Saturday, 16 June 2007

Leave BIR alone (II)

BIR’s Buñag must stay; Wonder girl named Berna
FROM THE STANDS By Domini M. Torrevillas
Saturday, June 16, 2007
Original article at the Philippine Star

And I thought Jose Mario Buñag was the best of the Bureau of Internal Revenue (BIR) chiefs — and that everybody agreed with me there. Sad to say, there are forces who do not think so, and want him out. I feel sorry for Jojo, as he had shown what admirers term “a splendid captainship” since he took over the tattered bureau left by BIR Commissioner Guillermo Parayno when he joined the breakaway cabinet group against President Macapagal Arroyo, the so-called Hyatt 10.

Under Buñag, BIR achieved an unprecedented growth rate of 20 percent last year despite the doomsday prognosis of his critics. In 2006, BIR collected P625 billion in taxes, which was P114 billion in excess of its collection. The bureau’s performance in 2006 was its best in 10 years, eclipsing by P30-billion what should have been the real collection target of the bureau for 2006.

Finance Secretary Margarito Teves, however, upped BIR’s collection goal for BIR to P675.4 billion, and refused to accept its being an “unrealitic tax collection goal.” Buñag asked that P2 billion be lopped off from BIR’s tax goals and that the responsiblity of collecting the sum belongs to the Bureau of Customs. He said that its tax goal for 2006 had already been bloated by P26 billion, considering the low interest and inflation rate that prevailed during the year.

Observers say that Teves’ “whis-perers” have convinced Secretary Teves to let go of Buñag to pave the way for the appointment of their protege as the new BIR chief.       

I hope Secretary Teves will think twice before letting Buñag go.

Leave BIR alone (I)

By Alex Magno
Saturday, June 16, 2007
Original article in the Philippine Star

There are reports that Executive Order 625 has been withdrawn. But there has been no official notice of such.

There has been no official notice, to begin with, that this unusual order was signed and issued. It has only been talked about in the business community, and among people anxiously observant of government’s revenue-generating capacity.

Anxiously, because Moody’s rating agency did not deliver the upgrade we all expected due mainly to concerns about our large actual debt service load and the sustainability of our revenue-enlargement effort. Any hint of politicization of our main revenue agencies will reverberate loudly in the investor community.

EO 625 is a strange document. Some might call it a testimony to the extent the workings of our bureaucracy may be influenced by powerbrokers.

To start with, the initiative for this EO did not emanate from the Bureau of Internal Revenue, which is the normal course of things. The badly written order emanates, according to the grapevine, from some discreet consultant’s desk.

The more ominous rumors have it that the document was inspired by influential people who bet boldly and lost badly in the last elections. We can only pray this is not the case.

The EO tasks the Bureau with rather improbable things, such as setting a monthly quota for prosecuting tax evaders and another quota for lifestyle checks. That orients the Bureau to a posture of hostility not only against its main clients but also against its own army of collectors. A formula for institutional breakdown if there ever was one.

The main “reform” element in the EO is the expansion of the traditional legal services department of the Bureau into “legal, inspection and enforcement.” That sounds pretty much like judge, jury and executioner. To those who have been victims of abuse of discretion, this sounds pretty much like an expansion of the margin of discretion of a unit susceptible to the appointment of political protégés.

What makes this EO alarming to some people is that it coincides with the appointment of a really junior officer to the most vital unit of the BIR is charge of administering the large taxpayers unit. This unit produces the bulk of revenues for the agency.

It also coincides with calls from nowhere in particular for the replacement of the incumbent BIR commissioner on the grounds that the targets set for the agency were not met in the first quarter of the year. Strange, too, because those very targets that were supposedly not met were being revised downwards because of errors in target-setting.

The “targets” set for the BIR misallocated P27 billion that should properly belong to the Bureau of Customs. These targets did not take into account the lower interest rate regime achieved precisely because the revenue agencies did perform very well in the preceding period, resulting in a small than expected deficit.

Nor did the targets take into account the fact that the National Treasury did not issue treasury bills because there was little need to borrow. Documentary taxes collected from the issuance of treasury bills account for a significant portion of the BIR’s revenue take.

In a word, those who want to take out the incumbent commissioner for whatever self-serving reason fault him for missing mythical targets. My poor mind tells me that it should be those responsible for misallocating the targets who should be crucified. They created the conditions for unwarranted expectation and needless disappointment.

The Bureau ain’t broke. Last year, it exceeded its true targets by P30 billion. That is the source of the exuberance that made our currency strong and our interest rates low.

Last year’s target was exceeded not because of some stroke of luck. It was an achievement best credited to pure hard work.

Hard work is sustainable. Luck is not.

Over the past year, the Bureau established a continuing tax reform administration group, cleaned up the registration data base, rolled out an integrated tax system for computerizing all its district offices, employed computer-assisted audit techniques and used benchmarking and profiling methods on an extensive scale. All these administrative reforms were made possible by technical assistance coming from international agencies such as the Millennium Challenge Account, the World Bank, the IMF, the SIDA, AusAid and JICA.

These international donor agencies are closely monitoring the operations of our revenue agencies, making sure they adopt global standards for efficiency and effectiveness. No slippage escapes their eyes, considering they have put in good money to assist our country in modernizing its governance.

So far, none have expressed alarm over failure to modernize procedures. They have, on the contrary, expressed satisfaction with the reforms that have been instituted and the fiscal discipline we have so far been able to maintain on the back of improved revenue performance.

The monkey wrench that could ruin the entire apparatus is politicization. That is the particular vulnerability of our entire bureaucracy due to the history and practice of political appointments reaching deep into administrative ranks.

The most effective step in ensuring the sustainability of our revenues is to enact into law the proposal to reestablish the BIR as a more corporate national revenue agency that derives its income as a percentage of its tax take. That will allow the agency to pay its people better, invest in new technologies and insulate itself from powerbrokers.

While an independent revenue agency is now the norm in most modern governments, we have had difficulty getting this enacted because our lawmakers are the same powerbrokers a modern revenue agency will be immune to.

May portfolio investments triple on upbeat economic output, strong peso

Full report at BusinessWorld Online

The net inflow of foreign portfolio investments, or so-called hot money flows, nearly tripled in May to $592 million from $243.1 million in April, the Bangko Sentral ng Pilipinas yesterday said.

The May net inflow data was higher than the $73.68 million net hot money flows in the same period last year.

This brings the net inflow in the five months to May to $1.7 billion, with newly-registered foreign portfolio investments amounting to $5.9 billion and capital outflows reaching $4.2 billion.

Friday, 15 June 2007

Bank Lending Grows Faster in April

Bangko Sentral ng Pilipinas
Media Release

Outstanding loans of commercial banks, thrift banks and rural banks grew faster by 12.1 percent year-on-year in April compared to the 10.5 percent growth (revised) recorded in the previous month. This was more than fourfold the 2.9 percent expansion registered a year ago, and the highest since October 2006. On a month-on-month basis, seasonally adjusted data posted a growth of 2.0 percent, from the 0.8 percent growth registered a month ago.

Bank lending to most sectors increased year-on-year. Lending to financial institutions, real estate and business services as well as community, social and personal services, which together accounted for more than half of total loans outstanding, expanded by 25.5 percent and 19.3 percent, respectively. Lending to the wholesale and retail trade sector and to the transportation, storage and communication sector also posted strong growth of 14.3 percent each. Meanwhile, lending to the electricity, gas and water; construction; and the agriculture sectors registered modest growth rates. By contrast, loans to the mining and manufacturing sectors declined by 17.3 percent and 6.9 percent, respectively.

The rising volume of funds being channeled to the services sector reflects the evolving structure of economic activity, which has increasingly relied on services as a key driver of growth. More broadly, the recent upturn in total bank lending reflects progress that banks have made in strengthening their balance sheets as well as stronger demand by firms and consumers amidst an expanding economy.

The BSP will continue to closely watch credit developments to ensure that they are supportive of non-inflationary yet strong and durable output growth.

OFW remittances rise 32.64% to $1.2B in April

Inflow exceeds $1B for 12th straight month
Bangko Sentral ng Pilipinas
Media release

Remittances of overseas Filipinos (OFs) coursed through banks climbed to US$1.2 billion in April 2007, higher by 32.6 percent year-on-year. This was the twelfth consecutive month that remittance flows exceeded US$1 billion. The continued strong growth in remittances since the start of the year brought the four-month cumulative level to US$4.7 billion, an increase of 26.1 percent over the level posted in the same period last year.


Remittances remained high even as the number of deployed overseas Filipino workers declined during the first four months of 2007 relative to the level recorded a year ago. Preliminary data from the Philippine Overseas Employment Administration (POEA) for the first four months of 2007 showed that the total number of deployed workers contracted year-on-year by 7.8 percent to 343,397, in spite of the pick-up in deployment for April. On a year-to-date basis, the aggregate number of land-based and sea-based workers at 263,324 and 80,073, respectively, were 6.3 percent and 12.3 percent lower compared to the number of deployed workers a year ago. The drop in deployment may be partly attributed to the new hiring policy of Saudi Arabia requiring Saudi-bound workers to secure “no objection certificates” from their previous employers as part of entry requirements. This new requirement was imposed to ensure that workers complied with their previous employment contract.

Looking ahead, remittances are expected to remain strong due to the increasing demand for highly-skilled and professional Filipinos, particularly in the fields of information technology, healthcare, hotel and restaurant, construction and shipbuilding industries.

The bulk of remittances continued to come from the U.S., Canada, the U.K., Saudi Arabia, United Arab Emirates, Italy, Japan and Hong Kong.

Four-month summary

Jan 1,099,354
Feb 1,085,544 2,184,898
Mar 1,304,847 3,489,745
Apr 1,191,540 4,681,285

See complete table.

Cabinet members not included in revamp?

Original report at ABS-CBNNews

Presidential Spokesman Ignacio Bunye said Friday there is no order for the economic team led by Finance Secretary Margarito Teves to submit their courtesy resignations, amid speculations of an impending Cabinet revamp.

"Just to set the record straight, the President has indeed asked for the courtesy resignations of top officials of government-owned and controlled corporations (GOCCs), including government financial institutions (GFIs). However, any news purporting to expand the coverage of the order to include members of the cabinet is totally inaccurate," Bunye said in a statement.

"No such order was made. The President was very specific. She was just referring to GOCCs and GFIs."

Socio-Economic Planning Secretary Romulo Neri said he will not submit a courtesy resignation.

"I'm not going to follow," he said.

Trade Secretary Peter Favila said there was no need to resign because there was no directive.

"There is no directive for cabinet members to hand over their resignations. The financial market might react to this badly. I sought the assistance of Executive Secretary Ermita to immediately issue clarification. Not that the Cabinet is against it. But there is no such directive. All this, the order to GOCC and GFI heads to resign, is to give the President a fresh mandate. She will have a continuing evaluation of performances of key officials."

Philippines' jobless rate falls to 7.4% in April

Full report at GMANews.TV

The Philippines’ jobless rate dipped to 7.4 percent at end-April from 8.2 percent a year ago, the National Statistics Office said Friday.

In its most recent quarterly report, NSO said the country’s employment rate rose to 92.6 percent in April from 91.8 percent a year earlier.

The employment rate is the percentage of employed persons against the total labor force.

Philippine stocks jump to new record high

Full report at ABS-CBN News

Philippine stocks closed at new record high on Friday, inspired by an overnight rally on Wall Street and as as investment firm ING raised its forecast 2007 GDP growth for the country.

The key index finished 42.67 points of 1.18 percent higher at 3,671.29, after touching an all-time intraday high of 3,693.67 points early in the session.

Portfolio Investments Net US$592 Million Inflow in May

Bangko Sentral ng Pilipinas

May 2007 Flows

Bangko Sentral-registered foreign portfolio investments posted a net inflow of US$592.0 million in May, 144 percent more than the US$243.1 million in April and the highest monthly total this year to date.

The bullish investor sentiment was sustained by encouraging developments, foremost of which were the generally peaceful elections, the continued strengthening of the peso, the 6.9 percent GDP growth in the first quarter, and the P12 billion fiscal surplus in April. Reports of strong first quarter performance of several big corporates also had a positive effect on investors.

On a gross basis, registered foreign portfolio investments in May aggregated US$1.4 billion, 73 percent of which (US$1.1 billion) were in shares listed in the Philippine Stock Exchange (PSE), mainly in banks and property firms. Placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for US$356.6 million or 25 percent, while placements in peso time deposits made up the remaining US$26.8 million (2 percent). These inflows more than offset capital repatriations/outflows of US$851.5 million, which pertained to:

a) divestments from PSE-listed shares of US$459.9 million (54 percent of total) and government securities of US$187.1 million (22 percent); and
b) withdrawals of peso deposits of US$204.5 million (24 percent).

January-May 2007 Flows

For the first five months of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$5.9 billion and US$4.2 billion, respectively, for a net inflow of US$1.7 billion. This net inflow was over two and half times the US$664.7 million net inflow in the same period in 2006.

Gross investment inflows, which rose by 115 percent from the year-ago level of US$2.7 billion, went primarily to PSE-listed shares of US$4.6 billion (78 percent of total), distributed mainly among property, telecommunication, holding and utility firms and banks. Investments in peso-denominated government securities, mostly FXTNs, accounted for US$1.2 billion or 20 percent, while investments in money market instruments and peso bank deposits had a combined share of only 2 percent. These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the country. About US$3.7 billion or 62 percent of these remittances originated from the United Kingdom, United States and Singapore.

Foreign investments in PSE-listed shares and government securities were 2.2 times and 1.8 times their corresponding levels in 2006.

Meanwhile, gross capital outflows for the same five-month period grew by 103 percent from US$2.1 billion in 2006. The outflows represented divestments from listed shares of US$2 billion (48 percent of total) and government securities (US$1.0 billion or 24 percent); and withdrawals of money market placements and peso deposits (28 percent). The continued appreciation of the peso has resulted in substantial foreign exchange gains for investors, with peso divestment proceeds fetching a higher equivalent in foreign exchange for repatriation purposes.

Click here to see table.

Gordon slams indolent congressmen for lack of quorum in the House

Original article at the Manila Standard Today

SENATOR Richard Gordon yesterday slammed the House of Representatives for its failure to act on the tourism bill before Congress adjourned last week.

While the Senate passed its version of the bill on third and final reading long before the closing of its session sine die, the House failed to do so because of lack of quorum.

“The Filipino people suffer yet again because of the indolence and the indifference of their representatives in the House. It was downright irresponsible for the members of the House to choose not to attend the last three sessions of Congress,” Gordon said in a statement.

“There could not have been a synchronized vehicular accident or sickness in the family which would have prevented them from doing so. There is simply no excuse nor explanation for such blatant and deliberate refusal to discharge their sworn duties to the Filipino people,” he added.

Apart from its failure to pass the tourism bill, the House earlier received flak for failing to approve its own version of the cheap medicine bill, and other pending important proposed legislation.

Gordon said the tourism bill aims, among other things, to provide much-needed job opportunities to workers here in the country so they don’t have to leave their families to seek greener pastures in foreign lands.

The bill according to Gordon, would have provided our workers with the “dignity that comes with being able to earn a decent living enough to put food on the table.”

“These reasons alone should have been sufficient for our counterparts in the House of Representatives to find it urgent to pass this very important bill, especially in a time when even white-collar individuals deem it necessary to seek employment abroad, a sign that even they are suffering from the inadequacies of our economy.”

Gordon said the failure of the House to pass the bill “smacks of indolence” as well as apathy of the congressmen to the sufferings of many of the Filipino people.

“Unfortunately, poverty again advances as tourism retreats, simply because of the failure of the House of Representatives to pass the tourism bill.” Roy Pelovello

Cabinet revamp--panel formed to oversee reshuffle

By Joyce Pangco Pañares
Original article at the Manila Standard

ALL Cabinet members must submit their courtesy resignations as part of President Gloria Macapagal Arroyo’s campaign to clean house as her administration enters its last three years, Executive Secretary Eduardo Ermita said yesterday.

A panel, headed by the chairman of Malacañang’s search committee, Bernardino Abes, would review the performance of each appointee and decide if his resignation would be accepted, he added.

Providing more details of the impending shakeup, Ermita said the President was serious about cleaning house.

“It will include everybody,” Ermita said. “She needs a free hand, so this revamp will cover all members of Cabinet. It will be expanded to include the other clusters, without necessary having to factor in political payback.”

The revamp began days after Mrs. Arroyo told the members of her Cabinet who accompanied her to China last week that the time for paying back political debts had passed.

The President’s statement suggested she would no longer put up with appointees who were backed by her political allies and had turned out to be liabilities to her administration.

Ermita said the President wanted to make sure she was surrounded by people who could implement her priority projects for the remaining three years of her term.

“Definitely, their performance will be the main criteria as to whether they will be retained once they submit their resignations,” the Palace official said.

There are about 117 government-owned or -controlled corporations, and some of the officials who head them had not lived up to expectations, Ermita said.

Ermita said the Government Service Insurance System, Social Security System, and the Land Bank of the Philippines would also be included in the revamp.

He said Internal Revenue Commissioner Jose Mario Buñag should not be complacent about a temporary reprieve from the President despite his agency’s dismal collection performance in the first quarter.

The President had earlier fired Nestor Valeroso, former head of the Large Taxpayers’ Service, and reorganized the agencies under the internal revenue bureau.

Mrs. Arroyo appointed Cesar Charlie Lim, a revenue district officer of South Makati, to replace Valeroso. With Fel V. Maragay

Cabinet revamp--rumours make the rounds

Original article at the Manila Standard
By Fel V. Maragay

President Gloria Macapagal Arroyo is expected to issue ad interim appointments [sic] to Cabinet members, ambassadors, agency heads and military officers whose nominations have been bypassed by the Commission on Appointments.

But Executive Secretary Eduardo Ermita could not say for sure whether the President will reappoint all the unconfirmed Cabinet members in view of her plan to make some changes in her official family.

“They have to be reappointed by the President in an interim capacity. We will see if the President will sign everybody’s appointment,” Ermita told newsmen during the traditional vin d’honneur in Malacañang on the occasion of the 109th anniversary of the Philippine Independence.

Among the Cabinet members who have yet to be confirmed by the CA are Raul Gonzalez (justice), Angelo Reyes (environment), Ronaldo Puno (interior), Margarito Teves (finance) and Hermogenes Ebdane (defense).

Ermita said the President is in the process of going over the papers of prospective appointees to vacant Cabinet posts such as the presidential chief of staff (vacated by Joey Salceda who was elected Albay governor) and president of the Philippine International Trading Corp. (vacated by Roberto Pagdanganan who ran for governor of Bulacan).

Recently, the President appointed former solicitor general and government peace negotiator Silvestre Bello III as presidential adviser on growth centers, replacing Rodolfo del Rosario who ran for governor of Davao del Norte.

Ermita has downplayed reports about an impending Cabinet revamp although Press Secretary and Presidential Spokesman Ignacio Bunye said that is to be expected.

Bunye said the first phase of the revamp will affect top officials of government-owned or -controlled corporations.

Finance Secretary Margarito Teves revealed that the President informed Cabinet members Saturday of her directive for presidents, chairman and members of the boards of directors of GOCCs to tender their courtesy resignation.

Teves who oversees several major government financing institutions, said he learned that the President is also thinking of replacing key officials in national government agencies.

“I think it will start from there [GOCCs] and of course, it can expand to all other appointees outside the GOCCs. But that’s her call.”

Teves said the President gave them a verbal order on the courtesy resignation of executives of GOCCs and she is expected to issue a memorandum order any day now.

He said the courtesy resignations will give the President a free hand in reorganizing the state corporations.

On the Cabinet reorganisation

Perfect timing

By Amando Doronila
Last updated 02:22am (Mla time) 06/15/2007

No less than a total Cabinet shake-up can allow President Gloria Macapagal-Arroyo to regain the political initiative to rejuvenate her moribund government in the next three years, following her crushing defeat in the May senatorial election.

The Palace announcement that the President has asked all members of the Cabinet and heads of 117 government-owned or -controlled corporations and government financial institutions to resign was emphatic.

Executive Secretary Eduardo Ermita told the press the other day: “It’s not a courtesy resignation. The President asked them to submit their resignation so that she will have a free hand.” That announcement foreclosed half-measures. It left no doubt about the intention of a sweeping top-level overhaul. If the President has to be ruthless on her collaborators to save her government from paralysis, the time is now. She appears to have seized the moment. The timing is perfect.

The announcement spared her more controversial Cabinet members -- especially those responsible for her election debacle -- from exiting in disgrace by being sacked. The order allows all Cabinet members, including the undeserving, to save face. It also punishes the Cabinet members who failed to deliver the votes in the areas assigned to them.

The decision to do a total revamp sent a few signals. First, it implicitly conceded defeat in the senatorial election, and acknowledged a change in the balance of power in the upper chamber.

The other signal is that the President has, without having to say it, heeded the unmistakable mandate resoundingly expressed by the election results for the Senate, more than the results for the House of Representatives and local posts. The mandate is that: It’s time for change, not only of the entire Cabinet, but more so of policies, involving national security, human rights abuses and financial and economic matters -- the key areas on which the administration was pilloried during the last election.

The total revamp signals a rare dawning of humility, of bowing to the sovereign will by an administration whose stock in trade during the past six years has been arrogance and pushing to the limits the arbitrary use of power. It also tacitly recognized that the midterm elections were a referendum on the Arroyo administration.

Such sensitivity to pubic opinion and electoral mandate is surely bound to be appreciated by the public. It can be interpreted as an honest effort at political reconciliation and opens the shutters for a fresh blast of the winds of policy revision.

The revamp is a political masterstroke in timing. It didn’t wait for the proclamation by the Commission on Elections on the final election results. It thus stole the thunder from the proclamation. It handed the President the opportunity to regain the initiative and the key to convert an electoral disaster into an advantage. It came at a time when the economy, acting independently of political uncertainty and turmoil, was showing signs of an economic turnaround.

The revamp comes as the triumphant opposition in the Senate begins to crack in disarray over how to divide the spoils. Already, opposition senators are squabbling over the Senate presidency and the chairmanships of key committees, and several blocs and factions have emerged among the 10 apparent winners last May and the five opposition holdovers in the Senate.

Together, the opposition senators can form a new majority to take control of the Senate, but their disarray offers the President an opportunity to exploit. The election has left the administration with a bloc of eight, including the two Team Unity candidates who survived the Genuine Opposition tide, Senators Edgardo Angara and Joker Arroyo. Unless the members of the enlarged opposition in the Senate pull themselves together as a solid entity over the Senate presidency and over policy issues, they could quickly squander their electoral gains and allow the President to thwart their objective of taking control of the Senate and seizing the initiative for setting the national agenda for the next three years.

The inclusion of the heads of government corporations and financial institutions in the announced revamp involves the most extensive head-chopping in the public sector ever to be undertaken by the seven-year Arroyo administration. The announcement followed the report of the World Bank that the Philippines does not need to impose new taxes but needs to plug leaks in the collection of existing taxes to meet its fiscal targets. Joachim von Amsberg, World Bank director fro the Philippines, said tax leakages were the critical element that could sustain or break the fiscal gains last year. “My suggestion would be to focus all its energies on raising and improving tax administration,” he said. New measures are not necessary “in the short term,” he added.

In the first quarter, the Bureau of Internal Revenue collected P143 billion, P12 billion less than the P155-billion collection target set by the government for the period. The shortfall in revenue collection is blamed for the current budget deficit of P52 billion, exceeding the targeted ceiling of P45.8 billion.

Revenue last year was boosted by the increase in the value-added tax rate from 10 percent to 12 percent in February 2006. The value-added tax was one of the key fiscal measures passed by the administration to crack the deficit. There are concerns that the fiscal gains may not be sustained in view of the revenue shortfall during the first quarter.

Tax chief recommends readjusting targets to reflect reality

Full article at BusinessWorld Online

Tax chief Jose Mario C. Buñag is recommending a fresh look at the revenue collection targets.

"The so-called slippage should be considered in context," Mr. Buñag said, citing value-added tax collections which are premised on an inflation rate higher than the actual.

Finance Undersecretary Gil S. Beltran said the target inflation rate was 3.3% while the actual rate was 2.7%.

"That the means the level of prices under the forecast is double [than] the actual rate ...We have to understand why there’s a slippage," Mr. Buñag said.

He insisted that targets have to be adjusted to reflect the prevailing macroeconomic environment.

"I’m saying it’s not as if the goal is absolute and inviolable and not subject to adjustment. It should be really subject to adjustment. It’s based on assumption, It may or may not fire out," he said.

"At the end of the year they should see. They should not judge whether the BIR and the [Bureau of Customs] worked hard enough or not. That’s my position. They should be given a year to determine whether we performed well or not."

Mr. Beltran said a review would be undertaken after the June figures come in, but he clarified that it would for macroeconomic assumptions, not the targets.

Confusion on tax chief dismissal a call for better staff support

By P. C. H. How
Original article from BusinessWorld Online

Businessmen yesterday said the effect of Malacañang’s about face regarding a revamp at the Bureau of Internal Revenue (BIR) would be limited as the reorganization had not been implemented.

Sergio R. Ortiz-Luis, Jr., president of the Employers’ Confederation of the Philippines, said it was the Executive’s prerogative as whether to amend an order if intervening reasons arise.

Federation of Filipino-Chinese Chamber of Commerce and Industry, Inc. President Francis Chua said the amendment was a "welcome move, in a sense that ... with proper due diligence with all concerned stakeholders, [President Gloria Macapagal Arroyo would] make necessary adjustments."

Peter L. Wallace of the Wallace Business Forum said "if [the order] had been put into effect and then reversed, then definitely this would have a negative effect on business. But if it was rescinded for another one, this doesn’t have any impact."

However, he added that "this doesn’t send a good signal of strong planning, to come out with one thing and a little bit later change it. We have seen a little too often that decisions were made without full research and work done prior to coming out [with the order]."

Mr. Wallace and former Socioeconomic Planning secretary Solita C. Monsod both cited the seeming absence in Mrs. Arroyo’s administration of the "complete staff work" for policymaking demonstrated during the time of President Fidel V. Ramos.

Ms. Monsod said the situation of taking back an Executive Order "merely creates embarrassment for the President," and that the "policymaking process" of the Executive should be studied.

She added that BIR Commissioner Jose Mario C. Buñag’s statement that Executive Order 625 calling for a bureau revamp had not been properly studied was an "indictment" of him and Malacañang.

Mr. Ortiz-Luis, meanwhile, said retaining of the composition of the BIR was preferable. A change in officers who will have to be reoriented "might further deteriorate collection."

Mr. Chua said the focus should be less on who is in charge but on implementing the proper revenue measures. He said the revenue targets were a "tall order", but added the government had to maximize collections for its programs

"At the end of the day, it’s a balancing act," he said. —

Chasing the real story behind the gov't broadband deal with China's ZTE

Do we really need a gov’t broadband?
Original article at The Philippine Star

The government spends P4 billion a year for landline, mobile and Internet services. Is that a problem? No. Given a huge 1.5-million-strong bureaucracy, it can be a glitch only if calls frequently drop or signals fade and yet charges are high. But since national and local offices subscribe to steeply competing private firms (PLDT, Bayantel, Smart, Globe, Sun, etc.), service is bound to be good and charges reasonable. Why, if agencies band together to negotiate, they might command even better rates for voice and data setups from an exclusive telecoms player.

So why is government raring to spend $330 million (P16 billion) in borrowed money for a national broadband network (NBN)?

That’s for Transport and Communications Sec. Leandro Mendoza to answer. It was he who signed last April an NBN supply contract with ZTE Corp. vice president Yu Yong, witnessed by President Arroyo in China.

Controversy bugs that deal, with even US ambassador Kristie Kenney protesting undue haste and six business groups urging abrogation. Sec. Cerge Remonde, as head of the Presidential Management Staff and the Cabinet’s Infrastructure Monitoring Task Force, has asked the DOTC to explain the NBN for transparency’s sake. Two months since the signing, Mendoza continues to hide the document, in breach of a Constitutional rule for full disclosure of all state transactions affecting public interest.

From sketchy claims of DOTC subalterns, the NBN supposedly will improve government communications. A seamless connectivity will link all government offices through landlines, cellular phones and Internet. DOTC project manager Norberto Conti was quoted as claiming that the NBN will also save the government P3 billion a year since outgoing calls will be monitored by the time the system starts operating in three years. The implication is that P3 billion of the P4-billion yearly government expense are unauthorized long-distance phone calls.

At any rate, according to Economic Sec. Romy Neri, the Commission on Information and Communication Technology first endorsed the NBN to the Cabinet in Oct. 2006. In a Nov. 21 meeting of Cabinet members in the National Economic and Development Authority, Neri and CITC chairman Ramon Sales presented the idea to the President. Arroyo preferred that a private firm initiate it as a Build-Operate-Transfer project, at no cost to government. After all, it has no money for telecoms infrastructure, was compelled by the Telecoms Act of 1995 to privatize all its telecoms facilities, and holds a poor record in running its own telecoms projects like the failed P10-billion Telepono sa Barangay.

On Dec. 5 a Filipino firm called Amsterdam Holdings Inc. submitted an unsolicited B-O-T proposal to the DOTC. It offered to link up all national offices with provincial capitols, city and municipal halls, state colleges and hospitals at its own expense of $240 million. For AHI to earn, government was to subscribe to its services, but at 25-percent less than prevailing rates. That would mean government paying only P3 billion of its present P4-billion annual bill, or a P1-billion discount.

DOTC at first liked the AHI idea. But then along came ZTE Corp. of China, backed by a high COMELEC officer and a powerful official’s spouse. Instead of initiating formal studies of the first proposal (AHI’s) as required by the B-O-T Law, the DOTC began negotiating with ZTE in Feb. for direct purchase of the broadband equipment.

At first ZTE offered to sell a complete network for $300 million. But faced with the superior bid of AHI to build a $240-million system at no cost to government, ZTE dipped to $262 million. It was still lopsided: ZTE’s $262 million versus AHI’s free equipment. And yet the DOTC dropped AHI in favor of ZTE. DOTC Assistant Sec. Elmer Soneja claimed that AHI had failed to submit proof of technical and financial capability, although documents show the contrary.

A funny thing then happened on the way to Boao, Hainan on Apr. 21, where Arroyo was to speak before regional business executives. A project that was not even a priority in Feb. suddenly became rush work. What was supposed to be a B-O-T deal, as AHI proposed, became a supply sale, as ZTE prevailed. Strangest of all, the ZTE price, at first $300 million then haggled down to $262 million, suddenly rose to $330 million at the signing table.

The government would have to borrow the $330 million (P16 billion), precisely since it has no money. And yet Malacañang proclaimed the ZTE deal as a “fresh investment”. In truth, generations will have to repay the P16 billion, just like the white elephant Bataan nuke plant.

On top of the hardware cost of P16 billion, the government will need to allocate billions of pesos more each year to run and maintain the NBN. All this, supposedly to save P4 billion a year that government spends on calls. It does not compute.

Perhaps the project evaluators changed their options from free to expense, B-O-T to direct purchase. They might have their reasons. But then, Arescom Inc. of USA, with Nasdaq-listed Wireless Facilities Inc., had also proposed to supply the NBN hardware just like ZTE. Its price — given last year, was only $135 million. This means the authorities came to like ZTE’s higher tag for millions of unstated reasons.

Thursday, 14 June 2007

PGMA hails Ford's choice of RP as production base of company's Flex Fuel Vehicle engine

Original report at Gov.Ph News

STA. ROSA CITY, Laguna – President Gloria Macapagal-Arroyo lauded today Ford Motor Company for choosing the Philippines over other countries and competing Ford plants worldwide as the production base of its pioneering Flex Fuel Vehicle (FFV).

The President cited Ford’s choice of the Philippines during the kickoff production of Ford Philippines’ P1.1 billion, world-class FFV engine plant at the company’s Greenfield Automotive Park here this morning.

Ford is the first company to produce FFV engines in Southeast Asia, highlighting the Philippines’ role as Ford’s Center of Excellence in FFV technology in the region.

The President attributed Ford’s decision to make the Philippine the hub of its FFV engine production to the favorable business climate in the country and the "productivity and competitiveness of the Philippines and the competitiveness of our great Filipino workers."

Ford plants in Spain, Mexico and China had vied for the right to put up the FFV engine production plant.

The President acknowledged Ford’s support for the government’s program to develop environment-friendly fuels and the new plant reaffirmed the company’s commitment to the Philippines. In return for Ford’s support, "you have the support of the government," she added.

She said that the new Ford investment comes at a time when the Philippines does not only have a "great work force but now we have the means to maintain our competitiveness and even enhance it by investing even more in human and physical infrastructure."

The President likewise cited the thousands of Ford’s Filipino workforce for their outstanding skill and talent that Ford needs to produce quality and world-class automobiles.

"I would like to add my piece of congratulation, first and foremost, to the wonderful workforce of Ford Philippines. You are the reason why this plant is here today," she said.

Ford, the President said, requires "state-of-the art engineering technology. We have already started a P200 million scholarship program for master’s in science and engineering and I hope some of you will benefit from that."

Contrary to common belief, the Philippines is not merely an "assembly industry . . . we also produce major components, the most major of which is the engine produced by Ford," the President said.

Aside from engines, Ford and other assembly plants also produce transmission system, wiring harness and hundreds of other automotive parts.

"So, we are a genuine automotive industry," she added.

Ford’s Sta. Rosa plant will manufacture E20 FFV engines to be used in the Ford Focus 1.8L and 2.0L models. The FFV engines, which are capable of running on traditional gasoline only, or a mix that contains up to 20 percent bio-ethanol fuel, will be exported to South Africa.

Joining the President in the plant's ceremonial launch were Trade and Industry Secretary Peter Favila, Energy Secretary Raphael Lotilla, Environment and Natural Resources Secretary Angelo Reyes and the US Acting Deputy Chief of Mission to the Philippines Rick Haynes, who underscored the plant's significance to the Philippines and the ongoing collaboration between Ford and the Philippine government.

Also present were Laguna Gov. Teresita Lazaro, Sta. Rosa City Mayor-elect Arlene Arcilla-Nazareno and Philippine Economic Zone Authority (PEZA) Director General Lilia de Lima.

Favila said the government applauds Ford's role in helping encourage investment in the local agro-industrial sector to produce and distribute alternative fuels.

He said Ford is a leading advocate of the biofuels industry to lessen the country’s dependence on imported oil.

"This investment also points to Ford's recognition of the Philippines as a globally competitive manufacturing base and strategic location to successfully expand its worldwide export program," Favila said.

Ford Philippines FFV engine production over the next five years is expected to reach 105,000 units valued at P6.5 billion (US$136 million). About 100 skilled technical and support positions will be filled exclusively by Filipinos.

"Ford appreciates the ongoing support of the Philippine government, and we're proud of our collaborative work to lead the Philippines' automotive industry in developing the country's biofuels industry and implementation and use of alternative fuels," Rick Baker, president of Ford Philippines, said in his welcome address.

"Our highly skilled Filipino workforce and ongoing human resources development and training are critical components of expanding our regional FFV leadership right here in the Philippines," he added.

Gov’t pushes development of alternative energy

Original report at Gov.Ph News

Manila (14 June) -- The Arroyo government, through the Philippine National Oil Company (PNOC), is looking into alternative fuels as the best solution to resolve the country’s dependence on imported crude oil and cut its greenhouse gas contribution. Concerned agencies were instructed by the President to fast track the development of newly discovered bio fuels and bio diesel.

This strong government support and the presence of a biofuel law have made the Philippines into one of the most attractive investment sites in the region. Furthermore, the country has large parcels of idle land suitable for jatropha plantations, plus the appropriate climate and a good labor force.

Investments in biofuel development include a two billion dollar investment committed by British firm NRG Chemical Engineering Pte. Ltd. and Tian Biogreen Energy Ltd.Investment for the next three years plus tie-ups with Sumitomo Corp., Samsung Corp. and Headwaters Inc.

Cosmo Oil, a Japanese company engaged in oil refining and sales, also plans to set up in Leyte a $100-million bioethanol plant and a $50-million biodiesel plant.

The bio-ethanol plant will need 34,000 hectares of land for a cassava plantation, 36,000 hectares for a sweet potato plantation, 76,000 hectares for a yam plantation and 40,000 hectares for a sugar cane plantation while the biodiesel project will need 17,000 hectares to be planted with oil palm and 61,000 hectares for copra production. (PIA—MMIO)

April exports up 5% yr/yr

Full report by the National Statistics Office


Export earnings in April 2007 inched up by 5.0 percent to $4.114 billion from $3.918 billion in April 2006. Similarly, receipts from merchandise exports during January to April rose by 8.1 percent to $16.296 billion from $15.073 billion during the same four-month period in 2006.


Accounting for 62.2 percent of the aggregate export revenue in April, Electronic Products slightly went up by 1.1 percent to $2.558 billion from $2.531 billion in April 2006. Except for Consumer Electronics and Telecommunication, all electronic products recorded a year-on-year increase ranging from a low of 0.8 percent to a high of 490.9 percent. Export receipts of the Electronic Products for January to April, on the other hand, increased by 7.1 percent to $10.426 billion from $9.735 billion during the same four-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 $163.16 million or 6.3 percent higher than $153.57 million in April 2006.

Cathodes and Sections of Cathodes of Refined Copper ranked third with total revenue of $101.84 million, reflecting a 1.3 percent increase from $100.52 million in April 2006.

Petroleum Products ranked fourth with export receipts of $91.06 million or a year-on-year growth of 22.0 percent from $74.66 million in April 2006.

Woodcrafts and Furniture ranked fifth with sales amounting to $85.91 million or a growth of 18.9 percent from $72.25 million in April 2006.

Rounding up the list of the top exports for the month of April 2007 were Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships (consisted only of electrical wiring harness for motor vehicles), $70.96 million or an annual growth of 24.6 percent; Coconut Oil with an export value of $65.61 million, down by 20.4 percent; Other Products Manufactured from Materials Imported on Consignment Basis, $54.92 million or a decrease of 5.0 percent; Bananas (Fresh) with proceeds billed at $37.10 million or an increase of 8.3 percent; and Metal Components, with export revenue of $34.87 million or 49.9 percent growth from the same month in 2006, highest year-on-year growth for April 2007.

Total receipts from the top ten exports reached $3.264 billion, or 79.3 percent of the total exports.

January: $4.167 (27.3%) ($3.272)
February: $3.689 (7%) ($3.447)
March: $4.566 (10.6%) ($4.127)
April $4.114 (5%) ($3.918)

State workers to get 10% pay increase in July; P10.3 B set aside

Full article at Manila Bulletin

State workers are assured of getting a 10 percent hike in basic pay in July as the Budget department will release before the end of the month the P10.3 billion needed to bankroll the pay increase.

Budget Secretary Rolando Andaya also announced that twin budget circulars, one for national agencies and the other for local governments, will also be issued to guide the compensation adjustment.

"The budget circulars will be released next week and then the Special Allotment Release Orders (SAROs) and the Notices of Cash Allocation (NCA) will follow suit," Andaya said.

The former refers to a budget document which authorizes an agency to incur obligation while an NCA authorizes an agency to pay an obligation incurred.

"Pay slips for July will reflect the increase," Andaya said.

Next months [sic] round of pay hike, the second in 18 months in the public sector, was authorized under Executive Order 611 which President Arroyo signed on March 14 this year.

Listed firms raise P34.8B in fresh equity in Jan-May, up 41.5% y/y

By Zinnia B. Dela Peña
Thursday, June 14, 2007
Full article at the Philippine Star

Fresh equity raised by listed companies from various capital-raising activities at the stock market amounted to P34.8 billion in the first five months of the year, up 41.5 percent from the previous level’s P24.63 billion, the Philippine Stock Exchange (PSE) reported yesterday.

PSE president and chief executive officer Francis Lim said the increase was due to the bullish sentiment of investors towards the stock market.

“The stock market is in the midst of a record-breaking run, and companies with funding requirements are taking advantage of investors’ positive perceptions about our market by offering their shares to the public,” Lim said.

Stock prices, as tracked by the 30-company benchmark PSEi, started reaching new highs on May 18, 2007, when it closed at 3,449.18 to erase the previous record high of 3,447.60 set on Feb. 3, 1997 or more than 10 years earlier.

The PSE, closed at 3,474.67 on May 31, 2007 or 16.5 percent higher than its level of 2,982.54 at the end of 2006.

“The record-breaking advance of the PSEi and the increase in equity from capital-raising activities create a favorable cycle for our market. I am confident we can maintain this favorable and welcome cycle as long as the government keeps in place sound economic policies; our political climate remains predictable; and the PSE will continue to implement its own reform program, ” Lim said.


With the May 2007 national elections over, Lim expressed confidence that proceeds from IPO will pick up.

“Now that the election fever has subsided, we expect more offering applications to reach our front desk,” Lim said. “I am reiterating my sense of optimism about the market’s ability to match, if not surpass, the amount of equity to be raised this year via the sale of primary shares to the public. That’s because we already have in the pipeline several pending IPO applications worth P16 billion,” Lim added.

Businessmen: No more impeachment tries, please

By Claudeth Mocon
Original report at the Business Mirror

THE business sector on Wednesday appealed to the opposition to set aside the plan to file an impeachment case against President Arroyo when the 14th Congress starts session to be able to sustain the economic growth in the coming years.

Jose Concepcion, presidential consultant for entrepreneurship and founding trustee of the Philippine Center for Entrepreneurship, stressed that the opposition should help in the launching of another kind of “revolution,” by working to make the people get interested in entrepreneurship.

Rolando Dizon of the Bacolod City Economic and Business Council, meanwhile, appealed to politicians “not to bring out anymore the issue of impeachment,” noting the need to sustain the 6.8-percent economic growth of the country.

Dizon said that an impeachment case will hamper the creation of more jobs and that poverty will be pervasive.

He added that initiating the impeachment case against the President will just be a waste of time because the opposition “don’t have the numbers.”

He called on the opposition to be more “constructive” now, rather than obstruct the economic growth of the country.

Concepcion, on the other hand, said, that it is time to talk about good things and not bad things now that the elections are over.

“Now that the election fever is over, it’s time [for the politicians] to get back to work,” Concepcion said, adding that few more years for the President will be beneficial to all.

Takenaka mum as gov’t seeks offers

Full report at BusinessWorld Online

After terminating an arrangement with Japanese firm Takenaka Corp., the government is now preparing to seek new contractors to complete the mothballed Ninoy Aquino International Airport Terminal 3 (NAIA-3).


Takenaka’s project director for NAIA-3 Ken Kurebayashi declined to comment when contacted yesterday.

"I am sorry, this is a very crucial time. Please ask your government," Mr. Kurebayashi said.


During the negotiations, Takenaka and government officials could not agree on the price, admission of liability, and the guarantee the firm would provide.

Takenaka’s latest offer to MIAA was for a lump sum of $10 million to start construction and a "provisional sum" of $4 million for additional work. The regulator rejected the offer, saying Takenaka’s conditions were "too excessive." Its earlier offer put the price of completing the 182,500-square meter terminal at $6-8 million.

The Japanese business community, meanwhile, refused to be drawn into the issue.

"Its complicated, so difficult to give an opinion. We only read it in papers. But similar to the overall sentiment, we would like to see the immediate opening of the new terminal," Japan External Trade Organization senior advisor Ichiro Tsuji said.

An official of the Japanese Chamber of Commerce of the Philippines said "We don’t want to give a comment on that matter."

Palace takes back BIR revamp order

.... as ’08 targets put more pressure on bureau

Full report at BusinessWorld Online

Malacañang has taken back an Executive Order detailing a Bureau of Internal Revenue (BIR) reorganization that apparently caught Finance officials by surprise.

The Palace yesterday released Executive Order 625-A amending EO 625, signed in May but only shown to reporters last week. This development also followed reports that President Gloria Macapagal Arroyo was poised to implement sweeping changes at the BIR, which has failed to meet revenue targets as of the first quarter of 2007.

The bureau failed to meet last year’s target, and now faces, along with the Bureau of Customs, more pressure to perform as the government proposes to raise revenue estimates for 2008.

In the rescinded Executive Order, Mrs. Arroyo placed the BIR’s Large Taxpayer’s Service (LTS) under a new office and axed the unit’s head. A program targeting tax evaders was also set up as a division, and officials then claimed the changes were prompted by the BIR’s lackluster performance.

EO 625-A, however, placed the LTS back under Tax bureau chief Jose Mario C. Buñag, and retained LTS officer-in-charge Nestor S. Valeroso. EO 625 had placed the LTS under the new Office of the Deputy for Audit and Fraud Investigation, and named South Makati revenue district officer Cesar Charlie Lim as Mr. Valeroso’s replacement.

The Run After Tax Evaders Program, which EO 625 said would now become a division, has been placed under the Office of the Deputy Commissioner for Legal and Inspection Group.

Mrs. Arroyo on Saturday had told BusinessWorld that she was looking at changes in the BIR. Asked to comment on Mr. Valeroso’s removal, Finance Secretary Margarito B. Teves that day declined to comment, saying he wanted to discuss the matter with Mrs. Arroyo.

The President met with Messrs. Teves and Buñag on Tuesday, and the Finance chief said Mrs. Arroyo had given the BIR a temporary reprieve with respect to the collection issue.

Mr. Buñag, asked about EO 625, said "The EO was not properly studied."

Mr. Teves was unavailable for comment yesterday, while Mr. Buñag declined to speak further, saying he had yet to see the new Palace order.

Mr. Valeroso, meanwhile, said EO 625-A restores the status quo at the BIR.

"In our existing structure, we are directly under the Office of the Commissioner. If EO 625 is revoked, we are back here," he said.

Asked whether the development came as a relief, Mr. Valeroso replied "If that is the assessment of top management, including the President, we have to be ready."

He maintained that the LTS has and continues to do its job.

"I’m not guilty. I’m trying my best to maximize our collection," he stressed.

Revamping the bureau halfway through the year may be counterproductive, he added.

"We are in the middle of the year. We can’t afford to have a learning curve. It will affect our collection," Mr. Valeroso said.

The BIR has to collect P765.9 billion of this year’s total revenue goal of P1.12 trillion, and the LTS is expected to contribute half.

Mrs. Arroyo has expressed disappointment with the P12.1-billion first quarter shortfall registered by the BIR, which threatens the P63 billion yearend deficit target.

Documents recently submitted to the Development Budget Coordination Committee, meanwhile, placed the revenue target for 2008 at P1.236 trillion.

Of this amount, tax revenues are expected to go up to P1.138 trillion from 2007’s P1.053-trillion target. The BIR must collect P873.9 billion next year, higher than its P765.8-billion target this year.

Collections by the Bureau of Customs, meanwhile, will increase to P254.7 billion next year from this year’s P228.2-billion goal.

Mr. Buñag said he was not aware of the new targets.

"We will have it studied first. They will need more people if that is what they want," he said.

Customs commissioner Napoleon L. Morales was not immediately available for comment.

The government’s non-tax revenue target for next year, meanwhile, was pegged at P98 billion, lower than this year’s P115.6 billion.

The government is looking at selling big-ticket items such as its 24% stake in food and beverage giant San Miguel Corp. and its 12% interest in Manila Electric Co. this year.

Wednesday, 13 June 2007

PGMA's plane makes historic landing at new Iloilo airport

Full report at Gov.Ph News

ILOILO CITY – The presidential plane carrying President Gloria Macapagal-Arroyo and party made a historic touch down at Runway 20 of the new Iloilo airport in Sta. Barbara-Cabatuan area at about 9:50 am today.

Iloilo Gov. Niel D. Tupas, Sr. led other provincial officials in welcoming Pres. Macapagal-Arroyo to inaugurate the PhP 6.2 billion New Iloilo Airport of Development Project (NIADP) in Sta. Barbara-Cabatuan towns in the Second District.

A state-of-the-art, the new airport is of international standards.

Pres. Arroyo will lead the inauguration with Japanese Ambassador Ryuchiro Yamazaki who also arrived for this event, along with Department of Transportation and Communications Sec. Leandro Mendoza and other cabinet members.

In an earlier interview, Gov. Tupas said that he’s very much elated that finally, the new airport could be inaugurated, since it could boost the economy of Iloilo and its tourism industry.

The NIADP, which is a major project under the Super Region, has been realized through the Special Yen Loan Package Agreement entered into by the Japan Bank for International Cooperation (JBIC) and the Government of the Philippines (GOP).

Contracted by Taisei-Shimizu Joint Ventures for a project cost of Y9,487,544,058 yen and the GOP counterpart of P1,625,508,763 with the additional amount of P129,985,322, the NIADP is being considered by Engr. Manuel Lauden, Deputy Project Manager, as the best and the first to have modern, latest technology belonging to Category F as determined by the International Civil Aviation Organization.

Cacao producers eyeing to triple production in 5 years

By Jennifer A. Ng
Full report at the Business Mirror

CACAO producers are eyeing to hike cocoa production to as much as 15,000 metric tons (MT) within five years or almost triple the average 5,600 MT dry cocoa beans produced by the Philippines annually.

The Cocoa Foundation of the Philippines Inc. (Cocoaphil) said it is banking on government support as well as its own advocacy of encouraging coconut farmers to practice intercropping and plant cacao trees.

Cocoaphil is an organization that actively promotes the integrated and sustained development of the Philippine cocoa industry.

Cocoaphil is one of the partners in the Success Alliance Program, a project funded by the United States’ Department of Agriculture whose chief aim is to increase cocoa production in the country.

In a briefing with reporters, Cocoaphil’s field operations manager Josephine Ramos, however, admitted that doubling or tripling cocoa production may be a tall order given the lack of government support for a 10-year “road map” for developing the local industry.

“What we need is a policy statement from the Department of Agriculture (DA) that they are supporting this road map to develop the industry. But until now, there is no support from the DA,” said Ramos, noting that the road map has been rolled out in October 2006.

Ramos noted that the Philippines has a lot of potential in terms of supplying part of the global demand for cacao. In Asia alone, the market for cocoa beans is estimated at 460,000 MT.

“Global demand for cocoa-based products such as chocolate is on the rise because of its health benefits,” she said.

According to research, flavanols in cocoa may help treat diabetes, stroke and dementia.

Cocoaphil noted that if the cocoa road map is implemented and supported by the DA, the industry can easily produce 75,000 MT to 100,000 MT of dry cocoa beans a year.

Agriculture Secretary Arthur C. Yap, for his part, said the DA is willing to sit down with industry stakeholders and find out how the government can help.

“What we want is for [producers and stakeholders] to make a presentation on how they are going to increase the income of farmers. They have to show how they intend to enhance the industry’s competitiveness,” said Yap.

The Philippines was the first Asian country to plant cacao and develop its cocoa industry.

But the implementation of the comprehensive agrarian reform program led to the demise of many cacao plantations in the 1990s, according to industry players.

The country requires about 32,000 MT of dry cocoa beans each year. The Philippines imports its requirement for cacao beans from Indonesia, Malaysia and cocoa powder from Singapore.

The imports are processed and are re-exported to Malaysia, South Korea, and the US in the form of cocoa butter, cocoa paste and cocoa beans.

Arroyo seeks higher, balanced ’08 budget

Teachers, policemen to benefit from pay hike
By Angelo S. Samonte, Reporter
Full report at The Manila Times

THE Arroyo administration has set a higher budget ceiling for next year as it plans to increase the salaries of public-sector workers particularly teachers and policemen, the Department of Budget and Management (DBM) said.

In a statement, the DBM said the 2008 budget ceiling was pegged at P1.227 trillion, 8 percent higher than this year’s P1.136-trillion spending bill.

Greenhouse emission levels have gone down—Napocor

By Euan Paulo C. Añonuevo
Original report at The Manila Times

The greenhouse emission levels in the Philippines have gone down significantly as a result of a much lower use of oil-based power plants, the National Power Corp. said.

Cyril C. del Callar, Napocor president, said Napocor has been using “less and less fuel oil-fired generation facilities” since 2005. Thus, besides the “financial rewards [Napocor] posted because of the significant savings we realized from cutting down on the use of these power plants, we have also reduced yearly overall emission levels,” he added.

The positive results were borne out of Napocor’s strategy to use oil-fired power plants only during the dry season when water supply from hydropower plants drops owing to low dam elevations.

From a double-digit number of almost 13 percent in 2003, Napocor has brought down the utilization of oil-based plants to a single-digit number of about 7 percent in 2006.

“These results have encouraged us in Napocor to adopt the same generation mix wherever possible for our off-grid small island operations under our missionary electrification function,” del Callar said

He said this has resulted in a significant decrease in the emission levels of the greenhouse gases—carbon dioxide (CO2), sulfur dioxide (SO2), nitric dioxide (NO2) and carbon monoxide (CO)—from the Napocor’s electricity production.

Company records showed that Napocor’s fuel oil consumption has decreased by about a third from 1.19 billion liters in 2003 to only about 885 million liters in 2006.

This resulted in equivalent decreases in emission levels per year from 2003 to 2006: CO2 at almost 40 percent, SO2 at more than 38 percent and both NO2 and CO at a little over 36 percent.

In addition to these reductions in emission levels, Napocor’s 11 watershed areas with a total area of more than 590,000 hectares have contributed to cleaner air through “carbon sequestration” as defined by the kyoto protocol.

Del Callar said, “Napocor manages its watersheds and geothermal reservations wherein the vegetation sequesters about 3.1 million tons of carbon dioxide a year. As part of our ongoing watershed projects and fulfillment of our mandate, we have initially reforested 140 hectares of open areas. This will increase CO2 sequestration by about 4,480 tons a year.”

Dollar surplus from remittances and portfolio investments to exceed $2B forecast

By Maricel E. Burgonio,Reporter
Original report at The Manila Times

THE Bangko Sentral ng Pilipinas (BSP) said its forecast for the country’s dollar surplus this year may be surpassed due to the unabated inflows of foreign money.

BSP Governor Amando M. Tetangco Jr. said monetary officials are set to upgrade their $2-billion surplus forecast for the country’s balance of payments (BOP), which summarizes the Philippines’ economic transactions with the rest of the world.

“It could do better than $2 billion,” Tetangco said.

In what has become its practice of sand-bagging, the BSP earlier made a conservative forecast for this year despite the $3.8-billion surplus last year. In April the BOP surplus stood at $282 million, bringing the first four months’ surplus to $1.7 billion.

A BOP surplus is generally seen in a positive light as it indicates that the country is generating enough dollars to service its foreign debt and pay for its imports.

Based on its latest report, the BSP said net foreign portfolio investments last month reached $1.579 billion, more than double the $667.44 million last year. Portfolio money usually is invested in the stock market and in other peso-denominated financial assets.

Net portfolio inflows reached $5.548 billion so far this year, with total outflows of $3.968 billion.

High portfolio investments, as well as strong remittances by overseas Filipino workers (OFWs) have strengthened the peso to fresh multiyear highs in recent months.

This year, the BSP sees OFW remittances reaching $14 billion from last year’s $12.8 billion. Apart from causing the peso’s rise, remittances fueled consumption, allowing the Philippine economy to register a 17-year record expansion in the first quarter.

Metro barangay heads ask for AFP presence

Original report at the Manila Times

BARANGAY officials from depressed communities in Metro Manila have asked the Armed Forces (AFP) leaderships [sic] to redeploy their troops to help maintain peace and order in their localities.

Nineteen barangay chairmen from the cities of Manila, Caloocan, Quezon and Taguig have sent a letter to AFP chief, General Hermogenes Esperon Jr., seeking for the redeployment of troops.

In a letter addressed to Esperon, dated June 4, the barangay chairmen said that presence of soldiers have helped bring down criminality in depressed communities in the metropolis.

“We are inviting them [troops] back to our villages, with your permission, to continue the good work that they have started,” the barangay chairmen said in the letter.

The local officials thanked the troops for making their community a safe place with residents’ no longer afraid to walk their street at night.

“The presence of the soldiers gave us peace of mind. Their departure before the elections made us realize that they are necessary to ensure order and progress,” the letter said.

The AFP National Capital Regional Command (Ncr­com), Major Gen. Ben Mohammad Dolorfino is set to discuss on Wednesday the review of troop of deployment in the metropolis with the AFP leaderships.

The AFP decided to pull out the troops from Metro Manila early last Month to douse speculation that the troops would be used or be involved in partisan politics.

PLDT value soars to P500B

By Mary Ann Ll. Reyes
Wednesday, June 13, 2007
Full report at the Philippine Star

From P121 billion in 1998 when Hong Kong-based First Pacific Co. (FPC) acquired a controlling stake in the Philippine Long Distance Telephone Co. (PLDT), its market value has soared to P500 billion, making it undisputably the largest Philippine company in terms of market capitalization.

During yesterday’s annual stockholders’ meeting, PLDT chairman Manuel Pangilinan emphasized that from P1,000 per share as of end-December 1998, PLDT’s share price has ballooned to P2,600.

In another development, Pangilinan, chairman of Metro Pacific Investments Corp. (MPIC), revealed that they will bid for the operation of the National Transmission Corp. (TransCo) power transmission facilities scheduled to be bid out by the fourth quarter of the year.

He said MPIC will tap a foreign technical partner who will likely own at most 40 percent of a new company that will bid for the operation of TransCo’s business.

In terms of profitability, Pangilinan, who is also First Pacific managing director and CEO, pointed out that PLDT’s net income reached P35.1 billion in 2006, another historic high for the company and 30 times what their profit was eight years ago. “This profit performance translates into a compound growth rate of 54 percent per year. PLDT is the country’s most profitable company,” he emphasized.

Also following the event, Pangilinan revealed that the PLDT board has just approved a new telco-related investment, but refused to give details. “This new investment will be a combination of new and existing technology,” he said.

Philippines on the cusp of mining boom

Present contribution to GDP is mere 1.2%
Full report at BusinessWorld Online

Boosted by soaring ore prices, cheap capital and a more investor-friendly regime, mining companies are rushing in and snapping up tenements in the Philippines seeking to profit from the developing world’s industrial boom, experts say.

From majors like BHP Billiton, Anglo-American and Xstrata to bare-bones exploration outfits, they are betting hundreds of millions of dollars that these investments, which could take up to 10 years, would hit paydirt before the unprecedented global metals demand flames out, they said.

The government expects fresh capital inflows of US$348 million into the sector, on top of US$694 million already sunk into the ground since the Supreme Court ruled two and a half years ago that the 1995 Mining Act, which opened the sector to foreign investors, did not contradict a constitutional provision on equity ownership limits.

P1.227-trillion budget for ’08

Full report at the BusinessWorld Online

Next year’s goal of a balanced national budget will see the government spending more than ever by P1.227 trillion, to be backed by a collection target of P1.236 trillion.

Budget Secretary Rolando G. Andaya, Jr. said next year’s budget ceiling would be 8% higher, or P90.6 billion, than this year’s expenditure limit of P1.136 trillion.

Tuesday, 12 June 2007

PGMA cites importance of strong bilateral, multilateral alliances

Original report at Gov.Ph News

President Gloria Macapagal-Arroyo underscored today the need to build and foster strong alliances on a bilateral and multilateral basis to ensure greater political, economic and military security.

The President led the diplomatic corps in a toast to the future of the Philippines and to international solidarity during the Vin D’ Honneur in celebration of the 109th anniversary of Philippine Independence held at Malacanang’s Rizal Hall.

"It is now more important than ever to build alliances on a bilateral and multilateral basis to ensure greater political, economic and military security," she said.

She said the Philippines struggle today is to "build closer, principled and mutually rewarding engagement with other nations," a very different struggle from that of 109 years ago when Filipinos were fighting for freedom and independence from colonialism.

"With the help of sincere allies like you, we shall continue to break free from the shackles that pin us down---poverty, divisiveness, terrorism, despondency—until one day, perhaps twenty years from now, we shall join the ranks of the first world nations among you," the President said.

She pointed out that the Philippine economy is "strong and stable" following the implementation of tough economic and political reforms needed to generate more revenue and improve the government’s fiscal position.

"Our economy has reached a new level of maturity with some of the strongest macroeconomic fundamentals in a generation. The Philippines offers one of the best values and best places to invest in Asia," the President said.

She also vowed to work harder and remain focused "on pro-growth, pro-trade and pro-investment strategies" to attract more investments that would create new jobs for the Filipinos and thereby uplift people’s lives.

Saying that security is essential for the country to achieve economic prosperity, the President assured the diplomatic community that the security situation in the country has "improved substantially" both in the fight against domestic and regional terrorism.

She added that the peace process in Mindanao has achieved a milestone with a new paradigm for peace through the use of hard and soft power with the support of international organizations and nations, including the United States, Malaysia, Indonesia, European Union, the Organization of Islamic Conference (OIC), and lately, Sweden.

Archbishop Fernando Filoni, the Apostolic Nuncio to the Philippines and dean of the diplomatic corps in the country, expressed the diplomatic community’s "felicitations and best wishes" to the President and to the Filipino people on the occasion of the country’s 109th Independence Day celebration.

Noting the 6.9 percent growth in the economy, the strongest in 17 years, Archbishop Filoni expressed the confidence of the diplomatic community in the President’s ability to further grow the economy.

Filoni also pointed out that interfaith dialogue of which the President is a leading advocate, is very important in the resolution of religious and ethnic conflicts.

Philippine media reported today that the Papal Nuncio has been appointed by Pope Benedict XVI as the Vatican’s undersecretary of state for general affairs.

Putting God first -- PGMA

Original report at Gov.Ph News

MANILA, June 12 (PNA) – President Gloria Macapagal-Arroyo ended her Independence Day speech today with a fervent prayer, asking God for His continued blessing for the Philippines to attain a lasting peace and prosperity.

”We adore You God the Father and acknowledge Your endless love and Almighty power. We put our trust to you our country the Philippines in the hands of Jesus and the Immaculate Heart of Mary,” the President intoned in her opening prayer broadcast live over NBN Channel 4 and Radyo ng Bayan nationwide during the 109th Independence Day anniversary at the Quirino Grandstand in Manila.

A devout Catholic, the President also took the occasion to thank God for providing the country with bountiful natural resources, the freedom that the Filipinos have been enjoying that “our forefathers had fought for whom we recognize them as heroes.”

The President also prayed to extend mercy to all the leaders who are serving in the government and to investors and traders and most of all to the ordinary laborers.

”Take care of the Filipino families,” she said, especially those who are sick, the less fortunate, the sinners and all those who are in need.

The President concluded her speech by praising and thanking the Lord Almighty as she asked God to save the country from disaster and war.

Mrs. Arroyo also called on the people for unity, and strive hard for every Filipino to have a decent life as the country moves forward.

She said it is more meaningful to commemorate the deeds of the nation’s heroes by showing the strength and dignity to fight against challenges facing the country at present.

The President said the surging economic growth and continued progress is the key to our total freedom for the people to overcome oppression and the quagmire of poverty.

This year’s Independence Day theme is: “Sama-sama tayo sa pag-asenso” (Let us unite to prosper).

The President said the present generation must continue to push through the aim of the heroes who fought for freedom and democracy.

She also said the people have much expectation to have political stability and economic reforms.

The President said serving the people is paramount than engaging in politics. (PNA)

Pressure mounts to revoke $330-M broadband deal

Original article at the Business Mirror

THE Philippine government must find a way to “diplomatically abrogate” its controversial $330-million contract with Chinese firm ZTE Corp. for the supply and construction of a national broadband network, as suggested by the business community, according to the former chief of the National Telecommunications Commission (NTC).

“This is definitely the right thing to do—for the Philippine government to find ways to persuade the Chinese government, which controls ZTE, that a mutually agreed voluntary dissolution of the contract has become imperative,” said lone Catanduanes Rep. Joseph Santiago.

He made the statement shortly after an influential alliance of business groups put out newspaper advertisements criticizing the “highly questionable” deal with ZTE, and seeking the diplomatic cancellation of the contract.

The paid advertisements, titled “Broadband for Barangays or Better Education and Health?” were put out by the Management Association of the Philippines, the Bishops-Businessmen’s Conference for Human Development, the Makati Business Club, the Foundation for Economic Freedom and the Financial Executives Institute of the Philippines.

“A central government that is electronically linked to local governments by broadband is a good idea. However, spending on an expensive broadband technology, instead of maximizing and expanding existing networks, is not the best option,” the business groups said.

“There already exists national broadband networks that our telecommunications companies operate. Our national government agencies can lease bandwidth from them at market rates,” they pointed out.

Earlier, Santiago had called for a review and recall of the deal, noting that similar multimillion ICT ventures by the government in the past decade or so had become white elephants, leaving taxpayers financially burdened. For instance, he cited the P10-billion Telepono sa Barangay program.

According to the business groups, the law clearly states that a fundamental objective of government is to develop and maintain a viable, efficient, reliable and universal telecommunications infrastructure using the best available and affordable technologies. “In doing so, the law emphasized that public telecommunications services shall be provided by private enterprises,” they said.

The country, they said, still lacks 41,000 classrooms, “even as our Constitution mandates that education should be the top priority in the national budget. Ask any poor family what their greatest fear is and the answer would most likely be health-related.”

They said that access to water is still a basic need in many remote villages, and the ZTE contract value of $330 million (P15 billion) “could be spent in building 36,000 classrooms, or 6,000 rural health centers, or 120,000 artesian wells.”

The business groups said building a national broadband network “puts government in the business of business, and in one that it regulates. This sends wrong signals to those who have already invested in the telecommunications industry and to potential investors in this country.”

Reiterating Santiago’s warning about ill-onceived projects, the businessmen noted that in the case of the “Telepono sa Barangay” program, the “dwindling number and deteriorating condition of public calling stations are also proof of the government’s lack of capacity to operate and maintain its own network.”

The businessmen concluded, “We strongly oppose the contract with ZTE. We respectfully call on the President to diplomatically abrogate the contract and to commit the funds to education instead, where the nation can benefit the most.”

Government mulls over paying off investors, taking over MRT

By Jun Vallecera
Original report at the Business Mirror

FINANCE Secretary Margarito Teves has hinted at buying out the consortium of investors that manages the Metro Rail Transit Line 3 or MRT 3 to save itself the trouble of paying lease rentals.

The trouble is not the magnitude of the obligation, but the process of securing the money with the consent of an often hostile or indifferent legislature.

“We might borrow to pay off the investors if it’s a takeover or fund [the IOUs] from budget appropriations,” he told reporters.

By this he meant that the decision to buy out the light rail investors who put in equity and raised debt to complete the project in 2000 has not yet been made.

Socioeconomic Planning Secretary and National Economic and Development Authority (Neda) chief Romulo Neri said earlier the buyout will enable government to save some $1 billion worth of lease rentals.

The MRT was constructed under the build-lease-transfer scheme, and the government pays monthly lease rentals, often late, to Tespi Corp., a subcontractor of the builder Sumitomo Corp. Teves knows he is thinking on borrowed time, as the obligation becomes due on the first week of August this year.

But at this point, he refused to reveal what he and Neri have in mind to end their problems over the inability of MRT 3 to liquidate or fund its operations using internally generated earnings.

MRT 3 is unable to fend for itself because its P15 per passenger fare structure at present is way below the break-even level of P30 per passenger.

Successive governments have refused to make adjustments fearing a harsh political backlash; and efforts to obtain the money by legislative fiat have also been inadequate.

Reports claimed MRT 3 received only half of the P2.1 billion in subsidies it sought from government last year, and that a similar request for more subsidies this year was not expected to fare any better.

Senior finance officials said on Friday requests of the nature brought before congressmen since 2001 were met with indifference or disdain.

“Historically, congressmen have not been of help to the MRT 3,” the officials said.

There is fear the government would fail to pay as the obligation matures and this failure would have an impact on the rest of the country’s creditors, officials said.

BSP siphons off P200B in excess liquidity

By Michelle Remo
Full report at the Inquirer
Last updated 02:58am (Mla time) 06/12/2007

About P200 billion worth of excess liquidity in the system has so far been mopped up by the central bank, Bangko Sentral ng Pilipinas (BSP), using monetary tightening measures it implemented in May, a ranking BSP official said.

GMA: ‘My vision is that we will be First World in 20 years’

Full article at BusinessWorld Online

BusinessWorld sat down with President Gloria Macapagal Arroyo last Saturday in Malacañang where Mrs. Arroyo, along with Finance Secretary Margarito B. Teves and Trade Secretary Peter B. Favila, outlined her administration’s thrusts. Excerpts from the freewheeling discussion:

‘We are not relaxing on fiscal reforms’ - GMA

No backsliding
Full report at BusinessWorld Online

President Gloria Macapagal Arroyo wants to assure investors, creditors, and credit watchers that the Philippines is not going to backslide in its bid to shore up finances, saying the government can balance the budget and fund an ambitious infrastructure program even without new taxes.


"Frankly I think the tax revenues we have now are sufficient. The biggest reform we have to make now is in the structural reforms. In the meantime, while we’re doing the structural reforms, we’re also accelerating privatization so that during the gap when the structural reforms are not bearing fruit yet the revenue stream continues through the privatization," she said.

Addressing concerns over a tax amnesty bill, which the Palace has allowed to lapse into law, the President declared that tax evaders charged in court won’t be allowed to get away.

"There were provisions that we were uncomfortable with which is why I did not sign it. On the other hand, I believe that having an imperfect law at this time is better than having a perfect law that might not come because there are a lot of potential tax collections that can be made."

Mrs. Arroyo vowed to work with an opposition-dominated Congress, admitting there were "contentious issues" raised during the election campaign "but it’s over. Let’s move forward because we have a country to serve."

[Read more details.]

Monday, 11 June 2007

Local airlines support air pact with South Korea

Except for PAL
BY MARICEL E. ESTAVILLO, Senior reporter
Full report at BusinessWorld Online

Amid stiff opposition from Philippine Airlines, Inc. (PAL), other local airlines are in sync in expressing their support to the expanded air agreement between the Philippines and South Korea.

Signed last May 31 in a meeting held in Davao City, the expanded air agreement increased the seat allocation of Philippine and South Korean airlines to 19,000 per week from the previous 7,000 and allowed cargo services of up to 400 tons per week.

"This will allow us to regularize our extra-section flights to Korea and allow us to expand our operations on a permanent basis, which will allow us to bring in more tourists," Cebu Pacific marketing director Candice Iyog said in a phone interview.

"We are for it. We are actually looking at opening a flight to South Korea, most likely Seoul," Southeast Asian Airlines (SEAIR) President Avelino L. Zapanta said in a separate interview.

Parties interviewed dismissed one recent report that the two-day negotiations with South Korea were conducted with an "almost total lack of transparency."

Takenaka terminated as NAIA-3 contractor

Full report at BusinessWorld Online

The government has decided to axe Takenaka Corp. as contractor for the idled Ninoy Aquino International Airport (NAIA) Terminal 3, and is considering a lawsuit against the Japanese firm.

"We’ve just terminated [them," President Gloria Macapagal Arroyo told BusinessWorld on Saturday.

Trade Secretary Peter B. Favila, who was with Mrs. Arroyo, said he delivered the message to Takenaka during the President’s working visit to Japan in late May.

"Takenaka is now seeking reconsideration of our decision of rescinding the contract," Mr. Favila said, but added that the government is not likely to change its mind because of continued delays in the opening of the facility.

"We have been held hostage for the longest time," he said.

Takenaka representatives were not immediately available for comment.