convenience' factor, is winning a lot of market share. Does not seem to matter there are potentially better VoIP systems out there, that do adhere to VoIP 'Standards' (such as SIP and/or ATA/ATA2), that are potentially capable of internetworking.

However for me, it is one thing,downloading some Skype software onto my PC for Free, but another when shelling out money to buy some VoIP 'hardware'.

I did not like the idea of being 'locked' in to using 'proprietary' Skype, if I bought some Internet Phone Adaptors (IPA). Potentially not being able to unlock the IPA, to use with another VoIP Service Provider?

But what is an Internet Phone Adaptor (IPA),
(you may well be asking yourself)?

Basically an IPA is an interface between a Telephone and the Internet (Broadband connection via Router/DSL 'Modem' usually, or sometimes built into the Router).

This is somewhat different from an Internet Phone that typically plugs into a USB port on your PC.

The difference being, with an IPA, one does need to have a PC switched ON, or even connected, (let alone the software running, and ones 'Stutus' enabled).

As long as you have power, and your Internet connection is up and running, then you can make and receive VoIP calls via a standard phone (including DECT Cordless), plugged into the IPA!

Calling to/from Philippines, is a lot more expensive than USA/UK/Hong Kong/etc?
(Because they did not implement true 'Telecom Deregulation' as in these other Countries. The Philippines just allowed new Carriers to join PLDT in a Telecom 'Club', instead!)

My wife, has a sister living in Hong Kong (married to Hong Kong Chinese).

The amount of money my asawa would spend of Mobile phone call re-loads, calling her sister in Hong Kong, was getting ridiculously expensive.

If her Sister had access to a PC in her home, and Skpe installed, that would have been one answer?

This is what I use to talk to my Brothers and Sisters in the UK, as well as my Brother, working in Bahrain - anyone with Skype installed that I add to my 'Contacts' List in fact?

I can't call my Dad for Free, as he does not have a PC/Broadband connection.

However I can call my Dad, via his UK landline telephone using 'Skype Out' where the Skype Internet Voice call passes through a 'Gateway' onto the UK dialled network, where the call is handled by the appropriate Carrier. There is a charge for this, but £10 Credit into ones Skype Account, goes a long way @ £0.012/min!

There are 2 problems here - i) her sister does not have a PC, even though there is Broadband DSL connection (her step-daughter using to her PC in her bedroom - usually locked/off!), ii) I am often on the PC and busy downloading things, or having many 'tasks' running concurrently. Whilst the amount of bandwidth is not that high, it is the low performance of my CPU, that can't cope with Skype voice call processing, and these other tasks at the same time, and tends to degarade the voice call quality?

So Which Internet Phone Adaptor, and VoIP Service Provider to select?

Having looked into and researched several VoIP Internet Phone Adaptors available, I decided aagainst going the Skype 'proprietary' solition that does not conform/interwork with SIP/ATA/ATA2.

So I decided to go VoIP Standards based Hardware - but SIP or AXA /AXA2?

This sometimes more to do with the particular VoIP provider you select, as some Hardware is compatible with both SIP and AXA. Some VoIP Network Providers (such as, support both SIP and AXA.

The Freshtel Network in Australia, is part of Rather like Skype in terms of Free Internet to Internet Voice Calls.

One can download the 'Firefly' Softphone, register for a Free Freshtel TD
(mine is Freshtel TD: 81354400)

Those who are Australian Residents, and subscibe to a Call Plan with Freshtel, can avail of a FREE Internet Phone Adaptor

Freshtel 3010 ATA

Those who are UK Residents, will no doubt be aware of Supermarket giant, TESCO, and it's entry into the VoIP market with a range of Internet Phones and Service Contracts.

What some might not be aware of is that this TESCO VoIP Service is actually using the Freshtel/ Network, and OEM Hardware.

NB: Received this e-mail from TESCO
concerning their I
nternet Phone and Talk WiFi Services:-

We are writing to let you know that from 27th April 2010, we will no longer be providing Tesco internet phone and Talk Wi-fi services. This is due to a number of factors that impact the service we provide to you, so we have decided to discontinue this offering.

From this date your Tesco internet phone account will be closed and the service will not be available. You will no longer be able to access your online account or be able to make calls using your Tesco internet phone.

This does not affect any other services provided by Tesco Telecoms.

We apologise for any inconvenience and will be happy to assist you with any enquiries you may have.

The Tesco internet phone team

Questions and Answers


What if I have more than one Tesco internet phone account?


You may own more than one account linked to this email address. This email notification affects all Tesco internet phone and Talk Wi-fi accounts. All accounts will be non-operational after the above date.


How much credit do I have on my account?


Log onto your account at, and click 'Login/Register' and enter your account number and password in the log on section.

For Pay as you go accounts:

Once you are logged in, the first screen it will show 'You currently have ___ of available credit'

For Call Plan accounts:

  • Once you are logged in, you will need to view your last bill. Your bill will show a 'CR' if your account is in credit.


Will my Tesco internet phone work with other internet phone services?


We cannot guarantee that your internet phone will work with other internet phone providers and recommend you contact alternative services directly for information.


Will I be able to get a refund on the Tesco internet phone I've bought in store or through Tesco Direct?


We will be happy to offer you a full refund providing you have a receipt or proof of purchase and it was bought after 27th December 2009. Please return the phone to your local store. Alternatively, if you bought your phone from Tesco Direct, please call 0845 600 4411.


Can I still top up my account in-store and on-line?


Unfortunately, you are now unable to top up your Tesco internet phone account.


I've diverted my Tesco internet phone to my mobile phone, will this still work after the 27th April 2010?


Unfortunately not. We advise you to cancel all redirections to and from your Tesco internet phone by 27th April 2010. You can do this by logging into your account and changing redirections. If you require assistance please contact our customer care team.

Do you have any other questions?
Please contact our customer care team:

@ or


0845 300 20 20
9am - 9pm Monday to Saturday and 10am - 4pm Sunday.
Calls may be recorded


Tesco Internet Phone/Talk Wi-fi
PO Box 5879
Kings Business Park
Kings Drive
L34 1PJ

Tesco IPA 1000 internet phone Adapter

Catalogue number: 100-9564

Was £49.97 - but not any more!
Now £19.98
- Save £29.99

Was £49.97 Then £24.98 Now £19.98 Save £29.99

One of my Cebu_BritClub (Yahoo Group) Members, Martin Brown, offered to do me a favor by bringing out a pair of these TESCO IPA 1000's, to me here in Cebu, during his December visit. Martin however, went a stage further, and found the same Tesco IPA 1000 units on E-Bay UK.

These were being sold Brand New, still in unopened box, complete with it's £5 Voucher
(for Call Time).

With Tesco giving 50% off the price, the Bids on Ebay, were lower accordingly.

Total cost
of winning 2 Bids for TESCO IPA 1000 (including UK postage) = £26 (for 2)

With the IPA 1000, now available from Tesco @ £20, perhaps you dont need to find units on Ebay to get a good deal?

IPA 1000 - Installation and Operation

Installation was easy, as I have an extension block off my UPS that has 'universal sockets' meaning just about all power plugs will connect, including UK 13A type.

Just connect the supplied Ethernet LAN cable to the IPA 1000 WAN port, and a spare port on my Linksys WRT54G Router. Which in turn was connected to the MyDSL supplied aDSL 'Modem' (PLDT supplied ZyZEL P600 series - with just the 1 x Ethernet port).

Connected a cordless DECT phone to the IPA 1000 Telephone jack socket, and I was ready.

Once powered on, the Indicated on the top of the IPA 1000 was initially flashing RED, then flashing ORANGE. Once the start up sequence had finished (which took 5 minutes or so?), the light turned solid GREEN, indication the IPA 1000 had connected successfully and was ready for use.

(Because Martin had opened the boxes on my request, he had given me the units Seriel No. With that I was able to go to and register my account, select the Telephone No., and give the Serial No of the IPA 1000 unit I was using on that Account. You have to supply an e-mail address, then an acknowledgement is sent out, to which you click on a URL to complete the registration process).

But as my wife's sister did not have her unit installed in Hong Kong yet,
"How could I test/use it"?

,This was easy - use my PC and SKYPE-Out to dial the TESCO Phone Number (Which I had selected to be a pair of Bournemouth numbers, so my Dad and other Family Members , like my son, who is currently working in Bournemouth, and my brothers and Sisters and cousin, all living there, can just make a local phone call, and our phone rings here in CEBU).

My wife. Sha-Sha's, new Tesco Internet Phone number: is: 01202 806504

I dialled +441202806504 via Skype and the DECT phone, connected to the IPA 1000, Rang!

The configuration settings seemed to have downdloaded after connection to the Internet, and first being powered up.

Needed to test the voice call quality, next.

I first called up my Dad (Using Skype-Out ,as I normally do, SkpeOut Rate to UK is £ 0.012/min or 1.2p/min).

Compare SkpeOut Rate to the Philippines £0.113/min or 11.3p/min.

So calling our Tesco Internet Phone number: +44 1202 806504, using SkpeOut, is cheaper than calling our Philippines landline +63 32 2728694.

I could have picked up the DECT phone connected to the TESCO IPA and dialled his Bournemouth No.

Tesco Call Rates (for 'Pay as you Go') are little bit more expensive than SkypeOut @ 2p/min, but if the PC is not powered up, and/or the Skype software not running, convenience wins out over the slight cost increase.

However I wanted to compare the TESCO Internet Phone quality, against Skype that I had been using.

So having spoken to my Dad using Skype, I got him to ring a local Bournemouth No 806504 (My Tesco No.)

My DECT phone connected to the IPA 1000 Rang, I answered it and my Dad was there speaking to me - remarkably clear! My Dad commented that it was just as good as calling other Bournemouth landlines.

Certainly the Quality seemed better than Skype, according to that one test call at least

Advantages of using TESCO Internet Phone Adaptor (IPA1000)

  • You don't need connection to a PC, - direct to Broadband Internet Router
  • Interworks with network users (i.e Freshtel in Australia)
  • Calls to other Tesco internet phone customers are FREE
  • Skype Out calls to UK (Tesco internet Phone No), cheaper than calls to Philippines
  • It works with your existing broadband connection from any provider
  • You get an extra phone line with no additional line rental
  • TESCO voicemail service is FREE
  • You'll get a new standard UK landline number (select Area and Number)
  • It's easy to set up and use, and calls are really clear
  • You'll pay less for calls to mobiles and landlines in the UK and overseas
    (but a little bit more than SkypeOut if using TESCO 'Pay as You Go')
  • You choose the TESCO Call Plan and add-ons that suit the way you make your calls
    (Only needed to make calls to non-Tesco Internet Phone users - comes with £5 Credit Voucher)

Wednesday, May 9, 2007

New Yahoo Group - "High Interest Rural Banks - Philippines"

High Interest Rural Banks - Philippines

This Group was formed for discussion, information, and promotion of certain Rural Banks within the Philippines, that are offering High Interest Time Deposit products.

  • Here is a good place to find FAQ's on this topic.

  • Reference material and Links to relevant websites.

  • Discover the truth and reality behind genuine banks, registered with Banko Sentral ng Pilipinas (BSP), with genuine products - deposits are insured with Philippine Deposit Insurance Corporation (PDIC).

"Don't believe it - too good to be true?" Here is where you can find out hopefully?

Whilst you can post your opinion on such Banks, and their 'products', we ask that you back up such 'viewpoints' with some sound 'argument' and 'logic', rather than voice mere 'suspicions' and 'rumours', OK?


This Yahoo Group "High Interest Rural Banks - Philippines" is effectively closed now!

  • No New Message Posts, being Approved
  • All new Applications for Membership, being Rejected
  • 'Messages' closed to Members
  • 'Files' closed to Members
Blame the Blogger of this Blogspot:-

BLOGGER details:-

Name: Suhir

Home: Pune, Maharashtra, India

About Me: I am a Business Man. I am from Pune. This blog is a part of my hobby.

No, he is not a business man, but a Hacker!

His Hobby is ripping off Yahoo Group Message Posts, and putting them on his Blogs, via an Atom Feed.

Sudhir has no respect for why this Yahoo Group was formed, nor why it was Members Only, who expected their Messages to be viewed only by other 'Members' of this 'Private Group

He is a thief who steals 'Private' message posts, and makes them available to the 'Public' via these 'Blogs' of his.

He is doing no work on his Blog, no creative effort - just THEFT!

Well we have had enough of this!

Google don't seem to care that this 'Sudhir' is able to set up his, with the same 'name' as our Yahoo Group (with '' tacked on) and via this RSS/Atom style 'Feed' - simply steals messages from any Yahoo Group Public or Private apparently, without permission.

I dont think this 'Sudhir' joined our Yahoo Group, under false pretenses, and using some 'alias' to become a Member.

They don't seem to care, that there is this Security problem, that allows 'Sudhir' to achieve this.Well I care, that the Members expected their Message posts to be Private, and they are not, with this Yahoo Group.

The answer is simple, we just STOP using this Yahoo Group!'

'Sudhir' won't get much pleasure from stealing this MESSAGE, 2 times every day!

Owner: hi-interestruralbanksrp Yahoo Group

Sorry if any genuine Members, do not like receiving this Message via a DAILY 'Calander' Event, with Reminders

Suggest you unsubscribe from this Yahoo Group, and become a Member of the replacement Group - (having submitted your Application Form beforehand, and received the Invite to Join).

Anyone wanting to receive an 'Invite' to Join the replacement Group, needs to accurately complete and submit this Form -

Hope to see you on the 'Private' Wiki

David Whittall

Tuesday, May 8, 2007

PDIC Insured Deposit - reduces Risk?

Depositing funds in Philippine Rural Banks is Risky?

Why - becuse some 8 x Rural Banks get closed down by the Monetary Board each year!

Having said this, deposits are insured (up to Php250,000 per depositor/per bank), by the Philippine Deposit Insurance Corporation (PDIC), which reduces/offsets, this risk somewhat?

Banko Sentral ng Pilipinas (BSP) is taking steps to improve banking practices, so there is less chance of the Monetary Board needing to close a particular bank down.

  • "In particular, the market and liquidity risk guidelines provide that if the BSP determines that an FI’s risk exposures are excessive relative to the FI’s capital, or that the risk assumed is not well managed, the BSP will direct the FI to reduce its exposure to an appropriate level and/or strengthen its risk management systems. "Although the guidelines are not strictly Basel 2 to conform with institutional arrangements and operating realities in the Philippines, the principles outlined are consistent with Basel 2 principles and international best practices," the BSP said".
  • The Bangko Sentral ng Pilipinas (BSP) has approved a further tightening of its "fit and proper" rule for directors and officials of banks and other financial institutions. The new set of guidelines expand the grounds for disqualification of bank directors and officers by adding more crimes and offenses not previously included in the existing guidelines.

    The "fit and proper" rules were intended to ensure that officials in charge of banks and other financial institutions possessed the required integrity and competence for prudent and sound management. The BSP started tightening such rules in 2002 and two years later began prohibiting top officials from holding concurrent positions in different bank entities. It has also has been tying up loose-ends in the directorship and officership of banks to prevent conflicts of interest that could open loopholes for unsafe and unsound bank practices.
  • The 50-year-old Bank Deposits Secrecy Act has now been changed. Previously, owing to the absolute secrecy of deposits, unscrupulous, bankers have managed to manipulate financial reports to the detriment of the depositing public. This absolute confidentiality of bank deposits, over the years, has abetted unsound banking practices, which, in turn led to the collapse of a number of banks and the financial ruin of tens of thousands of depositors.

    Previously it was only after the Monetary Board has already closed down an erring bank, that regulators are able to examine deposits and belatedly discover unsound banking practices. Examiners from the BIR, Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) may now scrutinize bank deposits "for supervisory and tax audit purposes". Hopefully this will allow them to now discover erring banks with unsound banking practices, and take action, before the banks needs to be closed?
  • Based on Section 16 of the General Banking Law, to maintain the quality of bank management and afford better protection to depositors and the public in general the MB will "prescribe, pass upon and review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit."
  • "After due notice to the board of directors of the bank, the Monetary Board may disqualify, suspend or remove any bank director or officer who commits or omits an act which render him unfit for the position," the BSP law said. The BSP added that in determining whether an individual is fit and proper to hold the position of a directoror officer of a bank, regard "will be given to his integrity, experience, education, training, and competence.
  • "The [BSP's] Supervision and Examination Sector shall make an annual assessment of the performance of external auditors and will recommend deletion from the list even prior to the three-year renewal period, if based on assessment, the external auditors' report did not comply with BSP requirements," the circular says.
  • The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved tighter guidelines on dealings of banks with their Directors, Officers, Stockholders and Related Interests (DOSRI) under the provisions of the General Banking Act. "We hope these regulations would curb excessive DOSRI lending which has been a major cause of bank failure," said BSP Governor Rafael Buenaventura.

Republic Act 9302 not only increased the amount of deposit covered by insurance (to Php250,000) but also restored the Philippine Deposit and Insurance Corp.’s (PDIC) authority to implement stricter monitoring and governance standards for banks. The new law is careful to point out that it is not duplicating work being done by the Bangko Sentral ng Pilipinas. RA 9302 reverts examination powers to PDIC, a mandate curiously taken away from the agency when the General Banking Act was signed in 2000. With the restoration of examination powers, the PDIC can once again look at bank ledgers, and even conduct an investigation on a bank based on a complaint lodged against it.

Tightening the screws

"Some other relevant provisions stipulated in RA 9302 worth mentioning are: continuing deposit insurance coverage for depositors even if the bank is delinquent in premium payments; stiffer criminal and civil liabilities for erring bank owners and officers; legal indemnification for acts of PDIC officials done in good faith; and enhanced regulatory and liquidation powers which includes the authority to reduce abnormally high interest rates on accounts held by closed banks. Erring bank owners found engaged in unfair and unsound banking practices will be liable to up to 12 years in prison or up to P2 million in fines. Banks that peddle in dubious bank promotions that promise "double your money" schemes in one year should beware.

Let’s just hope that the new law gives PDIC enough muscle and teeth to carry out its mandate.

Shoring depositors’ confidence

At least, the amendments on the PDIC Charter will boost the sagging morale of wary depositors who fear bank closure each time the political and economic scenario dims. With the higher insurance coverage, 96 percent of the total deposits in the banking system will now be fully backed by deposit guarantees, up from 91 percent from the previous insurable cap.

Based on 2003 banking data approximating deposits in the system at P2.4 trillion, the new insurance coverage translate to full insurance coverage for some P716 billion in deposits versus P462 billion at the previous P100,000 cover.

For now, depositors have one more good reason to leave their hard-earned money with banks rather than in the hands of pyramiding con artists."
If you read what the press and the PDIC report on Banks getting closed, such as Bank of Cebu, which was closed on August 31, 2006, you should also see, how responsive the PDIC are becoming.
"The PDIC took over THE BANK OF CEBU (A DEVELOPMENT BANK) and its branches, assets, records and affairs effective August 31, 2006".
"A week from takeover of The Bank of Cebu (A Development Bank), state insurer Philippine Deposit Insurance Corporation (PDIC) will start servicing depositors’ claims for insured deposits on September 8, 2006. This is in keeping with PDIC’s commitment to start claims servicing in single-digit turn-around-time (TAT) from bank takeover".
Now you could be thinking, it is one thing to "starting to service claims", but actually "paying out the returned deposits", could take several months?
A friend of mine posted the following message to a Forum on 11th september 2006:-
“Just a little bit of information, a Filipino friend has just received [last Friday - 8th September] a payment of Php 250,000 from the PDIC. after his account went down the Bank of Cebu, his balance at closure was 600,000, he has been informed that the remaining balance will also be refunded, However no time span was given, as the Banks assets have to be sold first.
So the PDIC payment was pretty prompt (8 Days)".
It seems the PDIC can start paying out pretty quickly, after you have submitted your claim with all the required documents, and provided the banks records are accurate and complete.
"Deposit records are subjected to an examination prior to the start of servicing/settlement of claims. As soon as the pre-settlement examination is completed, PDIC shall schedule the servicing of claims".
The length of time needed for the pre-settlement examination of deposit liabilities of a closed insured bank largely depends on the completeness and accuracy of records turned over by the Bank to PDIC and the number of deposit accounts to be examined. On the average, claims servicing for banks with problematic records starts 2-3 months after takeover by PDIC.

I don't know what you think about this PDIC insured deposit, but for me, it definately reduced the risk of me losing my money, if such bank, where I placed my deposit, were to be declared closed, by the Monetary Board (MB).
The way I see it, is investing my money, by placing funds in a Peso Time Deposit. with a registered, controlled, regulated Bank, and having such deposit insured by the PDIC, is lot less risky, than investing in Stocks & Shares and say UITF's?

Tuesday, May 1, 2007

"What does it cost to live/retire in the Philippines?"

I have mentioned certain Rural Banks in the Philippines that offer up to 20%pa. The monthly Interest from such, was instrumental in my being able to take 'Early Retirement' and Live in Paradise (Cebu) with a 'comfortable', enjoyable, lifestyle.

Many people ask
"What does it cost to live/retire in the Philippines?"

The answer to such a question is complex, because of many variables?

  • Is this a single person, a married couple, or a family with Children (if so what ages)?
  • Are you going to consider 'Renting' somewhere to live?
  • If married to a Filipina, you could consider purchase of lot, and have a house built.
  • What about 'Transport' - use of 'Buses' and 'Taxis', or 'Purchase' a vehicle?
  • What sort of 'Lifestyle' do you envisage?

    The cost of going out to Bars/Resteraunts, Clubs, Cinemas etc is a lot cheaper than the UK etc, However it obviously needs a higher budget, than buying food and drinks from Supermarkets, and cooking and entertaining at home. What sort of 'Sports' might you wish to follow? Golf is more affordable, but Membership to some Clubs can be costly. Sub Aqua is not that expensive to get trained up, if you dont already have dive qualifications. Buying you own gear is better long term than renting, but travelling to different parts of the Philippines to discover new Dive spots adds up, depending where and hjow often. Staying in Resort Hotels with Dive Boats for hire and Master Diver as guide, does increase the Budget you will need also.

Certainly if you have children, you need more 'income' to cover the cost of schooling. This increases, as the children get older, with High School, College, and perhaps University.

I would suggest 'Renting' a place - initially at any rate. This gives you a chance to get the feel for the selected area of the Philippines, the City/Town and the 'Banangay'.

If/when you come to considering buying a house/lot, is it best to have an individual Lot or a 'Subdivision' from a Developer? Do you choose a design from such a Developer with House/Lot purchase, or 'Lot Only' and have your own House designed and built just the way you want it.

Certainly the cost of having a custom house built here in the Philippines is a lot less that comparable properities say in the UK.

Our 3 storey (105 sq m) extension with the following:-

1st Floor: Reception, Lounge,fully fitted Kitchen and Dining room.
Garage, external entrance to Maids quarters.

2nd Floor: Master Bedroom with en-suite/common Bathroom and Terrace,
2nd Bedroom, hall, Terrace at Rear and stairs to 3rd Floor.

3rd Floor: Lounge area, Mini-Bar with Dartboard, store cupboard with access to loftspace,
Large Terrace (with impressive views of hills and land down to coast).

View a 'slideshow' of our Philippines Home
(built for just £13K, or $23.3K, 2.5 years ago)

The Bottom Line
A couple with no children, the house, and a car, already paid for, could have a 'comfortable' lifestyle on Php50-80,000 a month.

Monday, April 16, 2007

Worked Example showing what's possible.

Worked Example

Showing what could be achieved using certain Rural Bank Products in the Philippines
NB: This is for illustrative purposes only, it is not suggested it is followed, without taking independent financial advice.

Suggest having a 'balanced investment Portfolio' and perhaps never invest more than you can afford to lose?

See Spreadsheet for detail.

Here we see how a Family (couple with 2 children), could invest up to Php2M, in just one Rural Bank, and stay within the PDIC insured Deposit limits (Php250K per depositor):-

Rural Bank 1

This shows the 6 Year 'Hybrid' CTD/SSD product, which not only gives 20%pa Rate, with Interest credited Monthly (Tax Free), but offers 20% Advance Interest (from months 61-72). This effectively lowers the cash investment required by 25%, but does mean no Interest in the 6th Year. However in the unlikely event of the Bank getting closed by the Philippine Monetary Board, and handed over to the PDIC for liquidation, all Interest received to that time is retained. Any future interest will be lost whilst the claim is processed by the PDIC, and ones Deposit returned.

This could be repeated at a 2nd Rural Bank if required?

This example shows potential additional Deposits at another Rural Bank, but this time using the
5 Year Time Deposit (CTD/SSD) product.

Rural Bank 3

This could be repeated at a 4th Rural Bank if required?

SUMMARY (if options for additional Rural Banks taken up for consideration):-
Investment (consideration)............... Php7,200,000
DEPOSIT Total (Returned after 5 Years)..... Php4,000,000
Total (Returned after 6 Years)..... Php4,000,000
Interest Received (per month) ...............................................Php133,333

Depending on your Finances, circumstances, and Investment Portfolio diversity, if having additional funds for Rural Bank Time Deposit consideration, one could consider an additional Rural Bank, but utilising it’s monthly Interest re-invested to a 6th Rural Bank, perhaps?

Additional Deposit consideration, providing re-investment to help protect Capital against Inflation:-

You will note here, only half the possible Deposits have been placed. One could double ones Investment in this Rural Bank, if funds and investment plans permit, potentially, and still remain within PDIC insured Deposit limits?

Using just the Deposits shown above in this illustration however, produces additional income of Php16,666.67 a month. If this is kept in a Savings Account, after 6 months it will be at least Php100K. This is typically the minimum Deposit for a 5 Year Time Deposit.

3 Year Time Deposits may also be available (also paying 20%pa potentially, but one has to be aware such 20% Rates might not be available at the end of the 3 Year Term?).

Rural Bank 6

The revised totals would thus become:-

CASH Investment (consideration)....................Php8,000,000
Total (Returned after 5 Years)..........Php4,000,000
DEPOSIT Total (Returned after 6 Years)..........Php5,000,000
DEPOSIT Total (Returned by end of Year 10)...Php1,000,000
CAPITAL TOTALPhp10,000,000
TOTAL Interest Received pm (after Year 5) = ...........................Php166,667

This is just an illustration of what a Family (couple with 2 children), could consider as an Investment, into 5 Year CTD & 6 Year 'Hybrid' Time Deposits of certain Rural Banks in the Philippines.
Anyone considering such, should conduct their own research to make sure the products, rates, minimum deposits, and PDIC insurance Deposit limits are met.

Decide if the Reward v Risk is acceptable - seek Independent Financial Advice, if required.

This illustration can be scaled down, but the PDIC insured limits have been met with this example in Rural Banks 1, 2, 3, 4.

Rural Bank 5 investments could be increased with another 4 x Deposits of Php200K, which utilising the 'Hybrid' Advance 20% Interest, increases Total Deposit by additional Php1M.
This is turn can be re-invested in Rural Bank 6, which still has scope for additional Php1M Deposit through careful selection of deposit amount and depositor to stay within PDIC limit of Php250K per Depositor (Single Account) + Php250K limit shared (Joint Account) Depositors total.

Saturday, April 14, 2007

How can such Banks afford to give 20%pa on Deposits?

The simple answer to "how Banks can afford to pay out 20%pa on Deposits", is "they do so, by charging high Interest Rates for 'Loans' (typically up to 36%pa)".

Now you may be thinking that 36%pa is very high Loan Rate?

Well that is 3% per month, and typical of what a Credit Card company might be charging.

In much of the Philippines, the only way villagers can borrow money is from loan sharks. They collect from their debtors every day. The most efficient private entities who are engaged in micro-lending are the "Bombays". Although they operate illegally as usurers, they have actually mastered the technique of marketing and collecting, so much so that they have flourished and grew and their simple "5-6" operation have been passed through generations.

They're known as five-sixers because they take six pesos back for every five they lend. That works out to an annual interest rate of over 1,000 percent.

Indebtedness to informal loan sharks is a huge problem in the Philippines.

Many of the Philippines poorest, who live on the edge of subsistence without a single peso's margin, have no option but to go to the local money lender for loans to buy stock for their small businesses, or to tide them over when emergencies come up.

These guys charge anywhere from 5 to 20% interest per month ( that's 60 - 240% per year! ) and can use brutal tactics on anyone who don't pay.

In the "one-day-loan" system they might charge 100% per day!

At these kind of rates, debts quickly skyrocket, and many find themselves in a swift, downward spiral, with more and more of their money going just to pay the interest, losing all hope of getting out of debt.

It seems crazy to pay this kind of interest, but to those with no other credit options, the money lender means survival, and so people keep going back.

This is why the poor stay poor.

I think this explains why many in the Philippines, are willing to borrow money from a Bank that charges as much as 36%pa, for such a loan.

How can these Banks be sure they will collect the loan repayments?

Generally such Banks typically offer such loans, only to those with proven means to repay. This might be various types of loans like micro-finance loans for entrepreneurs. Salary loans for government teachers for example, with automatic salary deduction schemes guaranteeing a 100% collection. These, among others, ensure the Banks of receiving between 24% to 36% interest income per year. OFWs, soldiers, and SMEs, are other typical borrowers of money from these Banks.

Why such a difference between these 'Rural Banks', and the 'Commercial Banks'?

As an example, I heard that BPI Family Bank have a rule of thumb for its bank: add 7% to the cost of money and you have the general cost of capital.

A 'Commercial' Bank's long-term lending rate might typically be 11% now. Deduct 7% and you have just 4%. The bank can offer its clients is 2% for saving deposits, with just 2% profit for the bank. Commercial Banks don't make their big money from savings/loans - rather from Credit Cards and the like.

A 'Rural' bank's lending rate averages 36% for short-term loans. Deduct the 7% and a Rural Bank has 29%, leaving 9% profit ,after offering clients 20%pa on Deposits.

Other banks may set aside a big percentage as provision to write-off bad loans, while a Rural Bank that has a low ratio of bad loans, would need only a smaller percentage as provision.

Of course, other factors like stakeholder expectations on ROI, and actual operating expenses all come into play. Generally you find most Rural Banks have lower overheads - smaller, less prestigious offices, a lot less 'managers', means lower salaries also.

Rural Banks have to stay 'competitive', to attract 'cash' Deposits.

Rural banks lose P500m accounts
By Eileen A. Mencias

The Rural Bankers Association of the Philippines has asked the Bangko Sentral ng Pilipinas to stop the migration of deposits from rural banks to big commercial banks.

Pablo Ronquillo, a consultant of the Rural Banks Association of the Philippines and a former central bank lawyer, said deposits in the rural banking industry were being siphoned off by the big universal and commercial banks through their high yielding unit investment trust funds.”

"The good prices on the bonds and equities resulted in an improvement in the value of most trust funds, with some even reporting a net return of as much as 24 percent.

“The UITF offers as much as 24 percent net interest on deposits which is too attractive and tempting for the enterprising depositors to transfer their accounts not only from rural banks but also from other thrift and commercial banks,” Ronquillo said.

Tetangco, however, told reporters that the central bank had seen an increase in deposits in the system. He said higher deposits were also noted in thrift and rural banks".

So Rural Banks need to offer products such as 5 Year Term Deposits with 20%pa Interest Rates (with interest credited monthly), to remain attractive to Depositors, who might otherwise consider UITF's paying 24%?

Personally, I will stick to these Rural Bank Time Deposits, for the following reasons:-

  1. Less Risky - Deposit insured by PDIC
  2. Guaranteed Return - CTD states Interest Rate of 20%pa, paid monthly for full term
  3. Tax Free - Interest payment gross of 20% Withholding Tax (as exempt)
  4. Ability to Cancel, quick payout and with known costs - High net balance.
    If needing urgent cash for some emergency, it is possible to cancel the Time Deposit.
    This can be done quickly (1-2 days), and the penalties are fixed and known for doing so.
    In most cases you will still be better off financially, for having placed than the Time Deposit, then terminated, over any other form of savings investment over the same period.

So far, I have not come across any, overriding reasons, why one should NOT consider such Deposits?