Friday, 11 July 2008

Philippine real estate growth to continue uptrend

By Roger M. Garcia
Business Mirror
http://www.businessmirror.com.ph/07102008/special_feature01.html

A LEADING real-estate developers group “watered down” speculations that the construction and real-estate sector is heading for a slump as they would be forced to increase their selling prices as a result of the current upward trend in the prices of steel and other major construction materials.

In an interview with the BusinessMirror, Andy Mañalac, president of the National Real Estate Association Inc. (Philippines), said the anticipated 20-percent average increases in prices of property projects, such as residential and office condominiums, will have a minimal effect on the industry in general, more so on the current market base.

Mañalac allayed fears of some sectors, particularly the construction sector, that the real-estate boom is heading for a bust.

“The market is here to stay. So let’s not rock the boat,” he said, even as he advised home buyers and investors to become more discerning in their choices of investments and acquisition plans.

Mañalac, also the executive sales director of Lucio Tan’s property firm Eton Properties Inc., compared today’s situation to the past two cycles the real-estate industry has experienced.

“The [real-estate] industry has seen and experienced the worst times during the late ’80s [first cycle] and the devastating effects of the Asian financial crisis near the end of the ’90s era.”

The whole world is our market

“Philippine real-estate market base has expanded a hundredfold. It has now become global.” With the current quality of real-estate developments—particularly the “township concept”—sales volume from among Filipinos abroad, including foreign investors from Asia, Europe and the Middle East have expressed a keen interest in acquiring residential and leisure-oriented developments in the country.

“The whole world is our market,” declared Mañalac. “Not to mention the cheap prices of these properties.”

He cited the current marketing trends today as compared to the situation in the late ’80s, when homebuyers and real-estate investors were merely comprised of wealthy Chinese businessmen.

“During the last two cycles, the real property sector’s inability to fly could be attributed to many factors, such as interest rates that reached as high as 22 percent, and exchange rates [from P26 to a US dollar to as high as P50 for every dollar],” he said.

On the marketing aspect, Mañalac said today’s technology, practically unheard of 15 to 20 years ago, has largely contributed to the sales and marketing efforts of developers.

Buyers and sellers can now transact via the Internet as model units and configuration and amenities of condominium units can be viewed online and buyers don’t have to see the actual units.

Road shows abroad, particularly in Europe, the Middle East and the US, have become a regular fare for sales people of developers.

Para ngang nagpapapunta lang sa Quiapo ang mga developers [Developers look like they’re just sending people to Quiapo],” he said

Mañalac also cited brisk sales, particularly in London and other European countries where there is a large concentration of Filipino migrant workers plainly because of the appreciating value of the European currency.

He said the country’s situation in the past decades has brought the property sector to rock-bottom level.

Besides high interest rates, Mañalac cited the failed coup attempts, power outages, lack of financing facilities, among others, that made investing in real estate the last thing in the minds of overseas Filipinos, particularly Fiipino-American retirees and Europe-based Filipinos.

In short, Mañalac stressed, the market is very much alive. And its capacity to pay has more than doubled. More so, condominium living has become a very acceptable trend compared with the situation before.

The types of development today, particularly residential condominium units, remain pretty much affordable since most buyers can now settle for a 36-sq-m to 55-sq-m dwelling unit. Fifteen years ago, most condos were built at an average of 80-sq-m to 150-sq-m per unit, he explained.

“On top of all these, [the] cost of real estate in the Philippines still remains as one of the cheapest on a per square meter basis. Not to mention its world-class quality and perfect location,” Mañalac stressed.

Philippine property developers have somehow mastered the art of combining affordability and best location in their respective projects.

He, likewise, assured prospective real-estate investors and buyers that “now is the best time to buy and own real-estate properties.”

In the final analysis, Mañalac swears that the current price increases in construction materials that would surely lead to higher price tags on almost all projects in the pipeline will create only a small dent on the continuing upward trend in property investments and ownership.

“As soon as prices of steel and other construction materials have stabilized, developers are the ones who will first benefit, especially those who opted to continue with what they have already ventured in or started with,” he concluded.

Philippines aiming to be top world producer of geothermal energy

Three groups to invest in RP geothermal plants
Ava Kashima K. Austria
BusinessWorld Online
http://www.bworldonline.com/BW071108/content.php?id=042

A GROUP of Australian, Icelandic and Filipino investors have committed to invest at least $450 million to develop geothermal power plants of up to 40 megawatts each in Luzon, Visayas and Mindanao, which could make the Philippines the biggest producer of geothermal energy in the world.

One group called Guidance Management Corp. (GMC) will initially spend $8 million to conduct geological surveys before drilling exploratory wells at the Amacan geothermal prospect in Compostela Valley province in Southern Mindanao, GMC Chairman Joaquin Rodriguez told reporters yesterday.

"We will spend roughly around $300 million to develop the initial 40-megawatt capacity of the area, but we’re hoping that it could be more than 40 megawatts," he added.

Meanwhile, another group, Biliran Geothermal, Inc. (BGI) expects to spend an initial $1 million for surface exploration, $15 million for drilling and $150-$450 million for a geothermal plant in Biliran province in Eastern Visayas.

A third company, listed Basic Energy Corp., will spend an initial $3.15 million for the exploration of a geothermal site in Mabini, Batangas in Luzon. It was not clear how much the company will be spending to build the plant.

Basic Energy is the former Basic Petroleum Corp., which has a long experience in energy exploration and development. It has participated in almost all oil discoveries in the country since 1978.

"With the awarding of these contracts, we could climb to the no. 1 spot," said Energy Undersecretary Ramon Alan V. Oca.

He said the Philippines is just 70 megawatts behind the US in terms of geothermal production. The Philippines, the world’s second-largest producer of geothermal energy after the United States, has 22 active volcanoes and sits on the seismically active Ring of Fire.

Mr. Oca said geothermal potential of the country is around 4,400 megawatts. "Right now we already have 2,000 megawatts, so 60-120 megawatts of added capacity are quite significant, as this could already power some cities and towns," he added.

The Philippines wants to raise its geothermal capacity to 3,131 megawatts by 2013. Geothermal power currently accounts for around 18% of energy needs in the Philippines.

GMC and BGI are targeting to provide power to the mining industry in Compostela Valley and Biliran, while Basic Energy is seeking to boost tourism in Batangas through cheaper power.

The Energy department awarded GMC a 50-year contract to explore geothermal projects in an area totaling nearly 47,500 hectares in Compostela Valley. GMC also operates two coal mining projects in the central province of Negros, holds a geothermal service contract in the northern Kalinga province, and a $150-million biofuel project.

GMC is a synergy between a Filipino mining group and Australian mining and energy players.

Another company that received a service contract from the government was BGI, which plans to develop a geothermal project covering 22,394 hectares in Eastern Visayas. The area is estimated to have at least 100 megawatts of geothermal energy.

BGI is a joint venture company formed by Filtech Energy Drilling Corp. and Envent Holding Philippines, Inc. Envent’s key shareholders are Reykjavik Energy Invest and Geysir Green Energy, both based in Iceland and leaders in the renewable energy sector with focus on geothermal energy. All three companies are targeting to produce 20-40 megawatts of power from the areas. A 40-megawatt plant can power up the entire province of Ilocos Sur. The companies will be given seven years to explore geothermal potentials of the areas.

Energy Secretary Angelo T. Reyes said the geothermal projects would "provide economic opportunities for the country and bring us closer to our goal of becoming the largest producer of geothermal energy in the world."

He also said the development of geothermal energy in the country would help avert an energy crisis amid rising international oil prices. Growing concern about greenhouse gas emissions released by conventional power plants, high oil prices and growing power demand have fueled the popularity of geothermal power. —

Thursday, 10 July 2008

Northrail given 45 days to clear rail tracks for project to start

Philippine Star
By Ding Cervantes

ANGELES CITY – Edgardo Pamintuan, Subic-Clark Advisory Development Council (SCAD) chairman, ordered yesterday the North Railways Corp. (Northrail) to clear within 45 days the 34-kilometer tracks from Caloocan City to Clark Field to allow the Chinese contractor to start work immediately on a new railway.

In an interview with The STAR, Pamintuan said he found out during a recent inspection of project sites in Caloocan City, Malabon and Valenzuela City that Chinese National Machinery and Equipment Group Corp. (CNMEG) has not abandoned the project as he had earlier reported.

“The equipment are there, the fabrication plant is there,” he said.

Of some 180 Chinese personnel doing design and survey work on the project, only 20 have remained, he added.

Pamintuan said CNMEG would not buckle down to work unless the Northrail and the Bases Conversion Development Authority (BCDA) have cleared all problems in the railway that would link Metro Manila to the Clark Special Economic Zone.

“I think CNMEG is right in asserting that its contract for the project provides that the pathway be cleared thoroughly first,” he said.

Pamintuan said eight old railway bridges that were supposed to be demolished by Northrail to allow CNMEG to construct new ones have not yet been demolished.

“(When) I asked Northrail why they were not demolished, they said they needed explosives, and that they got P10 million which they turned over to the AFP (Armed Forces of the Philippines), but the procurement process is taking time,” he said.

Pamintuan said of the 34-kilometer railway, only 22 kilometers had no problems, and the rest needed expropriation of properties initiated by the BCDA.

“I was told the BCDA could not start expropriations because the Northrail Corp. has not yet submitted its survey on the areas,” he said.

Pamintuan said Northrail has suggested that CNMEG start work in non-problematic areas, but this would be contrary to the contract, which does not allow piecemeal work on the project.

Despite these problems, Pamintuan hopes that CNMEG would start work on the project within 45 days.

Pamintuan said he is holding a series of meetings with Chinese officials and those of Northrail and the BCDA to iron out difficulties.

Philippine economy back on track next year, govt predicts

Bloomberg with Joyce Pangco Pañares
The Manila Standard
http://www.manilastandardtoday.com/?page=news1_july9_2008

THE Philippines expects economic growth to accelerate in 2009 as inflation and interest rates ease, an official said yesterday.

The expansion in the gross domestic product may accelerate to a range of 6.1 percent to 7 percent in 2009, Budget Undersecretary Laura Pascua told reporters after a meeting of economic managers.

That range would compare with this year’s revised target range of 5.7 percent to 6.6 percent, Pascua said.

She made the statement even as another official said the government was deciding if it could lower the tax on oil and petroleum products to help soften prices.

A possible lowering of that tax was in response to calls to suspend it, said Augusto Santos, director general of the National Economic and Development Authority.

“It will not really be suspending but more of lowering the VAT, but we have to clarify that this would require legislation,” he said.

“We can lower the VAT to a level that is revenue-neutral. Given the increase in [oil tax collections], we have windfall revenue, so we can lower the VAT rate to the extent that the government will no longer generate windfall.”

That windfall reached P4 billion in the first quarter, and the government spent P2 billion of the money to pay for the power bills in June of consumers using 100 kilowatt hours or less. It also earmarked P1 billion to provide scholarships to deserving students, and another P1 billion to modify diesel engines to run on cooking gas.

Finance Secretary Margarito Teves said the government would lose P73.1 billion in oil revenues if the oil tax was lifted.

“Lifting the VAT on oil will largely benefit the rich because they are the biggest consumers of oil, while most of the consumption of the poor families is VAT-exempt, such as food products,” Teves said.

Philippine govt increases ’08 spending program by P99b

By Lawrence Agcaoili
The Manila Standard
http://www.manilastandardtoday.com/?page=business2_july9_2008

The government is increasing expenditures by P64 billion to P99 billion this year to bankroll several programs that will help poor Filipino families cope with skyrocketing oil and food prices.

The inter-agency Development Budget Coordination Committee approved the increase in government spending to a range of P1.299 trillion to as much as P1.334 trillion this year from the original allocation of P1.236 trillion.

The government sees current operating expenses for personal services, maintenance and other operating costs, subsidy, allotment to local government units, interest payments and tax expenditure funds reaching P1.047 trillion to P1.056 trillion this year, instead of P1.022 trillion.

It expects capital outlays that cover infrastructure, capital transfer to local governments, and agrarian reform to amount to a range of P240.61 billion to P266.86 billion from P202.22 billion.

Finance Secretary Margarito Teves, meanwhile, warned that the proposal of the Catholic Bishops’ Conference of the Philippines to lift the value-added tax on oil would result in foregone revenues of P73.1 billion.

The government earlier dropped its plan to balance the budget this year and postpone fiscal consolidation back to the original 2010 schedule under the Medium Term Philippine Development Plan.

The DBCC in May approved a new fiscal plan in which the government expects to incur a budget deficit of P40 billion under a medium-case scenario and P75 billion under a worst-case scenario.

The government expects higher revenues as a result of rising oil and food prices. Total revenues this year are expected to reach P1.259 trillion, or P23.7 billion more than the original target of P1.236 trillion.

Inflation not an immediate threat to new growth target

Maria Eloisa I. Calderon
BusinessWorld Online
http://www.bworldonline.com/BW071008/content.php?id=006

SOARING INFLATION owing to the unabated rise in oil and food prices will not likely derail achievement of this year’s 5.7-6.6% economic growth target, the National Economic and Development Authority (NEDA) yesterday said.

Inflation hit a 14-year peak of 11.4% in June, mainly due to volatile oil and commodity prices. The Philippines is an oil importer and, despite being an agricultural country, depends on rice imports to keep up with demand.

The economic impact of the subsequent domestic fuel and food price adjustments have led to wage and fare increases, which are expected to further add to inflationary pressures this year.

The government has been forced to revise its macroeconomic assumptions a number of times this year, the latest being earlier this week when the economic growth range was expanded to 5.7-6.6% from 5.7-6.5%. The initial target for the year, following last year’s record 7.3%, was 6.5-7.0%

But when asked whether higher prices were already a threat to the new full-year growth target, actiing Socioeconomic Planning secretary Augusto B. Santos told a briefing that "at this point in time, no".

However, he did not rule out possible tweaks yet again by September.

"But things are very dynamic so we’re monitoring the situation," he added.

The widened 5.7-6.6% growth goal was based on an inflation forecast of 7-9% for 2008.

The central bank earlier set a 3-5% inflation target for this year, but has changed its forecast amid a tougher external environment.

NEDA simulations show that for every 1% increase in transport fare, inflation rises by 0.017 percentage point.

A similar 1% rise in the benchmark Dubai crude oil price would mean an additional 6.7 basis point- pressure on inflation, Mr. Santos said.

While just announced fare adjustments would "produce second-round effects on inflation", the NEDA said their impact was already factored into the revised inflation forecast. —

Light rail ‘loop’ operational by 2010 elections

PLG Montecillo
BusinessWorld Online
http://www.bworldonline.com/BW071008/content.php?id=005

THE P6.4-BILLION Light Rail Transit (LRT) North Extension Project will be open for business in time for the 2010 presidential polls, officials yesterday said.

LRT Authority Administrator Melquiades A. Robles, in a statement, said the project "will bring the much needed relief to the traffic in the area."

During the project’s ground-breaking, Mr. Robles said Metro Manila’s light rail system had become a social commodity. Its expansion, he added, would decongest traffic, lessen pollution and provide the system more capacity.

He called the project, touted as "Closing the Loop", the government’s long-term response to rising fuel prices.

"Riding the LRT is the most efficient, fastest and cheapest way [to travel] and proven more so with the current fare among other modes of transportation," he said.

The project will connect the LRT Line 1, which runs from Baclaran to Monumento, with the MRT, which traverses Edsa from Pasay to North Ave. in Quezon city. It will involve an entirely elevated 5.4 kilometer viaduct and will feature three new stations: Balintawak, Roosevelt and North Stations.

A DMCI-First Balfour consortium has been awarded the A1, A2 and B packages of the project that will cover the construction of the stations and the train lines. Package C, which will cover the electronics side, is yet to be awarded.

First Balfour CEO Fiorello R. Estuar said the project’s P6.4 billion budget was under pressure due to the rise in prices of construction materials. He said this had prompted the company to redesign the project to make it more efficient to build. He assured however, that quality of construction would not suffer. — P. L. G. Montecillo

NAIA-3 to finally open later this month; domestic flights set

PLG Montecillo
BusinessWorld Online
http://www.bworldonline.com/BW071008/content.php?id=004

AN OVER TEN-YEAR WAIT for the mothballed Ninoy Aquino International Airport Terminal 3 (NAIA-3) to open will end in less than two weeks.

Tirso G. Serrano, Manila International Airport Authority assistant general manager, yesterday said the opening of NAIA-3, delayed numerous times since legal troubles and completion issues hit the project, will finally open on July 22.

"The pronouncement is to start with domestic operations with PAL (Philippine Airlines) Express, Cebu Pacific and Air Philippines," he said.

"Our ultimate goal is to pursue our strategic plan of utilizing the terminal largely for international operations so as to optimize the features of the terminals."

International flights some six months after the opening, or sometime in January next year, Mr. Serrano added.

The terminal’s opening is expected to help alleviate overcapacity at NAIA Terminal 1, Terminal 2 and the old domestic airport.

The current terminals have a combined capacity of only 18 million passengers annually but are being used by more than 20 million.

President Gloria Macapagal-Arroyo, along with 400 others flying in from San Francisco, was one of the first passengers to use NAIA-3 when she came home following an official visit to the United States.

The terminal will initially be used at half of its capacity, Mr. Serrano said.

NAIA-3 has been held up as an example of how foreign investors’ fortunes can suddenly change in the Philippines.

Initially conceptualized in the early ’90s with a group of tycoons interested in putting up the funds, it was finally won in 1997, via bidding, by the Philippine International Terminals Co. (Piatco) consortium.

The project broke ground later that year, and both Piatco and the government set 2002 opening target.

Allegations of impropriety led to the Supreme Court nullifying Piatco’s contract in 2003, with the decision ruled as final the following year.

Questions over the legality of the move, and the compensation that needed to be paid, led to the filing of lawsuits in both local and international courts by Piatco and its German partner, Fraport AG.

The cases have yet to be decided with finality.

The government, meanwhile, reached an agreement with contractor Takenaka to finish the facility, with an opening scheduled for 2006.

That plan was shelved after part of the terminal’s ceiling collapsed, and a subsequent review said rehabilitation work had to conducted. — P. L. G. Montecillo

Jollibee eyes 10,000 stores abroad by 2020

The Manila Bulletin
http://www.mb.com.ph/BSNS20080710129407.html

Jollibee Foods Corp., the country’s number one homegrown fastfood chain, is eyeing the establishment of 10,000 stores globally including its acquired other brands by 2020 largely through franchising.

Ernesto Tanmantiong, president of the publicly-listed JFC, revealed this in a keynote speech at the 16th Philippine International Franchise Conference saying this target supports the company’s vision to become the largest food company in the world.

"We will be as well known as any other brand in the world, the best quick service restaurant and the most endearing brand that has even been," Tanmantiong said.

Speaking on the topic of franchising first secret of "dream big", Tanmantiong said their vision 2020 was set by his brother Tony Tancaktiong when Jollibee had only five stores.

"He was not joking then. Now, we are celebrating our 30th years and welcoming the 2020 vision," Tanmantiong said.

So far, the JFC group has a total of 1,727 stores of which 1,483 are in the Philippines and 244 internationally.

Jollibee has the most number of stores with 632 of which 50 percent are under franchise arrangements. The rest are Red Ribbon, Greenwhich, Chowking, Manong Pepe’s and Daily France.

The group has 18 stores in the U.S., 11 in Brunei, 9 in Vietnam and opening two more this year, 1 in Hong Kong, 1 in Saipan, 1 in China, and 1 in Middle East.

In particular, the company has cited strong potential in China, which it considered not a marathon but a sprint and the Middle East, which future is promising.

"We will rely on franchising as we look forward internationally," Tanmantiong said. The company has also put up its own Jollibee Franchise Corp. to attend to its growing number of franchisees.

Tanmantiong, however, said that the success of the group is not without hardships noting that its first international debut was a failure but they did not stop and learned from their experiences.

"It is always better to dream big than small," he said noting that the dream is big and is fueled by passion and hardwork chances are part of that big dream would be attained or all of it.

"Believe in your dream," he told a crowd of franchisers and businessmen. The company is also attributing its success to the company’s workers.

"This is a crucial transition stage (for us). We are gearing up for greater challenges. We have hurdled a lot of challenges in the past, and went through cycles of economic crisis. Crisis after crisis, challenge after challenge, we continued to persevere," Tanmantiong said. (BCM)

Franchising now accounts for 5% of Philippine GDP — study

By BERNIE CAHILES–MAGKILAT
The Manila Bulletin
http://www.mb.com.ph/BSNS20080710129406.html

The franchising sector has contributed an estimated P106.75 billion to the nation’s economy translating to 5 percent of the country’s total gross domestic product for the years 2005 to 2007, a study revealed.

Results of a study conducted by the Philippine Franchise Association (PFA) with the University of the Asia and the Pacific (UA&P) were divulged at yesterday’s opening of the 16th Philippine International Franchise Conference and Expo (PIFCE).

Since its introduction in the Philippines in the 80’s, franchising has experienced phenomenal growth, proving itself as a resilient and adaptable business strategy, the study said.

"It also continues to be an important driver of the Philippines’ economic growth and national productivity," the study added.

The study was also supported by the Department of Trade and Industry data, which showed that franchisees have a success rate of 65 percent and stand a better chance of flourishing among the small and medium enterprises.

DTI Undersecretary Zenaida C. Maglaya, in a speech before the event said the success of the franchising business is the result of an operation based on partnership and sharing.

Wednesday, 9 July 2008

Cabinet meeting on poor


CABINET MEETING ON POOR -- President Gloria Macapagal-Arroyo delivers her statement before she presided over the National Anti-Poverty Commission (NAPC) Cabinet Group Meeting Tuesday (July 8, 2008) at Malacanang's Aguinaldo State Dining Room. With the President in photo (from left) are Commissioner Ricardo Saludo of the Civil Service Commission, Agriculture Secretary Arthur Yap, Executive Secretary Eduardo Ermita, National Economic Development Authority Director General Augusto Santos, Agrarian Reform Secretary Nasser Pangandaman, and Presidential Management Staff Head Cerge Remonde. (Rey Baniquet/OPS-NIB Photo)

Manila's PLDT Q2 mobile subs growth exceeds goal

Reuters
http://in.reuters.com/article/rbssConsumerGoodsAndRetailNews/idINMAN7750820080708

MANILA, July 8 (Reuters) - Philippine Long Distance Telephone Co (PLDT) (TEL.PS: Quote, Profile, Research), Manila bourse's most valuable firm, said on Tuesday it added more than 1.6 million mobile phone subscribers in the second quarter, beating its 1.5 million target.

PLDT, a unit of Hong Kong-based First Pacific Co Ltd (0142.HK: Quote, Profile, Research), said last month it expected rising fuel and food costs as well as a volatile peso to weigh on sales, trimming its revenues and core net profit this year.

"We confirm that the combined cellular subscriber bases of Smart and Piltel stood at over 33 million as of end-June 2008, reflecting net additions of over 1.6 million in the second quarter of 2008," PLDT corporate secretary Lourdes Rausa-Chan said in a statement to the stock exchange.

PLDT has set core earnings guidance of 37 billion pesos this year, up 5 percent from 2007.

In the first quarter, PLDT's core net profit climbed 11 percent to 9.3 billion pesos ($203 million).

Shares of PLDT, the most actively traded stock on Tuesday, rose 2.75 percent, outpacing the main index .PSI which rose 1.49 percent. ($1=45.8 Philippine Peso) (Reporting by Rosemarie Francisco; Editing by Tomasz Janowski)

Subic sees export earnings rising to $3B on shipbuilding

RMG
BusinessWorld Online
http://www.bworldonline.com/BW070908/content.php?id=054

SUBIC BAY FREEPORT — Annual export earnings of this freeport zone are projected to rise three-fold to $3 billion in five years from the current $900 million, largely due to ships made to order here.

Export earnings here rose 50% to $900 million last year from $600 million.

A press statement quoted Subic Bay Metropolitan Authority (SBMA) Administrator Armand Arreza as saying that with the full operation of Hanjin Heavy Industries Corp.-Philippines (HHIC-Phil), there will be 43 more ships that will be built in the next five years in the Korean firm’s shipyard.

"The economic significance of Hanjin’s contribution cannot be overemphasized," Mr. Arreza said, citing the 3,000 workers presently employed by Hanjin.

"Because of the tireless efforts of these Filipino workmen, Hanjin will continue to expand and will employ 21,000 workers by 2010," Mr. Arreza said.

READ MORE ...

Tuesday, 8 July 2008

End-June 2008 GIR Level Rises to US$36.7 Billion

Media Releases
Bangko Sentral ng Pilipinas
07.07.2008
http://www.bsp.gov.ph/publications/media.asp?id=1844

The country’s gross international reserves (GIR) rose to US$36.7 billion as of end-June 2008, up by US$0.5 billion from the previous month’s level of US$36.2 billion. The increase in reserves was attributed mainly to the deposit by the Power Sector Assets and Liabilities Management Corporation (PSALM) of proceeds from the privatization program of the National Power Corporation (NPC), as well as the Bangko Sentral’s income from its investments abroad, credits from foreign financial counterparties, and revaluation gains. These receipts were partly offset, however, by outflows arising mainly from payments of maturing foreign currency-denominated obligations of the NG and the BSP, and prepayments of NPC’s various foreign loans.

The current GIR level can cover 6.0 months of imports of goods and payments of services and income. It was also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 2.9 times based on residual maturity. [Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.]

The level of net international reserves (NIR) as of end-June 2008, including revaluation of reserve assets and reserve-related liabilities, remained steady at US$36.2 billion. NIR refers to the difference between the BSP’s GIR and total short-term liabilities.


VIEW TABLE HERE....

Targets revised anew by gov’t to 5.7-6.6% range

2008 growth range widened, imports goal lowered
R. A. M. Rubio with Reuters
BusinessWorld Online
http://www.bworldonline.com/BW070808/content.php?id=001

FRESH REVISIONS to official macroeconomic targets were announced yesterday by the government, which said further tweaks were possible given a changing external environment.

This year’s growth target was slightly widened to 5.7-6.6%, with the boost likely to be provided by the services sector, from the revised 5.7-6.5% bared a little over a month ago.

Earlier in the year the gross domestic product (GDP) growth target was an even higher 6.3-7%.

Next year’s growth forecast was similarly widened, this time at the lower end, to 6.1-7% from 6.2-7%.

The changes were made by the interagency Development Budget Coordination Committee (DBCC), which last announced revisions on May 28.

"Agriculture will be adversely affected by fuel increases because it is fuel-intensive. Industry may be affected by slower exports because of slower growth in the US," Budget Undersecretary Laura B. Pascua said after the DBCC meeting.

"But National Economic and Development Authority is quite bullish for the services sector which is still growing. You see the economic structure changing towards services," she added.

"As long as the government sustains its spending, it should not be so bad. The industry sector should not go down. It should be bullish. We can be bullish for the industry sector if government can sustain contributions to economic activity."

Ms. Pascua said the government expects rising food and oil prices to continue pressuring inflation, now expected to hit 7-9% this year. This means that an even earlier 3-5% goal has now been abandoned.

The outlook for consumer prices in 2009 was set at a range of 4-6%.

"The expectation next year is things will normalize. Food and fuel prices won’t be that volatile. We want also to sustain government spending to sustain economic efforts," Ms. Pascua said.

Weak demand from the United States, meanwhile, has led to a lower export growth target for 2008: 5% from May’s 6%. The initial target for the year was for 8% growth.

Imports growth, meanwhile, is now expected to hit 10% this year from 7%, largely due to higher shipments of oil and rice, Finance Undersecretary Gil Beltran said.

Merchandise exports grew by 6% and imports by nearly 7% last year. The Philippines imports nearly all of its crude oil needs and its oil bill is expected to climb this year as world oil prices continue their record-breaking trek.

The country is also the world’s biggest rice importer this year after it contracted a record of about 2.3 million tons of the grain to offset a shortfall in local output.

The central bank said last month it expected the country’s trade deficit this year to expand by a third and reach $11 billion, the highest in at least nine years.

Having abandoned plans of a balanced budget this year, the government said it continues to expect a fiscal gap of as much as P75 billion this year, equivalent to 1% of GDP. The shortfall is expected to be trimmed to P40 billion in 2009.

Revenues, meanwhile, are expected to go up to P1.25 trillion this year from P1.236 trillion previously. The Bureau of Customs (BoC) is expected to shoulder the adjustment, with a new target of P269 billion this year from P254.4 billion previously. The Bureau of Internal Revenue’s (BIR) goal remains unchanged at P844.95 billion.

The government expects to earn a windfall from the value-added tax on oil imports, which it plans to use to pump-prime the economy.

The revenue outlook for 2009, meanwhile, was set at P1.38 trillion where the BIR and BoC have to generate P963.6 billion and P305.5 billion, respectively.

This year’s expenditures program was unchanged at P1.236 trillion but this will go up at P1.42 trillion in 2009.

The bellwether 91-day Treasury bill rate will likely go up between 6-8% from an earlier forecast of 4-5%.

Ms. Pascua said targets for revenues and expenditures would likely change as Finance Secretary Margarito B. Teves was still looking at medium term trends.

"He wants to be sure. He wants the projection to be firm both on the revenue side and spending. If we can improve the trends in the medium-term, that will be better," she said. —

Monday, 7 July 2008

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Malacañang pushing Northrail project in reorganization fiat

Alexis Douglas B. Romero
BusinessWorld Online
http://www.bworldonline.com/BW070708/content.php?id=074

THE GOVERNMENT will push through with the $503-million North Luzon Railways (Northrail) project as President Gloria Macapagal-Arroyo has ordered the inclusion of North Luzon Railways Corp. officials in the Subic-Clark Alliance for Development Council (SCAD).

The directive was embodied in Executive Order 733 signed by Executive Secretary Eduardo R. Ermita on June 16.

In the order, the President even noted the project’s importance, but which the opposition claimed has onerous conditions.

"Northrail is an essential component of the vision to make the Subic-Clark corridor the best service and logistics center in the region," the order read.

The directive stated that both the chairman and the president of Northrail will serve as members of SCAD. Both will be appointed by the President.

Last week, Mr. Ermita announced the appointment of SCAD Chairman Edgardo Pamintuan as chairman and chief executive officer of North Luzon Railways Corp.

All heads of local government units within the coverage of the Subic-Clark corridor, as well as departments, bureaus, offices and agencies, were tasked to help the SCAD implement its programs and projects.

SCAD was formed through Executive Order 504 issued on April 10, 2008.

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