By Bernardette S. Sto. Domingo
Original report at BusinessWorld
THE BUSINESS process outsourcing (BPO) industry is targeting another 40% growth next year on the back of strong demand for back office, engineering and financial services.
Oscar R. Sañez, chief executive officer of the Business Processing Association of the Philippines (BPAP), said the industry is expected to end the year with more than 300,000 jobs and revenues of about $4.5 billion-$5 billion from $3.3 billion last year.
"Next year, we are looking at $7 billion. Two thousand seven is a turning point for the industry. Before 2007, we were growing without a direction now we have more focused strategies required to meet our goals," he said.
Mr. Sañez said BPAP also expects an influx of big-ticket investments. "I talk to two to three investors every week, mostly from the US and the UK. There’s very keen interest here for back office, financial, and engineering services," he said.
BPAP earlier launched the Roadmap 2010, which outlined initiatives to capture 10% of the global market share by 2010 and boost revenues to a range of $13 billion to $16 billion as the country positions itself as the second or third largest BPO service provider worldwide.
With a larger market share from the current 5%, the industry is looking at creating about 3.5 million jobs.
Mr. Sañez said the country is positioning to achieve a 10% share of the $130-billion global BPO market by 2010, or about $13 billion to $16 billion from the current $3.3 billion, by addressing major issues such as sustaining talent supply, creating new locations and sustaining the right business environment for investors.
India now corners 40% of the global BPO market, but the Philippines is "in the big opportunity seat," the BPAP official said.
He also said the industry will work with the academe and the government to ensure the country’s growth in the offshore business. He said the industry will collaborate with colleges and universities, adding that improved education is expected to support the talent requirement of the industry.
The government, for its part, needs to ensure that healthy tax incentives are in place to attract more BPO investors, Mr. Sañez said.
Benedict Hernandez, vice-president and general manager of call center firm eTelecare Global Solutions, earlier said the call center industry is expected to generate about 500,000 jobs and $4.8 billion-$7 billion in revenues by 2010. The industry currently employs 200,000 call center agents and raised about $3 billion in revenues last year.
For his part, Rainerio Borja, president of People Support ( Philippines ), Inc., said the industry also needs to provide training programs and beef up the education system to sustain the growth of the BPO industry, adding investments are needed to develop human resources.
"We have achieved so much in the last six to seven years, but we’re not resting on our laurels. We’re working on the challenges to get to where we want to be," he said. —
Saturday, 24 November 2007
By Bernardette S. Sto. Domingo
Original report at The Manila Standard
A GROUP of visiting European Parliament members yesterday praised President Gloria Macapagal Arroyo’s tough stance on Myanmar and called Manila a “pillar of democracy” in Southeast Asia.
“We would like to underline how much we appreciate the democratic structure of this country,” said Hartmut Nassauer, chairman of the European parliament’s delegation for relations with the Association of Southeast Asian Nations.
While the Philippines has its own problems, including a wave of extra-judicial killings and perceived corruption, “compared to the other Asean member states, to our point of view, the Philippines are a pillar of democracy,” he added.
Nassauer, part of a European parliament delegation visiting the country to meet officials and inspect European Union-funded development projects, praised Mrs. Arroyo for speaking out against Myanmar’s junta at an Asean summit earlier this week.
“I must say we are impressed by the performance of your president in the Asean summit in Singapore,” Nassauer said.
Mrs. Arroyo on Wednesday called for the immediate release of Myanmar’s opposition leader Aung San Suu Kyi, warning that Filipino lawmakers might refuse to ratify Asean’s first-ever charter until she was freed.
Aung San Suu Kyi has been under house arrest for 12 of the past 18 years.
Nassauer reiterated that the European Parliament would block a proposed free trade deal between the EU and Asean unless progress was made on the human rights front in Myanmar, which faced international condemnation after its bloody suppression of anti-government protests in September.
The group also met with Supreme Court Chief Justice Reynato Puno to discuss allegations that military and police elements were behind some of up to 800 murders of leftist dissidents as well as those of a number of provincial journalists.
The issue was “a big problem because it is influencing the picture of the Philippines in the free world,” Nassauer said.
The delegation encouraged the government to make progress in this area by prosecuting suspects. AFP
By Francis Earl A. Cueto, Reporter
Original report at The Manila Times
THE European Union (EU) on Friday said it believes that the loans that they are allotting to the Philippines are being used properly, contrary to earlier claims made by the US-based World Bank that its road-loan projects in the Philippines are tainted with anomalies.
Hartmut Nassauer, chairman of the European Parliament’s delegation for relations with the Association of Southeast Asian Nations (Asean), told media in a briefing that the EU loans are put to good use.
Nassauer, part of a European Parliament delegation visiting the country to meet with Philippine officials and inspect EU-funded development projects, said their trip does not indicate their finding of anything anomalous about such projects.
“I must say that we have a strong monitoring [system],” he added. “We have good reasons to rely on our own administration and monitoring systems, and there are checks and monitoring actions that we have done. I am convinced that [the Philippine government is] doing well with the money of the EU.”
This was not the first time that an international body debunked the image painted by the World Bank with loans to the Philippines. Presidential Commission on Good Government (PCGG) Commissioner Nicasio Conti earlier said the United Nations even praised the anticorruption efforts of the government.
Conti, a guest at a UN convention where he discussed government efforts to recover the Marcos family’s allegedly ill-gotten wealth, added that the international community does not perceive the Philippine government to be corrupt.
The Crime Conventions Section, a branch of the United Nations Office on Drugs and Crimes, has said there is a clear effort by the Philippines to rid its agencies of graft and corruption.
Conti, the corporate secretary of Bisyon 2020, presented a private sector-initiated anticorruption scheme pioneered in 2005 by businessmen and captains of the industry. “Bisyon,” the Pilipino word for vision, stands for Business for Integrity and Stability of Our Nation.
Earlier, the World Bank said it had not suspended any loan to Manila, adding it would push the continuation of deliberations on phase 2 of the government’s National Road Improvement and Management Program, which is involves a $232-million loan.
Nassauer said corruption is not an isolated problem in the Philippines as it is a worldwide phenomenon that is being addressed by every government.
The statement was a far cry from what was revealed by the World Bank, which expressed concerns over alleged corruption, prompting them to withhold a total of $265 million in two phases of a loan program to finance road construction in the Philippines.
Agreement gives opportunity for small farmers to export products like small pineapples and organic vegetables
By Efren L. Danao, Senior Reporter
Original report at The Manila Times
More Philippine products will enter the Japanese market once the Japan-Philippines Economic Partnership Agreement (JPEPA) is ratified, government officials told a Senate hearing presided by Sen. Mar Roxas on Friday.
Agriculture Undersecretary Segredo Serrano said that local producers of tropical fruit wines, small bananas, small pineapples, tropical vegetables and organically-grown vegetables are among those that Japan had agreed to import from the Philippines once JPEPA becomes effective.
He pointed out that the Philippines is not exporting these products to Japan at the moment.
“These products will enjoy zero tariff in Japan immediately. These are produced by small farmers and cooperatives,” Serrano said.
The Philippines exports $700 million worth of agricultural products to Japan each year, with $500 million accounted for by bananas.
Roxas said it is important for the Senate to determine what Japanese agricultural products could enter the Philippines tax-free so they could determine if it would be detrimental to small farmers and fishermen.
Sen. Edgardo J. Angara lauded the expanded market for Philippine products through JPEPA but he stressed that the opening of the market does not necessarily mean the Philippines would automatically enjoy the benefits.
He urged the government to prepare a plan of action that could enable local producers to meet the demand in Japan, including availability of capital, technical assistance and trade missions. He also pointed out that in the case of agricultural products, it is necessary to educate producers on the stringent quarantine standards of Japan so that local producers could meet them.
“At the same time that the government is trying to maximize the market access opportunities offered by JPEPA, it should also provide safety nets for sectors that would be adversely affected by it,” he said. “We should maximize our gains and minimize our losses.”
Trade and Industry Secretary Peter Favila said that while a number of products exported to Japan already enjoy zero tariffs, the agreement would make the zero tariffs a permanent benefit.
Angara said that because JPEPA would make P5.7 billion of Philippine exports to Japan permanent at zero tariff, the market access of these products will be predictable.
“This will give more room for planning, investment expansion and growth,” he affirmed.
Ambassador Manuel Teehankee, the Philippines’ permanent representative to the World Trade Organization (WTO), said that the Philippines is not obliged to grant to other friendly countries the concessions given to Japan under JPEPA.
He said that the Most Favored Nation clause of WTO would not be applicable to the agreement since it was done outside the WTO.
During the hearing, former socio-economic planning Secretary Solita Monsod also endorsed to the Senate concurrence to JPEPA.
“The benefits of JPEPA far exceed its cost. Please ratify,” she pleaded.
Roxas, who presided over the hearing in the absence of Sen. Miriam Defensor Santiago, set the next hearings on the JPEPA on December 13 and 14.
Tehran Times Economic Desk
TEHRAN – Iran has purchased and run a heavy and light polyethylene factory in the Philippines, said a National Petrochemical Company (NPC) official here on Friday.
Talking to MNA, Mohammad-Hadi Rahbar added that the factory is worth at more than 300 million euros with the annual production capacity of 220,000 tons.
Run by Iranian management and Filipino manpower, the factory will export its products to Europe, he said.
Referring to Iran-Venezuela methanol joint venture entitled “VenIran Petrochemical Company (VIPC)”, the official said that a methanol unit will be established in Iran and a similar one in Venezuela, with an annual 600,000 ton output each.
Original article at Mikrofax
The World Bank has announced that it will adopt procurement procedures developed by the Philippines to provide billions of dollars in loans to six government agencies during 2008.
Filipino budget and management secretary, Rolando Andaya, has held a meeting with the World Bank country manager for the Philippines, Maryse Gautier, to discuss a deferred road-building loan and the country's procurement systems.
He claims that the World Bank is now planning to use procurement processes developed in the Philippines for projects in other Asian countries and for training purposes. The bank's procurement sector helps borrower countries to improve their procurement systems.
The road-building loan has been deferred while the World Bank awaits information on an investigation into the bidding for two road projects in the Philippines and Mr Andaya insists that the incident has strengthened the relationship between the World Bank and the Filipino government, particularly in terms of procurement issues.
According to the Manila Standard, the Filipino government believes that the problems over the road-building loan are down to weaknesses in the World Bank's own procurement system rather than Manila's.
The World Bank stated on its website: "The initial gains from its implementation have earned the Philippines international recognition for procurement reform in some key sectors, including education."
Original report at ABS-CBN News
President Arroyo on Saturday checked up on the disaster preparedness of local government officials and this time of the provinces of Region 2 as Typhoon Mina changed course and is now moving very slowly towards the provinces of northern Luzon.
After a briefing given by the National Disaster Coordinating Council on the change in the movement of the Typhoon Mina (international codename Mitag), Mrs. Arroyo called on the phone several local executives of the affected provinces.
Among those who expressed their readiness to handle the effects of the powerful typhoon were Quirino Gov. Dakila Carlo Cua, Isabela Gov. Grace Padaca, Nueva Vizcaya Gov. Luisa Lloren Cuaresma, Aurora Gov. Bellaflor Angara-Castillo Ifugao Gov. Teodoro Baguilat and Gov. Alvaro Antonio of Cagayan.
Antonio reported that the Cagayan Provincial Disaster Coordinating Council (PDCC) have been mobilized to evacuate residents living near riverbanks and other low-lying areas, while Angara-Castillo said that their province is already prepared for the typhoon’s onslaught.
Cuaresma reported that the municipal disaster coordinating councils in the province have been reactivated. The Nueva Vizcaya governor requested a chopper from the Philippine Air Force to bring relief goods to remote areas in case landslides occur.
Meanwhile, Baguilat told those in the meeting that Ifugao was already prepared and that he has coordinated with the mayors in his province.
Padaca, meanwhile, said that they are monitoring the situation now that Isabela is directly in Mina’s path. They are evacuating around 54,000 residents, and said that in the municipality of Dinapigue evacuees is are being assisted by soldiers from Army’s 7th Infantry Division.
Quirino’s Cua meanwhile has given instructions to provincial officials to identify areas that are prone to floods. He also reported that the Department of Social Welfare and Development office in the province will provide food at evacuation centers, and that he has requested the NDCC to coordinate with the Quirino PDCC because of lack of logistics in the area.
Cua also reported that the town of Madela is already isolated. He also took the occasion to ask from the chief executive financial assistance for a repair of a bridge damaged by previous typhoons.
Mrs. Arroyo on Friday also called for an emergency meeting of the NDCC to check on the preparations of local officials in the Bicol Region which at that time was expected to bear the brunt of the powerful typhoon.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) reported to Mrs. Arroyo that the typhoon was moving very slowly toward northwest.
It is expected to cross northern Luzon and parts of Central Luzon, hitting Aurora, Isabela, Quirino, Nueva Vizcaya, Ifugao, Mountain Province, Benguet, and Ilocos Sur.
The weather bureau expected Typhoon Mina to make landfall in the Aurora-Isabela area by Sunday noon.
Earlier, all government agencies in Isabela and Aurora provinces have been placed on alert in anticipation of the landfall of typhoon Mina.
NDCC spokesman Anthony Golez said the order came after the typhoon changed direction and veered towards the northwest direction.
He said NDCC chief Gilbert Teodoro Jr. has already ordered the regional disaster coordinating councils in Regions 1, 2, 3,4-A and 4-B to undertake all precautionary and preparedness measures.
"The different government agencies have undergone all their precautionary activities as well…evacuations are taking place as of the moment," Golez in a press conference at the NDCC office in Camp Aguinaldo, Quezon City.
Secretary Estrella Alabastro of the Department of Science and Technology (DOST) stressed that they had already forecasted two scenarios last Thursday, that the typhoon might move westward to Bicol or hit northwest of Aurora.
Alabastro said the second scenario would likely happen as Mina inched slowly toward that direction.
Friday, 23 November 2007
Business sentiment remains strong
Respondent firms expressed strong confidence that the economy would continue to improve in the fourth quarter as the confidence index (CI) rose quarter-on-quarter by more than seven index points to settle at 48.0 percent. Respondents attributed their optimism to the following factors: 1) a generally stable macroeconomic environment (as evidenced by low inflation, stable interest rates, and appreciating peso); 2) pick-up in demand with the approach of the Yuletide holidays; 3) higher OFW remittances; 4) harvest season; 5) increase in foreign investments; and 6) new and enhanced business strategies.
However, year-on-year, the CI was slightly lower by 1.4 index points as the number of respondents who indicated “no change” in sentiment has increased. Nonetheless, the current level is the second highest level since it breached the 40.0 percent-mark in Q4 2006. The respondents’ slightly less optimistic outlook on a year-on-year basis may have been influenced by the recent events in the local and global forefronts such as: 1) concerns over a possible slowdown in the US economy due to problems in the housing market; 2) unabated increase in crude oil prices; and 3) local political noise.
By contrast, the economic outlook for Q1 2008 was favorable compared to the same period a year ago as the index at 40.9 percent was up by 3.8 index points year-on-year. As expected, the quarter-on-quarter CI declined by 12.2 index points due to expectation that business will slacken after the Yuletide season.
During this quarter’s survey, more respondents from the NCR (National Capital Region) were bullish on the economy than their counterparts from the AONCR (Areas Outside the NCR).
Classifying respondent firms according to type of business (i.e., importer, exporter or engaged in dual roles), results indicated that importing firms were the most bullish on the economy while exporters were the least optimistic. The upbeat outlook of the importers may be attributed in part to the stronger peso that reduces the cost of their imports in peso terms.
A breakdown of respondents by employment size revealed that large-sized firms (with 500 and more employees) were the most optimistic on the economy, with the index at 53.0 percent in the Q4 2007 and 44.4 percent in the next quarter.
The economic outlook of all sectors broadly improves
The fourth quarter indices of all major sectors went up quarter-on-quarter, except that of construction although its index remained as one of the highest among the four major sectors.
The highest confidence level in Q4 2007 was posted by the services sector at 60.3 percent, due mainly to the brisk business outlook of the hotels and restaurants sub-sector as they expect greater business opportunities during the holidays.
The construction sector at 52.5 percent, meanwhile, registered the highest year-on-year increase of 7.8 index points, reflecting the current property boom in the market.
As expected, the business outlook of the wholesale and retail trade sector as well as the industry sector at 46.5 percent and 39.2 percent, respectively, were higher quarter-on-quarter, while remaining almost unchanged compared to their year-ago levels. This could be due in large part to greater business operations of firms in anticipation of the heightened consumer demand during the Christmas season.
By Q1 2008, sectors anticipated slower business economic activity compared to the previous quarter as consumers typically adjust their spending behavior after the holidays. Notwithstanding this, firms from the industry, construction and services sectors were upbeat that economic activity would be moderately stronger than in Q1 2007.
Respondents anticipate improvement in operations
Respondents who anticipated an improvement in their fourth quarter operations outnumber those who indicated otherwise as the indices remained positive. Respondents were broadly anticipating better business operations this quarter relative to a year ago but were expecting a slowdown compared to the last quarter. The lower business production in Q4 2007 for orders in Q1 2008 could be dragging down the outlook on business operations for Q4 2007 relative to Q3 2007.
Access to credit and financial conditions remain favorable
The access to credit index remained positive at 7.3 percent indicating an improvement in the availability of lending facilities as perceived by respondents. This is the sixth consecutive quarter of positive index for the measure on credit access. This trend was consistent with data on outstanding loans granted by banks, which has been on the uptrend since July 2006. The financial condition index has continued to be negative at 7.8 percent, although the index indicated that the number of respondents with unfavorable cash positions has been reduced from last year’s level of -14.1 percent.
Employment and expansion plans are up
Firms indicated that the number of people employed in Q1 2008 would go up, with the employment index at 16.6 percent. The employment outlook was particularly strong for the construction and services sectors, reflecting the positive outlook of these sectors in the next quarter. Meanwhile, the number of industry firms with expansion plans posted a record-level of 33.7 percent, indicating that more industry firms would expand operations in the next quarter. This augurs well for the economy as it points to renewed investor confidence in the country.
Although business outlook was seen to be generally improving, respondents cited competition, particularly emanating from local firms, and insufficient demand leading to low volume of sales as major risks to their business operations.
Expectations on selected economic indicators
Majority of the respondents anticipated that the peso would remain strong in Q4 2007 and Q1 2008. They expected inflation rate to accelerate in Q4 2007 but to slow down in Q1 2008. Meanwhile, respondents expected interest rates to decline in Q4 2007 and Q1 2008.
The Q4 2007 BES was conducted from 8 October to 9 November 2007. A total of 1,048 firms nationwide were surveyed. They were drawn from the Securities and Exchange Commission 2005 Top 5,000 Corporations as follows: 472 companies in NCR and 576 firms in AONCR, covering all 17 regions nationwide. The overall survey response rate for this quarter is 73.7 percent (68.9 percent last quarter). For NCR, the response rate was 80.3 percent (66.9 percent last quarter); and for AONCR, the response rate was 68.2 percent (from 70.5 percent). A breakdown of responses received by type of business showed that 14.4 percent are importers, 15.2 percent are those with dual roles (both importer and exporter), 8.5 percent are exporters. Sixty-two percent of respondents indicated either “not-applicable” or “no response” to this category.
Thursday, 22 November 2007
THURSDAY, NOVEMBER 22, 2007 | FOREIGN RELATIONS
SINGAPORE (via PLDT) -- President Gloria Macapagal-Arroyo has pledged to continue working for the release of detained political leader Daw Aung Suu Kyi to pave the way for democratic reforms in Myanmar, Press Secretary and Presidential Spokesperson Ignacio R. Bunye said today at the closing of the 13th Association of Southeast Asian Nations (ASEAN) Leaders Summit here.
In an interview, Bunye said the President’s position is "in representation" of the Philippines stand, and it will be pursued in the various fora that she will attend in the future.
"The President has been very consistent about the Philippine position on Myanmar and this is a position which the President, in representation of the Filipino people, will try to pursue in other fora," Bunye said.
"To be more specific, the President pledged to continue working for the early release of Daw Aung Suu Kyi," he added.
Bunye expressed satisfaction on the holding of the 13th ASEAN Summit, saying the President's attendance in the yearly meeting of the leaders of the regional bloc was a success.
"Masasabi po natin na naging matagumpay ang pagdalo ng ating Pangulo sa ASEAN Summit dahil, unang-una napirmahan po itong ASEAN Charter na alam nating nagsimula sa Cebu at naging malaki po ang kontribusyon ng Pilipinas, particular ng ating Pangulo dito sa pagbuo nitong Charter at maging ang ating dating Pangulong Fidel Ramos ay naging isa sa mga Eminent Persons (Group) na naging bahagi sa paglikha ng ASEAN Charter," Bunye said.
"At itong pagpirma ng ASEAN Charter ay nagbibigay ng isang matibay na hudyat na ang ASEAN ay handa pong maging isang matibay na regional bloc para harapin ang iba pang mga bansa," he added.
"We all know that ASEAN will provide balance to the growing influence of China in world trade as well as it will affect our traditional relationships with North America and Europe," Bunye said.
Aside from the ASEAN Charter, Bunye said that equally important were agreements and discussions that were signed at the sidelines of the Summit, namely the Philippine-New Zealand Air Agreement (PNZAA) and the bilateral talks between President Arroyo and Chinese Premier
On the PNZAA, Bunye said this agreement will allow for more flights between the two countries and increase employment opportunities for Filipinos living and working here and in New Zealand.
The bilateral meeting between President Arroyo and Premier Wen centered on furthering the exploration and development of the resource-rich South China Sea.
Bunye said Premier Wen expressed hope that the current state of exploration would lead to the development of the fullest potential of the South China Sea.
Bunye lauded the holding of the Summit, saying the gathering of world and regional leaders in Singapore enhanced “our multilateral relations with the other world leaders and other countries and this will definitely result in more trade, more investments and ultimately more jobs for the average Filipino."
WEDNESDAY, NOVEMBER 21, 2007 | FINANCE
The Philippine Government and the World Bank are issuing this joint statement to make important clarifications about news reports on the National Roads Improvement and Management Program (NRIMP), partly funded by loans from the World Bank.
Contrary to reports, the Bank has not suspended any loans for the NRIMP. One-tenth of the loan for the first phase, amounting to $33 million, was canceled due to failed biddings in three road contracts. The Government and the Bank instituted measures to address bidding problems in future.
The second phase, amounting to $232 million, is to be deliberated by the World Bank executive board upon submission of additional information requested when the Board first discussed the loan proposal last month.
The World Bank continues to support development in the Philippines and remains actively engaged with the government in strengthening governance and fighting corruption.
The Economist, in its Nov 17th-23rd edition, says the "regulatory approach being taken in the Philippines [for m-banking] provides a good model for other countries. Rather than trying to rule out the best rules in advance, which could hamper innovation, the regulator is working closely with the banks and operators behind the country's two m-banking schemes. That way the regulator can see what is going on, so the schemes' operators get more flexibility. The experience will feed into new banking regulations. Rules that are too tight will hinder adoption; rules that are too lax could allow fraudsters to bring the whole idea of branchless banking into disrepute. But if the regulators strike the right balance, m-banking may provide the next example of the mobile phone's transformational power."
What is the advantage of m-banking in poor economies? The Economist says that it "has the potential to give the 'unbanked' masses access to financial services, and bring them into the formal economy."
See http://www.economist.com/opinion/displaystory.cfm?story_id=10133998 for full article.
The Economist also refers to a World Bank case study of the Philippine set-up.
Tuesday, 20 November 2007
SINGAPORE - Philippine President Gloria Arroyo on Monday warned her country would be hard-pressed to ratify the ASEAN charter if Myanmar refused to embrace democracy and free opposition leader Aung San Suu Kyi.
In comments to Southeast Asian leaders at an informal dinner Monday, Arroyo stressed she had earlier called for Myanmar's junta to free the Nobel peace laureate and that her freedom was a "fundamental concern" for the Philippines.
"The expectation of the Philippines is that if Myanmar signs the charter, it is committed to returning to the path of democracy and releasing Aung San Suu Kyi," Arroyo said.
"Until the Philippines Congress sees that happen, it would have extreme difficulty in ratifying the ASEAN charter."
Arroyo had made the same comment to Myanmar Prime Minister Thein Sein earlier in bilateral talks.
The charter, aimed at transforming the Association of Southeast Asian Nations (ASEAN) into a rules-based organization, was adopted by ASEAN foreign ministers on Monday, and is to be signed by the 10 ASEAN leaders on Tuesday.
"Resolutions in the Philippine Congress strongly support this position and give greater mandate for me to continue this advocacy," Arroyo said of her call for Aung San Suu Kyi's freedom.
Arroyo's spokesman Ignacio Bunye said Thein Sein had assured her that Myanmar's ruling generals were implementing its so-called roadmap to democracy, but that the process would take time.
Monday, 19 November 2007
By Roderick T. dela Cruz
Original report at The Manila Standard
ECONOMIC growth in the Philippines has been reducing the number of poor Filipinos, the World Bank says in a report.
It says the number of people living on less than $1 a day in the Philippines went down to around seven million, or 8.1 percent of the population, this year from 8.1 million or 9.6 percent last year.
And the number of Filipinos living on less than $2 a day fell to 32.4 million—or 37.5 percent of the population—this year from 34 million or 39.9 percent last year.
The Bank says the figures are expected to improve further in 2008, when the number of Filipinos living on less than $1 a day drops to 6.9 percent of the population, and those living on less than $2 a day falls to 35.2 percent on the back of a 6.7-percent growth in the gross domestic product in 2007 and 6.2 percent in 2008.
Despite the improvement, the Philippines still has one of the largest populations of poor people compared with Malaysia, Thailand and Vietnam, the Bank says.
It suggests that urbanization is not a guarantee for poverty reduction, noting that Thailand and the Philippines were at similar levels of development and poverty levels in the early 1980s.
While the Philippines urbanized more rapidly than Thailand, Thailand was able to reduce its poverty levels faster, and what this means is that urbanization efforts must be matched by investment in rural development for rapid poverty reduction.
“Urbanization by itself will only stimulate rural-urban migration and exacerbate problems of urban unemployment, congestion and urban poverty,” the Bank said.
It cites econometric evidence from the Philippines showing that growth in agriculture results in more poverty reduction than growth in industry.
Still, the Bank says 2007 should mark a milestone for poverty reduction in the whole of East Asia, with the number of people living below $2 a day in the region now estimated to have fallen below 500 million for the first time, down from an estimated 540 million in 2006 and over 1 billion in 1990.
“Poverty declines are widespread across countries, including both low-income economies such as Cambodia, Laos, Papua New Guinea and Vietnam, as well as middle-income economies such as China, Indonesia and Thailand,” the Bank said.
It says strong economic growth—reaching an estimated 10.1 percent for developing East Asia in 2007—is providing the underpinning for poverty reduction.
But it notes that based on individual country experiences, poverty in the region is now overwhelmingly a rural problem, with poverty declining unevenly.
“And even as poverty continues to fall in the aggregate, it is often the case that lower-income groups experience slower income growth than higher-income ones, resulting in widening income inequality,” the Bank said.
By Ma. Elisa P. Osorio
Original report at The Philippine Star
The Department of Trade and Industry (DTI) said the local electronics sector will greatly benefit if the bilateral agreement between the Philippines and Japan is implemented.
In a statement, the DTI said the ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA) is expected to bring positive developments and growth to the electronics industry, which has been, for over a decade, the primary driver of Philippine exports.
A study by the Universal Access to Competitiveness and Trade (U-act) anticipates an additional export value of up to $1.26 billion in the semiconductor sector once the agreement is implemented.
Meanwhile, exporters said they will lose $2 billion annually while the semiconductor industry will miss out on $150 million investments annually if the country does not ratify JPEPA.
Sergio R. Ortiz-Luis Jr. president of Philippine Exporters Confederation (Philexport) said exporters stand to lose $2 billion from overseas sales in Japan if the JPEPA is not signed.
“We (exporters) will suffer if the JPEPA is not ratified because 14 percent of our exporters go to Japan,” Ortiz-Luis explained. He said the products that will suffer greatly are electronics and agricultural products.
Without JPEPA, Ortiz-Luis said Japan can impose higher duties on products from the Philippines when compared to other countries with an economic partnership agreement with (EPA) Japan.
The country’s fellow ASEAN member nations like Malaysia, Singapore and Indonesia have signed their own EPAs with Japan. Thailand, on the other, hand is scheduled to sign with Japan next month.
Meanwhile, Ernesto B. Santiago, president of the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) warned the country will lose $150 million per year in additional investments.
“If the Philippines is not part of the bilateral, we will not be in the radar screens of these companies and we will not be an investment destination,” Santiago said.
According to him, more than 200 of the 900 electronic firms located in the country are Japanese owned. In fact, four of the top electronic firms have presence in the country. These are NEC, Hitachi, Fujitsu and Toshiba.
Sunday, 18 November 2007
By Eileen A. Mencias
Original report at The Manila Standard
The country’s balance of payments position swung to a surplus of $1.19 billion in October on the back of steady remittances and heavy investment flows, bringing the year-to-date surplus to a record high of $7.85 billion.
“The BoP has continued to register a strong surplus as a result of sustained foreign exchange inflows coming from overseas Filipinos’ remittances, merchandise exports, net inflows of foreign direct and portfolio investments and investment income of the central bank,” Bangko Sentral ng Pilipinas Gov. Amando Tetangco Jr. said in a mobile phone text message to reporters.
The BoP is a record of the country’s transactions with the rest of the world, including exports, imports, loans, investments, debt servicing and remittances. A surplus means more dollars were plowed into the economy than what went out.
The BoP surplus is expected to increase further with maturing obligations amounting to less than $420 million until the end of the year and remittances expected to exceed $2 billion in the next two months.
The huge surplus in the BoP has enabled the central bank to beef up its reserves to an all-time high of $32.4 billion at the end of October.
The central bank raised its forecast on the BoP surplus in August to $6.3 billion. Central bank officials said the surplus would now clearly exceed $7 billion. The payments surplus may fall in 2008, however, as the central bank expects growth in remittances to slow.
The payments surplus this year has resulted in a stronger peso, which in turn has helped contain inflation.
The central bank cut its key policy rates by 25 basis points Thursday due to a benign inflation outlook and manageable risks.
Money sent home to the Philippines by millions of Filipinos working abroad surged 15 percent to $10.5 billion in the nine months to September, the central bank said Thursday.
September remittances grew 12.4 percent from a year earlier to $1.1 billion, the 17th straight month that the transfers topped the billion-dollar mark, the bank said in a statement.
“Remittances have remained strong as local banks continued to provide expanded banking services to remitters and their beneficiaries, encouraging the use of formal channels of remittance transfer,” the statement said.
It said local banks have been increasing the number of remittance centers abroad and establishing tie-ups with foreign financial institutions to “better respond to the needs of overseas workers.”
Worker remittances from the eight million Filipino workers overseas are one of the country’s main sources of foreign exchange.
One in 10 Filipinos work overseas, and the funds they send home helped the economy grow at the fastest pace in two decades in the second quarter by buoying consumer spending. (With AFP)
October 2007 Flows
Bangko Sentral-registered foreign portfolio investments recorded a net inflow of US$274.1 million in October, up from September’s US$35.8 million .1 Several factors helped boost investor confidence during the month, including Bangko Sentral’s 25-basis point reduction in policy rates, the upward adjustment in IMF’s 2007 growth forecast for the Philippine economy to 6.3 percent from 5.8 percent in July, easing concerns about the US economy, and several reports of strong third quarter corporate earnings.
On a gross basis, registered foreign portfolio investments2 in October aggregated US$1.2 billion, 79 percent of which pertained to shares listed in the Philippine Stock Exchange (PSE). The balance went to placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs. These inflows exceeded capital repatriations of US$955.2 million, which arose from the following: a) divestments from PSE-listed shares (57 percent); b) divestments from government securities (12 percent); and c) withdrawals of money market placements and peso deposits3 (combined 31 percent share).
January-October 2007 Flows
For the first ten months of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$13.4 billion and US$9.7 billion, respectively, for a net inflow of US$3.7 billion. This net inflow was almost twice the US$1.9 billion net inflow for the comparable period in 2006. The generally upbeat outlook on the domestic economy sustained the positive investor sentiment.
Gross investment inflows of US$13.4 billion were 118 percent more than the total for the same period in 2006. Investments in PSE-listed shares of US$11.0 billion accounted for 82 percent of total and were 2.5 times the comparable amount in 2006. Property, telecommunication, utility and holding firms captured about 74 percent of investments in said shares.
Peso-denominated government securities, primarily FXTNs, accounted for US$2.2 billion (16 percent) of the total investment inflows while money market instruments and peso bank deposits had a combined share of just over one percent. The United States, the United Kingdom, and Singapore were the top countries of origin of the investment funds during the period.
Meanwhile, gross capital outflows of US$9.7 billion for the period were 128 percent higher than last year’s figure. The outflows arose from divestments from listed shares (47 percent of total), government securities
(20 percent) and withdrawals of money market placements/peso deposits (33 percent).
1 As adjusted due to a custodian’s amended report
2 These statistics, which pertain to newly registered investments, are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.
3 Generally represent temporary placements of sales proceeds from divestments from listed shares and government securities.
Growth in outstanding loans of commercial banks, thrift banks, and rural banks (net of reverse repurchase or RRPs) remained strong at 6.2 percent year-on-year in September after reaching a six-year high of 7.1 percent in August. This was considerably higher than the 0.5 percent growth in the same period last year. On a month-on-month basis, seasonally adjusted lending declined by 0.3 percent, a reversal of the 0.2 percent growth registered a month ago.
Gross of banks’ RRP placements with the BSP, bank lending growth decelerated slightly to 4.4 percent year-on-year in September from 4.5 percent in August. On a month-on-month basis, however, seasonally adjusted lending in September grew by 1.2 percent from the 0.6 percent growth in the previous month.
Bank lending to all sectors of the economy, except mining and utilities (electricity, gas, and water), posted expansions during the period. The transportation, storage and communication sector led the expansion, growing at a robust pace of 23.7 percent, while loans to the manufacturing sector—which represented one-fifth of total loans—registered a positive growth, after posting declines during the previous seven months. The construction as well as the wholesale and retail trade sectors also grew by 11.6 percent and 5.0 percent, respectively, also higher than their growth rates in August. Meanwhile, growth in the agriculture, fisheries and forestry (AFF) as well as the community, social and personal services sectors both exhibited modest deceleration to 3.9 percent and 11.8 percent, respectively, from the 6.1 percent and 12.6 percent in the previous month. Net of RRPs, lending to financial institutions, real estate and business services (FIREBS) exhibited the same decelerating trend, growing by 6.0 percent in September from 18.2 percent in the previous month.
Meanwhile, preliminary year-to-date data indicate that non-bank sources of corporate funds have also increased, an indication of the continuing diversification of funding sources by the corporate sector.
The BSP’s easing of policy rates last October is expected to further encourage bank lending and investments going forward, and provide the necessary boost to the economy. The BSP continues to closely watch credit trends to ensure that developments in bank lending and other sources of financing are consistent with the price stability objective, while supporting the liquidity requirements of the economy.
Remittances from overseas Filipinos (OFs) coursed through banks grew year-on-year by 12.4 percent in September 2007 to US$1.1 billion. The robust inflows in September, while slightly lower than the remittances in August, remained above US$1.0 billion for the seventeenth straight month. This brings total remittances for the first nine months of the year to US$10.5 billion, 15.0 percent higher than the level posted during the same period a year ago.
Remittances have remained strong as local banks continued to provide expanded banking services to remitters and their beneficiaries, thus encouraging the use of formal channels of remittance transfer. Moreover, local banks have been increasing the number of remittance centers abroad and establishing tie-ups with foreign financial institutions to better respond to the needs of overseas workers. It may be noted that the remittance network of local banks has increased to 3,939 in 2006 from only 1,183 in 2005 as the number of correspondent banks more than quadrupled in 2006 to reach 3,187.
In addition, preliminary data from the Philippine Overseas Employment Administration (POEA) showed that the number of deployed workers in September rose strongly year-on-year by 8.7 percent. By type of worker, the number of deployed land-based and sea-based workers increased by 3.2 percent to 70,023 and by 29.2 percent to 23,461, respectively. The number of deployed Filipino workers has been growing since July 2007, moderating the contraction in deployment seen in the early part of the year. As a result, year-to-date, the decline in the total number of deployed workers has slowed down to 1.7 percent to reach 827,275.
Remittances came largely from the U.S., the U.K., Italy, the United Arab Emirates, Saudi Arabia, Canada, Singapore, Japan, and Hong Kong.
Original report at Gov.Ph News
FRIDAY, NOVEMBER 16, 2007 | FOREIGN INVESTMENT
The Subic Bay Freeport Zone has attracted yet again another big-ticket investment with Redondo Peninsula Energy, Incorporated (RP Energy) investing $420 million in a 300-megawatt (mw) coal-fired power plant in the SBFZ starting next year.
RP Energy officials, who paid a courtesy call on President Gloria Macapagal-Arroyo in Malacanang this morning, said their investment would double to $840 million once Phase 2 of the project is completed.
The power project is a joint venture of Taiwan Cogeneration Corporation (TCC) and Aboitiz Power Corporation (APC).
The $420-million initial investment is only for Phase l of the power plant. Completion of Phase 2 would also double the plant’s capacity to 600-mw.
RP Energy officials said the power project would be operational by 2011, in time for the projected power supply crunch in Luzon of 1,950 MW in 2010-2014.
The President was briefed on the project by TCC and APC officials composed of TCC president Brian Hsu, TCC vice president Henry Wu, TCC project manager Sean Chen, APC president Erramon Aboitiz, APCE vice president Luis Miguel Aboitiz and APC chairman Jon Aboitiz.
Also present were Energy Secretary Angelo Reyes, Chairman Ed Pamintuan of the Subic-Clark Alliance for Development Council (SCADC), and Subic Bay Metropolitan Authority (SBMA) Administrator Armand Arreza.
Miguel Aboitiz said their circulating fluidized bed (CFB) technology is clean and environment-friendly, adding that being one of the most efficient coal-fired power generators in Luzon, the facility is guaranteed to easily pass the national emission level standards.
The Taiwanese investors said they are very appreciative of the government’s support to their project.
“We believe the national economy of the Philippines has entered a stage of steady and robust growth under Your Excellency’s leadership and we are very comfortable with the prospect of our project,” they told the President.
In her trips abroad, the President has made it a point to promote Clark and Subic as an alternative and competitive investment hub in the Southeast Asian region.