Saturday, 12 May 2007

DoTC seeks gov’t guarantee on $ 329-M broadband project

By FIL C. SIONIL
Original report at Manila Bulletin

The Department of Transportation and Communications (DoTC) is seeking a sovereign guarantee for the $ 329-million worth of soft loan the Chinese government will provide to finance its ambitious but controversial national broadband network (NBN) project nationwide.

The sovereign guarantee will have to be first issued by the Department of Finance before the project financing goes up for approval by the Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas (BSP).

The BSP clearance is required since it is considered an offshore borrowing. As a prudent measure, the regulators monitors all foreign financing and/borrowings to have an estimate of the amount of dollars the country needs to pay off loans as it falls due.

The Chinese facility will carry a three percent interest rate with 25-year maturity, inclusive of the five-year grace. Payments or amortization will commence on the five years of the availment.

Although, a memorandum of agreement (MoA) has already been inked between DoTC and the Chinese government through ZTE, a state-owned telecoms carrier and equipment manufacturing firm based in Shenzen, the availment of the facility has yet to commence.

"We need a sovereign guarantee. Also, the approval of the Monetary Board," said DoTC Director Ricardo Diaz of the community planning service.

Diaz said the government will not shell out any centavos for the project. "There will be no counterpart funding. It will be 100 percent financed by the Chinese government through its Eximbank."

The MoA covers, among others, the commitment of DoTC to pursue the NBN project to be undertaken by ZTE with financing from the Chinese Export-Import Bank.

The NBN project has already passed the scrutiny of the inter-agency, Investment Coordinating Council chaired by Socio-economic Planning Secretary Romulo Neri as well as the approval of the National Economic Development Authority Board.

It entails the establishments of 300 base stations and 145 feeder stations that will connect 25,844 local government units and barangays nationwide, claimed Project Director Norberto Conti.

Upgrading of the existing facilities of the government is, also, included in the project, which will run for three years.

Diaz said the NBN project will be cost-effective for the bureaucracy, moving forward.

To provide a graphic example, Conti cited calls emanating from the head office of the department of agriculture to its regional offices will be free of charge.

On an annual basis, the government spends some P3.7 billion for its communication expenses. However, both officials cannot provide the amount of money that can be saved with the NBN in placed amidst admitting that DoTC has done economic simulations.

"Communications is a very good catalyst to economic development," he, instead, countered.

Both Diaz and Conti brushed aside allegations of preferential treatment, saying that the offers made by US-based firm, Arescom Inc. and Amsterdam failed to meet the requirements of the project.

"The US firm’s offer is not comparable in terms of coverage. What they submitted is not complete," Diaz said, adding that the firm’s proposal, which include 22 sites, does not complement the requirements of DoTC for the NBN project.

The proposal of Amsterdam, on the other hand, is a 40 percent government usage and 60 percent private with the state given a 25 percent discount and the project to be completed under the build-operate-and-owned scheme, a variant of the build-and-operate-transfer program of the government.

Conti affirmed that the major consideration in choosing the Chinese firm is its financing assistance. "That was the major consideration."

"We believed the process has been right. The feasibility (study of ZTE) conforms with our needs," declared Conti, optimistic that the necessary paperworks and clearance will finally be obtained for the work to commence sometime this coming September.

Grant Thornton: RP firms best at cutting power costs

Full report with table at Grant Thornton

Companies in the emerging markets have done most to date to manage future energy cost pressures according to the Grant Thornton International Business Report. The International Business Report covered the opinions of 7,200 privately held businesses in 32 countries, representing 81% of global GDP. Out of a maximum score of 600, companies in the Philippines (410) lead the way, followed by: Brazil (360), mainland China (341), Malaysia (307), Germany (306) and Turkey (303).

Main action taken by companies to reduce energy cost pressures:


  • 58% of businesses globally have undertaken an energy review to understand how they may be wasting energy, led by companies in the Philippines (83%)

  • 59% of businesses have reduced their energy consumption, again led by the Philippines (85%)

  • 60% of businesses have put in place measures to ensure all computers and electrical equipment is turned off, top were Malaysian companies on 85%. The least action taken was by businesses in Thailand (16%) and Sweden (39%)

  • 44% of businesses have spent most on energy saving equipment with Brazilian businesses (66%) the most likely to invest

  • 20% of businesses have invested in alternative fuel/energy supplies. European businesses are more likely to have invested in these (24%)

  • 22% of businesses have considered relocating to reduce transportation costs with companies in mainland China (46%) most likely to have contemplated this.


Alex MacBeath, global leader of privately held business services for Grant Thornton International, said:

"There is a simple clear message from our findings. Unless environmental factors such as energy and raw material costs become issues that significantly affect a company's profitability there is no incentive for it to take action, and reduce its impact on the environment. There must be motivation to take action on raw material and energy costs or companies will continue to focus on other cost pressures such as salaries and wages.

"We are now at a tipping point in looking at climate change and environmental management. It is time businesses recognised the fact that unless they take action to reduce their impact on the environment, it will harm their long-term competitiveness.

"There is also a role for national Governments to look at the long-term competitiveness of their economies and factor energy and raw material costs into that equation. Unless they take action to actively encourage businesses to invest for the future and reduce their impact on the environment, they will ultimately damage their economies."

Respondents were measured by whether they had undertaken six energy and environmental initiatives:

  • if they had undertaken an energy review

  • reduced energy consumption

  • put measures in place to turn off electrical equipment

  • invested in energy saving equipment

  • investigated alternative fuel/energy supplies

  • considered relocating to reduce transportation costs


Each country in IBR was given a score based on the percentage of businesses who had carried out each of the criteria. For each of the six criteria, the highest score a country could receive was 100, with a total maximum score for the management of energy and environmental issues league table of 600.

Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist business advice to privately held businesses and public interest entities.

Clark fast becoming training center for A320 pilots

Original report from Positive News Media

CLARK FREEPORT, May 12, (PNA) -- Clark is fast becoming a training ground for pilots of A320 aircraft following opening of the $ 15.6 million Clark Aviation School at Clark Polytechnic inside Clark Freeport zone.

Clark Development Corporation (CDC) president and CEO Levy P. Laus was impressed at the operations of the aviation school in Clark.

The training school is being run by Alpha Aviation Group (AAG), a world class training for international airline personnel.

Clark aviation, which is being operated by AAG, is a first of its kind in Asia. It has modern aviation training facilities, particularly for aspiring A320 pilots.

Initially, the aviation training school firm has three flight training devices; two fixed-base simulators covering the basic and intermediate phases of the flight instruction; the third being an A320 level and full flight simulator.

Laus said this is great news not only for Clark, AAG and the Philippines, but also for the airlines in the region that are in need of airbus pilots.

The airbus A320 is known to be one of the most efficient regional aircraft. Currently, Asiana, Tiger airways and Cebu Pacific – which have flights to and from the Diosdado Macapagal International Airport (DMIA) – use this aircraft in servicing Clark and other destinations.

Market forecasts indicate that in Asian region alone will require 6,000 new pilots each year for the next 20 years to meet the growing demand for pilots.

Alpha aviation is creating a network of world class international aviation training academies in Europe, Middle East and South East Asia providing initial training for pilots, engineers, cabin crew and other skilled aviation personnel in addition to recurrent and aircraft specific training support for airlines.(PNA)

Friday, 11 May 2007

RP stocks rebound led by Ayala Corp

By Judith Balea
Full report at ABS-CBN

Philippine stocks rebounded on Friday, buoyed by gains in blue chip Ayala Corp., as players placed their bet on companies that reported strong first-quarter earnings, analysts said.

The Philippine Stock Exchange composite index closed 22.40 points, or 0.67 percent higher, at 3,364.61.

Market breadth was positive as gainers beat losers, 62 to 48, with 57 stocks unchanged.

A total of 3.85 billion shares worth P3.75 billion were traded.

Update on Q1 Growth

GMANEWS.TV & ABS-CBN

RP exports grow 13% in 1st quarter to $ 12.3 B

By EDU LOPEZ
Full report at Manila Bulletin

The country’s merchandise exports rose by 13 percent year-on-year to 12.3 billion in the first quarter of 2007, making the yearly expansion over the full-year target of at least 11 percent.

This came about following a 10.6 percent increase in March to $ 4.6 billion, an improvement from the 7.8 percent annual increment in February.

The National Statistics Office (NSO) attributed the increase to the growth of semiconductors (14.1 percent), machinery and transport equipment (8.7 percent) and mineral products (77.1 percent).

"Compared to the growth of worldwide sales of semiconductors, the local semiconductors subssector bucked the trend and posted a relatively higher growth rate," said Socio-Economic Planning Secretary and NEDA Director-General Romulo L. Neri.

Semiconductors account for 53.8 percent of total export revenues. The United States still dominates the country’s export destinations with its 14.8 percent share, followed by Hong Kong with 14.3 percent. Japan slid to third place with 13.1 percent share, slipping by 8.6 percent.

On a cumulative basis, Hong Kong, China and Taiwan are the fastest growing export markets at 110 percent, 45.6 percent, and 60.2 percent, respectively.

Net hot money inflow hits $1.089B in Jan-Apr

By Des Ferriols
Full report at The Philippine Star 05/11/2007

Net hot money inflow amounted to $1.089 billion in the first four months of the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Preliminary data ending April 28 indicate that total inflow amounted to $4.417 billion during the four-month period but outflow amounted to $3.327 billion, leaving only $1.089 billion in net inflow.

Despite the huge outflow, however, the total net inflow in the first four months of the year was 84.26 percent higher than last year’s $591 million as investors capitalized on the country’s positive economic prospects.

Last year, the total inflow was also significantly lower over the year ago level, amounting to only $1.96 billion while total outflows amounted to $1.369 billion.

Thursday, 10 May 2007

Net Foreign Direct Investment Inflows for January-February 2007 Climb to US$633 Million

Media Release
Bangko Sentral ng Pilipinas
05.10.2007

Foreign direct investments (FDIs) registered a net inflow of US$551 million in February 2007. This brought the two-month FDI level to US$633 million, significantly higher by 33.5 percent from US$474 million in the comparable period a year ago.

FDI net inflows during the first two months of 2007 resulted from the more than twofold increase in net equity capital inflows to US$578 million. This was traced, in turn, mainly to the acquisition in February 2007 by a foreign conglomerate of holdings of a local bottling company. Other foreign direct investments were channeled to the following industries: manufacturing (chemical products, electronics), mining (mineral processing), services (international courier, information technology development), real estate, financial intermediation, agriculture, and construction.

Reinvested earnings for January-February 2007 at US$32 million were also five times higher than last year’s US$6 million on the back of higher retained earnings of foreign banks in their local branches. Meanwhile, loans granted by head offices to their subsidiaries in the Philippines - accounting for the bulk of the other capital account - amounted to only US$23 million from US$260 million during the comparable period a year ago as some local subsidiaries repaid their loans from their mother companies abroad.

The major sources of FDI flows during the two-month period were the U.S., Japan and Singapore.

Steady gains for peso

By Jake Lee
Original report at Bloomberg

The Philippine peso advanced on speculation yields on the nation's assets will rise as the central bank absorbs more cash from the financial system.

Bangko Sentral ng Pilipinas today expanded access to deposit accounts previously available only to banks, to government pension funds, state companies and others investors. The peso will strengthen as funds shift to the central bank, which pays 8 percent for a six-month deposit, double the comparable treasury bill yield, said Ricky Cebrero, executive vice president at East West Banking Corp. in Manila.

'Safety Measures'

``Local yields will rise because the central bank's action is attracting foreign funds, boosting the peso,'' Cebrero said. ``Bond yields will probably keep on rising.''

The peso gained 0.2 percent to 47.175 against the dollar, according to Tullett Prebon Plc, the world's second-largest inter-dealer broker. The currency may advance to 46.50 after the local and legislative elections on May 14, Cebrero said.

ABS-CBN, Ayala, Aboitiz, SM, Metro Pacific report profits for Q1

Headlines from GMANEWS.TV & ABS-CBN

Merchandise exports up 10.6% for March

National Statistics Office

Export earnings in March 2007 inched up by 10.6 percent to $4.566 billion from $4.127 billion in March 2006. Receipts from merchandise exports during January to March, on the other hand, rose by 13.1 percent to $12.270 billion from $10.847 billion during the same three-month period in 2006.

ELECTRONIC PRODUCTS GREW BY 9.6 PERCENT

Accounting for 66.6 percent of the aggregate export revenue in March, Electronic Products went up by 9.6 percent to $3.043 billion from $2.777 billion in March 2006. Other electronic products that showed year-on-year increases are Components/Devices (Semiconductor) at 14.1 percent with a share of 53.8 percent; Office Equipment at 171.0 percent with a share of 0.7 percent; Communication/Radar at 70.8 percent with a share of 0.6 percent; and Control and Instrumentation at 125.1 percent with a share of 0.1 percent. Export receipts of the Electronic Products for January to March, on the other hand, rose by 13.7 percent to $7.955 billion from $6.995 billion during the same three-month period in 2006.

Articles of Apparel and Clothing Accessories continued to be the country�s second top earner with a combined share of 4.0 percent and an aggregate receipt of $184.24 million or 5.0 percent lower than $194.00 million in March 2006.

Woodcrafts and Furniture, ranked third with export receipts of $97.30 million or a year-on-year growth of 110.0 percent from $46.34 million in March 2006.

Cathodes and Sections of Cathodes of Refined Copper, ranked fourth with total revenue of $78.24 million reflecting a 76.1 percent climb from $44.4 million in March 2006.

Other Products Manufactured from Materials Imported on Consignment Basis, ranked fifth with sales amounting to $77.72 million or a growth of 10.6 percent from $70.25 million in March 2006.

Rounding up the list of the top exports for the month of March 2007 were, Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships (consisted only of electrical wiring harness for motor vehicles), $73.07 million or an annual growth of 15.1 percent; Petroleum Products with an export value of $52.26 million, down by 42.1 percent; Metal Components, $43.66 million or a decrease of 0.3 percent; Bananas (Fresh) with proceeds billed at $30.16 million or a decline of 11.5 percent; and Coconut Oil, with export revenue of $25.73 million or 62.8 percent decline from the same month in 2006.

Wednesday, 9 May 2007

Govt defers opening of Iloilo airport to avoid politicking charges

05/04/2007 | 03:23 PM
Cheryl Arcibal
Original report at GMANews.TV

The opening of the new Iloilo airport has been deferred to until after the May elections, Presidential Management Staff chief Cerge Remonde told reporters on Friday.

At the sidelines of the National Government Infrastructure Forum, Remonde said the government has decided to further postpone the airport's opening, originally scheduled last month, to avoid allegations that the project is being used to boost the chances of administration candidates.

PGMA vows increased investments in infrastructure to further boost RP's global competitiveness

WEDNESDAY, MAY 9, 2007 | ECONOMY
Original reports at Gov.Ph News

JAGNA, Bohol--- President Gloria Macapagal-Arroyo vowed today that her administration would increase its investments in human and physical infrastructure in a move to sustain the country’s economic gains and further boost its global competitiveness.

In her brief message after she inaugurated the P 60.4-million Jagna Port Expansion Project and the P1.8-billion Bohol Circumferential Road Improvement Project (BCRIP) Phase 2, the President said the government could now invest more on infrastructure projects with the availability of new revenues as a result of the tough economic and fiscal reforms she implemented.

"As part of that effort, we are committed to consolidating the gains in new revenues by making long overdue investments in human and physical infrastructure," the President said.


PGMA tapes RO-RO infomercial at Jagna Port in Bohol

"Biyahe na sa Ro-Ro!"

Thus said President Gloria Macapagal-Arroyo in the Roll-On, Roll-Off (Ro-Ro) infomercial she shot at the Jagna Port against a backdrop of the very serene Guindulman Bay after she inaugurated the P60.4-million Jagna Port expansion project this morning.

Attired in a light blue pantsuit, the President, looking like a professional commercial model, went through the Ro-Ro infomercial in just a few minutes.

Documented by the Radio–TV Malacanang (RTVM), the infomercial will be aired on national television starting May 12 when the Strong Republic Nautical Highway (SRNH) project turns four years old.

In the infomercial, the President encourages passengers to take the Ro-Ro as it is "dependable and affordable."

The President said that the Ro-Ro "is the backbone of trade from Mindanao to the Visayas to Luzon" as it has kept the cost of food down as well as improved the lives of farmers.

She also said that the Ro-Ro would boost tourism in the Visayas, the "Tourism Center of the Philippines" in her super regions economic development plan.

The SRNH was conceptualized to interconnect by land and sea the island provinces of the country through Ro-Ro and cargo vessels, ferry boats, fastcraft and other modes of land transportation.

Initially, it covers 919 kilometers cutting across 17 cities, towns and islands but the Arroyo administration intends to further strengthen the project so as to enhance investment opportunities, agro-industrial development, trade and commerce and tourism in the country.

Peso closes at new 6-yr high

By Des Ferriols
Original report at The Philippine Star 05/09/2007

Strong dollar inflows spurred by rumors of a possible ratings upgrade propelled the peso to a new six-year high yesterday, closing at 47.26 to a dollar as foreign investors started buying into local shares.

At the Philippine Dealing System (PDS), the peso opened at 47.33 to the dollar and gathered momentum throughout the day’s session until it closed at its intra-day high of 47.26 to the dollar.

Market sources said the strength of the currency was buoyed by reports that Standard & Poor’s (S&P) could upgrade its stable outlook on the country’s ratings when its sovereign debt review is released after the elections.

Traders said the market was also reacting to the pronouncements made by the Bangko Sentral ng Pilipinas (BSP) that it was not too concerned about the strength of the peso as long as it still reflects the country’s economic fundamentals.

"Higher dollar reserves are giving the peso another boost," said Ed Garcia, a currency dealer at East West Banking Corp.

Moreover, the peso is expected to remain strong and possibly gain even more momentum as dollar inflows reach one of the main annual peaks right before the opening of classes in June.

"Right about now people are enrolling their kids," said one trader. "That means more dollar inflows from overseas workers."

Tuesday, 8 May 2007

DFA urged to introduce electronic machine-readable passport program

Original report at Positive News Media

MANILA, May 8 (PNA) -- Tourism Secretary Ace Durano is urging the Department of Foreign Affairs to introduce the long-overdue electronic machine-readable passport program for efficiency and security purposes.

"We have been strongly expressing to DFA that we should adopt it. Not having this technology is inconvenient for tourists. But they can't be used because we don't have the technology. I don't know why it can't be implemented already," Durano said during the 2nd National Government Infrastructure forum.

"By adopting mahine-readable passports, we'll be able to solve a lot of things. In terms of reading visa applicants, it would be easy we do not have to check records individually," he added.

Durano noted that the DoT is pushing for free visa policy especially in potential tourist markets.

"But there is a interdepartment body that reviews our request and not only for security purposes," he said.

The new passport is also aimed at facilitating applications for visas because Filipinos are still being required to present a certification by DFA indicating the data in their passports are reflected in the department's consular records.

Durano said there is a need for the adoption of this technology especially now that there is a high growth of tourism in the country with the influx of foreign tourists.

But, he also noted that aside from technology, foreign tourist arrivals "depend on the pace of capacity expansion" which are air seats, room and development of tourist destinations.

The project is also part of the Philippine's compliance with the International Civil Aviation Organization that requires all member states to use machine-readable passports by 2010.

The DFA decided to implement the 1.4 billion electronic machine-readable passports this year in partnership with the Bangko Sentral ng Pilipinas, which also prints the old passports.

But it was blocked on February this year after the BCA International, a Philippine-Thai firm that won the bidding, obtained a temporary restraining order from Pasig Regional Trial Court. (PNA)

FCDU Resources Reach All Time High

Media Release
Bangko Sentral ng Pilipinas
05.08.2007

As of end-December 2006, the total assets of the Philippine Foreign Currency Deposit Unit (FCDU) System reached $23.6 billion, exhibiting a 13.8 percent year-on-year growth. This was the highest recorded asset level surpassing the prior peak of $21.7 billion at end-year 1997. The bulk of these assets (95.9 percent or $22.6 billion) were still held by universal/commercial banks (U/KBs). The balance was accounted for by thrift banks (TBs) at 4.1 percent or $1.0 billion.

Net Income After Tax (NIAT) for the year 2006 reached $777 million. This was 25.0 percent higher than the $622 million earnings posted in 2005. The improvement was attributed to the simultaneous increase in net interest income (8.6 percent to $568 million) and non-interest income (44.6 percent to $348 million). Complementing these was the 5.4 percent decline in operating expenses to $126 million. Consequently, the return on assets (ROA) stood better at 3.5 percent as against the 3.1 percent ratio last year. U/KBs accounted for 96.3 percent of the system’s reported earnings while TBs contributed the balance of 3.7 percent.

Deposit liabilities continued to be the main source of funding, accounting for a hefty 79.6 percent of the total FCDU resources. These were valued at $18.8 billion, 14.1 percent higher than the $16.5 million posted last year.

Meanwhile, asset preference shifted in favor of marketable securities. The proportion of assets held in this type of securities (net) rose to 35.7 percent from 32.9 percent last year. In contrast, the share of investments held to maturity (net) declined to 12.1 percent from 14.6 percent last year.

Investments were also preferred over loans as indicated by the decrease in share of loans, net (exclusive of interbank loans) to total assets to 11.2 percent from 12.7 percent last year.

Major credit beneficiaries of FCDUs were: the Manufacturing Sector with 32.5 percent share (or $0.9 billion); the Electricity, Gas and Water Sector with 19.5 percent share (or $0.6 billion) and the Transportation, Storage and Communication Sector with 11.7 percent share (or $0.3 billion). Altogether, the exposure to these three (3) industries accounted for 63.7 percent of the total FCDU loans for the semester.

FCDUs likewise posted enhanced loan and asset quality for the period. Both non-performing loans (NPLs) and non-performing assets (NPAs) ratios dropped to 1.0 percent (from 1.8 percent last year) and to 0.4 percent (from 0.7 percent), respectively. This improvement was traced to the 33.8 percent reduction in NPLs, which subsequently led to the 32.0 percent contraction in NPAs. Moreover, NPL and NPA coverage ratios strengthened to 187.0 percent (from 155.1 percent) and 174.4 percent (from 148.5 percent), respectively.

Monday, 7 May 2007

Gov't confident of attaining 100% electrification by 2008

Full report at News.Balita.Ph

With the country's expanded rural electrification program reaching the 95.26 percent level as of the first quarter of this year, the Arroyo administration is confident that its target of energizing all of the 41,945 barangays nationwide will be attained by 2008.

According to the Department of Energy (DOE), a total of 39,955 barangays across the country now have access to electricity services, leaving just 1,990 more barangays still to be energized.

Govt vows to liberalize air policy in Subic, Clark

By Roderick T. dela Cruz
Original report at the Manila Standard

An open-air policy will soon be implemented in the Subic-Clark corridor that will make it the country’s major gateway, with the completion of expressways linking it southward to the financial center of Makati.

“In the next few months, there will be an open-sky policy there,” Subic-Clark Alliance for Development Council chairman Edgardo Pamintuan told foreign and local businessmen during the 2nd National Government Infrastructure Forum held recently at the Makati Shangri-La Hotel on May 4.

Pamintuan, who is also the head of the Luzon Urban Beltway, made the statement to assure investors that the government will lift its restrictions on foreign carriers wanting to stop over at Clark and Subic to drop off foreign tourists.

Subic and Clark will be connected through the P21-billion Subic-Clark-Tarlac expressway which, Pamintuan said, will be completed by November this year.

Fidgety BSP hopes plan can plug gushing money flow

By Jun Vallecera
Reporter
Original report at Business Mirror

MONETARY authorities hate to admit that fast-rising money supply growth—as borne by latest M3 data at end-March showing further acceleration to 24.6 percent from only 22.4 percent a month earlier—is making them all fidgety.

The sustained acceleration comes at a time when inflation was seen to have definitely bottomed out, rising to 2.3 percent in April after having approximated a first-world inflation rate of 2.2 percent in March.

Low and stable inflation is the Bangko Sentral ng Pilipinas’ holy grail, but the rapid acceleration in money supply could easily undo what monetary officials have put in place to ensure growth averaging at least 6.1 percent this year.

The BSP cannot allow inflation to range beyond 4 percent this year as programmed, or risk explaining to President Arroyo its failure to rein it in, as required by law, while convincing the public of their potency or effectiveness as monetary officials.

Failure will compel the BSP to jack up interest rates and punish everyone, rich or poor, with higher cost of money. The central bank has so far avoided that by resorting to other monetary tools at its disposal.

BSP Governor Amando M. Tetangco Jr., however, was confident on Friday the antiliquidity measures that kick in starting May 10 should achieve the goal of slowing down M3 growth “lower than 20 percent” again.

Faster-than-anticipated M3 growth has been galloping the past four months, or a fourth of the maximum time under which it can be manipulated so that the economy does not revert to a regime of high inflation.

According to Tetangco, the decision allowing the various trust units to avail themselves of the BSP’s special deposit account facility “should significantly lower the amount of excess liquidity in the system.”

Trust units have never been allowed to participate in any BSP facility until the new rules kick in on May 10, and the expectation is that the bulk of excess liquidity should be siphoned off by then.

“We estimate at least 75 percent of excess liquidity in the system will be siphoned off,” Tetangco said.

No one likes to say it for the record, but some sources claimed some P500 billion or P600 billion worth of funds should wind their way back to the BSP and no longer wreak havoc on the now overheating financial system.

Tetangco had fewer things to say about the plan that entices government-owned or -controlled corporations such as the Government Service Insurance System and the Social Security System to come and deposit their cash assets with them.

“We will offer a market-determined interest rate to encourage them to deposit their money with us instead.

We will set it lower than our overnight borrowing rate,” Tetangco said.

This means the BSP is prepared to pay the GSIS and SSS returns lower than 7.5 percent, hardly comforting for GSIS chief Winston Garcia, who said in prior interviews that the GSIS earns an average of 11 percent off its investment portfolio.

Philippine foreign reserves hit $25B at end April

Original report at ABS-CBN

The Philippines' gross international reserves hit a fresh record of $25 billion at the end of April, the central bank said on Monday.

The reserves were equivalent to about 4.7 months of imports and five times the country's short-term external debt based on original maturity.

(Click here for table courtesy of Bangko Sentral.)

Philippines needs stronger economic growth- Teves

Original report at ABS-CBN

KYOTO, Japan - The Philippine economy needs to grow faster and attract more foreign direct investment to fund key spending on social services and infrastructure, Finance Secretary Margarito Teves said.

The government aims to achieve economic growth of 6.1-6.7 percent this year, and the growth forecast for 2008 that is expected out next week will likely be somewhere near or above that level, Teves said.

"At the rate of 5 to 6 percent, the benefits of economic growth are not immediately shared by the lower income group," Teves said.

"This is the reason why we cannot sacrifice spending on social services and infrastructure," he told Reuters on the sidelines of the Asian Development Bank's annual meeting in Kyoto, western Japan.

The nation's economy grew 5.4 percent in 2006. The ADB expects it to expand at a similar rate this year and has forecast growth of 5.7 percent in 2008.

The government wants to end nearly a decade of budget deficits in 2008. But it also wants to raise infrastructure spending from the current 2.2 percent of gross domestic product, one of the lowest in the region, to boost economic growth and attract foreign capital.

As part of steps to increase state revenues, the country needs to further increase foreign direct investment, which exceeded 2 billion dollars last year, Teves said.

"We need more foreign direct investment in a large amount," Teves said.

"I'm hoping this year we can go beyond the 3 billion (dollar) mark," he said, adding that he would be "pleasantly surprised" if the amount reached 3.5-4 billion dollars.

The long-term goal would be to boost annual foreign direct investment to around 5-6 billion dollars, he said.

The nation's budget deficit shrank in 2006 to P62.2 billion, the lowest level in eight years and the third year in a row that the shortfall was below the government's target.

The government is aiming for a P63 billion budget deficit this year, although it overshot its first-quarter target by 6.2 billion pesos. - Reuters

Sunday, 6 May 2007

Statement of NEDA Secretary Romulo Neri: The wrong use of GDP data

Original report at Positive News Media

MANILA, May 6 (PNA) - The May 4, 2007 advertisement of the Black and White movement says we are losing to the economies of Vietnam, Cambodia, Laos, and Bangladesh. It cites comparative data on the growth rates of gross domestic product (GDP) and exports, the level of foreign direct investments, and the gross domestic investment rate.

Let’s focus on the key issue of GDP. The average for 2001-2006 was pulled down by the political crisis of the last administration that led to People Power II. As a result of the crisis and the May 2001 rebellion, GDP growth in 2001 was only 1.8 percent. The economy recovered slowly, posting growth of 4.4 percent in 2002, and 4.9 percent in 2003. It would be fairer to judge the economy minus the crisis hangover effect. The GDP growth rates were 6.2 percent in 2004, 5.0 percent in 2005, and 5.4 percent in 2006. That averages 5.33 percent, which is quite respectable.

But isn’t that lower than the growth rates posted by Vietnam, Cambodia, Laos, and Bangladesh? The flaw is that the argument does not consider the base. As a simple example, the GDP growth rate of the United States in 2006 was only 3.4 percent. Does it mean that the United States economy is losing to that of the Philippines? No, for America’s GDP is much larger than ours. Growth rates tend to slow the larger the base.

It is more useful to compare the GDP level of the Philippines with that of the others. For example, the GDP of the Philippines is twice that of Vietnam, a country of roughly equal population size.

2006 GDP levels

Philippines US$ 116.90 billion

Bangladesh 69.02

Vietnam 48.26

Cambodia 6.60

Laos 2.77

To say that we are losing to Vietnam, Cambodia, Laos, and Bangladesh is plain wrong.

The best index of comparison is GDP per capita in purchasing power terms or PPP. This refers to making adjustments for differences in prices across countries.

2006 GDP per capita (in PPP)

Malaysia US$ 12,700

Thailand US$ 9,100

China US$ 7,600

Philippines US$ 5,000

Indonesia US$ 3,800

Vietnam US$ 3,100

Cambodia US$ 2,600

Bangladesh US$ 2,200

Laos US$ 2,100

(Source: CIA: The World Factbook)

The Philippines is not at the top of the list, but neither is it the basket case that the advertisement tries to portray. (PNA)

Philippines Shows the Way in Besting China

By MICHAEL CONNOLLY
May 4, 2007
Original report at the Wall Street Journal

After years in which manufacturers of all stripes have been scrambling to locate plants in China, Texas Instruments Inc.'s decision to build its new $1 billion assembly plant in the Philippines instead, after shortlisting the two countries in a head-to-head contest, might be a sign of things to come as other countries learn how to best China, especially as the costs of setting up there grow.

As James Hookway reports, the move both highlights the Philippines's economic revival and challenges the conventional view that China is Asia's most cost-effective factory floor. Land prices on China's industrial coastal belt are rising, and wages have been rising at double-digit rates for several years, in some cases now even exceeding the cost of hiring skilled workers in countries such as the Philippines.

Indeed, the new investment comes as the Philippines is experiencing an economic resurgence of sorts after years in the doldrums. Buoyed by remittances from more than 10 million Philippine workers overseas and by tax legislation that has eased concerns about the country's financial stability, business is thriving. Texas Instruments considered other locations for its new plant, including Thailand, Vietnam and China. In the end, it came down to China and the Philippines.

Economic analysts say Texas Instruments's decision to pump $1 billion into its second Philippines plant could help encourage other manufacturing industries to follow, just as Intel's $1 billion commitment to build a semiconductor packaging plant in Vietnam unleashed a flow of new investments to that country. Intel is also increasing its investments outside China, partially to secure its global supply chains in case of disruptions from any one location. Intel announced plans earlier this year to build a $1 billion chip-testing and assembly plant in Vietnam, and has also increased its investments in Malaysia.

Repair of South railways to begin next month: exec

Sunday, May 06, 2007
Original report at Sun.Star Manila

THE rehabilitation of the second phase of South railways will start next month.

This, after the Philippine National Railways (PNR) completed the bidding and awarded the contract to China National Technical Import and Export Corp. (CNTIEC) for the rehabilitation of the railways' phase two which will cover the upgrading and remodeling of its tracks and bridges.

"Instead of starting in September as previously reported, we are pleased to announce that work on South railways is expected to begin as early as June," said PNR general manager Jose Ma. Sarasola II.

CNTIEC is a state-owned foreign trade corporation, specializing in import and export of technologies and complete set of equipment.

Since the project will start in June, Sarasola said it would be completed by early 2009.

The entire project would cost US$314 million that would include strengthening of tracks, reconstruction of bridges, improvement of stations and flagstops, installation of signaling and communications facilities, and rehabilitation of maintenance depots.

Phase 1 of the rehabilitation plan will start from Caloocan to Alabang and would cost US$50.42 million, while Phase 2 covers Alabang to Calamba.

Sarasola said the government already coordinated with the National Housing Authority (NHA) for the relocation of residents along railways.

The PNR and NHA are working hand-in-hand to deliver a modernized railway system, while efficiently addressing the needs of affected families, he said. (MSN/Sunnex)