Saturday, 6 June 2009

Make the most of Manila's chaotic charm

Dean Irvine

(CNN) -- Manila often gets a bad rap, derided as dirty, chaotic, and an incoherent mess of unfinished urban areas and slums.

It's a world away from carefully planned Asian cities like Singapore -- which makes it perfectly suited for visitors who don't need their lives hermetically sealed in air-conditioned shininess.

Manila is alive with a mix of cultures, from Spain, China and the numerous Philippines islands. Sights to gawp at are thin on the ground, but the city streets have enough going on to enthrall even the most disinterested visitor.

Though it was bombed to bits during the Second World War, Intramuros is one of the most coherent areas of the city. Worth a morning's visit, the old walled city's buildings (or rather what was left of them) were left untouched, even when the area was given an update in the 1980s. But it still retains a unique atmosphere in a city where the capital's expanding population is reflected in its growing sprawl.

The Manila Cathedral was one of the buildings pummeled in the war, but the rebuilt version is faithful to the original 16th-century edifice. Fort Santiago, once the guarding fortress of the city and River Pasig, is now a war memorial. Nearby is Rizal Park, a green spot named after the national hero. What he would have made of the moat outside the old city's walls being made into a golf course is anybody's guess.

Taxis are the best way to negotiate the city, and they're cheap and plentiful, but it's worth jumping into the back of a crazily colorful jeepney at least once, just for the experience.

Regardless of the means, head towards the towers of Makati, one of the more central areas that make up Metro Manila. Home to big businesses and major hotels that may make you feel like you're in Singapore, if you're there on a Saturday make sure you wander through Salcedo Market. It's an upmarket affair, relatively speaking, where you can grab some great local food and produce. Those hankering for excellent western food and a glimpse of Manila's long-lunching business-types should head to Apartment 1B, on Lafayette Square.

While you're never far from an urban vignette that contrasts with the central business district's gloss, it's best to plunge into another area of the city for more local color and flavor. A taxi ride away is Marikina City, home to some uniquely Manilan attractions.

Once the shoe-making capital of the capital, you'll find Marikina Shoe Museum here. But it doesn't house just any old shoes. No, it's basically a celebration of the shoes of Imelda Marcos, the country's former first lady, who still deeply divides opinions among Filipinos. A bit kitsch, a bit weird, with over 605 pairs of her footwear (size eight and a half if you must know) and a selection of photos of the former first lady with world leaders, complete with hilariously obsequious captions, it's a sight to behold.

Snap back to reality with a moto-taxi ride to Marikina City's market. The covered lanes are a hive of stalls and intriguing local life. Heading back towards the central area of the city and Manila Bay, visit Cubao Expo. Located just off General Romulo Street it was formerly Marikina Shoe Expo, a mix of shoe outlets for nearby factories.

Now the low-rise complex of boutiques, bars, galleries and antique shops has to be a contender for hippest spot in Manila, a city that doesn't bother itself too much with anything so affected. Relaxed and fun, it's a great place to while away a few hours. When the shops there close you can get some great, local, home-made food, down a cocktail or Red Horse lager or two, and wind down away from the chaos of the streets and plot some evening entertainment.

Later on, head to Makati, one of the main areas for bars of varying descriptions and clientele. Saguijo's bar is one of the city's best for music. Attracting typically exuberant Manilan crowds, like all good live music venues it's got a comforting, grimy edge. It hosts bands playing all sorts of music, and, rare for Filipino bands, no covers. To push on through to the morning light, Embassy in Fort Bonifacio is the club with the most in-crowd hipsters queuing to get in.

End-May 2009 Philippine GIR is Modestly Higher at US$39.319 Billion

The country’s gross international reserves (GIR) as of end-May 2009 stood at US$39.319 billion, minimally higher by US$3 million from the previous month’s level of US$39.316 billion. The preliminary GIR level could cover 6.3 months of imports of goods and payments of services and income. It was also equivalent to 6.0 times the country’s short-term external debt based on original maturity and 3.1 times based on residual maturity.

According to Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr., major foreign exchange inflows during the month included revaluation gains in the BSP’s gold holdings on account of the rise in the price of gold in the international market during the month, foreign currency deposits by the National Government (NG), as well as income from the BSP’s investments abroad and net foreign exchange operations. These receipts were broadly matched by payments of maturing foreign exchange obligations of the NG and the BSP.

While the GIR level remained broadly steady, the level of net international reserves (NIR), which includes revaluation of reserve assets and reserve-related liabilities, rose to US$38.3 billion as of end-May 2009 from the month-ago level of US$37.8 billion as a result of the BSP’s partial settlement of credits extended by foreign financial counterparties. NIR refers to the difference between the BSP’s GIR and total short-term liabilities.

Friday, 5 June 2009

XIII St Petersburg International Economic Forum -- President Arroyo

RR Donnelley Adds Second Facility in Manila

What They Think?
Friday, June 05, 2009

CHICAGO & MANILA, Philippines -- R.R. Donnelley & Sons Company announced today that it has enhanced its global business services and outsourcing platform with the opening of a second facility in Manila, in the Philippines. With a focus on delivering advanced support services for litigation, review and contract drafting services the new facility will also offer a broad portfolio of research and creative services to clients across many industries. The new RR Donnelley professionals in Manila join more than 60,000 RR Donnelley colleagues operating in nearly 40 countries.

With this latest expansion, RR Donnelley builds upon its leadership in the growing legal services market—creating an innovative center of excellence to meet the evolving needs of corporate legal and law firm clients.

“Our growth has been largely fueled by our ability to earn our clients’ trust and deliver quantifiable results,” said Tom Juhase, President of RR Donnelley's Global Services offering. “The new Manila facility enables us to accelerate innovative and highly specialized work-flow applications for our clients while enhancing our ability to attract and retain the finest talent.”

Customers turn to RR Donnelley's outsourcing platform to help preserve capital, minimize expenses and streamline operations. By applying a proven, systematic approach to creating repeatable processes, methodologies and tools RR Donnelley enables clients to achieve transformational value.

Manila’s strong education system provides access to a diverse and skilled work force with language proficiency. RR Donnelley’s existing Manila facility provides legal, creative communications, research and analysis and financial management services to Fortune 1000 companies and financial institutions, law firms and other professional services organizations. The expansion will triple the size of the company's workforce in Manila, allowing RR Donnelley to handle new engagements as well as accommodate the growth of existing client relationships.

“RR Donnelley’s financial strength has allowed us to make opportune investments in response to growing demand,” continued Juhase. “As a result, we are strategically positioned to provide exceptional, cost effective and scalable solutions to our customers worldwide.”

Philippines, Spain sign new air-services agreement

Lenie Lectura
Business Mirror

THE Philippines and Spain have sealed a new air-services agreement (ASA), fielding 28 weekly flights for each country.

From Manila to Madrid and Barcelona, there were seven flights per week awarded to the Philippines.

To Madrid and Barcelona from Clark’s Diosdado Macapagal International Airport, 14 weekly flights were allocated.

Other points in the country, except Manila and Clark, were allotted seven flights in a week. The same goes for Spain, in which daily flights were also made available except for Madrid and Barcelona.

“There were also an equivalent number of flights granted to Spain. To and from or vice versa, Spain gets the same number of flights as we have,” said Civil Aeronautics Board (CAB) Executive director Carmelo Arcilla in a phone interview on Tuesday.

Also, Manila was granted rights to service 200 tons of cargo per week while Clark got 300 tons per week. “For cargo, seven flights per week were also granted,” added Arcilla.

The air talks took place in Madrid last month.

This is the eighth air pact sealed by the Philippine air panel since the start of the year. Last month, a new deal with Singapore was finalized. ASAs were sealed with Brunei and Australia last March; Kuwait and Bahrain in February; and Qatar and the United Arab Emirates in January.

The CAB is a member of the Philippine air panel. The other members are composed of officials from the Departments of Transportation and Communications, Foreign Affairs, Tourism, Clark International Airport Corp., and representatives from local airline companies.

Worst is over for Philippine economy -- NEDA

Davao City (4 June) -- The worst is over and the Philippine economy is surely on the rebound, backed by the expected upsurge in consumer spending and President Gloria Macapagal-Arroyo's strategy to massively invest in human and physical infrastructures to generate thousands of jobs for Filipinos.

Undersecretary Rolly Tungpalan, deputy director general of the National Economic and Development Authority (NEDA), who is also deputy spokesman on economic affairs, said the modest 0.4 percent gross domestic product (GDP) growth, and the gross national product (GNP) 4.4 percent growth from January to March this year, compare fairly well with the negative figures of most economies in Asia.

Tungpalan said after the first quarter report, the Philippine stock market immediately surged and the country's April and May economic performance fared better due to heightened consumer spending and investments.

He stressed, "What we started to see is real good evidence that the worst is over." "We have reason to believe that a recession is not a likely scenario in our case," Tungpalan added.

In her recent visit to Korea, the President said her strategy to sustain economic growth includes increased but controlled spending on vital food, energy and human and physical infrastructure programs and create more jobs for the people.

The President secured commitments for at least 24,000 jobs for Filipino workers in Korea over the next three years.

The President also secured pledges of more than half-a-billion dollars of Korean investments that would generate at the very least another 24,000 new jobs in the country. (PIA)

Philippine May inflation down to 3.3%, 18-month low

Benjamin V. Buco, Jr.

THE RISE in consumer prices eased further in May to 3.3% from 4.8% the previous month as the costs of all commodity items fell, the National Statistics Office (NSO) reported Friday.

Core inflation, which excluded volatile food and energy items, also slowed down to just 4.4% from the previous month's 5%. The May inflation figure for the month was within the central bank forecast of 3.3% to 4.2%. The annual inflation in May 2008 settled at 9.5%.

The NSO traced inflation's sustained downtrend to falling costs of food, oil and other commodity items.

"The decline in the price of meat along with the slowdowns in the price increments of other commodity groups also contributed to the downtrend," the statistics agency said in a statement.

New resort complex to rise at Clark

Jessica Anne D. Hermosa

A SOUTH Korean firm will be investing $200 million for a new resort complex at the Clark Freeport's subzone and another P218 million to build the roads there, Clark Development Corp. (CDC) said in a statement on Friday.

Donggwang Clark Corporation will be employing 1,000 workers once the resort at the "Next Frontier" in Sacobia Valley, Tarlac is completed. The company is still drafting the project's site development plan for CDC's approval.

Its investment for roads , will cover the construction of a 1.8-kilometer "Spine Road" and a 4.5-kilometer "East Road 2" that will link the area to the McArthur Highway.

"[The cost of the road construction] will be considered as advance lease rentals following standard government procedures," the statement read.

Earlier, the state agency announced it was developing the 2,000-hectare extension of the freeport to accomodate more investors.Investments there will be qualified for the same economic zone incentives including a four-year tax holiday and a succeeding 5% tax on gross income.

Ayala, SM malls in tug-of-war for train station

J.S. Gatuslao

THE HEAD of the National Economic and Development Authority (NEDA) has met officials of the country’s top property developer over a looming row involving the location of a proposed "Grand Central Terminal" connecting the Metro Rail Transit and Light Rail Transit commuter train lines at a Quezon City intersection.

Ralph G. Recto, NEDA director-general, said he met with Ayala Land executives last Wednesday to discuss the location, and was "looking at the possibility" of moving the Grand Central Terminal, which was supposed to be near the SM City North EDSA mall, to a corner lot owned by the National Housing Authority (NHA).

Plans have been approved by the Investment Coordination Committee but still need to be shown to the NEDA board, he said.

Mr. Recto said the proposal to move the terminal to the NHA property is the "most reasonable and most pragmatic ... so both are satisfied," referring to SM and Ayala Land, which owns the TriNoma mall at the beginning of the MRT line near North Avenue.

In an earlier interview, Mr. Recto said the terminal was originally planned to be built near TriNoma. The current plan places it on the opposite side, closer to SM City North EDSA. The terminal will cost an estimated P777.598 million.

Thursday, 4 June 2009

What recession? Philippine Central bank sees $6-B BPO earnings this year

Manila Bulletin

The Bangko Sentral ng Pilipinas (BSP) has raised its earnings forecast for the business process outsourcing (BPO) sector to $6 billion this year from $3-$4 billion.

BSP monitors all foreign exchange (FX) flows into the country including remittances from overseas Filipinos, foreign direct investments, dollar reserves, among other FX indicators.

BSP deputy governor Diwa C. Guinigundo said the BPOs remain one of the growth drivers of the economy because of its impact on the services sector.

The central bank’ $6 billion projection, although higher than previous forecast, is lower than industry projection of $7.5-$8 billion for this year.

The Business Processing Association of the Philippines (BPAP) said revenues will likely grow by 30 percent from 2008’s $6.06 billion. BPAP’s original forecast was 40 percent but with the global economic slump and its impact on BPO demand, growth projections were reduced.

Guinigundo said the continued shift to high-value services such as back office services, IT outsourcing and engineering/design process delivery, along with the increasing need to outsource non-core business activities of firms operating in advance economies, are expected to propel the growth of the BPO industry in 2009.

The BSP has its own BPO survey called “Benchmark Survey of IT-Enabled Services” to monitor the FDI inflows. Since 2006, the BSP has been coordinating with various government agencies and private sector groups to institutionalize the regular conduct of the survey. Besides the trade department, the National Statistics Office and the National Statistical Coordination Board will also work with the BSP to consolidate numbers and definition of terms.

The first BSP-led BPO survey was released in June 2007, but there is a two-year lag since the review only covered the period 2004 and 2005.

What recession? Philippine forex reserves rose to $39.5B in May

By Michelle Remo
Philippine Daily Inquirer

MANILA, Philippines—The Philippines’ Gross International Reserves—a measure of a country’s ability to service obligations and engage in commercial transactions with the rest of the world—registered a new historic high in May, keeping the Philippines sufficiently liquid despite the lingering global economic crunch.

According to Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., preliminary estimates by the BSP showed that the GIR further rose to $39.5 billion as of May, the month when overseas Filipinos usually send more remittances to their families to pay for their children’s tuition.

In April, Tetangco said the GIR stood at $39.3 billion, revised downward from the $39.5 billion reported earlier by the BSP.

Although some expect remittances to contract steeply this year because of job cuts in advanced economies, the BSP said alternative labor markets abroad have opened—such as Canada, Australia, Qatar—and Filipinos were highly demanded by foreign employers.

Contrary to most projections, the BSP expects total remittances this year to equal last year’s $16.4 billion. The BSP also noted that the increase in deployment of Filipino workers was still in the double-digit level, citing data from the labor department.

Tetangco said the gradual revival of market confidence in emerging economies like the Philippines was also helping increase the amount of foreign portfolio investments entering the country.

He said higher inflows of “hot money” would beef up the country’s balance of payments (BOP) and the GIR.

Tetangco said increasing inflow of investments in securities and equities to the Philippines was partly a reason the peso has strengthened somewhat in May than the previous month. After hovering mostly in the 48 level, the peso moved into the 47-to-a-dollar territory last month.

Developing nations like the Philippines have been urged to tap the international credit market to borrow and support their BOP and GIR as the lingering global turmoil is seen creating pressure on their liquidity positions.

The BSP, however, said the Philippines need not borrow for BOP and GIR purposes as of the moment, noting that the country’s foreign exchange liquidity was still relatively healthy.

The GIR in May is estimated to cover at least six months’ worth of imports.

Although the GIR was rising steadily, the BSP has set a conservative forecast that it would settle at $37.5 billion by the end of 2009, the same as that in end-2008.

What recession? Peza investments up 18% to P9.75B

By Abigail L. Ho
Philippine Daily Inquirer

MANILA, Philippines—After a dismal first quarter, the Philippine Economic Zone Authority registered an 18.2-percent increase in investments to P9.75 billion in May, from P8.25 billion in the same period last year.

The number of projects approved by the Peza board went up to 48 last month from 34 in the same month the year before, Peza director general Lilia de Lima said in a briefing Wednesday.

She said these new projects would generate 6,351 new jobs, a 119-percent surge from the 2,900 jobs created in May 2008.

Most of the newly approved investments are still in the information technology sector, de Lima said.

Exports, however, remained sluggish, falling 22.6 percent in May to $178.6 million from $218.9 million in the same period last year.

“Our figures on investments, exports and employment were down for the first four months of 2009, compared to the same period last year. Just as we were thinking of downscaling our targets, the performance for May gave us good reason to put on hold such adjustment,’’ she said in a speech before members of the Semiconductor and Electronics Industries of the Philippines Inc.

Peza aims to grow investment value by 10 percent, employment numbers by 5 percent, and export dollars also by 5 percent this year.

In an earlier interview, de Lima said Peza expected the second quarter to be “much better,” as demand for the country’s products start to pick up.

“I think we have bottomed out. The orders are starting to come in. Companies have said they will start to expand. They are now trying to recall the people that they have let go,’’ she had said.

In the first quarter, Peza experienced a 50-percent drop in investments as investors adopted a wait-and-see attitude amid the global recession.

Companies, mostly those from the semiconductor and electronics sectors, were forced to either retrench workers or implement shorter workweeks.

Chip giant Intel Corp. even announced the closure of its Philippine facility some time in the second half, a move that would displace around 1,800 employees.

What recession? Philippine electronics firms start rehiring

Philippine Daily Inquirer

MANILA, Philippines—Companies in the semiconductor and electronics industries are now starting to rehire as plant production increases to meet the need to rebuild inventories in preparation for future demand.

In a briefing Wednesday, the Association of Seipi (Semiconductors and Electronics Industries of the Philippines Inc.) Personnel Administrators chairman Artemio del Rosario said 20-30 percent of the more than 462,000 employees in the sector were affected by the economic downturn.

By “affected,” he said these employees were either retrenched or had to make do with shorter workweeks.

“But there are companies now that are rehiring workers, and there are companies that are expanding. Business is picking up,” he said. “Those who were laid off are coming back, and we haven’t heard of companies still implementing shorter workweeks. Some are even operating overtime.”

Association of Seipi Purchasing Managers chairman Isagani Ong said in-country manufacturing facilities were now starting to rebuild their inventories following several months of not producing and just focusing on depleting available inventory.

“Inventory has been depleted and manufacturing facilities are producing again. We’ve already hit bottom in the first quarter. We’re now building inventory to prepare for future demand,” he said, adding that the next few months would show whether increased levels of production were just being implemented to rebuild inventories or to meet higher end-user demand.

Seipi president Ernesto Santiago said that while the group was keeping its projection of a 20-percent decline in exports this year, it was also optimistic that the industry was already on the road to recovery and that there was nowhere to go but up.

“We believe business will be back. That’s how dependent the world is on this industry,” he said. “We’ve already hit the bottom, and business is slowly picking up. The movement is slow, but at least it’s picking up.”

He said that despite the overall doom-and-gloom situation, the industry still managed to register P1.8 billion in new investments in the first five months of the year.

While 15 percent lower than what was generated in the same period last year, he said these infusions proved that the industry was “still moving.”

What recession? Filipinos still upbeat on the economy

Abigail L. Ho
Philippine Daily Inquirer

MANILA, Philippines—Most Filipinos are still relatively optimistic that the economy will improve soon, according to a recent survey by global market research firm Synovate.

According to the 2,000-people survey, 44 percent of Filipinos nationwide believed that while the economy was still weak, it would soon start to recover.

Forty-three percent of respondents even said that they had earned more in the last six months.

Despite this, Filipinos still chose to be relatively frugal, choosing to spend a little less and becoming more conscious of the things that they actually buy.

“Interestingly enough, Filipinos across the Philippines generally share a sentiment of renewed optimism and this is a good thing as it leads to greater consumer confidence,” Synovate Philippines managing director Carole Sarthou said in a statement.

“However, our results show that they have become more conscious when it comes to spending, with close to two-thirds (or 59 percent) paying more attention to prices of food items before making a purchase. This trend may continue throughout the year,” she added.

First to go on the list of purchases are luxury items, with 76 percent of those polled saying they had chosen to refrain from buying premium and branded goods.

Among items considered luxury, the biggest casualties were high-tech gadgets at 38 percent, followed by branded items at 27 percent.

Twenty-six percent of those surveyed also chose not to dine out, while 25 percent and 23 percent, respectively, said they had sacrificed holidays and big-ticket items such as expensive appliances.

“High-tech gadgets and branded goods topped the list of items to be [avoided] among those from Metro Manila, while over a quarter [28 percent] from Mindanao said they were giving up on outside meals with friends, choosing cheaper dining options instead. Again, it’s a matter of priorities and Filipinos are, in fact, making changes to their spending habits across the Philippines,” Sarthou said.

Twelve percent of Metro Manila respondents, however, said they were actually spending more on luxury items.

Necessities were on top of the list of Filipinos’ purchases at 61 percent. The biggest spenders were respondents from Metro Manila (70 percent) and South Luzon (67 percent).

“It’s evident that the current economic situation has impacted the lives of everyday Filipinos, but in spite of this worrying trend, the people we interviewed were generally determined and upbeat, with over three quarters (86 percent) agreeing that they will always find a way to afford some items that make them feel good,” she added.

The survey also showed that Filipinos were also saving less (42 percent) and investing less (29 percent).

Philippine electronics sector on way to recovery

Electronics already ‘hit the bottom’
Ben Arnold O. de Vera
Manila Times

THE Philippines showed green shoots of recovery in May, with investments in the country’s economic zones growing, and makers of electronics, the country’s main export product, seeing signs of returning demand.

Lilia de Lima, Philippine Economic Zone Authority (PEZA) director-general, told reporters on Wednesday that investment pledges last month reached P9.75 billion, up 18.19 percent from P P8.25-billion in the same month last year.

The agency earlier reported that its first quarter investment pledges plunged 51 percent from P27.7 billion last year to P13.7 billion this year.

De Lima said May marked the first month when PEZA posted positive growth figures, following a slump in investments, exports and employment generation in the first four months of this year.

“We are seeing some light at the end of the tunnel,” she said.

The incentive-giving agency approved a total of 48 projects last month, compared with 34 a year ago.

Projected employment of the approvals also jumped 119 percent, as PEZA-approved investments last month are expected to create 6,351 jobs, compared with the 2,900 promised for last year’s registrations, de Lima said.

Exports from PEZA registered enterprises, however, went down last month, as locators shipped out $178.6-million worth of goods, compared with $218.9 million in the same month last year.

De Lima said the information technology sector boosted investments in ecozones last month.

Despite the global economic slowdown, she said PEZA is maintaining its growth targets of 10 percent in investments, 5 percent in exports, and 5 percent in employment this year.

Ernie Santiago, Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) president, said the sector, which accounts for at least 60 percent of the country’s exports, has already “hit the bottom” in the first quarter of this year.

Louie Macatiag, Association of SEIPI Finance Executives chairman, said inventory building and restocking activities among firms that depleted inventories, are bringing in back orders.

Artemio del Rosario, Association of SEIPI Personnel Administrators chairman, said most companies have resumed six-day operations, and some have rehired displaced workers.

“I have not heard of companies still on reduced work schedules now,” he said.

Del Rosario said between 20 percent and 30 percent of the industry’s about 462,000 workforce was affected by the global economic slowdown.

Santiago said the consumer electronics segment would also beef up the demand.

He said semiconductors and electronics exports are slowly but surely inching up to a positive month-on-month growth rate—0.76-percent in January, one percent in February, and 9 percent in March.

“We are in the early stages of recovery,” said Isagani Ong, Association of SEIPI Purchasing Managers chairman.

SEIPI expects the second quarter of this year to be better than the previous quarter, officials said. But Santiago said the industry maintains its forecast of minus 20 percent growth overall this year.

He said the electronics industry accounts for about a third of the global gross domestic product, so it is natural for this sector to recover. “Electronics is the global driver and electronics business will definitely be back,” he said.

The SEIPI head said investments in this sector have dipped, as most companies are reluctant to invest now because of the ongoing global financial crisis.

He said investments in the domestic semiconductors and electronics sector went down year-on-year, to just $40 million in the first five months, from $200 million last year. This sector generated a total of $400-million worth of investments last year.

Philippine GDP puzzles ... again

Economic cluster tackling growth issues
Jun Vallecera & Mia Gonzalez
Business Mirror

ECONOMIC managers are to tackle later this week the issues arising from the apparent disconnect—between the low first-quarter growth and the robust lending levels and government disbursements—that has puzzled monetary officials and put those in the Executive on the defensive.

The government acknowledged on Tuesday it failed to spend as much as P10 billion in the first four months as part of pump-priming activities seen to help push the economy forward at a healthy pace this year.

But the admission still does not explain the disparity between all that growth-inducing money going into the system, as economic growth expanded by only 0.4 percent in the first three months rather than by the consensus growth of around 2.5 percent.


More puzzles behind Philippine GDP figure

Lending, liquidity still growing
Jun Vallecera
Business Mirror

BANK lending as well as money demand sustained continued double-digit growth rates in April, deepening the mystery behind why local output was a tepid 0.4 percent in the first three months and sharply lower than the consensus forecast growth of around 2.5 percent.

Latest numbers from the Bangko Sentral ng Pilipinas (BSP) show bank loans expanding again by 13.4 percent in April while domestic liquidity, which measures money accessible by consumers and businesses, lifted by another 13.7 percent.

Both are lagging indicators of the state of the economy, but they pertain to that now-perplexing period when economic activities in the country supposedly crawled to near-zero state.

“The double-digit growth of outstanding loans of commercial banks including [the BSP’s borrowing] or reverse repurchase agreements [RRPs] was sustained at 13.4 percent in April, albeit a deceleration from the previous month’s growth of 18.9 percent.

“Net of RRP placements with the BSP, bank lending grew at a faster pace of 19.0 percent in April from 17.8 percent in the previous month,” BSP Governor Amando Tetangco Jr. said in a statement.

The bulk of these loans were for production purposes, its volume rising faster during the month to 18.1 percent from 16.8 percent in March.

Consumption loans, mainly credit cards, personal loans, housing loans and cars purchased on deferred-payment basis, also quickened to 13.3 percent from only 9 percent the previous month.

Gross bank loans totaled P2.144 trillion but stood at P1.989 trillion on net (that is, excluding interbank lending) basis.

Loans extended to the following sectors, which comprised nearly half of total loans, contributed significantly to lending growth: agriculture, hunting, and forestry (which grew by 33.6 percent); real estate, renting and business services (by 36.8 percent); transportation, storage and communication (by 68.2 percent); electricity, gas and water (by 34.6 percent); and other community, social and personal services (by 37.3 percent).

Loans to the manufacturing sector and financial intermediation activities, which accounted for more than a quarter of total loans, likewise contributed to lending growth, although marginally, at less than one percent each.

Meanwhile, bank lending to wholesale and retail trade; public administration and defense; education; construction; and mining and quarrying sectors registered contractions during the month.

“These developments affirmed the BSP’s commitment to help provide the appropriate macroeconomic conditions for continued credit expansion, while fulfilling its primary mandate of maintaining price stability,” Tetangco said.

He reported a slight deceleration in liquidity growth, also known as M3, from the 15.6 percent recorded in March to 13.7 percent in April.

“The expansion in liquidity was fueled mainly by the continued rise in net foreign assets at 20.2 percent in April, which can be traced to the sustained growth in the net foreign assets of the BSP and the banks at 19.8 percent and 22.5 percent, respectively.

“Net foreign assets rose as the BSP continued to build up its international reserves and banks settled a significant portion of their foreign liabilities,” Tetangco said.

He vowed to continue to monitor the level of money in the financial system to ensure an adequate supply of liquidity for the orderly functioning of the markets and to provide for the economy’s growth requirements, while guarding against any potential build-up in price pressures.

What's wrong with the latest Philippine GDP data (II)

Be careful, Philippines
Outside the Box
John Mangun
Business Mirror

There are far too many people out there that are talking foolishly and, perhaps, dangerously about the Philippines. They are the ones who believe that any comment about the economy is some sort of secret language of politics. Positive analysis of the economy is obviously a cover for being pro-GMA. Likewise, any negative economic assessment is to be against GMA.

The problem, the dangerous problem, is that when you start making economic decisions because of your “politics,” the wrong decision is always the result. If you cannot have a clear picture of the economic situation because your politics clouds the view, then how can you make wise economic decisions?

No one has been able to show me any substantial and pervasive evidence that the Philippine economy is in bad condition or even significantly worse condition than a year ago. My e-mail address is below when you have something more than words to back your viewpoint. And as I wrote two days ago, the latest economic data distort the reality.

However, current government monetary policy from the Department of Finance and the central bank may be extremely dangerous and, in my opinion, is putting this economy at very great risk.

This is a little complicated, but bear with me for a moment.

From my view, current policy seems to be based on the assumption that the Philippine economy is going down and the USA economy is going up. If that is the case, then one proper policy would be to lower interest rates, as the government is now doing, in an effort to stimulate economic activity. Part of the problem with this is that it sacrifices the value of the peso. But that would not be a concern if one assumes that the US dollar is the currency of choice and is going to be strong in the long term, anyway. If the dollar is growing stronger because of a stronger US economy, there is little anyone can do except to accept a P50-to-$1 exchange rate and hope lower interest rates do spur the economy.

But if the Philippine economy does not need any stimulation and if the US economy is not getting better, then the absolute last thing the Philippines needs is anything that would artificially encourage a weaker peso. Further, if the local economy is not going to be stimulated by lower interest rates because the economy is growing as fast as it can without unnecessary government intervention, then the weaker peso will actually make the economy worse.

Anyone who says the US economy is getting better is a fool. The best that can be said is that the USA is not falling quite as fast as it was two months ago. But to say that a bottom has been reached is pure fantasy. But that is short-term. It is the long-term picture that predicts an economic catastrophe.

As I wrote two months ago, the US government took the greatest economic gamble in history. It lowered interest rates to zero and pumped hundreds of billions of newly printed “fake” money into the economy, hoping that a quick rush of economic activity would offset the disastrous inflationary results. It is not working, as evidenced by the rapid drop in value of the dollar.

Have you noticed oil prices lately? Oil is headed back to $75 (and local gasoline to P40) because of the very weak dollar. Higher oil prices will stop any slight improvement in the US economy. And the dollar is going much, much lower. In addition, US interest rates are going up as fast as oil prices.

US government-debt interest rates are at a six-month high because the financial markets are convinced that current policy is going to create massive inflation in the year to come. The economic-stimulus program is not stimulating the economy, and it is creating the potential for historically high inflation rates, maybe 10 percent or more. That is why oil and commodity prices are going crazy. And as the dollar depreciates, the US stock market will soar as stocks become increasingly cheaper for foreign money to buy.

The Philippine government is making the same gamble that the USA is making. It is betting that “stimulus” will offset any inflation risks.

A weaker peso in the current global environment will send local fuel prices (and local inflation) skyward, as happened last year. It is betting that a US recovery and a weaker peso will increase our exports. If the government is wrong, the local economy will sink like a rock in deep water.

What the government should do is appreciate the reality of the incredible strength of this economy given the global situation. The government should do all it can to strengthen the peso to true free-market levels to offset the decline of the dollar and resulting higher commodity prices.

Gambling about and tying the Philippines to the US economy makes no sense and could create an economic disaster.

PSE stock-market information and technical analysis tools provided by Inc. E-mail comments to

Wednesday, 3 June 2009

Inauguration of NAIA Expressway and related Road Projects

NAIA Expressway Skyway Flyover, Ramp 4, Pasay City
May 30, 2009

Before departing for the Republic of Korea for an official visit, President Gloria Macapagal Arroyo led the ceremonial drive-thru to formally launch and open to the public the Ninoy Aquino International Airport (NAIA) Expressway Flyover and its related road projects. Department of Public Works and Highways (DPWH) Secretary Hermogenes Ebdane, Jr. briefed the President on phase one of the projects which involved the construction of multi-level interchange facility directly connecting the Metro Manila Skyway and South Luzon Expressway (SLEX), and the recently completed NAIA International Terminals, Manila Domestic Airport as well as the rest of the airport facilities.

Hanjin to hire additional 24,000 workers for its Subic and Misamis plants

JEJU ISLAND, South Korea (via PLDT) – President Gloria Macapagal-Arroyo expressed elation here today after being informed by Hanjin Heavy Industries and Construction Corporation (HHICC) officials that the company would here an additional 24,000 Filipino workers for its Subic and Misamis Oriental plants. At present, Hanjin Philippines, Inc. (HPI), HHICC’s main office in the Philippines employs 16,000 workers.

As this developed, President Arroyo conferred the Presidential Medal of Merit on former Hanjin Philippines, Inc. president Jong Shup Shim for making HPI one of the world’s largest ship building conglomerates and for his contribution to the shipbuilding industry in the Philippines.

Jong is also credited for influencing Hanjin Heavy Industries and Construction Corporation (HHICC), to put up a shipbuilding facility in the Subic Freeport Zone in Zambales.

The awarding was held yesterday at the Shilla Hotel here at the sidelines of the ongoing 20th Anniversary of ASEAN and Republic of Korea Commemorative Summit.

During a meeting with HHICC president N.H. Cho at the Shilla Hotel in this island city, President Arroyo lauded Hanjin’s billion dollar investment in its Subic shipyard, and additional multi-billion investment in a new facility in Misamis Oriental, for making the Philippines the fourth largest ship-builder in the world.

Jong later told mediamen that starting this September, HPI will begin local production of ship components which they normally import from Korea for the assembly of ships at the Subic shipyard.

Jong estimated that the company would be able to manufacture $29-million worth of locally produced components for the first year and expressed confidence that this amount would increase to $57-million next year.

This, according to Jong will make the ships produced at the Hanjin shipyard in Subic, entirely and proudly Philippine-made. (PND)

Tuesday, 2 June 2009

ASEAN leaders sign free trade pact at the end of Sokor Summit

MANILA (PNA) –- President Gloria Macapagal-Arroyo and other leaders of the Association of Southeast Asian Nations (ASEAN) on Tuesday signed a free trade agreement in South Korea which they hope will nearly double two-way trade to USD 150 billion by 2015.

After the signing, the President flies to Russia for the St. Petersburg Economic Forum.

Reports reaching Malacanang said the trade ministers from South Korea and ASEAN signed the pact to liberalise investments on the final day of a summit by their leaders on the southern island of Jeju.

The investment accord is the final plank of a comprehensive free trade agreement that also covers trade in goods and services. Pacts opening up trade in goods and services are already in force, reports said.

"We expressed our expectations that the trade volume between ASEAN and the ROK will increase to USD 150 billion by 2015 through the ASEAN-ROK FTA and other complementary trade arrangements," the leaders said in a joint statement.

Two-way trade doubled to USD .2 billion in 2008 from USD .4 billion in 2004, reports said.

The completion of the free trade pact comes amid a push by South Korea to further increase its presence and influence in ASEAN, a 10-nation bloc with a combined population of more than half a billion people.

Analysts said China and Japan are already ahead in engaging ASEAN, which has a combined gross domestic product of around USD .3 trillion.

South Korea's finance ministry said the country sees ASEAN "as an export market which can offset sluggish markets in developed countries," especially after the global financial crisis.

Apart from exports, its companies are also expected to benefit since infrastructure spending is a major part of government stimulus packages in Southeast Asia, ASEAN officials have said.

South Korea can also secure better access to ASEAN's massive wealth in natural resources including timber, rubber and oil and gas.

Indonesian Trade Minister Mari Pangestu told AFP in an interview on Monday that her country exports to billion worth of natural gas to South Korea annually.

South Korea also buys food and fish products as well as footwear, textile and paper and pulp from Indonesia.

Increased but controlled spending key to maintain Philippines' economic resiliency -- Arroyo

JEJU ISLAND, South Korea (via PLDT) – President Gloria Macapagal-Arroyo revealed here yesterday her government’s “battle plan” and strategy on how to keep the country’s economic resiliency in the face of the threat of recession confronting the entire world.

By embarking on increased but “controlled” spending on vital food, energy and infrastructure programs, the President said “we will be able to “secure our food, fuel and rice needs.”

“So we intend to increase our spending and direct this spending to secure our food, fuel and rice needs which means investing in food security and energy security and also in jumpstarting our economy by investing in long delayed infrastructures – infrastructures that were needed from decades ago which we could not afford until now,” she added.

President Arroyo spelled out her battle strategy to reporters on the sidelines of the 20th Anniversary of ASEAN-ROK Commemorative Leaders Summit yesterday.

The President further pointed out that aside from the above-mentioned list of “spend-worthy” items, human and physical infrastructures are equally critical.

“Spending in human and physical infrastructure means investments in education, healthcare and social services along with roads, bridges and ports,” the President stressed.

She vowed, however, that this calculated and planned spending would not be used improperly assuring that “we will maintain benchmarks of fiscal discipline so that we will continue to have a stable macro-economic environment.”

“The important thing is that we have jobs, jobs, jobs and jobs for our people,” the President emphasized. (PND)

What's wrong with the latest Philippine GDP data (I)

The real economic numbers
Outside the Box
John Mangun

For more than 30 years, I have been a financial professional, analyzing and interpreting economic and business data. And never in those decades have I seen an official government economic report as suspect as the release last week of the first-quarter Philippine economic numbers.

I felt as if I had bought a used paperback novel from National Book store and several chapters were missing. It seems to me that the number crunchers who prepared the report may know how to add and subtract properly; they just do not have a clue what the numbers mean. To say that the data indicates or foreshadows a recession is pure fantasy. If I were less of a gentleman, I would describe the conclusions voiced publicly about the economic data with one word that starts with the letters B-U-L-L.

Let me explain.

We are told that the economy is so bad that personal consumption and spending are in serious trouble. Except that personal spending rose 9 percent from first quarter 2008 to first quarter 2009. Tell me again about personal spending dropping. But, the “experts” tell us, between 2007 and 2008, personal spending rose 15 percent. Yes, absolutely, and here is why.

In that 2007 period, oil cost $55. In 2008, the cost in the January-March period was $100 so, of course, personal spending went much higher over 2007. Fuel prices nearly doubled. This year, 2009, oil was selling at $45 so we did not have to spend as much for gasoline. Yet spending did go up, and where was the biggest jump? Food. That increase was not because food prices were significantly higher; it was because we had more money to spend for the table and not for the gas tank.

See, the number crunchers are not looking at what is called “current prices.” That is why they can say that personal spending grew only by 0.8 percent. They are using the statistical practice of using “constant 1985 prices, ” using “constant peso-value” factors in inflation to make a value comparison over a long period.

Two things.

One, “constant peso” distorts the picture when measuring in the short term, say, one or two years, because inflation is not a significant factor over a short period. Further, for the purposes of short-term economic data as this current report is, the “value” of the peso is not important. The only important question is this: Did Filipinos buy more goods and services in 2009 than in 2008? And the answer is yes, 9 percent more. If we were able to buy 9 percent more this year than last, obviously some people have redefined the word “recession” to suit their own false perception.

What about the performance of specific industry sectors? Here again, the “experts” want to use 1985 constant pesos to make their point. However, using real 2008-09 pesos, the ones we use every day, all major sectors grew over 2008. Agricultural production up 9.2 percent, industry up 1.1 percent, services up 5.7 percent. That means across nearly all sectors, the Philippines produced more. In fact, we produced 4.8 percent more over 2008; not the 0.4 percent that the headlines banner. That production is called the gross domestic product (GDP). By comparison, the USA’s current dollar GDP in first-quarter 2009 went down 3.1 percent.

What about our money relationship with the rest of the world? Exports dead. Remittances dying. Nonsense. Our net monetary inflows in first-quarter 2009 are staggering. In part due to the drop in oil prices and factoring in the increase in remittances, inflows to support the outsourcing industry, tourism and all other sources including borrowing, net money inflow increased by an amazing 53.7 percent over 2008. This fact completely renounces all the gloom and doom about the subject you read three months ago. No comparison to 2008, the Philippines is a cash magnet for the rest of the globe. Yes, foreign investment is down significantly. What do you expect? The foreigners are broke. Malaysia’s foreign investment in the first quarter dropped 79 percent. China down 34 percent. The bright side: The Philippine economy is not dependent on foreign money the way the others are.

One hidden very bright spot is in capital formation. That is the transfer of savings from households and governments to the business sector, resulting in increased output and economic expansion. Overall, there was a decrease of 0.2 percent. Less money was spent in the manufacturing sector. But construction was up 22 percent and agriculture up 49 percent. With the general global attitude so negative, the capital-formation numbers should have tanked if we are in a recession. India, for example, saw capital formation drop 2.3 percent.

The bottom line, though, is this: Philippine gross national product (GNP), the value of what we produced added to the money that came in from abroad from all sources, increased by 9.3 percent over first-quarter 2008 in current pesos. That is not as good as 2007 to 2008, where the current peso GNP increase was 14.2 percent, to be sure. And the GDP only grew 4.8 percent lower than 2008’s current peso 11.7 percent.

But even using “constant peso” values, GNP grew by 4.4 percent over 2008. Not bad for a country in “recession” while the rest of the world slowly burns to the ground. More about that on Thursday.

Global downturn an opportunity for the Philippines

THE GOVERNMENT should take advantage of the ongoing downturn to enact reforms that will position the country as a prime investment destination once the global economy recovers, foreign business leaders said in a policy paper released yesterday.

The Joint Foreign Chambers’ paper, which lists prescriptions for "preparing to rebuild foreign investment inflows", has been submitted to President Gloria Macapagal Arroyo and key state agencies. It also seeks to guide policymakers of the next administration, officials said.

The recommendations include an emphasis on reform instead of resiliency in economic strategies; a call for the immediate passage of key bills and construction of infrastructure especially in Luzon; and that the business climate be improved by easing foreign investment laws, addressing corruption, and upgrading education.

"We believe the foreign investment community can invest tens of billions of dollars more and create many millions of new jobs ... but this will only happen once the world economy is back on track and if the investment climate in the Philippines is attractive enough in comparison to alternative competing economies," European Chamber of Commerce of the Philippines, Inc. President Hubert D’Aboville said at the presentation of the 14-page document.

The paper states that direct investments to the Philippines only accounted for 3% of a $51.1-billion inflow into Southeast Asia.

"More work is needed and this is the best time to prepare," Mr. D’Aboville said.

The first of the eight-pronged approaches described involves a warning against complacency in undertaking reforms. A 10% growth by 2013 or 2014 should be attempted, the paper states.

"We encourage the President to share her proposals for rebooting in her forthcoming State of the Nation Address in July and encourage candidates for the presidency to include specific business and economic reform proposals in their platforms...

"[And] we suggest the government organize a Special Crisis Experts Group comprising of leading economists, businessmen and senior government leaders to recommend key reforms...," the paper continues.

It goes on to recommend that key bills be passed before the current Congress’ term ends. The list of priorities includes draft laws that seek to rationalize investment incentives, grant tax perks to real estate investment trusts (REIT), and harmonize the Philippines’ customs laws to international standards. Also tagged were the Freedom of Access to Information, Department of Information and Communication Technology Act, Pre-Need Code, and Residential Free Patent bills.

Asked to comment, House Speaker Prospero C. Nograles said in a text message that the REIT bill would likely be the only one to be finished by their branch of Congress.

The foreign chambers went on to reiterate previous calls to enjoin the private sector in the government’s review of foreign investment laws, and earlier recommendations on building more infrastructure, particularly those that will improve Luzon’s transportation networks.

"If they are already started, they would have a good chance of [continuing under the new administration]," American Chamber of Commerce of the Philippines, Inc. President Austen Chamberlain told BusinessWorld at the sidelines of the briefing.

Education must also be upgraded to make the workforce more competitive, while corruption should be diminished to attract investors.

"[And] in the months ahead, the Joint Foreign Chambers will consult with industry associations to identify and prioritize industry-specific reforms that will most accelerate growth in these ’Big Winner’ sectors," the paper states further, tagging agriculture, business process outsourcing, creative industries, infrastructure and logistics, manufacturing, mining and tourism as pivotal.

These recommendations will be reiterated to presidential candidates once they emerge, Mr. Chamberlain said.

US to help beef up Philippine military capability

2010 US budget includes policy approach for allies
M. P. T. Jamias

THE PHILIPPINES can expect increased military capability-building assistance from the Obama administration, which has adopted a strategy to beef up capacities of Asian allies in the war against terrorism, the top US Defense chief said yesterday.

"Looking forward, I believe [the Philippines-US] relationship needs to evolve into a broader, strategic one," said US Defense Secretary Robert M. Gates in a joint press conference with Defense Secretary Gilberto C. Teodoro, Jr. in Camp Aguinaldo, Quezon City yesterday.

Mr. Gates noted that his department has added "hundreds of millions of dollars" to the 2010 US budget for allies to "advance this kind of partnering where we build partner capacity."

"I think one of the fundamental tenets of American foreign policy under the Obama administration, as well as the Department of Defense itself, is the growing importance of partnering around the world and building partner capacity," he added.

Messrs. Gates and Teodoro met to discuss defense relations.

"The visit of Secretary Gates is one step further to the goal [of] increasing "enduring cooperation" between and amongst our armed forces, defense departments and our governments to combat common threats in international terrorism," said Mr. Teodoro in the same briefing.

The US military has been training troops in counter-terrorism in Sulu province, a stronghold of the Abu Sayyaf with links to international terrorist organizations al Qaeda and Jemaah Islamiyah.

Mr. Gates commended the Philippine military and expressed collaboration in the future. "We will continue to support their efforts to defeat terrorists and extremists threatening their country and the region. Together, we will not relent until this threat has been eliminated."

For his part, Mr. Teodoro said both countries will "join hand-in-hand to solve regional or area-wide problems."

He said the Philippines should "develop its own capacities" instead of relying on foreign aid alone.

The Philippines is set to receive $667 million in official development assistance under the proposed 2010 budget submitted to the US Congress, according to an earlier report from the Department of Foreign Affairs.

Philippine-US military relations have been threatened by the Senate’s rejection of a new military basing agreement in 1991, and the conviction in December 2004 of US Marine Lance Corporal Daniel J. Smith for raping a Filipino in Subic that nearly affected the annual Balikatan joint military exercises. The Makati regional trial court ruling was overturned by the Court of Appeals last April based on a new affidavit released by the victim identified as Nicole.

The Philippines has a Mutual Defense Treaty with the US that was signed in 1947.

Philippine pharma industry remains bullish in ’09, raises major concerns

MANILA (PNA) - Pharmaceutical sales in the country is expected to grow by five to six percent this year from P116 billion in 2008, said the Pharmaceutical and Healthcare Association of the Philippines (PHAP) as the industry group hopes to remain viable with the support of the government.

PHAP, composed of more than 50 Filipino and multi-national drug manufacturers, also expressed optimism that the role of the industry in the research and development (R&D) to discover and make available innovative, safe and life-saving medicines will be further appreciated as the world and the Philippines prepare for global health threats like the Influenza A (H1N1), among many others.

“The role of research and development has become more relevant today as we brace for existing and emerging health threats in a globalized community,” said PHAP Executive Director Reiner W. Gloor.

In 2008 alone, biopharmaceutical companies have invested a record $ 65.2 billion in research and development efforts and on the average spend 15 years of R&D to obtain regulatory approval for a new drug.

“The global economic crisis, the extensive research and development process, and the expiring patents are some of the reasons we have this growth projection this year,” said Gloor.

He added that the Philippine pharmaceutical industry grew by 10.18 percent in 2008 per IMS.

PHAP, consisting of providers of most of the country’s patent medicines, was assured of the government’s support to ensure that the pharmaceutical industry in the country remains viable.

In a recent meeting with the PHAP membership, President Gloria Macapagal-Arroyo said the government recognizes intellectual property rights as an important incentive for scientists and researchers to discover new and effective medicines.

“I would like to assure you that we religiously implement laws that uphold patent protection,” said President Arroyo.

“It (government) supports research and development which requires the protection of intellectual property rights,” said Gloor.

Gloor said industry leaders were grateful for the opportunity to dialogue with the Chief Executive on major concerns.

Philippine share prices rally to eight-month high

AFP and Kristine Jane R. Liu

SHARE PRICES closed 2.9% higher yesterday, at an eight-month high, on prospects of further domestic policy easing, dealers said.

The Philippine Stock Exchange index added 69.34 points to close at 2,458.65 while the all-shares index gained 30.72 points to 1,598.59.

There were 85 gainers, 43 losers and 42 unchanged.

Turnover amounted to 3.95 billion shares worth P3.78 billion pesos.

"There was excess liquidity in the system because of the rate cut and it is finding its way into the market," Astro del Castillo, managing director at First Grade Holdings, told Dow Jones Newswires.

"Also, things are looking up, particularly for consumer spending ahead of next year’s elections."

The central bank cut rates by 25-basis points last week, bringing its overnight borrowing rate to a new 17-year low of 4.25%. It has indicated there is still room to cut rates, given the 0.4% gross economic product growth in the first quarter.

For Maria Arlysa E. Narciso of AB Capital Securities, Inc., "investors... are hanging on to the sentiment we can go higher or the trend has changed."

She said the market’s sustained rallies are not normal considering the economic outlook remains bleak.

Looking forward, she said, chances are high the market will see a steep fall, especially if there is negative news significant enough to have a big impact.

"The market is badly calling for a correction. We do not think this is normal and it is surprising the market continues to climb despite the negative news," Ms. Narciso said.

Harry G. Liu of Summit Securities, Inc. said the stable economic numbers and the steady peso are keeping the local market afloat. Technical indicators, he said, are pointing to the market testing the 2,500 levels.

"Everyone is hanging on the US market. If it continued to climb last night and went above the 9,000 level despite General Motors Corp. filing for bankruptcy [yesterday], the local market will likely take the cue [today]," Mr. Liu said.

Mr. Liu said the worst, including the possibility of the economy falling into a recession, seems to have been discounted by investors.

Still, the analyst warned, investors should not immediately jump into the conclusion the market has made a turnaround.

The market, he said, is just experiencing a medium-term upside recovery after slumping by 1,600 in October 2007.

"Some economic numbers are still not good and it will take awhile for the market to revert to a bullish trend [but] as long as market activity remains steady, the market will recover," Mr. Liu said.

All six subindices rallied yesterday, led by property shares that surged by 5.84% or 48.53 points to 878.27.

Mining and oil stocks added 4.41% or 242.59 to 5,736.49 while financial companies gained 4.4% or 25.16 points to 596.35.

Holding firms climbed by 1.6% or 22.66 points to 1,432.35 while industrial stocks rose by 1.44% or 45.75 points to 3,208.95.

The service sector rallied by 1.35% or 17.08 points to 1,278.50.

Andrew Tan-led property company Megaworld Corp. shot up by 13.68% or P0.13 to P1.08.

Sy-led Banco de Oro Unibank, Inc. added 6.06% or P2 to P35, while Metropolitan Bank & Trust Co. surged by 5.88% or P2 to P36.

Ayala Land, Inc. gained 5.74% or P0.50 to P9.20, while sister firm the Bank of the Philippine Islands climbed by 5.68% or P2.50 to P46.50.

Index heavyweight Philippine Long Distance Telephone Co. advanced by 0.67% or P15 to P2,225, while Manila Electric Co. rose by 2.6% or P3 to P118.

WB, DOF, TAN sign $1.01-M grant for transparent procurement

Cai U. Ordinario
Business Mirror

The World Bank, the Department of Finance, and the Transparency and Accountability Network Foundation Inc. (TAN), a civil society anticorruption coalition, signed on Thursday a grant agreement amounting to $1.01 million to promote transparency in procurement mechanisms in poor municipalities in the country.

The grant, called Japan Social Development Fund (JSDF) Grant for Improving the Quality and Responsiveness of Public Spending in Poor Communities through Localized Procurement Reform, will institutionalize participatory public-procurement processes in poor communities; localize procurement reform; and monitor evaluation and project management.

The project will be implemented by the Government Procurement Policy Board (GPPB) and TAN. The funds for this capacity building grant will come from the JSDF being administered by the World Bank.

“With this grant, the government of Japan is proud to contribute to the empowerment of local communities in the Philippines and the promotion of transparency and accountability in local governance, two pillars of a strong and vibrant democracy,” said Kohei Noda, financial attaché of the Embassy of Japan in the Philippines, who witnessed the signing at the World Bank office in Manila.

The grant will institutionalize partnerships between local government units (LGUs) and the local communities for procurement to ensure more efficient and responsive public services in poor communities. This will be achieved through consultation with poor communities, review of community-based procurement experiences and identification of ways in which poor people can be more directly involved in local public procurement processes.

It will support training activities that target community leaders, volunteers, and members of LGU Bids and Awards Committees, and will develop training materials and guides for communities and LGUs on local procurement with a particular focus on the participation of community members and civil society organizations.

The grant builds on the success of the ongoing World Bank-funded Kalahi-CIDSS and other similar community-driven development projects in promoting more participatory and transparent decision making in poor communities which has resulted in the delivery of basic public services that are cheaper, faster, and better and with less leakage than comparable investments implemented by government agencies.

World Bank country director Bert Hofman said greater focus on governance is one of the strategic shifts in the new World Bank Country Assistance strategy for the Philippines for fiscal year 2010-12.

Hofman said that the grant will help the government improve governance by enhancing transparency in the use of public funds. He said the grant supports better governance through cooperation between civil society and government, for which the Philippines is becoming increasingly renowned. “Improving governance is critical to achieving better development outcomes and making growth work for the poor,” he said.

Finance Secretary Margarito Teves welcomed the JSDF grant, saying the project will boost government efforts to fight corruption in public procurement.

Aggressive pricing boosts Philippine domestic-airline passengers by 21% in Q1

Lenie Lectura
Business Mirror

DOMESTIC passenger air traffic from January to March this year rose by 21 percent to 3.40 million compared with 2.76 million in the same period a year ago aided by the airline’s aggressive pricing strategies, data from the Civil Aeronautics Board (CAB) showed.

Philippine Airlines (PAL), Cebu Pacific, Air Philippines, Zest Airways and Seair all transported a total of 3,403,699 passengers out of the possible 4,294,678 seats for domestic travel during the period.

Of the total number, Cebu Pacific, the airline unit of conglomerate JG Summit, recorded 1,609,405 passengers compared to PAL’s 1,512,614.

Cebu Pacific recorded a load factor of 81 versus PAL’s 80 percent during the period out of a possible 1,961,324 seats for Cebu Pacific and 1,897,118 seats allocated by PAL.

Air Philippines, the low-cost partner of PAL, recorded 124,516 passengers out of the possible 198,292 seats; Zest Airways, formerly Asian Spirit, reported 114,611 passengers and 193,236 allotted seats; and Seair transported 42,724 passengers as of end-March this year with 94,709 seats.

Air Philippines reported a load factor of 74; Asian Spirit with 59 percent; and Seair with 78 percent.

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

The total load factor or the number of seats occupied during a flight rose to 76 percent in the first quarter from 75.6 percent in the same period last year.

CAB deputy executive director Porvenir Porciuncula said the airlines continued to offer aggressive pricing strategy and search for and opening of new domestic routes.

Pay adjustment for Philippine government employees ensured

Bernard U. Allauigan

A CONFERENCE committee yesterday approved a measure that would upgrade and rationalize state employee compensation, scheduling its ratification today to meet the targeted July 1 implementation.

Acting Senate panel chairman Richard J. Gordon and House panel chairman Quirino Rep. Junie E. Cua said the measure, in the form of a joint resolution, that was certified as urged by President Gloria Macapagal-Arroyo, would be approved by Congress today.

Congressional sessions end tomorrow even if the second regular session is scheduled to adjourn on Friday.

Mr. Cua said the amendments to the Salary Standardization Law would increase pay by half within a four-year period.

He said the 2009 budget has allotted P20 billion for the purpose, adding Congress should appropriate an additional P100 billion to raise the total to P120 billion for the four-year implementation.

Under the reconciled measure, the total pay will be limited to:

  • basic salaries, including increments;
  • standard allowances and benefits;
  • specific-purpose allowances and benefits; and
  • incentives.

Excluded are indirect compensation under existing laws such as retirement benefits, insurance, employee compensation insurance, Home Development Mutual Fund or Pag-IBIG Fund benefits and Provident Fund benefits.

Mr. Cua said the proposal would benefit 1.1 million workers, including 200,000 military personnel.

Investors expected to swamp SM bonds


Sy-led SM Investments Corp.’s plan to raise up to P10 billion from bonds has generated significant interest according to the lead underwriter, with the issue deemed "oversubscribed" on the first day of a road show.

"We feel that there is a strong demand for the seven-year bond from insurance companies and banks, [so] our efforts are now more focused on the five-year bond which we will offer to retail investors," said Eduardo V. Francisco, head of BDO Capital and Investments Corp., the investment banking unit of Banco de Oro Unibank, Inc. which is controlled by the family of Henry Sy.

Mr. Francisco said this is the reason why the bond will be sold for eight business days instead of the usual five working days starting next week.

SM Investments is also going to Cebu City and Davao City today and tomorrow to attract potential investors in the provinces.

Last week, the group secured the approval of the Securities and Exchange Commission to offer P5 billion in fixed-rate bonds, with a provision to sell P5 billion more in case of an oversubscription.

The bond will be issued in two tranches maturing in five and seven years, which will carry a 7.75% to 8.25% and 8.6% to 8.9% interest per annum, respectively.

The bonds, which could be bought for a minimum of P20,000 and in multiples of P10,000 thereafter, represents SM Investment’s first time to sell bonds to the public, having opted to borrow from large financial institutions before.

Proceeds will be used for the group’s three-year expansion, with projects like the Two E-Com Building, Radisson Hotel, Arena Coliseum and the expansion of the SMX Convention Center at the SM Mall of Asia; the planned SMX Convention Center in Cebu and the SM Cebu Radisson Hotel; and for another hotel.

Merril F. Yu, senior vice-president of SM Hotels Corp., said Radisson Cebu would open in December.

The proposed arena will be able to accommodate at least 12,000 people. Expansion will also add another 10,000 square meters to the SMX Convention Center’s 40,000-square-meter gross land area.

"This is going to be a big project. We plan to start the construction of the arena next year," Mr. Yu said.

Mr. Yu said there are still no specifics for a plan to build budget hotels, but the idea is to have 50 to 150 rooms per hotel depending on the location.

SM is now involved in five core businesses: retail and wholesale, mall development, banking and financial services, property development, and hotel and entertainment.

SM Investments Chief Finance Officer Jose T. Sio said the company has no plans to slow down on expansion as the group wants to be "well-positioned" when the economy recovers.

Shares in SM Investments dipped by 4.47% or P15 to P320 apiece yesterday.

Monday, 1 June 2009

New Philippine-Korea biofuel deals worth $600M signed

Neil Jerome C. Morales
Updated as of 3:18PM, 06/01/2009

TWO LOCAL firms have signed separate deals with two South Korean companies for biofuel production ventures worth $600 million in total, the Agriculture department said on Monday.

The two companies, with the help of their foreign partners, will develop lands for bioethanol and biodiesel feedstock production in various parts of the country.

Bioethanol producer Enviro Plasma, Co., Ltd. and Central Luzon Bioenergy Corp. will put up a 500,000-liter per day bioethanol plant worth $300 million in Clark, Pampanga sourcing the sugarcane feedstock from 46,000 hectares of plantation in Tarlac and Pampanga.

Enviro Plasma has also made a pledge to President Gloria M. Arroyo to build a $175-million distillery and power plant, also in the central Luzon area.

Meanwhile, South Korean biodiesel producer Eco Solutions Co., Ltd. and partner Eco Global Bio-Oils Inc. will invest $175 million to put up a biodiesel plant capable of producing 100,000 liters of biodiesel per day in General Santos City in South Cotabato. The feedstock will be sourced from their 100,000 hectares of jatropha plantation in General Santos City.

Foreign chambers push for Philippine trade reforms

Updated as of 4:13PM, 06/01/2009

FOREIGN businessmen on Monday released a paper which outlines government actions needed to prepare the Philippines for the world economy's eventual recovery.

The Philippines should take advantage of the current downturn to enact reforms that will make its investment climate more attractive when the crisis is over, the Joint Foreign Chambers said at a media briefing.

The chambers want the speedy passage of key laws including the rationalization of fiscal incentives and the building of infrastructure, mostly to improve transportation networks in Luzon.

Barriers to foreign investment, corruption, deficient education should also be addressed, they said.

Government, they added, should also focus efforts to bolster the following sunshine sectors: business process outsourcing, agriculture, creative industries, infrastructure and logistics, manufacturing, mining and tourism. —Jessica Anne D. Hermosa

Philippines almost ready for 2010 automated polls

Comelec to award automation contract soon
Anna Valmero

MANILA, Philippines--After a month of bidding, the Commission on Elections (Comelec) is set to award the P11.3 billion contract for the automation of the 2010 elections this week, a poll official said.

“We will make the SBAC report and recommendation to the Commission en banc tomorrow and it is up to them if they will award the contract immediately or by end of the week. We are all systems go for 2010 poll automation ,” said Special Bids and Awards Committee (SBAC) chairman Ferdinand Rafanan.

“We are ready to make the recommendation for Smartmatic-TIM [as the bidder capable for the 2010 automation project] although we still have to deliberate some items. After we make the recommendation the ball is with en banc whether they will approve our recommendation or not,” said Rafanan.

The SBAC Technical Working Group finished the technical evaluation on Saturday and the bidder passed all 26 technical criteria.

Meanwhile, there were only few remaining documents that must be verified for post qualification of eligibility documents, he added.

The bidder consortium Smartmatic and Total Information Management was the only bidder left during the final leg of the automation bidding, which involved the technical evaluation of poll machines and the post qualification of eligibility documents.

The bidder pegged its bid at P7.191 billion or P4 billion below the total contract amount.

Should Smartmatic-TIM bagged the contract, the excess P4 billion in the supplemental budget will “naturally go as an inherent funding of the poll body,” said Rafanan.

“The P4 billion will go to Comelec savings. Those are only figures and will only be disposed by the Department of Budget and Management for approved projects,” said Rafanan.

Rafanan noted the technical evaluation of poll machines, specifically the precinct count optical scan (PCOS) units from Smartmatic-TIM was “successful” and noted even Congressman Teodoro “Teddy Boy” Locsin and representatives of Senator Manuel Roxas II, who came to observe the demonstration and vote using the machines, had no negative comments.

Asia: Weathering the Economic Crisis

Its banks are strong, while debt loads and inflation are low. But that doesn't mean there aren't challenges for investors

By Frederik Balfour

Though it may have been half-forgotten by many investors since the crisis, its educated workers, natural resources, and—in some countries, at least—first-class infrastructure make it worth paying attention to. ASEAN has a total population of 560 million, and its combined gross domestic product of $1.3 trillion is greater than India's. Indonesia, Thailand, Malaysia, the Philippines, Vietnam, and Singapore—which account for about 95% of the region's economy—attracted nearly $50 billion in foreign direct investment last year, vs. China's $92 billion.


New Metro Manila rapid bus system to cost P55B

Darwin G. Amojelar
Manila Times

To solve the Philippines’ traffic woes that apparently are best dramatized in Metro Manila and the outskirts of the country’s principal region, the Department of Transportation and Communications (DOTC) plans to construct a multibillion-peso bus rapid transit (BRT) system in the region similar to that in Bogota, Colombia.

Documents obtained by The Manila Times from the National Economic and Development Authority (NEDA) showed that the BRT system—a 426-kilometer alternative rapid transit mode—will cost about P55 billion.

The pre-feasibility study on the system also showed that this alternative transit mode, unlike the Light Rail Transit (LRT) and Metro Rail Transit (MRT) systems that use train coaches, will use busways instead of rail tracks. The LRT 1 and LRT 2 and MRT 3 systems—all operating in Metro Manila—are seen to ease commuter traffic especially during peak hours.

Today and coinciding with the reopening of schools, the government will have begun operating the MRT 3 system on a 24-hour run.

“A BRT is a surface metro system that can be delivered at a fraction of the cost of rail. The system offers segregated median busways with median stations, pre-boarding fare collection and fare verification, free transfers between corridors, competitively-bid concessions, high-frequency service and low-station dwell times, clean bus technologies and modal integration,” the NEDA documents said.

The Transportation department is planning to have two pilot routes—the 21-km C-5 (South Luzon Expressway-Commonwealth Avenue in Quezon City) route and the 24-km Edsa-Binangonan (Rizal) route—which will cost a total of over P6 billion.

The C-5 BRT will have 16 stations while the Edsa-Binangonan BRT, 18 stations.

The estimated cost per kilometer in the construction of the Edsa-Binangonan pilot corridor is P139.07 million and of the C-5, P129.33 million.

The two pilot routes were chosen from 11 potential BRT corridors.

NEDA cited the positive impacts of the BRT system in Bogota, including high level of service at low cost, less boarding time, equal-opportunity access, safety, reduction in some pollutants, efficiency and customer satisfaction, all achieved at a fare of $0.40 and not requiring any subsidies.

The BRT system in Bogotá can handle 40,000 passengers per hour.

NEDA said that pedestrian spaces and bike paths will complement the proposed BRT system in the Philippines.

In Asia alone, 15 BRT systems are in operation and 21 systems are in the planning stages or undergoing construction.

Currently, the Philippines has three mass rail systems—LRT 1, LRT 2 and MRT 3.

LRT North Extension is expected to be completed next year and MRT 3 construction is set to start, also next year. The government is also proposing to extend LRT 1 to Cavite province, south of Manila.

Philippines' SM sees resilience in retail business

Honey Madrilejos-Reyes
Business Mirror

THE SM group expects its retail business to remain resilient despite the slowdown in the country’s economic growth.

“The Gross National Product [GNP] still grew by 4.4 percent in the first quarter. That’s why on the retail level, it is not as bad as it looks like because the net factor income still buffers the economy that feeds the consumption spending,” explained SM Investments Corp. (SMIC) vice president for investor relations Cora Guidote.

While the Philippine economy, as measured by the Gross Domestic Product, only grew 0.4 percent in the first quarter due to the impact of the US financial meltdown and the global crisis, the demand for the services of the overseas Filipino workers (OFW) continued to increase, contributing to the hefty growth of the net factor income from abroad (NFIA) to 40.8 percent and thus, pushing GNP to grow by 4.4 percent in January to March.

“That’s why from an SM standpoint, we are okay as long as your NFIA is still boosted by the positive growth in OFW remittances,” added Guidote.

The SM group’s aggressive shopping mall expansion is also not affected by the economic slowdown, she said.

“We take a very long-term perspective in expansion so we are continuing with [the expansion program], with the view that once the projects are completed two to three years from now, the economy has already recovered. Even the malls we are opening this year are not as large as the ones last year. So if you take a look at it, we are calibrating the expansion on the basis of our own reading,” she said.

In the first quarter, SMIC, the group’s holding company for the mall, banking, retail merchandising, property development and hotel and entertainment investments, posted a 13-percent rise in net income to P4.2 billion as consolidated revenues grew 11 percent to P35.2 billion, primarily buoyed by retail sales.

In a related development, SMIC said it has obtained approval from the Securities and Exchange Commission (SEC) to sell fixed-rate domestic retail bonds.

The bonds—with a minimum investment value of P20,000 per transaction—will be issued in two tranches, maturing either in five or seven years. SMIC aims to issue an aggregate principal amount of P5 billion with an oversubscription option of up to P5 billion.

The bonds, which are jointly underwritten by BDO Capital & Investment

Corp., BPI Capital Corp., China Banking Corp., Union Bank of the Philippines and RCBC Capital Corp., is backed by a Triple A credit rating by Philippine Rating Services Corp. (PhilRatings).

Triple A is the highest rating assigned by PhilRatings to obligations that are of the utmost quality with minimal credit risk. It is also assigned to issuing companies with an extremely strong ability to meet its financial obligations.

Following SEC’s approval of the issuance, SMIC executives will conduct domestic roadshow starting today until June 3 in Manila, Davao and Cebu.

Low GDP figure baffles Philippine Central Bank

Jun Vallecera
Business Mirror

THE Bangko Sentral ng Pilipinas (BSP) is baffled by the lack of solid growth in the first three months when bank-lending growth, while lower than previous, continues to be strong.

BSP Governor Amando Tetangco Jr. and his deputies acknowledged the broader macroeconomic picture does not tally with what the financial data submitted by banks and financial institutions suggest.

As a result, they all want their fiscal colleagues to revisit current fiscal policy and see if this can be made to support more closely with the monetary objective of stable prices and optimal growth.

“As I said before, there has to be a good mix between fiscal and monetary policy. On our side, we have adopted an easing or accommodative stance since the last quarter of 2008, so any additional fiscal spending can help,” Tetangco said.

This was drawn by confirmation that local output, measured as the gross domestic product (GDP), grew by only 0.4 percent in the first quarter, sharply lower than the consensus growth—seen earlier averaging as much as 2.5 percent.

Neither Tetangco nor BSP Deputy Governor Nestor Espenilla Jr. can explain the apparent disconnect.

Based on banking data, and even if one validates this with the various banks, lending continues to be strong. Some of the big commercial banks even report double-digit lending growth, and lending is also strong even in the rural-banking industry,” he said.

Lending across all banks averaged 18.9 percent in March or slower than bank lending in February averaging 22.5 percent, but was still deemed robust.

Espenilla said there had been some tightening of credit standards resulting from the global financial downturn, but the bottom line is that local banks continue to lend in healthy volumes.

“Credit is not an issue from that perspective. But as to how that connects to lower GDP is something worth analyzing,” Espenilla added.

He sees lending still growing in double digits in the months ahead as banks endeavor to refocus from treasury operations, prevalent in the past, to the more traditional or core lending activities the industry is known for.

Espenilla and Tetangco acknowledged the GDP report is a lagging indicator and that the impact of long-gestation projects has yet to be reflected in the quarterly reports.

Tetangco said demand indicators like loan and liquidity “remain consistent with sustained economic activity.”

And yet, strong lending activities cannot in this case be linked to an economy that ought to have moved more quickly during the period but hasn’t, according to Espenilla.

Tetangco said the Cabinet-level Development Budget Coordination Committee (DBCC), where he sits as ex-officio member, is set to review the year’s fiscal and monetary programs later this month.

“They have to look at the factors behind the slowdown, and whether or not the first-quarter outturn can be considered the worst. If so, then the second quarter could prove better,” he said.

On the issue of additional fiscal space, Tetangco said the more important consideration was the long-term trend: “What is important is the longer-term trend in fiscal policy, whether you see fiscal consolidation happening over the medium to long term so that you can have a bigger deficit in the short term.”

This view cuts to the chase of what the central bank officials have been saying since the start of the year when they first advocated for a wider-than-programmed budget deficit as an antidote to the global recession.

“If the market believes that over the medium and long term the government is able to go back to fiscal consolidation then there should be no negative market reaction,” Tetangco said.

Finance Secretary Margarito Teves has stuck to his guns and refused to widen the year’s budget deficit, seen averaging within 2.5 percent of GDP of P199.4 billion.

Teves said a deficit as wide as 3 percent of GDP, for example, was out of the question.

MRT3 starts 24-hour run Monday

Manila Bulletin

The Epifanio de los Santos Avenue (EDSA)-based Metro Rail Transit Line 3 (MRT3) starts its 24-hour run Monday to provide an alternative mode of transportation for call center agents and others who work during odd hours of the night.

Two trains will be deployed for a 30-minute headway according to the MRT3 website (, for the extended run from 11 p.m. to 5 a.m.

The MRT3 serves the North Avenue, Quezon City-Taft Ave., Pasay route.

MRT3 general manager Reynaldo I. Berroya said the firm will deploy more security guards and have the stations fully lighted to ensure security during the extended hours of operation.

"Security guards will be on board the trains to protect passengers," Berroya said.

The 24/7 operation of the MRT3, he said, is "consistent with the covenant of President Arroyo with business process outsourcing (BPO) agents to assist them by providing a safe, fast, and economical transport services," noting that at this period, most buses and jeepneys are in their garages already.

Call center agents finish their shifts at about midnight and at 4 a.m.