Saturday, 13 June 2009

Philippines' LRT1 North Extension project is a debut for local contractors

http://www.gov.ph/index.php?option=com_content&task=view&id=2000834&Itemid=2

The construction of the Light Rail Transit 1 (LRT1) North Extension—from Monumento in Caloocan City to North EDSA in Quezon City—is a “debut for local contractors in building major rail infrastructure.”

This was the assessment of LRT Administrator Melquiades Robles who said that being funded by the General Appropriations Act; the law requires that the project should be bid out to local contractors, which LRT did.

From the original P6.3 billion, the budget had to be increased to P6.7 billion because of the new requirement for a common (elevated) terminal for the LRT1 Extension, MRT3 and the soon-to-rise LRT7 (from Bulacan crossing Commonwealth Avenue) he said.

But unlike the LRT1 North Extension, the construction of LRT 7 will be placed under the jurisdiction of the Department of Transportation and Communications (DOTC), which will bid out the project, Robles said.

Robles informed President Gloria Macapagal-Arroyo, who inspected the project development last night, that construction will be completed in 203 days (from June 12) or in January 2010.

The President originally scheduled its completion in Dec. 2009 but because of delays in obtaining local permits, the project was delayed by four months, Robles told the President.

He said commercial operation of LRT1 will start in Feb. 2010 — minus the common terminal at North EDSA.

Robles said he and the local contractors of LRT 1 Extension -- DM Consunji and First Balfours -- are happy that finally a rail project has been awarded to local contractors, thus giving them a chance to showcase their expertise and capability to handle such big ticket projects.

Most big infrastructure projects are foreign-funded and are awarded to foreign contractors who tie up with local contractors (as their subcontractors). Often, it is the foreign contractors that get the credit for the project.

“At last, here is a chance for the local contractors to show to the world that they, too, are qualified and capable to handle such big responsibilities even outperforming their foreign counterparts,” Robles said.

The LRT, he said, has set the record as the rail project of its magnitude to be completed in one year. “If it weren’t for the delays in the release of local permits, we could have scheduled the commercial run even before Dec. 2010,” he added.

On the additional funding requirement for the common terminal area, the President instructed Robles to follow up his request with Budget Secretary Rolando Andaya. (PND)

New Philippine consumption pattern benefits PLDT—Pangilinan

Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/?page=business4_june13_2009

The spending priorities of Filipinos are changing and one company said it is reaping financial benefits from the change, despite the impact of the global economic downturn.

Philippine Long Distance Telephone Co. chairman Manuel Pangilinan said while overall consumption expenditure grew just 0.8 percent year-on-year in the first quarter, spending in transportation and telecoms rose 4.1 percent.

In comparison, other sectors such as tobacco, beverages, clothing and footwear declined between 11 percent and 38.7 percent.

“This should mean that spending priorities may have changed. The consumer may postpone the purchase of clothes, reduce their drinking and smoking, but still spend on communication,” Pangilinan said.

“Texting has now become essential. As have chatting, blogging, e-mailing and social networking on the Internet,” he added.

Pangilinan said no country, including the Philippines, had been spared from the adverse effects of this crisis. “Yet despite these unfavorable macroeconomic trends, certain Philippine corporates, including PLDT, demonstrated positive performance last year, and in the first quarter of this year,” he said.

“The solid performance of PLDT and the increasing bias in consumer preferences towards our products and services, together provide some cheer to our prospects in this year 2009.”

Data from the national income accounts released by the National Statistical Coordination Board showed that the percentage share of food, transport and communication; household operations; fuel, light and water; and miscellaneous services in total household expenses rose in the first quarter of 2009 from a year ago.

The percentage share of beverages and tobacco; clothing and footwear, and household furnishings dipped in the same period.

Pangilinan also noted that the gross national product, which includes net factor income from abroad, actually grew 4.4 percent, ahead of the 0.4 percent growth of GDP.

“This means that more money has actually been placed in the hands of the Filipino consumer for the period, more than what the GDP numbers indicate,” he said.

President Arroyo inspects LRT-MRT connection

http://www.youtube.com/watch?v=stq4_xvNqhA



http://www.youtube.com/watch?v=DdV8yPiRHpc



http://www.gov.ph/index.php?option=com_content&task=view&id=2000835&Itemid=2

Making an onsite inspection of the ongoing construction of the Light Rail Transit 1 (LRT1) North Extension last night, President Gloria Macapagal-Arroyo expressed satisfaction over the progress of the project.

When completed, the P6.3-billion project will close the MRT 3-LRT loop on Edsa, between Monumento in Balintawak, Caloocan City, and North Avenue, Quezon City.

The construction of the project had suffered a four-month setback because of delays encountered by the contractor in securing the relevant construction permits from local government units (LGUs) in the areas traversed by the light railway line.

The LRT1 is scheduled to be finished in Jan. 2010 while commercial operation is set for the following month.

LRTA Administrator Melquiades Robles informed the President that an additional P400 million would be needed to construct an elevated common terminal for LRT1 North Extension, MRT 3 and the soon-to-rise LRT 7 (from Bulacan crossing Commonwealth Avenue).

She asked Robles to follow up his request for additional funds with Budget Secretary Andaya.

The President was met at the construction site by Quezon City Mayor Feliciano Belmonte, PNP-NCR Chief Roberto Rosales and Robles, among others.

The President expressed elation upon being informed that some displaced overseas Filipino workers (OFWs) have been hired by DMCI, the contractor of LRT1.

Roberto Puwaw, 33, an electronics technician from the DMCI project in Dubai, lost his job when the company’s overseas project was completed. But Puwaw was called back by DMCI to help out as day supervisor in the construction of the LRT 1 North Extension project.

Cris Ibarra, 43, a civil engineer, had worked in several government projects including those under the Department of Public Works and Highways (DPWH). His latest job was with DMCI’s Boracay Hotel in Aklan, but his employment ended with the completion of the project.

The President talked to Puwaw and Ibarra both of whom thanked her profusely for their new employment.

Mall-goers and passersby at the Munoz site of the LRT1 waited for the President, who arrived shortly after 10 p.m. She was briefed on the status of the project by Robles. After the briefing, she headed for the MRT North Avenue station where she boarded a night train together with “graveyard shift” workers in various establishments in Metro Manila.

During the train ride, the President was briefed by MRT Corp. General Manager Reynaldo Berroya on the extended operating hours of the trains.

The President had directed the Light Rail Transit Authority (LRTA) to operate its trains on a 24-hour basis for the benefit of night shift workers including call center agents, security guards and hospital employees.

Call center agents, who were waiting for their ride at the MRT3 terminals, waved at her as her train passed by. (PNA)

Bourse ignores gloomy economic data

Kristine Jane R. Liu
BusinessWorld
http://www.bworldonline.com/BW061309/content.php?id=131

Investors turned a blind eye to poor economic data this week, choosing instead to ride along with the stock market’s over-all optimism, analysts said.

The benchmark Philippine Stock Exchange index or PSEi gained 2.77% to close at 2,598.80 week-on-week, while the all-share index added 1.11% to end at 1,645.64.

Average value turnover however was lower, reaching only P2.92 billion a day compared with the P3.39 billion a day the previous week. Foreign buyers continued to dominate with P728 million in transactions, but also lower than the P917 million in transactions the previous week.

Losers swept gainers 91 to 61, while 36 stocks did not move.

"Optimists prevailed for most of the four-day trading session, prompting barometers to land on positive territory. Several investors defied bad economic reports, as well as political news related [to opposition to constitutional amendments]," 2TradeAsia.com said.

Among the bleak economic figures released this week was the 35.2% drop in exports for April, faster than the 30.8% decline the previous month. The government has also projected that the budget gap would likely reach P250 billion this year, wider than the P200 billion forecasted earlier. It likewise adjusted its economic growth target for the fourth time to just 0.8%-1.8% from 3.7%-4.7%.

The optimism investors showed during the four-day trading session could be attributed to an "undervalued" stock market and increased interest in emerging markets like the Philippines, DBP-Daiwa Securities, Inc. said.

"We were surprised at the recent continued upside of the market even with the dwindling domestic macro fundamentals. We thought there was some irrationality in the horizon ... [We conducted a study on select blue chips to represent the market] and our findings showed that most prices are still undervalued compared to the same period last year and even five years ago," it said.

"This explains why the market is behaving with exuberance despite a fragile domestic economy."

DBP-Daiwa Securities noted that the market’s monthly turnover has grown by an average of 14.8% since the year started. "In our view, investors are slowly coming into the market and have been buying whenever there’s opportunity ... liquidity is starting to pour into the equity market probably for positioning purposes especially in the emerging countries as these are seen to recover first compared with the developed countries," the brokerage said.

Maria Arlysa E. Narciso of AB Capital Securities Inc. however advised investors not to be too optimistic. "In contrast with bearish economic fundamentals, the market turned a blind eye to indications of economic slowdown and climbed continuously. With this current condition, we advise against holding on to stocks for a long time," she said.

Only two of the six subindices gained during the week.

The service sector, where telco giant Philippine Long Distance Telephone (PLDT) Co. belongs, closed the week 6.49% higher at 1,391.11, while industrial stocks, which include utility Manila Electric Co. (Meralco), gained 4.69% to end at 3,530.09 week-on-week.

The erstwhile darling of the market, the mining and oil sector, dipped by 3.07% to 5,989.06, while property shares shed 2.01% to end at 899.55.

Financial companies retreated by 1.62% to 589.54, while holding firms tumbled by 0.32% to 1,422.43.

Select blue chips, especially those belonging to the Lopez group, landed on the market’s top 30 gainers this week.

Meralco, which is partly owned by the Lopezes, surged by 12.4% week-on-week to touch a record high of P145 per share, while Pangilinan-led PLDT rose by 9.43% to P2,495. Both stocks were responsible for the market’s two-day gain on Wednesday and Thursday.

Meanwhile, Ayala-led Manila Water Co., Inc. added 10.71% to end at P15.50 apiece, while Lopez-led holding company First Philippine Holdings Corp. gained 6.56% to close at P32.50. Another Lopez holding company, Benpres Holdings Corp. went up by 5.71% to P2.22.

Thursday, 11 June 2009

Globe says Philippine broadband users to hit 20m

Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/?page=business5_june10_2009

THE number of households with broadband access is expected to rise to 4 million, or about 20 million users, and telecom companies have intensified their campaign to capture a larger share of the market.

Merchi Orlina, head of Globe Telecom’s Consumer Broadband Business Group, said telecom companies had cornered only a fourth, or over a million subscribers, of the potential market.

“Broadband penetration rate is just 8 to 12 percent in the Philippines. This is expected to rise because of very aggressive competition among providers,” Orlina said.

Globe Telecom has expanded its wireless broadband network by introducing its USB-based Broadband Tatoo and its Globe WiMax. The company will also soon deploy its own fiber-to-home technology that would compete with those of Philippine Long Distance Telephone Co. and SkyBroadband.

Orlina said that just a few weeks after introducing its WiMax service, Globe now had 4,000 subscribers.

WiMax, which stands for worldwide interoperability for microwave access, is a standards-based technology designed to enable the deployment of wireless broadband access as a cost-efficient alternative to cable and DSL.

Globe initially deployed WiMax in Metro Manila, Southern Luzon and Cagayan de Oro. Orlina said most of those who subscribed to WiMax service had switched from their old fixed-line connection.

Philippine mining investments to hit $628m

Othel V. Campos
Manila Standard
http://www.manilastandardtoday.com/?page=business4_june10_2009

INVESTMENTS in the Philippine mining sector is projected to hit $628 million this year, up 9 percent from $577 million in 2008, a government official said yesterday.

“We’re still bullish. Metal prices are on the rebound like copper, gold and nickel,” said Mines and Geosciences Bureau director Horacio Ramos, noting that cumulative investments had reached $2.11 billion since the mining was revived in 2004.

He said the government was confident of reaching its goal of generating $10 billion to $12 billion in cumulative investments by 2013.

Ramos said about one-fourth of the projected investments this year, or $157 million, were realized in the first quarter.

Expansion projects include the Palawan HAPL nickel, Rapu-Rapu, Canatuan silver-gold, Sto. Tomas copper, Teresa gold, Berong nickel, Maco nickel, SIRC nickel, PASAR copper smelter; Philsaga Co-o gold and the Acoje nickel of Euro Nickel and Rusina Mining.

Projects that are on the construction and development stage are the Carmen copper, Palawan HPAL nickel line 2, Masbate gold, Canatuan base metal, Iligan ferronickel smelter plant, Manticao ferronickel smelter, Isabela nickel, Philsaga gold expansion and Acoje nickel heap leach.

Those in the feasibility and financing stage are the Tampakan copper project, Surigao Sumitomo HPAL, Boyongan copper, Itogon gold, Nonoc nickel, Mindoro nickel, Akle cement, Runruno gold, Far Southeast gold, and King-King copper-gold project.

There are about seven projects in the advanced exploration stage, three of which are directly managed by the government.

The Mining Bureau remains keen on achieving a “mining country” status by 2011.

Investing mistakes you are making right now

Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/home/opinion/11585-investing-mistakes-you-are-making-right-now.html

The Philippine Stock Exchange is unquestionably the investment opportunity. From the 2008 lows in November, the market has increased by some 30 percent, and that is only the beginning. The next target for the Philippine Stock Exchange Index (PSEi) is 2,800, which means that prices will have increased over 50 percent in about seven months. And we are still only at the beginning. By the time this rally matures, the index will have risen 80 percent. And that increase is nothing in comparison to individual stock prices.

Megaworld is already up over 100 percent. Filinvest Land Inc. has tripled in price. Ayala Corp. more the 50 percent. The list is very long. But, again, this is only the beginning. I would not be a bit surprised to see the PSEi at 3,900 or 4,000 by Christmas 2009. And I would be willing to bet that you have not participated in the best rally in the history of the PSE.

A stock-market rally always starts when no one believes the market will rise. Last November, the economic world as we know it was coming to an end (and it still is). Through the first quarter of 2009, all the “experts” were saying that the Philippines was doomed. And here at the end of the second quarter, the “experts” are still screaming that the Philippine economy is ready for collapse. And yet, we are looking at 12 to 18 months of a virtually unbroken period of rising stock prices.

Certain attitudes will stop you from getting richer investing in the stock market this year. By thinking exactly the opposite way, you will significantly increase your wealth.

One mistake the average investor makes is looking at the past. That is, you should rarely be concerned where the stock price came from, but look only at where it is going.

I know that it is incredibly difficult to look at an issue where the price has doubled in a relatively short time and still buy the stock. Filinvest (FLI) started its climb in March 2009 at P0.32 and is now trading at P0.83. By anyone’s standards, that is a monumental increase. But I virtually guarantee this: In a few months, you will look back and regret that you did not buy at the current price, just the same way you are now regretting that you did not buy at P0.32.

The psychology behind this is that we hate admitting and accepting that we made a bad decision.

On March 31, I advised you in this column to buy in the stock market. FLI traded that day at P0.37. If you did not buy FLI, for example, it is because you thought that I was wrong. By the way, there is nothing personal about this. It is just the way we think.

Now I am telling you to buy FLI again. If a person agrees with me this time, it is an admission that not agreeing to buy FLI in March was a bad decision. It is much more comfortable for us to say, “Yes, he was right the first time, but he won’t be right twice.”

Many years ago, someone advised me to buy some property next to where the Alabang Town Center stands. I thought he was nuts. Although that was a bad decision, as I quickly found out, do you think I listened when he told me to buy another piece of land across from where Shoemart’s Megamall is now located? Of course not.

Another wealth killer is trying to learn from history. That is, trying to figure out why the price went up in the first place. This is sort of a part of the first mistake.

When I passed on buying the Alabang property and saw it skyrocket in value, I kept asking myself why would anyone pay such a high price for land in what was then the middle of nowhere? I could not successfully answer that question. So when the Ortigas property was offered to me, I told myself, why would the Ortigas area ever grow when Makati was so close? And I wasn’t the only one who thought Henry Sy was making a big mistake building Megamall. That is why he is rich and I am not.

You see, both properties increased in price, but not for the same reasons. Alabang was part of Metro Manila’s southward expansion; Ortigas was an undeveloped area in the middle of the metropolis. These areas exploded in value for similar but different reasons.

FLI’s move from P0.32 to P0.83 may have been motivated by investor interest entirely different from the investor reasons that will move it to P1.00-P1.50. Absolutely knowing why the first move happened will not help me make a decision about buying in now because the situation probably has changed. The reason for another price spike may have changed, but that does not change the fact that the price spike will happen. In other words, thinking too much about the “whys” often keeps you from taking action.



PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc. E-mail comments to mangun@email.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Wednesday, 10 June 2009

Cagayan Valley irrigation project

http://www.youtube.com/watch?v=DS_8GYPBzvE

Philippine airline firms undaunted by bleak outlook of operators worldwide

RUBY ANNE M. RUBIO
GMANews.TV
http://www.gmanews.tv/story/164444/Philippine-airline-firms-undaunted-by-bleak-outlook-of-operators-worldwide

MANILA, Philippines - Three local airlines remained confident about their respective outlooks despite global industry trends which indicate that the sector’s losses may double this year.

Philippine Airlines (PAL), reportedly Asia’s first air carrier, said that it would go “back to basics."

The Lucio Tan-led carrier hopes to “adapt and cope with the current market volatility by focusing on product improvement, asset and cost management and business efficiency," PAL president Jaime J. Bautista said.

Part of this initiative is to maintain PAL’s On time Performance, which he claims is "better than industry standards."

“Improving customer service both on ground and in the air, and offering competitive and affordable rates to loyal customers and new passengers will entice them to fly more and patronize Philippine Airlines," he added.

The company also expressed its “cautious optimism" about its three-pronged strategy which will focus on “contribution margin, cost efficiency, and risk management."

The said strategy will help tide the company over “during these difficult times," Bautista said. He added that the airline would continue to look for ways “to improve its operations and control costs without compromising passenger safety and comfort."

Meanwhile, budget carrier Cebu Pacific Airlines expects to meet its goal of transporting nine million passengers this year, the company said.

Cebu Pacific, which flew 23 percent more passengers last year to 6.7 million, is ranked by Airline Business Magazine as the third largest low-cost carrier and 22nd in the world.

The airline’s projection for this year “stays the same" as market conditions during the period “have been anticipated," Candice Iyog, Cebu Pacific Air Inc. vice president for marketing and distribution said.

However, she refused make any comments regarding the company’s financial performance. JG Summit Holdings Inc., Cebu Pacific’s parent, is listed at the Philippine Stock Exchange (PSE).

She issued these remarks on the same day the International Air Transport Association (IATA) announced that losses are seen to double this year.

This year’s losses may reach $9 billion, twice the $4.7 billion estimated in March, IATA, which claims to represent airlines that serve 93 percent of global routes, said.

“There is no modern precedent for today’s economic meltdown," IATA director general and chief executive Giovanni Bisignani said in a statement. “This is the most difficult situation that the industry has faced."

IATA said revenues would drop an “unprecedented" 15 percent to $448 billion in 2009 from last year’s $528 billion.

Meanwhile, a different perspective is offered by Zest Airways.

Established last year after its owners acquired what was then Asian Spirit Airlines, Zest Airways currently serves local routes from Bacolod to Busuanga.

And that exactly is its advantage.

Although it expects to post losses for its first year, the company, like all local carriers, is “least affected in the region," said Alfredo Yao.

“Domestic travel is good. It has increased by 20 percent in the first quarter unlike those in the western side," he said.

These expectations go against the IATA’s global industry forecast.

Passenger demand is expected to decline by 8.03 percent to 2.06 billion travelers compared to 2.24 billion in 2008, the group said.

Meanwhile, air cargo demand is expected to decline by 17 percent.

In 2009, airlines will likely carry 16.96 percent less at 33.3 million tons of freight from 40.1 million tons in 2008, IATA said.

For this year, Asian carriers are seen to post “the biggest loss at $3.3 billion as the region’s largest market, Japan, is in deep recession," IATA said.

Growth markets of China and India are delivering major losses as export-driven demand slows, IATA said. Nevertheless, it added that this is a slightly better performance than the $3.9 billion that the region’s carriers lost in 2008.

To help reverse this bleak outlook, the IATA asked governments around the world to avoid protectionist policies even as they invigorate their economies to curb the global slowdown.

Liberalization is “more critical" since the airline industry is facing the “most difficult" situation that is seen to drag operators’ revenues and incomes, the IATA said.

“Our future depends on a drastic reshaping by partners, governments and industry. We cannot bear the cost of government micro-regulation, crazy taxation and partners abusing their monopoly power," Bisignani said.

He noted it took three years to recover after the Sept. 11, 2001 attacks in the United States.

“Protectionism is the enemy of global prosperity. In the 1930s, it prolonged the recession. And it will not work today. To build a strong global economy, we must fight hard to keep the world trading," he added. - GMANews.TV

Work to start on $1-billion logistics hub in Philippines' Clark Freeport

RMG
BusinessWorld
http://www.bworldonline.com/BW061009/content.php?id=053

CLARK FREEPORT — Work will soon start to develop a 167-hectare prime property adjacent to the Diosdado Macapagal International Airport into the $1-billion Global Gateway Logistics City (GGLC), Clark International Airport Corp. (CIAC) President and CEO Victor Jose I. Luciano said in a speech here yesterday.

The project, launched on Sept. 1 last year, will be developed by Kuwait-based KGL Investment Company.

Mr. Luciano was speaking in ceremonies at the CIAC Aerodrome Canteen after distributing a total of P1.5 million in financial assistance to eight informal settlers who would be displaced by the project. CIAC estimates it will have to pay a total of P23.5 million to 107 such settlers.

"The Global Gateway Logistics City will soon rise to create employment for your children as well as to catapult the development of the Diosdado Macapagal International Airport," he told the audience, adding the project will generate 70,000 jobs in the next five to seven years.

The project will include warehousing, distribution, multi-nodal logistics, light manufacturing and other facilities to support activities in the 2,367-ha Clark Civil Aviation Complex.

Philippines' 2010 automated election assured; top bidder named

Emilia Narni J. David
BusinessWorld
http://www.bworldonline.com/BW061009/content.php?id=072

THE COMMISSION on Elections (Comelec) en banc, through a resolution, has awarded the election automation contract to Total Information Management (TIM)/Smartmatic, finally ending speculation that next year’s polls would again be held via the fraud-prone manual method.

In an interview with reporters, Comelec Chairman Jose A. R. Melo yesterday said: "After this resolution, the special bids and awards committee will give the company the notice of awarding and then they can start manufacturing the machines."

He said the Comelec advisory council was concerned over the program’s source code "so we will ask Smartmatic to provide the source code. If they do not want to we will not agree." A source code is a set of readable text that allows computer programmers to "communicate" with software. It also determines whether the system is prone to hacking.

Mr. Melo noted the company provided the source code for machines in last year’s Autonomous Region in Muslim Mindanao (ARMM) elections.

Smartmatic was one of the service providers of the more expensive direct recording electronic system, or touch-screen technology, for the ARMM elections.

The poll body would also be requiring Smartmatic to post a performance bond worth around P35 million or at least 5% of its proposed automation budget.

TIM/Smartmatic was the only bidder left after six others were disqualified by the special bids and awards committee for failing to provide some documents. The bidding, which began over a month ago, originally had seven bidders. Smartmatic provided all documents and was the only company to demonstrate precinct count optical scan machines. The company is based in the United States but has offices in Venezuela, Spain, Taiwan and the Philippines.

Smartmatic’s bid was P7.2 billion for 82,000 machines covering 80 precincts nationwide — reduced from 200,000 due to the "clustering" of precincts — that would service about 45 million voters as of last count during the 2007 midterm elections. The company promised to provide results in 36 to 48 hours.

Mr. Melo said Comelec may "publish the bids of those who reached the financial stage like Smartmatic and Indra (Sistemas Consortium) for transparency’s sake."

Tuesday, 9 June 2009

Philippine economy has almost tripled in size

VIRTUAL REALITY
Tony Lopez
Manila Times
http://www.manilatimes.net/national/2009/june/09/yehey/opinion/20090609opi4.html

The latest Pulse Asia survey still shows a deep distrust for President Arroyo. Only 25 percent of the people have a big trust in her; half or 48 percent have either a small or no trust at all.

This is sad. Among all presidents, she has done the best for the economy.

A strong economy is Arroyo’s defining legacy. The first eight years have seen 32 quarters of consecutive and sustained economic growth, the best and the longest in the country’s history.

Average per capita GDP growth was nearly 5 percent during the first eight years. Average per capita GNP growth was 5.5 percent. Per capita GNP at current US dollars doubled, from $967.3 in 2001 to $2,060.6 in 2008 or a daily income of $5.64.

Middle class country

This makes the country middle class because the World Bank and global benchmark for middle class income is between $2 and $10 a day.

In GNP terms, President Arroyo greatly expanded the size of the economy from $68 billion in 2001 ($967.3 per capita times population size of 70 million) to $185.4 billion ($2,060 per capita times 90 million). That’s a growth of 173 percent in eight years or 21.6 percent per year. In less than a decade, the economy increased in size 2.72 times even as 20 million more Filipinos were born during her presidency.

The NSCB has warned of a recession because GDP grew by 0.4 percent in the first quarter. In Australia, the GDP grew at half that rate, by 0.2 percent. Yet, the Australians see growth ahead. They were supposed to be in recession and yet, it did not happen. To me, a 0.2 percent growth is a statistical error. Yet, the Australians are euphoric and we are not.

All presidents, from Ferdi-nand Marcos to Joseph Es-trada, suffered either a recession or a massive decline in growth in their final year of their reign. Can President Arroyo escape this jinx?

My view is that recession need not happen. President Arroyo has instituted substantial economic reforms to make the economy competitive and keep growing. The consumer base has expanded by almost three times under her.

The Philippines’ major Asean neighbors, notably Singapore, Thailand and Malaysia, are all having a recession. Only Indonesia and the Philippines have eluded the ignominy, thanks to their large consumer base.

Manuel V. Pangilinan, in his speech before the MAP in January, declared the Philippines will not escape the unpleasant effects of global financial crisis. But he remained optimistic, for one reason: “A large portion of the country’s gross domestic product [84 percent] is accounted for by domestic consumption and government expenditures, while net exports account for no more than 4 percent of GDP.”

Pangilinan suggests infra spending, focusing on the country’s core-growth areas, rather than spreading it around the country. These core areas include the National Capital Region, the Central to Southern Luzon growth corridor, the Metropolitan Cebu area, and the Metropolitan Davao area. “Not only the government but also the private sector should mobilize, direct and focus their infrastructure spend in these strategic locations,” he said.

Private sector role

Indeed, it is time for the private sector to pitch in. The taipans and tycoons of this country tripled their wealth during Arroyo’s presidency. True, some of them suffered sharp declines in wealth in the last quarter of 2008. The market cap of their companies went down by as much as 85 percent. Since then, however, stock prices has risen dramatically, such as Ayala Corp. whose share price has climbed 77 percent from its November low of P171 to a near-high of P302 as of June 8.

Areas that can be ramped up to prevent a recession include housing, telephony; electricity and water services, other services, and agriculture.

Increasing housing inventory now makes sense because interest rates are at historic lows, construction material costs have come down by at least 30 percent from their early 2008 highs, it is job generating, and it has spillover effects on 15 other industries. Developers have plenty of internally generated cash from IPO proceeds (Vista Land for instance raised P15 billion last year) and profits from sales of low to medium housing units.

We have 50 million cellular phone subscribers—26 million of PLDT-Smart, 15 million of Globe, and nine million of Sun Cellular.

In other countries, cellular phone ownership equaled if not exceeded the population figure. If rates come down, networks are expanded, and content is improved, the Philippines can double subscriber base to 90 million. Ayala’s Manila Water will increase capex this year to P10 billion from P8 billion in 2008. They just got their water franchise renewed for another 15 years. Manila Water says it will generate 21,000 jobs every year and provide P5.3 billion in concession fees to the government.

biznewsasia@gmail.com

Philippine automotive sales rebound in May, jumps 4.6% from April

Max V. de Leon
Business Mirror
http://www.businessmirror.com.ph/home/economy/11454-automotive-sales-rebound-in-may-jumps-46-from-april.html

Automotive sales in the country rebounded in May, registering a 4.6-percent increase compared with April.

However, the industry’s growth remained in the negative territory with a 3.7-percent drop in sales for the first five months of the year.

The Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) reported that the industry sold 10,450 units of vehicles in May from only 9,980 units in April.

“The increase in May sales continues to validate the relative confidence of consumers on the market where they continue to purchase vehicles for their needs whether for family/personal or for business use. Key to sustained sales is the stable financing environment, which allows buyers to take out loans to finance their purchases,” Elizabeth Lee, Campi president, said in a statement.

She said sales are expected to continue to be stable and grow in the coming months, with the auto players sustaining promotional activities and easy payments that benefit buyers.

The industry needs to double its marketing efforts as it is still performing below the January-to-May 2008 pace. For the first five months of the year, local auto players only managed to sell 49,002 units compared with 50,883 units in the same period last year.

Passenger car (PC) sales for the first five months of the year increased by 2.3 percent to 17,562 units, while the number of commercial vehicles (vans, pickups, SUVs, AUVs, trucks, buses) sold dropped by 6.7 percent to only 31,440 units.

Toyota Motors Philippines remains as the market leader, although its sales went down by 6.2 percent for the period at 17,080 units.

Eleven other Campi members are experiencing lower sales for the year, with the biggest drops felt by Pilipinas Hino at negative 48.2 percent, General Motors Automobiles Phils. at negative 408 percent, Nissan Motor Philippines negative 36.7; Isuzu Philippines negative 24.4 percent, and Columbian Motors negative 23 percent.

Mitsubishi Philippines is enjoying brisk sales so far with 8,750 units and a 27.3-percent increase to place second overall.

Honda is third with 7,164 units, Hyundai 4,001; Isuzu 3,250; Ford plus Mazda 2,610 units; Universal Motors 1,936 units; Columbian Autocar 1,270 units; Suzuki 916 units, and Nissan Motor Philippines 719 units.

The next six months

Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/home/opinion.html

The latest starlet sex scandal certainly makes for interesting news. And as the election looms closer, Cha-Cha becomes the center of political discussion. But it might be time for those in the local media and press to occasionally look beyond sex and politics.

Three weeks ago, a monumental (at least in my mind) event occurred in the financial world. The debt rating of the United Kingdom was lowered from “stable” to “negative” by Moody’s. You remember Moody’s rating service, don’t you? It is the ones that is always saying that the Philippine economy is going to fall into the South China Sea unless we do what we are told and follow the Western model.

Yet searching the local press and media, I was unable to find a major article or wise words from a local pundit about the UK story. I would think that this might be important enough to mention since now the Philippines has a better credit outlook than a member of the G-7 group of “great economies.” So much for the “basket case” economy, unless of course, you mean the West.

I know you are probably fed up with my ranting and raving about the economic collapse of the West, but it might be a good idea to start making some plans for the real “New World Order” that is going to come over us in the next 12 to 18 months. I am still getting email from politicians hysterically screaming about the global-warming myth, so you see that I am a little concerned that these same people might be making economic policy affecting the country.

But forget about the longer term. It is the next six months that look quite interesting and quite exciting, exciting in a positive way.

Although I disagree with Department of Finance and Bangko Sentral policies regarding interest rates and the peso, I do not think it is going to matter one way or the other. Much greater events are going to overwhelm what our policymakers do. A slight reduction in interest rates will mean nothing as the USA goes into a period of worse economic contraction combined with raging inflation and a dying dollar.

Realize the situation in the USA. Government debt by the end of 2009 will equal an unprecedented 80 percent to 90 percent of US gross domestic product. Future borrowings may be 12 percent of GDP annually. By comparison, the Philippines’ debt-to-GDP stands at 54 percent. Not good, but the Philippines’ ratio is falling; the USA’s is increasing.

In the third quarter, the USA will try to issue $1 trillion of new debt. Fingers are crossed to see if the world (read: China) will buy that debt at very low interest rates. If not, it is inevitable that the USA will massively devalue the dollar or US interest rates will go even higher than they are now, killing any economic recovery.

So what are the consequences on your own business if the peso moves to 40 to the dollar? Cheaper imported raw materials and goods? But what abut the peso purchasing power of dollar remittances?

The government is caught between a rock and a hard place on the peso. If they keep the peso artificially cheap to preserve its purchasing power, then we will see P50-a-liter gasoline as oil goes to the nominal dollar price of $80 to $100. Are you better prepared for either of these events than the government?

The government is also relying on the recent 3.3-percent inflation rate to hold. Not a chance, if the peso stays at 47 to the dollar and oil prices continue up. The business people I talk to are not going to get caught with lower inflation-caused profit margins like they were last year. Want an example from the grassroots that the government is clueless about? Already the price of DVDs (Yes, I know these are pirated copies) have just been increased at the local night market.

However, this is about the next six months, and during that time, the local stock market is going up, up, up. My peso/inflation gloom and doom is going to take some time to potentially kick in. Right now, there is a tremendous amount of cash, liquid cash, in the system. This, combined with low inflation and a little fear, is creating an incredible amount of financial fuel to raise stock prices.

Someone called this a “budding bull market.” I guess the fact that the market is up nearly 40 percent from 2008 lows was ignored. This is a full-blown rampant bull market. The “budding” part was two months ago when we moved from 1,800 to 2,000. Would you be happy with a fairly easy 20-percent stock profit? Ok, just this once. Send me an e-mail.

So I anticipate a rising peso, a rising stock market, and also a significant increase in economic activity. But be cautiously prepared because the greatest threat to our economic well-being rests in the fancy conference rooms, here and abroad, where government economic policy is formed and implemented. We all have a great wealth-building opportunity during these next six months if we are aggressive in our actions to take advantage of it.



PSE stock-market information and technical-analysis tools were provided by CitisecOnline.com Inc. E-mail comments to mangun@email.com.

Monday, 8 June 2009

Imagine a world without Filipinos

http://www.arabnews.com/?page=13§ion=0&article=110923&d=16&m=6&y=2008
Abdullah Al-Maghlooth | Al-Watan, almaghlooth@alwatan.com.sa
Arab News

Muhammad Al-Maghrabi became handicapped and shut down his flower and gifts shop business in Jeddah after his Filipino workers insisted on leaving and returning home. He says: “When they left, I felt as if I had lost my arms. I was so sad that I lost my appetite.”

Al-Maghrabi then flew to Manila to look for two other Filipino workers to replace the ones who had left. Previously, he had tried workers of different nationalities but they did not impress him. “There is no comparison between Filipinos and others,” he says. Whenever I see Filipinos working in the Kingdom, I wonder what our life would be without them.

Saudi Arabia has the largest number of Filipino workers — 1,019,577 — outside the Philippines. In 2006 alone, the Kingdom recruited more than 223,000 workers from the Philippines and their numbers are still increasing. Filipinos not only play an important and effective role in the Kingdom, they also perform different jobs in countries across the world, including working as sailors. They are known for their professionalism and the quality of their work.

Nobody here can think of a life without Filipinos, who make up around 20 percent of the world’s seafarers. There are 1.2 million Filipino sailors.

So if Filipinos decided one day to stop working or go on strike for any reason, who would transport oil, food and heavy equipment across the world? We can only imagine the disaster that would happen.

What makes Filipinos unique is their ability to speak very good English and the technical training they receive in the early stages of their education. There are several specialized training institutes in the Philippines, including those specializing in engineering and road maintenance. This training background makes them highly competent in these vital areas.

When speaking about the Philippines, we should not forget Filipino nurses. They are some 23 percent of the world’s total number of nurses. The Philippines is home to over 190 accredited nursing colleges and institutes, from which some 9,000 nurses graduate each year. Many of them work abroad in countries such as the US, the UK, Saudi Arabia, the United Arab Emirates, Kuwait and Singapore.

Cathy Ann, a 35-year-old Filipino nurse who has been working in the Kingdom for the last five years and before that in Singapore, said she does not feel homesick abroad because “I am surrounded by my compatriots everywhere.” Ann thinks that early training allows Filipinos to excel in nursing and other vocations. She started learning this profession at the age of four as her aunt, a nurse, used to take her to hospital and ask her to watch the work. “She used to kiss me whenever I learned a new thing. At the age of 11, I could do a lot. I began doing things like measuring my grandfather’s blood pressure and giving my mother her insulin injections,” she said.

This type of early education system is lacking in the Kingdom. Many of our children reach the university stage without learning anything except boredom.

The Philippines, which you can barely see on the map, is a very effective country thanks to its people. It has the ability to influence the entire world economy.

We should pay respect to Filipino workers, not only by employing them but also by learning from their valuable experiences.

We should learn and educate our children on how to operate and maintain ships and oil tankers, as well as planning and nursing and how to achieve perfection in our work. This is a must so that we do not become like Muhammad Al-Maghrabi who lost his interest and appetite when Filipino workers left his flower shop.

We have to remember that we are very much dependent on the Filipinos around us. We could die a slow death if they chose to leave us.

The [US] Economy Is Still at the Brink

SANDY B. LEWIS and WILLIAM D. COHAN
New York Times

The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse.

CLICK HERE TO READ THE ENTIRE ARTICLE
http://www.nytimes.com/2009/06/07/opinion/07cohanWEB.html?em

TeleTech eyes two more sites in the Philippines

Abigail L. Ho
Philippine Daily Inquirer
http://technology.inquirer.net/infotech/infotech/view/20090608-209318/TeleTech-eyes-two-more-sites-in-RP

MANILA, Philippines - US-based Business Process Outsourcing firm TeleTech Holdings Inc. plans to open at least two more delivery centers in the country, in addition to the 12 already operating in various parts of Luzon and the Visayas.

Richard Bledsoe, country manager for the Philippines and chief operating officer for Asia operations, said the company was focused on beefing up its operations in the country by adding more personnel and even new sites.

The planned new sites, however, would not be opened this year as TeleTech Philippines still has capacity that could be filled up in its existing centers.

“There’s a couple of new sites to be opened. Maybe not this year, but we’re already looking at new locations. For this year, we’ll just fill our existing capacity. We still have a lot,” he told reporters Friday evening.

Options for locations of the new sites include Tarlac and one area within Metro Manila, he said.

TeleTech aims to hit the 25,000-employee mark by the end of the year. It currently has more than 22,000 employees in 12 sites all over Luzon and the Visayas.

In Metro Manila, TeleTech has delivery centers in Pasay City, Novaliches in Quezon City, and Bonifacio Global City in Taguig.

The rest of its Luzon presence is in Cainta in Rizal, Pampanga, Bacoor in Cavite, Lipa City in Batangas, and Sta. Rosa in Laguna.

The company is also present in the Visayas with units in Cebu, Dumaguete, Iloilo and Bacolod.

“There’s a great chance we’ll hit 25,000 employees this year. We have a lot of new business coming in,” Bledsoe said.

He added that the Philippines, which represented close to half of TeleTech’s Asian operations in terms of employee numbers, was a key part of the company’s overall business.

“The Philippines has taken its place as a premier BPO destination. We’re always looking at the next best opportunity,” he said. “My role is to grow our Asian presence. We now have more than 50,000 employees in 17 countries. This region is integral to TeleTech.”

Philippines' Semirara scores a success, selling coal to Thailand

Paul Anthony A. Isla
Business Mirror
http://www.businessmirror.com.ph/home/regions/11303-semirara-scores-a-success-selling-coal-to-thailand.html

COAL producer Semirara Mining Corp. has successfully entered the Thailand market during the first quarter of the year, helped by its new trading partners.

The Philippine company, now in its third year of doing business in the international market, scored a success in gaining access to Thailand, a new market for Semirara.

Semirara said new partnerships in coal trading have been forged that helped it clinched the Thai market, adding that coal traders Noble Energy and Coal Pulse were instrumental in cultivating Thailand as a buyer of Philippine coal.

In a disclosure to the Philippine Stock Exchange, Semirara said coal exports remained robust in the three months to March, despite a two-percent decline in delive-ries compared to a year earlier.

It noted that coal exports dropped to 443,101 metric tons (MT) 453,670 MT during the same comparable period.

Also, Semirara noted that Holcim Cement as a buyer is a significant marketing breakthrough. Holcim is one of the county’s biggest cement companies.

Semirara said sales to cement plants dropped to 148,777 MT during the period from 232,125 MT, and sales to other power plants dropped by 62 percent to 77,421 MT from 138,381 MT.

Total sales volume for the coal producer fell 4 percent to 1,078,344 MT from 1,120.962 MT.

The company earlier bared plans to export 2.5 million MT of coal to India and Thailand this year.

Semirara has targeted coal production to reach 5 million MT this year, said its marketing manager Cesar Villanueva.

Villanueva added that half of its production target is for export buyers, the other half for the domestic market.

Semirara’s local customers include Global Power, Mindanao’s coal plant owned by STEAG State Power and Aboitiz Group, Asia Pacific Energy Corp.—majority-owned by Formosa Heavy Industries Corp. of Taiwan—as well as cement plants and other companies.

Based in Semirara Island, Caluya, Antique, Semirara is into mining and exploration, developing and selling coal resources.

Philippines' ABS-CBN records ‘strongest’ monthly sales of P1.4B in May

Jeremiah F. de Guzman
BusinessWorld
http://www.bworldonline.com/BW060809/content.php?id=048

LOPEZ-LED ABS-CBN Broadcasting Corp. enjoyed its highest selling month in May, reporting revenues of P1.4 billion, and expecting the total to reach P3.8 billion for the second quarter.

In a statement on Friday, ABS-CBN said revenues for the month of May surpassed April revenues of P1.1 billion and even summer 2007 revenues when political ads significantly hiked ad sales.

Television and radio segments of the flagship station accounted for 90% to 95% of total revenues, Channel 2 Head of Sales August Benitez told reporters on Friday.

The broadcast outfit cited its nationwide lead in ratings.

"We are able to utilize 90% to 100% loading in our prime-time programs, having at most 18 minutes of ads every hour," Mr. Benitez said.

Even noontime shows were doing well in terms of ads, he added.

Oz Trinidad, ABS-CBN head of sales and strategic planning, said the market has been very receptive to the various "special executions" included in sales packages.

This has strengthened the network’s revenue streams outside of commercial spot placements, she said, citing a "less cluttered environment" than competitor GMA Network, Inc.

"The May results are simply a testament to the success of our win-win strategy," Ms. Trinidad said in a statement.

ABS-CBN is expecting to book P3.8 billion in sales for the second quarter, far better than the first quarter’s P2.7 billion and the year-ago level of P3.4 billion.

"June is mirroring May based on the daily averages, but this month is a bit lower since it is one day less than the previous month," Mr. Benitez said.

He said infomercials and "policacies" or political advocacies are beginning to contribute significantly to ad revenues. "Infomercials comprised 7% to 8% of our revenues for the month of May," he said.

Senator Manuel B. Villar, Jr., Senator Manuel A. Roxas II, and Makati Mayor Jejomar C. Binay were the most "aggressive" in ad minutes, he said.

Subic investment pledges reach $7B

Rey M. Garcia
BusinessWorld
http://www.bworldonline.com/BW060809/content.php?id=043

SUBIC FREE PORT — Investment pledges for the country’s top free port and economic zone have reached nearly $7 billion during the first six months of the year, officials said.

Fresh capitalization of $86 million from South Korean shipbuilder Hanjin Heavy Industries and Construction Corp. brought the amount of pledges to $6.64 billion.

Hanjin’s investments will be used to put up new facilities to manufacture ship spare parts and other components.

In a statement, the Subic Bay Metropolitan Authority (SBMA) said new investments from Hanjin will be delivered in two tranches. An initial $29 million will come in September, while the remaining $57 million will come in the first quarter of next year.

The SBMA made the announcement after Hanjin officials met with President Gloria Macapagal-Arroyo in South Korea recently and committed new investments totaling $86 million.

SBMA administrator Armand Arreza said investments in Subic stood at $5.78 billion as of the first quarter of 2009. "These pledges will bring Subic’s cumulative investment total to about $6.64 billion," he said.

The new commitments by Hanjin will place Korean investments in the Subic Freeport to $2.85 billion, the biggest volume of foreign direct investments here.

With the new investments, Hanjin is also expected to remain the single biggest employer in Subic, with some 4,000 new positions to be added to some 16,000 jobs already existing at the Hanjin shipyard in Subic’s Redondo Peninsula.

Hanjin has so far constructed four container ships out of its Subic shipyard since 2007.

In the first quarter of 2009, it became the biggest exporter in Subic after posting revenues of $179.36 million when it simultaneously delivered its third and fourth vessels.

The Korean shipbuilder initially committed a $1-billion investment when it signed in at Subic in 2006, but increased its exposure by $68 million the following year.

Mr. Arreza said continued confidence by foreign investors, particularly Korean companies, will help double the number of workers in two years.

Optimism to send Philippine stock prices higher this week

KRISTINE JANE R. LIU
BusinessWorld
http://www.bworldonline.com/BW060809/content.php?id=131

Investors’ new-found optimism is expected to continue driving trading although profit taking because of the shortened trading week might temper the rally, analysts said.

"The market is showing no signs of slowing down and seems to be heading for higher ground," AB Capital Securities, Inc. said.

"Perceptions of improving external fundamentals are seen as the main catalysts for investors’ new-found optimism."

The massive amount of liquidity that has remained uninvested, the brokerage said, will add fuel to the market’s continuous rally.

And with interest rates at their current lows — and which are seen to go down some more — AB Capital Securities said this has made local stocks even more attractive because of the higher yields they offer.

"Many investors and traders, who have been waiting for a correction, seem to have given up waiting. They have gone beyond technicals and are not afraid to [put their money in the stock market] despite the lack of a reasonable technical correction," it said.

The composite index last week posted a week-on-week gain of 6% or 139.37 points to 2,528.68.

Since the year started, the local market has gone up by 35.02% with almost all six subindices’ values up by almost half.

"A big chunk of money is coming from foreign fund managers, who are beginning to look at other countries that have stronger economic fundamentals," AB Capital Securities said.

They are said to be favoring emerging economies that are reporting better numbers compared to major economies. Since the month started, foreign investors have been net buyers with P880 million.

Despite the market heading higher, DBP-Daiwa Securities, Inc. said there might be occasional pullbacks due to the four-day trading week and the lack of market moving news.

"[The market’s recent surge might be impeded given the shortened trading week due to the celebration of Independence Day on Friday]," it said.

"Moreover, with lack of fresh leads, investors may opt to realize gains given that the main index has already reached overbought levels," DBP-Daiwa Securities said.

The only local economic data scheduled for release this week is exports for April. The National Statistics Office will release the data on Wednesday.

Analysts said they expect the figure to be better since it has shown indications of bottoming out. In March, it declined by 30.9%, down from 39.1% drop in February.

"In our view, investors will continue to focus on stocks with strong correlation with interest rates, especially property and banking sectors," DBP-Daiwa Securities said.

Property shares rose by 10.64% to 918 week-on-week, while financial shares rallied by 4.91% to 599.23 week-on-week.

AB Capital Securities, however, warned investors not to be overly optimistic and to take a break before engaging in excessive buying.

"Given the high valuation and the overbought state of the market, we recommend against buying aggressively at this point in time," it said.

"Market players should continue to play this rally by trading and not adopting a buy-and-hold strategy."

The market, AB Capital Securities said, would nevertheless try to break its next resistance at 2,780 while support remains at 2,350.

Philippine central bank prepares for exit from policy easing

Paolo Luis G. Montecillo
BusinessWorld
http://www.bworldonline.com/BW060809/content.php?id=051

DESPITE KEEPING its bias for cutting interest rates, the central bank is already studying how it would reverse its current policy once the economy starts recovering.

The Bangko Sentral ng Pilipinas (BSP) said it is now being mindful of the impact of its accommodative policies — implemented since late last year — on inflation once economic conditions improve.

"At the moment, our assessment is that the risks to inflation are low, and we have room to ease further; being mindful, however, that liquidity does not become excessive," BSP Gov. Amando M. Tetangco, Jr. told reporters via e-mail over the weekend.

"[But] we have to be mindful that we have been easing since the fourth quarter of last year," he said, noting that interest rates would eventually have to be raised to make sure inflation pressures, expected later this year, do not disrupt economic activity.

"We also need to look at the medium term because, if there is a need to change the stance of monetary policy at some point in the future, that change or shift should be done in smooth adjustment," he added.

For the moment, however, he said monetary officials are still studying on how exactly to go about reversing its current policy.

"It will be unwise for me to characterize and compare any change in stance we will make against previous policy actions because the inflation process is dynamic, interrelationships of macroeconomic variables are not static and our policy framework is forward looking," Mr. Tetangco said. "The speed and timing of any change in our policy stance will depend on many factors, most importantly on the outlook for inflation."

Inflation pressures have, so far, remained subdued, despite the measures which should have been shoring up domestic demand and driving prices up.

The rise in consumer prices has steadily eased since its peak of 12.5% in August of last year, when oil and commodity prices spiked in world markets. Inflation eased to its lowest in 18 months to 3.3% in May from 4.8% in April, as fuel and utility prices dropped below year-ago levels.

The central bank has cut its policy rates by a total of 175 basis points since December last year, in a bid to reduce borrowing costs and encourage banks to lend. This brought the benchmark borrowing rate to 4.25%, the lowest since May 1992 when the rate stood at 4.125%.

Mr. Tetangco has also noted that cutting the BSP’s overnight borrowing rate, or the premium paid to banks that park their funds at the central bank, to a record low of 4% is in the "realm of possibility."

The BSP cuts rates to discourage banks from parking their funds at the central bank and instead, lend these to the public.

The BSP has also cut local banks’ reserve requirements by two-percentage points and tripled its rediscounting facility to P60 billion for more direct infusion of liquidity into the economy.

In a bid to provide an appropriate mix of monetary and fiscal measures to prod economic activity, BSP’s steps have been complemented by an increase in government spending by way of a P330-billion economic stimulus package for the year. The P100-billion infrastructure component of that package, however, has yet to be spent.

The Treasury bureau reported a 15.5% rise in total disbursements to 463.72 billion as of April, but the 0.4% gross domestic product growth recorded in the first quarter — which prompted some officials and analysts to warn that the economy was on the brink of recession — raised questions on how and where exactly that money was used.

To be sure, over a quarter of those disbursements were allocated for debt interest payments.