Investing In the Philippines — RTB’s

I’ve written more than once in this journal about some strangely structured and ill-advised investment schemes (scams?) in the Philippines.  Sadly some of them were even heavily touted by fellow expats, and I’ve lost friends over the issue as well.

One huge scheme, the Legacy Group Rural Bank fiasco is still playing out in many levels of the Philippine government.  A number of banks have been closed, many people have been accused of crimes, some have been formally charged and fortunately for the depositors involved, the Philippine Deposit Insurance Corporation (PDIC) is in the process of paying claims of depositors.  Will everyone get back every penny they invested?  I surely don’t know, I hope so, but it surely can’t leave a very good taste in the mouths of anyone involved.  I think it’s better to make investments that you don’t need ‘scoundrel insurance’ for.

How to Move to the Philippines Manual


The reason I smelled a rat long ago and the reason the Legacy Group house of cards tumbled, in simple terms, is greed and an unsound business plan.  If you ask people to invest, guarantee to pay them a certain high rate of interest and then have no suitable investment vehicle bringing money in to pay the interest going out, it doesn’t matter if you are Bernie Madoff or if your heart is pure as the driven snow … the scheme can’t survive.

On the other hand, I myself surely hate having money in the bank earning little or no interest.  My US-based credit union proudly touts 5 Year certificates of deposit paying a whopping 3.0% per annum … fully subject to income tax, of course.

Or the old safe and secure standby, US Savings Bonds .. buy some today while the simply astounding rate of return is a whopping 0.70% PA.  (That’s not a misprint, I went and looked it up and had to clean my glasses to make sure I wasn’t misreading the information at the official government site.  Pretty unattractive in my book

For those of us who live in the Philippines and have a bank account here there is an interesting alternative.  Before reading further, do bear in mind that:

  1. An investment advisor advisor I am not.  Invest in any thing at your own risk and if you think you need professional guidance, get it.
  2. I have no interest in these investment vehicles at all.  I do not sell them, get any commission or anything else of value and only mention this as an item that interests me and may thus interest you.

That out of the way, I’m talking about Government of the Philippines Retail Treasury Bonds.  Here’s some information regarding these investment instruments along with a link to an excellent source of financial data here in the Philippines:

First, what is a Retail Treasury Bond?

The Philippine Retail Treasury Bond (RTB) is a direct and unconditional obligation of the Philippine government generally considered a safe and liquid investment opportunity. The RTB, issued by the Bureau of Treasury (hence the name), is one way for the government to raise needed funds.

It is safe because it is fully backed by the government and rarely does a government, including the Philippines, defaults on a debt security such as this. It is liquid because it can be traded in the secondary market prior to maturity.

It is called Retail because at Php5,000 (US$112) minimum investment, even individuals can invest here … learn much more about TRB’s and other finances at the excellent Pinoy Money Talk

9% before taxes sounds pretty good to me.  I’m on my bank manager’s list for a couple hundred thousand Pesos’ worth … if the bonds get offered later this summer.  Last year there was no offering because the government was meeting its income goals and didn’t need to borrow, this year we will see what we will see.

Regardless of what you think of the bonds … or if they even get offered this year, I highly recommend a regular read of Pinoy Money Talk … an excellent resource to learn what’s going on here in the Philippines financially, written at a level we non-financier types can easily understand


    • says

      I should have explained that Laurence, sorry. That information was for the July/August 2008offerring that did not come to pass. So far as anyone, including my bank manager knows, the terms and details will be essentially the same for 2009 … again assuming there is an offering. I haven’t seen anything offcial on the proposed 2009 bonds themseleves in a month or so now, but there was some other economic indicator news last night that says the Philippines is doing far better than expected as we near the end of the second quarter so they may never issue any again this year … too bad, but not being broke is a good thing.

  1. Joe says

    PHI is traded on the NYSE as an ADR. Despite the brutal run down in stock prices you would have to think this stock is a winner. I have traded this ADR in the past but I do not know of any other worthwhile investments in the Philippines. I am thinking about venturing into the stock again.

    Are there any reasons why I should not? Just interested.

    I am certainly not plugging the stock and every investor should research before investing in any stock, mutual fund ect.

    • says

      Joe, thanks for commenting. Of course this is all my personal opinion, but you asked for it. I would consider the stock being listed in the NYSE a huge risk factor. How many Americans have had their life savings and retirement funds wiped out over the past two years by various crooked thieves and their friends .. like the current sec treasury word is he was agreat freind of Bernie Madoff while pres of the New York Fed, many people at the Fed were known to be virtually enthralled by Mr. Madoff’s “talents”), or the outgoing one who just lest (moved right into a highly paid position at a company he had just dumped millions of your money and mine into ( wonder if he picked the clor of his drapes and his office furniture while still writing checks from TARP that can’t be accounted for these days … you wnat _these_ guys, Republican or Democrat handling your savibngs?)). This you would consider an investment? I consider it playing poker with a blindfold on.

      Please note I don’t consider the Philippine stock exchange much better. I do not recommend stocks in today’s world, period. Government Bonds, such a I mentioned here are an investment, stocks are blind speculation, pour and simple, and I wouldn’t touch them with a 10 foot pole.

      That tirade out of the way, PHI (PLDT) is not something I consider good for future gains, They are still an old-line telephone company and telephone companies as we know them are buggy whip stocks. Most of them think the ‘old ways’ wil come back … so did the buggy whip comanies. Skype is notwthe world’s _largest_ long distance carrier. Telcos with wires and wire-based business policies are shaky at best.

      If I were investing in the stock market, I’d get into something that was promiing in alternative energy, or a pharmaceutical company that looked to be going places. Americans are addicted toprescription drugs for every conceivable ailment and the current US government policy/lobbying group base gives them a license to print money … there is no Skype breathing doen Pfizers neck, in other words.

  2. says

    I loved the budget you published with saving being the number one item. That is a very smart way to save money and cover for those unplaned expences. I also enjoy your blogs on cost of thing there.

    • says

      Thanks, Don. I know there are people who differ with me on the way I displayed this, but people come here looking for advice on living in the Philippines, not being an accountant 😉 I don’t have large following, but people get in touch with me frequently … and I have already heard dozens of sad, sad stories, about people who moved here and then ran into unforeseeable expenses and are flat broke.

      Many of these people are better educated than I, amd a great many of them started out wealthier. But even the people who haven’t suffered a setback,yet, need to understand that they likely will. Sickness, crime victimization or even a downright ‘senior moment’ can happen to anyone from high school dropout to Harvard Phd. If you put actual, real money in the bank … here, where it is accessible, _first_ thing each month … before the rest of your income just gets frittered away, the _worst_ that can happen is your grandkids get rich when you pass on.

      But if you, or worse yet, your spouse or other family member suddenly has a life threatening illness or something like that which happens to everyone, dumb or smart, the ability to walk up to that window at your bank and just draw out a couple big handfuls of Pesos is going to feel like something so good you can’t even describe it.

      More than one person has said, Oh I keep my savings back in my home country’. Good. I keep savings in my home country too. But do you know how long it might take to ‘tap’ that bank account? Could take a week … which is a hell of a long time when your kid is lying in a hospital bed and you have a prescription in your hand that you can’t buy becuase Mercury Drug store demands payment first.

  3. Joe says

    Thanks for the response. I rarely talk about finance on the web.

    I enjoy your blog and I hope you continue writing as I will continue to read.



    • says

      No problem, Joe, thanks for the kind words. We can certainly discuss finance here any time …anyone who joins in, though, will just have to endure my opinions.

      I’m not a big fan of the government licensed/condoned thievery of my fellow US citizens that has been going on for the past couple years … this isn’t a political thing, both parties are as ‘dirty’ as the other. It’s an example of how the US government really has little or no control over huge segments of the ‘moneyed aristocracy’ … if you have the right freinds you can just outright pillage the ordinary folks out there who are just trying to raise afamily and earn aliving. It saddens me as much as it angers me. One reason I live here is it isolates me from a lot of what’s going on back in the USA … ostrich-like, I know, but then again every man has to cope with stress in his own way. Be well.

  4. zikh says

    Hi! Would you know if the 5 and 7 year TRBs are subject to the 20% with holding tax?

    • says

      Yes they are, a few years ago five year and longer bonds were exempt from interest taxation, but no more. The ROI’s on the site I mentioned take this into account.

  5. says

    I discovered these Co-Operative Banks here in the Philippines that were offering “Double Your Money in 5 Years” but that was not paying Monthly Interest as it was ‘compounded’ to give you 100% AFTER 5 years. I thought about it but never actually put funds in, but was tempted to do so after having met a Foreigner,married to a filipina who had got Double his Deposit back at the end of 5 Years. He was telling me that it was now after 6 years, so less attractive but stil way better than Commercial Banks could offer.

    It was in March 2005 that I put Php100,000 into Bank of East Asia, Rural Bank, offering 20%pa, paid Nett (as exempt from 20% Withholding Tax, by virtue of being a 5 Year Savings plan).

    Anyway I went back to the UK the next month to celebrate my 50th Birthday with Family, and when I returned it was May, and 2 months Interest had been credited to my Bank Account.

    I doubt if I was the 1st Foreigner to put funds into one of the 12 x Rural Banks of ‘The Legacy Group’, but may well have been one of the 1st to post about having done so on Yahoo Groups and Forums as Pinnoy Money Talk did not exist back then for such detailed discussion on this and all Topics related to making, and Saving Money.

    I did not put my money into these Banks, without some research and investigation and checking with the BSP website and that of the PDIC and the RBAP, to determine if such Bank was a Member.

    In the end. myself, my wife, and her Daughter had Peso Time deposits in some 5 out of the 12 x Legacy Group Banks and earning very well of it. So much so that I did not have to think about working to generate enough income to live off.

    I don’t want to go into discussion on “Too good to be True” and How can such Banks afford to pay 20%pa. People that think such things, generally have not really lived in the Philippines and discovered the true cost of borrowing funds when you have virtually nothing. Just find out what is the true cost of Pawning to get funds in an Emergency and what the ‘Loan sharks’ pay, the ‘Bombays or the ‘5-6ers’.

    Get behind on your Real Property Taxes (assuming you are lucky enough to own Land or House/Lot), and they (the Government) charge 2%per month (compounded) as late payment penalty!

    What prompted me to RISK putting substantial amount of my Life Savings, encashed Life Policies, Pension Funds etc into such Rural Banks, was the fact they were PDIC covered up to the Insured Deposit Limit (Php250,000 at that time – now Php500,000).

    Joint Accounts carry separate Insurance Cover, so this can be exploited as a Couple, such you can place one Joint account of Php250K then another of Php250K, as each is split to give Php125K as Insured Deposit Share, and you can do that again to get anoer Php250K share of the 2nd Joint account making Php250K Total.

    Well that was the ‘Theory’ but in practice when the Monetary Board announced Closure of all 12 x Rural banks of ‘The Legacy Group; in the months of December, all our monthly income from these Banks, stopped at the same time.

    The writing was on the wall when Celso G de Los Angeles, said he wanted to get out of Banking and move into Real Estate? Well it looks like he also got out of Pre-Need also and the Senate Investigation revealed many failing of the SEC to Regulate and Control that Industry. We lost money from that but only what we could afford to lose. Much was from the ‘Advanced Interest’ offered by some Rural Banks, so not really at risk as it was money we never spent, only money we were supposed to get in the 6th Year.

    The PDIC took 3 months to announce Claims Acceptance, instead of the 9 x working days or less that they used to ‘brag’ about acheiving.

    Payment of the submitted Claims was not within a few days or the same day that the PDIC staff in a series of Forums around the Country promised either.

    We submitted on March 23-25 for 4 x closed Banks, and on April 20, for the 5th Bank. In June/July the PDIC had paid some 11 Claims out of the 46 Claims submitted.

    Nothing more forthcoming from the PDIC except ‘Hoops’ they wanted the Claimants to Jump through before paying out despite having taken 3 months to check all the Banks Records and Documents prior to announcing Claims Acceptance. Some 6 months later, and no communications what so ever from the PDIC in all that time, in may cases.

    The PDIC Charter actually states Claims should be completed.within 6 months from submitting such Claim. It also says if Gross Negligence and 3 other offences caused such delay it could mean Jail terms of 6 – 12 months for those found Guilty of such DELAYS. Here we are now 18 months from Bank Closure and 15 Months from Claims submissions and many more than the PDIC would care to truly announce have not received even one claim payment yet!

    If Truth be told the PDIC are guilty of Gross Negligence and someone should go to Jail over this, but doubt if they ever will?

    Its the Philippines after all, where Presidents can be accused of Plunder, found guilty, then allowed to stand for President again.

    So how big is the Crime of the PDIC deliberately delaying the mailing of letters by anything from 23 days to 44 days! Even when payment is approved and payment Checks issued and signed, the Post Mark Date was a months later and delivery via Phil Post to Talisay City Post Office, took another 16 days or more, even longer had we not ‘collected’!

    Now we are discovering the PDIC has started to ‘short change’ us, on the Claim Payments, by over Php24 on at least 4 payments. Still waiting for what possible mistake that must have made or some false evidence. We already had to submit Affidavit of Ownership with Circumstances and Supporting Documents, that show and prove funds to the amount claimed were infused into the books of the respective Bank, in the name of the Claimants who submitted.

    Then 5 months later the PDIC, without any explanation, pay somewhat LESS then the documentary evidence should have demonstrated got paid ihow come there was the issue of Official Receipts, ‘Certificate of Time Deposits’,or’ Special Saving Deposit’ Pass Books, and ‘Schedule of Interest Payments’ and ‘Bank Certification, that we also asked for in almost all cases.

    Still we cant complain too much as the ‘average earned over the Term (that included all the time from Bank Closure to actual PDIC payment received and then cashed), still averages out rather a lot higher that most other Investments that can offer your Money Back at least.

    I got ‘burned’ on the Pre-Need Buy Back ‘Scam; as it was later determined in that Senate Investigation. I also got ‘burned’ on the import of Chines Motorcycles when it was discovered the funds so raised from ‘Angel Investors’ were never even used to pay the Manufacturer. File a Syndicated Estafa case against those who worked the Scam and guaranteed the Checks, and Catherine L. Soronio files a bogus charge with the BOI, in an attempt to have some of us Foreigners, who filed Court Cases against her, deported. That backfired on her in my case, as I am a Permanent Resident and exempt the need for Alien Employment Permit (AEP).

    Still like Gambling on the Stock Market or elsewhere, you might lose on some ‘deals/investments’, yet win on others. As ling as you WIN more than you LOSE, you are ahead, and if that enough to live of and keep you in good health, love and happiness, then just enjoy what life you have here in the Paradise of the Philippines.

    I am earning 5% on my PDIC payments, suitably invested. That is not pa but per month, payable bi-monthly so have funds to cover the increasing Electric, and water bills, and afford to go out to meals, the cinema and generally enjoy life again here in the Philippines.

    We are now Grandparents to a baby granddaughter, who is 4 months old and also brings us a lot of joy and happiness.

    David & Sha-Sha in Talisay City, Cebu

    • says

      Thank you, David, for a very frank and illuminating comment. It’s very useful for other readers to have someone speaking from authority on these issues. Hope all goes well in your current 5% per month?!?!? investment project.

      • says


        Don’t worry, I started such new investments (Php600K) over 1 year ago, so I/We received 10% (Php60K) every 2 months. I rolled it over for another 2 months, so that’s another Php60K, so worth doing I figured. I do not want to take it out for another 12 months, and would be concerned if they were still offering it much longer?

        This is a relatively small family business (Capitalized to Php50M) that got new Licence/Permit to import additional Rice. They went from 10 Container a months 12 months ago to now bringing in 40 x 20′ containers a month (they don’t allow Rice in 40′ Containers I was told?).

        Anyway I don’t wont to go into any more detail of what this investment is, that I put my funds into. Whilst it stays under 19 x investors, then there is not the need to get an SEC Secondary Licence to offer Securities to the Public.

        We learned that LCPI should have had one of those ‘Secondary Licenses’ from the SEC, to buy back those Pre-Need Plans. So I am am a lot more cautious, and concerned, that it is genuine profits being generated from genuine imports of Rice and Sugar.

        There is an ‘Employee Loan’ scheme, offering a return of 5%pm being discussed on ‘LivingInCebuForums’. I am nothing to do with that and will stick to the one I have 12 months experience of.

        I am considering buying a Condominium,or Condotel, in my own name, with these funds from these Rice and Sugar Imports.

        This should give me a bit more protection than sinking it into buying another Lot, off her Sister, as it would have to be in my wife name.



  6. Rich Son Poor Son says

    Guys, where is the new forum?.These forum been there for 4 yrs now…How about 2012?.

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