Thursday, 15 November 2007

Philippines names four groups bidding for power grid

Reporting by Karen Lema
Editing by Michael Urquhart
Original report at Reuters

MANILA, Nov 15 (Reuters) - The Philippine government has named the four groups given the go ahead to bid on Dec. 12 for a multi-billion dollar 25-year contract to run the national power grid.

The bidders will have a chance to comment on the auction transaction documents in a closed-door prebid conference on Thursday, the state agency overseeing the sale of the government's power assets said in a statement sent late on Wednesday.

The four groups are:

1) Monte Oro Grid Resources Corp, which teamed up with State Grid Corp of China. Monte Oro's president Walter Brown is also chairman of mining firm Philex Corp (PX.PS: Quote, Profile, Research);

2) Two Rivers Pacific Holdings Corp of Metro Pacific Corp (MPI.PS: Quote, Profile, Research) and Italy's Terna-Rete Electtrica Nazionale S.P.A. (TRN.MI: Quote, Profile, Research);

3) San Miguel Energy Corp, a unit of food and drinks group San Miguel Corp (SMCB.PS: Quote, Profile, Research), and TPG Aurora B.V.; and

4) a consortium of Citadel Holdings Inc and Power Grid Corp of India Ltd.

At a last failed auction of the power grid in February, only Citadel Holdings, a Filipino business group, with then partner Terna submitted a bid. The Dec. 12 auction will be Manila's fifth attempt since 2003 to privatise the transmission network. There were 21 investors that initially expressed interest to take part in next month's sale of the power grid, valued at nearly $3 billion by the government in earlier auctions.

The state agency PSALM said a fifth investor group, which it did not name, failed to qualify for the auction even after a reconsideration of documents from groups which failed to pass the first review round.

The power grid is likely to require $850 million over the next five years for upgrades and expansion. The private investment arm of the World Bank has said it will give financial help of up to $250 million to the winning bidder.

Air passenger traffic rises 23% in 1st 9 months

By Lenie Lectura
Original report at The Business Mirror

DOMESTIC passenger traffic in the first nine months of the year grew 23 percent to 7.69 million from 6.23 million aided by the airlines’ aggressive pricing strategies.

Civil Aeronautics Board (CAB) data showed that Cebu Pacific continued to lead the industry as it overtook Philippine Airlines (PAL) with 3,331,902 passengers from January to September this year, compared with the flag carrier’s 2,971,041.

In the first half of the year, Cebu Pacific carried 2,256,289 passengers as against PAL’s 1,981,267. This meant that during the third quarter Cebu Pacific added slightly over one million passengers while PAL added 989,774.

Comparing it with last year’s figures, PAL transported 2,874,756 passengers as against Cebu Pacific’s 2,126,333 from the period January to September 2006. Load factor for PAL hit 76 percent compared with Cebu Pacific’s 75 percent in the first nine months of last year.

The Gokongwei-owned budget carrier attained an 83-percent load factor out of a possible 4,037,915 seats during the first nine months of the year, compared with PAL’s 79 percent.

Cebu Pacific’s growth may be attributed to its continuing expansion, aggressive pricing strategy, and active search for and opening of new domestic routes.

Air Philippines, meanwhile, carried 835,071 passengers for the first nine months of the year from 724,086 in the same period last year. Load factor remained unchanged at 72 percent.

Air Philippines is 99-percent owned by the Lucio Tan Group. PAL, however, is 95-percent owned by Tan.

Asian Spirit registered 366,443 passengers from 321,241 in the same period a year ago. Load factor rose to 57 percent this year from 51 percent last year.

Seair posted 185,573 passengers, down from 189,688 in the same period last year. As a result, load factor dropped to 62 percent from 70 percent last year.

During the period, the number of domestic passengers carried by all the carriers reached 7,681,030 from 6,236,104 last year. Cargo also rose by 7 percent while the number of seats allocated for the period also grew by 16 percent.

Slanted (On Opinion Polls)

By Alex Magno
Original article at The Philippine Star

If an opinion poll was taken, during Galileo’s time, asking citizens if the Earth was round or flat, guess what the outcome would be?

Nearly everyone would have said the Earth was flat, of course. That was how it felt. That was what common sense dictates. That was what dogma said. It was, at that time, punishable to say otherwise.

The idea that the Earth was round — and, not only that, rotating on its axis — was totally laughable. It defies the common sense. Galileo was taunted in the streets for his proposition and asked why the seas did not spill over from a round, rotating planet.

If opinion polls then had the political impact they enjoy today, poor Galileo would not have been simply asked to retract his proposition. He would have been burned at the stake for heresy in order to please the mob, win political points and conserve the dogma.

Fortunately for Galileo, opinion polls were not yet in fashion during is time. A practical man, he quickly recanted what he knew was true, telling his apprentice there was no sense pushing an idea no one was prepared to accept. Recanting did not diminish the truth. It simply ensured everyone’s comfort, Galileo’s primarily.

Unfortunately for us, opinion polls are in fashion during our time. They ask the totally uninformed to render an expert opinion.

The results are treated as news. They grab the headlines. They influence the design of policy. They dictate the behavior of political leaders. They shape public expectation of what ought to be done. They conserve dogma.

And it is called democracy. The way that word is understood these days is that it is a condition where the banal opinions of the uninformed should take precedence over the sound conclusions of the expertly informed.

If we take this notion of democracy to undue extents, much tragedy could be produced.

For instance, if we ask people by means of an opinion poll if they wanted to be taxed, guess what the outcome would be? If, by means of an opinion poll, we asked them to choose between a proper national budget or simply distributing cash to every citizen, they will likely choose the latter.

If opinion polls were to be obeyed, we would have a regime that collects no taxes, subsidizes oil and food and gives away housing to all who have none. It would be a regime that is bankrupt, paralyzed and mired in debt. But what the heck, it will be a regime with high approval ratings — although eventually it will be a regime that runs out of the means to meet pompous public expectation and be overthrown.

In Venezuela today, the rich and the educated are marching in the streets to oppose a constitutional amendment that would allow Hugo Chavez to seek reelection indefinitely. Why are they doing that? Because Hugo Chavez will win every election in sight. He is popular. He has used the country’s oil income to dole out to the poor and subsidize everything he can.

But, after Zimbabwe under the leftist Robert Mugabe, Venezuela under Chavez has been the second fastest declining economy in the world. From having South America’s highest per capita income, it now has the lowest. In the name of some variant of socialism, this clown has redistributed poverty, not wealth. And the grateful poor will, by valid democratic means, reelect him to power indefinitely. The opinion polls will validate that.

A few days ago, the SWS released a poll where 13% said they were better off now after the peso appreciated and 30% said they were better off before appreciation. 57% said things were the same. In the usual neat way that SWS outcomes are reported, the numbers are broken down into income brackets and across regions of the country.

The news media dutifully carried out the results as a big story, concluding, as the SWS does, that the peso’s appreciation by a net effect of -17% harmed more Filipinos than it helped. The implication is that the peso’s appreciation is bad.

But how did we know that?

Those who said their lives were better before might have been simply reporting the usual erosion of inflation on fixed incomes rather a negative effect of peso appreciation. But since the SWS questionnaire linked income erosion to peso appreciation, we are all brought to what might be a contrived conclusion. It is entirely possible we might get the same profile of responses (or even worse) if the peso was depreciating.

And what about the 57% who said the behavior of the currency did not matter? That is a pretty impressive number. Why was this not the headline story?

Some of my readers have asked me this really unwarranted question: If the peso was behaving so well, why are oil prices still rising?

Well, over the past few months, the price of crude simply rose faster than the peso appreciated. From about $30 a barrel, the price in now well over $90 so quickly. If the exchange rate remained the same, we would be paying P100 per liter for fuel.

That did not happen. And that is what is important.

Surveys do not ask people to report on what did not happen. Most respondents do not know what did not happen. A certain degree of economic literacy is required to understand what did not happen.

When a calamity does not happen because of excellent weather forecasting, that is not news. It does not make the headlines. There are no dramatic pictures of weathermen issuing a bland advisory for all ships to remain in port.

There lies the usual slant.

Farm sector expands 4.3% in 1st 9 months

By Ted P. Torres
Original article at The Philippine Star

For the first three quarters this year, the agriculture sector grew by 4.3 percent with a gross value of P684.1 billion.

With this performance, agriculture officials remain confident that the sector will hit its revised growth target of 4.5 to five percent for the whole year this year.

The agriculture sector, which accounts for almost a quarter of the country‘s gross domestic product, grew by 3.88 percent last year.

“I am comfortable that the original full year target of 4.5 to five percent is achievable, depending on the weather,” Agriculture Secretary Arthur C. Yap said in a press briefing yesterday.

Forecasting for 2008 is not possible as the sector is dependent on weather conditions, Yap said, adding that “there are more uncertainties next year, and disturbing climate change is perceptible.”

The agriculture department had set an original growth target of 4.5 to five percent but this was downscaled to 3.8 to four percent due to the dry spell that affected the country in the second quarter.

To achieve the original growth target, the corn sector must grow by a similar 4.5 to five percent in the last three months of 2007, while the rice sector must expand by over five percent.

Bureau of Agriculture Statistics (BAS) director Romeo Recide said rice and corn will be the trendsetters for the remaining three months as the other sectors have been consistent in their performance in the previous quarters.

“Palay must grow by over 10 percent in the fourth quarter to support the full year growth target,” Recide added.

Meanwhile, the fishery sector continued to lead the agriculture sector with a 7.92-percent growth in the first nine months of 2007. This sector accounts for 26.35 percent of the agriculture sector.

At current prices, it contributed P134.6 billion for a little over 10-percent growth.

Output of commercial fisheries expanded by 10.71 percent. Aquaculture and municipal fisheries recorded a positive output of 6.5 percent and 8.16 percent, respectively.

Accounting for 46.77 percent of the agriculture sector, the crops subsector expanded by 4.17 percent, with a gross value at current prices of P350.9 billion. Palay and corn production grew by 3.45 percent and 9.5 percent, respectively. Banana, pineapple, mango, cassava, mongo, tomato, onion, eggplant and rubber also boosted the performance of the subsector.

The livestock subsector grew by 2.06 percent while the poultry subsector grow by a mere 0.41 percent.

Tuesday, 13 November 2007

Philippines: Chinese-funded North Rail Project Again Under Scrutiny

Mike Cohen
Pacific News Center Correspondent 12.NOV.07
5:30 p.m.

The $1.126-billion North Rail project in the Philippines funded by the Chinese government is again at the center of attention after Senator Juan Ponce Enrile accused House Speaker Jose de Venecia Jr. of "meddling" in the approval of the contract.

Enrile, who criticized the project in a privilege speech in 2005, disclosed that de Venecia had asked him to go easy on the Chinese contractors of the project. But de Venecia denied this and said that he merely told Enrile that the Chinese government was threatening to withdraw from the project.

"I did discuss the project with Enrile in 2005 but I only asked him not to rock the boat because the Chinese government threatened to withdraw from the project after he attacked it," said de Venecia.

Enrile, however said, he merely wanted to ensure transparency in government projects, especially after the recent scandal involving the construction of a national broadband system, wherein De Venecia's son had made serious allegations about the "political influence" used to approve the project.

North Rail: Vital link between Manila and Clark Economic Zone

The 80.2-kilometer North Rail is considered the flagship project of the Arroyo administration and is expected to boost economic growth, especially in Central Luzon.

The rail service would make it easier to access the Clark Special Economic Zone, Angeles City in Pampanga, the Diosdado Macapagal International Airport (DMIA) and Bulacan province from Manila.

Cerge Remonde, director general of the Presidential Management Staff (PMS), aired his concern over the possible adverse impact of politics on the project.

"We are hopeful that politics would not derail this important project which seeks to restore train service in Central Luzon," said Remonde, who also manages the national government's infratructure projects.

Project on track says DOTC

The Department of Transportation and Communications (DOTC) said the construction timetable for the two phases of the project is on schedule. The first phase of the project is expected to be completed by February 2010 while the second phase is expected to be finished in 2011.

"The first section of the project would definitely start in January 2008, as the remaining squatters residing along the old train line to be revived would be relocated by December," said North Rail Corp. President Jose Cortes Jr.

The Northrail project is divided into two sections: Section I spans Caloocan, Valenzuela, Meycauayan, Marilao, Bocaue, the Guiguinto Multi-Modal Station up to Malolos; Section II starts from Malolos to Calumpit in Bulacan up to Apalit, San Fernando, Angeles and the Clark Multi-Modal Station, all in Pampanga.

Phase I of the project will cost $452.32 million, while Phase II would require a budget of $673.67 million. The plan is to link up North Rail with the existing Metro Rail Transit (MRT) commuter trains and the Light Rail Transit (LRT) system to allow rail travel from Metro Manila to Central Luzon.

The rail system is expected to boost economic growth in Central Luzon as it would provide a crucial link between Clark and Subic Economic Zones, Manila, and economic zones in the Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) region. Currently, cargo trains run from the Calabarzon area to Manila and locators in the region rely heavily on it.

The Clark economic zone is home to cargo giants FedEx, DHL, and UPS. The North Rail project is expected to reduce traffic delays experienced by Clark locators and provide a more secure alternative for other businesses in Central Luzon to ship their goods. "Truck jacking" on national highways is a common problem experienced by shippers and businessmen in the Philippines.

For air passengers, the railway will also offer a more direct link to DMIA, considered as the country's hub for low-cost airlines such as Tiger Airways. The rail would cut travel time to 45 minutes from one hour and a half by bus or car.

South East Asia remains to be the number one investment region for mobile operators

Altimo, the international telecoms investment group, announces the findings of the second issue of Mobile Development Index (‘Altimo Index’), an international research project evaluating the relative investment opportunities in the world’s mobile telecoms markets.

The index was elaborated by Altimo in collaboration the Cambridge University, the London Business School and the New Economic School (Moscow).

Based on mobile industry and macroeconomic data (such as expected growth in ARPU, EBITDA margins, GDP growth, etc) from Q3 2006 to Q2 2007, Altimo and its partners have generated an index which attributes investment ratings to 77 markets globally.

[The first of] the key findings of the second Altimo Index [shows that] Southern and Eastern Asia will be the key region for investment for 2008-2012 driven by strengthening economies, growth in mobile spending and rising penetration:

o The Philippines, Indonesia and Vietnam are the top three mobile investment markets for investment in the short term.
o India has shown significant decline in indicators following rise in competition and steady growth of mobile penetration.

FDIs’ 26% rise signals RP is desirable: BSP

By Jun Vallecera
Original report at The Business Mirror

FOREIGN direct investments (FDIs), the kind that helps generate employment and stays for the long haul, flowed inward on net basis in the first eight months and totaled $1.7 billion, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

This was 26.2-percent higher than a year ago when it totaled only $1.4 billion, and an indication of the rising desirability of Manila as an investment destination, according to the BSP.

Net foreign direct investments in August alone totaled $77 million. “Contributing largely to this development was the more than 100-percent rise in net equity capital for the period to $1.7 billion,” BSP Governor Amando M. Tetangco Jr. said in a statement.

Equity capital has been rising since 2005 when it stood at $737 million during the period, to $793 million last year, and finally to $1.676 billion this year. Equity capital placements this year rose 58.7 percent higher to $1.863 billion and equity withdrawals slowed by 50 percent to only $187 million, from year-ago withdrawals of $381 million.

Manufacturers of electronics, food, automotive sensors, decorative crafts and health and chemicals producers were direct beneficiaries of the foreign inflows.

So were international couriers, information technology developers, multimedia service providers as well as construction, mining, real estate, financial intermediaries and agricultural industries.

According to the BSP, the bulk of the equity investments came from the United States, Japan, Singapore, South Korea, Hong Kong and Germany.

The other capital account, representing intercompany lending between foreign principals and their subsidiaries or affiliates in the Philippines, posted a net inflow of $25 million for the period, significantly lower than year-ago level of $396 million due to the repayment of loans by subsidiaries to parent firms.

The net reinvested earnings account also posted net inflow of only $21 million versus last year’s $176 million.

These inflows helped boost the country’s savings-to-output ratio to 29.8 percent of the gross domestic product, or higher than last year’s 28.5 percent of GDP.

Economists attributed the increase to the improving macroeconomic underpinnings of the country and to generally lower interest rates that lend to lower cost of capital, in turn encouraging people to expand capacities and invest more.

DHL Express invests P30M for service centers in Clark, Subic

By Lenie Lectura
Original report at The Business Mirror

DHL Express Philippines has invested P30 million for the establishment of two service centers in Clark and Subic to further strengthen its Northern Luzon operations.

The Subic service center opened last month, while the Clark center is scheduled to open in the first quarter of 2008.

The service centers there will serve clients from the manufacturing industry, semiconductor firms, importers, exporters and private individuals who have offices in Subic, Clark, Bataan and the Buffer Triangle economic zones.

DHL Express country manager Larry Llamzon said DHL’s Northern Luzon operations will boost the company’s operations. “In the next three to five years, the Northern Luzon operations will contribute at least 15 percent to the company’s total revenue,” said Llamzon.

DHL’s service centers in Laguna and Cavite greatly contribute to the company in terms of revenue. “They contribute around 30 percent of the company’s total revenue. Our service centers in Makati and Ortigas are also doing well,” added Llamzon.

He added that the company will be able to recover investments in Subic and Clark in less than three years.

The Subic will be the firm’s ninth service center in the country. The service centers are equipped with cutting-edge shipment-handling equipment which include shipment-tracking devices, package sorting and distribution, access control and surveillance systems to ensure efficient express delivery solutions.

Llamzon said the North Luzon Triangle, which includes Subic, Clark and Bataan, has always been a thriving business district. Foreign and local investors have seen the potential of the area and have tapped into it. DHL’s presence in North Luzon will further help attract more investors and contribute to the growth of the existing and business industries there.

“The new DHL service center will not only accelerate the company’s response time in the region but will extend DHL’s reach nationwide. It will also strengthen logistics trade facilitation capability and will also bring in additional income to the North Luzon Triangle,” said Llamzon.

Its rival FedEx is also present in Subic. Llamzon said the company welcomes competition and believes that the industry is big enough for the two largest players in the air express. FedEx was supposed to pull out all of its operations in Subic.

“Although our competitor’s pullout from the economic triangle would have brought in more clients, DHL believes that the presence of other logistics companies in the area will not be a hindrance to its growth,” he said.