Saturday, 20 June 2009

Philamlife: AIG's hidden gem

Jeanine Poggie

The American International Group(AIG Quote) is arguably the world's most legendary mess: a bailed-out, runaway, overleveraged insurer that appears, on the surface, to be all but worthless. Still, peel back the many layers of this insurance behemoth, and one finds not only a massive breadth of holdings -- but a number of surprises and hidden gems, as well.

In the first of an ongoing series of articles peering into the endless scrap-heap that is AIG, we focus today on one of those surprising assets: The Philippine American Life and General Insurance Company, the largest insurer in the Philippines.
Known locally as Philamlife, the company was recently lumped into American International Assurance Company, which is it slated to go public in Asia in 2010. Prior to the deal it was speculated that AIG would unload Philamlife along with all or part of its stake in Asia.

And while for AIG, Philamlife may be an afterthought, it bears noting that this company is essential to more than a million Philippine customers that utilize its life insurance, retirement planning, accident and health insurance and wealth management programs.

Indeed, Philamlife is not just an insurance company. It's also a major contributor to the country's development in the form of infrastructure projects in telecommunications and power.

Its Philam Foundation has spent $550,000 since 1997 to assist in social development in health, education, arts and culture and livelihood. The organization is also training 6,000 teachers and students in English to combat the problem of declining English proficiency.

The real estate arm, Philam Properties, is responsible for the construction and management of Philamlife's 34 office buildings, including the 48-story Philamlife Tower in Makati City. It is also the owner of the exclusive membership club, Tower Club.

It's assets like these that make AIG such a complex business to unwind, and one of the many reasons why the notion of allowing the the insurer cannot to simply disappear is not only unwise -- it's all-but impossible.

Here's more: In 2008, Philamlife recorded a profit of $69.3 million, a 187% surge from 2007. The company reported a 10.9% jump in investment income during the year to $214.2 million, even as gross premiums dropped 21% to $376.1 million.

Total revenue for the company last year reached $726.9 million.
The revenue from Philamlife's bancassurance arm, Philam Equitable Life Assurance, soared 70.6% from the year prior, generating $44.1 million.

The company's investment income was $2.14 billion, while its consolidated assets came in at $3.33 billion. Paid-out benefit and claims amounted to $153.4 million.

And despite all the drama surrounding its parent company, it's worth noting that 99% of policy-holders stuck with the insurance firm.

Placing a dollar figure on the international subsidiary is, of course, tricky, but one report had the company worth about $581.9 million in 2008 -- which was roughly half of its value from 2007. Still, it's also believed Philamlife that gave AIG up to $500 million to help the parent company ride out its bankruptcy.

"Certainly, in order for AIG to decide to keep it as a subsidiary means they believe it's valuable to their portfolio," says Dan Weedin, of Toro Consulting. "As far as a global strategy for them, this would seem to be an important player, especially as Asia continues to grow as an economic power."

"AIG has to brand itself as an insurance leader and move away from the credit mess they created," says Weedin. "Their financial strength is still in the insurance part, but perception of the company is in need of rejuvenation. Global subsidiaries like Philamlife go a long way toward rebuilding credibility."

Philippine mobile penetration rate seen to reach 147%

Roderick T. dela Cruz
Manila Standard

Mobile phone penetration rate in the Philippines will hit 147 percent over the next five years, according to a report by research firm Business Monitor International.

The research company said in its Philippines Telecommunication Report there were 68.056 million mobile phone subscribers as of December 2008, translating into a penetration rate of 75.9 percent in the Philippines.

BMI said that while growth was slowing due to the maturity of the market, it “estimates that over the next five years ended 2013, penetration rates will reach 147 percent.”

“Growth during 2009 and 2013 will slow, not only due to maturity, but as a result of weakened domestic consumption impacted by the Philippines ties with the US and the world recession,” it added.

Meanwhile, the research firm said the number of broadband subscribers in the Philippines hit 1.335 million as of end-2008, up by 77 percent from 756,167 in 2007.

The figures covered just the subscribers of the country’s three largest telecom operators, namely Philippine Long Distance Telephone Co., Globe Telecom and Bayan Telecommunication.

PLDT’s broadband subscribers increased 72 percent to 995,916 million as of December 2008.It has exceeded the one-million mark this year, according to company president Napoleon Nazareno.

Manila wins bigger slice of cruise market

Roderick T. dela Cruz
Manila Standard

THE Philippines is slowly becoming a destination for cruise ship passengers from Europe and the United States, and their number is expected to double in the coming months.

Costa Cruises, one of the largest European luxury passenger liners, has been bringing close to a thousand tourists to the country each month since May 2007, according to Jenica Ferrer, sales and operations officer of the Italian-flagged Costa Cruises in Manila.

Costa Cruises has 15 veritable floating hotels deployed around the world. One of its ships, Costa Allegra, is dedicated to cruise Southeast Asia .

Last year, Costa Allegra made 14 port calls in Manila and brought 10,586 tourists. It is expected to return to the South Harbor tomorrow as part of a regional swing that includes stops in Singapore, Ho Chi Minh City and Da-Nang in Vietnam, Hong Kong, Kota Kinabalu in Malaysia and Bandar Seri Begawan in Brunei.

The Web site of Costa Cruises showed that the Southeast Asian tour costs between 1,000 euros and 2,000 euros per passenger depending on the type of ship accommodation and tour package chosen.

Costa Allegra docks at Pier 13 at the South Harbor in Manila from 8 a.m. to 8 p.m., and their passengers have the option to avail themselves of any of the four tour packages.

The tour packages, lasting up to eight hours each, include bus tours around Metro Manila or to Tagaytay and Pagsanjan, or a short cruise to Corregidor. The cost of the local tour including lunch is 50 to 100 euros.

Costa Allegra has visited Manila six times this year, bringing a total of 4,710 tourists of whom 2,464 opted to go ashore and join the tours, Ferrer said.

Tourism Secretary Ace Durano said the Philippines expected 18,000 cruise passengers this year from 15 visits of the Costa Cruises, up from 10,586 last year, since the cruise company would field a larger vessel starting October—the 1,680-bed Costa Classica—instead of the 800-bed Costa Allegra.

Costa Cruises’ guests had cited the Philippines for having the warmest arrival reception of their destinations, with the Tourism Department treating day visitors to cultural performances and great shopping, Tourism Undersecretary Eduardo Jarque Jr. said

The Manila tour, for example, involves a visit to Intramuros, Fort Santiago, San Agustin Church and Museum, Manila Cathedral, Casa Manila, tdhe American Cemetery, Coconut Palace, the Cultural Center of the Philippines, and the financial district of Makati.

Boracay is also starting to get noticed by cruise operators, with the Delphin Voyager making a stop in the world-famous island in February.

Another ship, the Silver Whisper, also stopped in Cebu after Manila in February.

President Arroyo's press interview in Japan

Philippine President ends fruitful visit to Japan; gains are listed

TOKYO (PND) – President Gloria Macapagal-Arroyo leaves Japan today (Saturday, June 20) setting in motion the smooth and efficient implementation of the Japan-Philippines Economic Partnership Agreement (JPEPA) in labor and trade, security and economic cooperation.

The President described the fruits of her first official visit here since the JPEPA’s ratification during an interview by Paolo Romero of the Philippine Star and two senior reporters of the Asahi Shimbun and Nikkei, two of the biggest media outfits in this city.

The interview took place this morning at the Presidential Suite of the Imperial Hotel here.

“It has been a very fruitful visit. I came here as an official guest upon the invitation of the Japanese government so that we can pursue our very good bilateral relations and cooperation on a number of fields -- labor and trade, security and economy,” the President said.

On labor and trade, the President said the Philippines and Japan have been working on a smooth and efficient implementation of the JPEPA.

With the full implementation of JPEPA, Philippine export products such as bananas, pineapples, crabs, shrimp, tuna and even chicken will find a new market in Japan which, in turn, can supply the Philippine manufacturing sector with critical inputs such as specialty steel products and auto, electrical and electronic parts. Textiles and apparel will also enjoy mutual elimination of tariffs.

On security, the President said she was very glad when the Japanese Diet passed an Act yesterday that will further protect Filipino seafarers particularly those being deployed in vessels passing through the Gulf of Aden.

With the Philippines supplying 70 percent of the manpower on Japanese vessels and being the number one seafarer provider in the world, an estimated 227 Filipino sailors have already been abducted by pirates in the area.

“And I am very glad yesterday when both Prime Minster Taro Aso, who told me the day before, and the Japanese Minister of Transportation that the Japanese Diet has passed an Act that empowers the Japanese government to send patrol crafts from its Self-Defence Force to protect ships in the Gulf of Aden not only carrying the Japanese flag but the flag of any nationality,” the President said.

“That is a very, very big source of comfort for our Filipino seafarers and our government,” she added.

The President said Japan was the first country to really give, “in action”, a comprehensive solution to the problem of piracy in the Gulf of Aden.

“We also declared that we stand four-square behind our friend and ally Japan in seeking a comprehensive solution to the North Korean issue in line with the UN Security Council resolutions and hopefully through the Six-Party Talks framework,” the President said.

With Japan being our largest source of Official Development Assistance (ODA), the President also witnessed the signing of three agreements worth about $500 million.

The President said these will support credit for the agribusiness sector, infrastructure system such as ports, bridges and the roll-on roll-off (RO-RO) ferry system, and disaster mitigation and adaptation for Camiguin Island in Mindanao.

“I also had the honor of meeting with Their Majesties, the Emperor and the Empress, with Prime Minister Taro Aso and senior Japanese government officials, parliamentarians, with the business community and my message to all of them is: We value Japan as a reliable friend and ally,” the President said.

After the interview, the President visited the 39 Filipino nurses undergoing free Nihonggo language training at the Association for Overseas Technical Scholarship (AOTS) Language Training Facility here.

The nurses are part of the 283 health workers undergoing free language training in Japan that include 190 caregivers whom the President said are the “first visible impact” of the implementation of the JPEPA.

Afterwards, the President together with First Gentleman Jose Miguel Arroyo and the rest of official Philippine delegation left Tokyo to forge a better relationship between the Philippines and Brazil.

More "recession" news

Bulletin, Inquirer salaries
Victor C Agustin
Manila Standard

THE salaries of the key management officers of the Philippine Daily Inquirer are apparently immune from the economic downturn.

Despite the profits of the country’s leading broadsheet last year skidding to P125 million from 2007’s P181 million, a considerable 31-percent drop, the top Inquirer officers saw their combined compensation rise by 9.2 percent to over P45 million from 2007’s P41.8 million.

Being a private, almost a family corporation, the Inquirer is under no obligation to identify who, and how many, are included in that elite corps of officers in its annual report submitted to the corporate regulators.

The publicly listed Manila Bulletin, on the other hand, decided to freeze the 2008 compensation package to the same level as 2007’s, in view of the company’s 27 percent drop in net income to P181 million from 2007’s P251 million.

Despite being a more profitable firm—the Bulletin owns its printing presses, while the Inquirer pays to have the daily and the related publications printed by the Rufino-Prieto press—the Bulletin’s eight top corporate officers received a combined 2008 compensation of only P15.37 million, one-third the amount received by their Inquirer counterparts.

This year, in view of the worse advertising situation, Don Emilio Yap has decided to slash by P674,000 the total compensation package of the top management group, led by president Miguel Varela.

Highest Filipino in Pepsi

Tessa Hilado, a daughter of Aquino-era LWUA Administrator Justino Bernas, has been appointed senior vice president of finance and treasurer of PepsiCo, becoming the highest ranking Filipino in the US soft drink and snacks giant.

A graduate of St. Scholastica’s College and Ateneo de Manila, Hilado occupied the same position in Schering-Plough since May 2008 before being invited to join the $43-billion company.

Before Schering-Plough, Hilado spent 18 years at General Motors. Her last position there was assistant treasurer, after previously being finance chief of the commercial branch at GM’s financing arm.


• President Gloria Macapagal Arroyo, an inveterate texter like Barack Obama, has ditched the bulky Nokia E90 Communicator in favor of the smaller E75, of which she has two, one in red and another in blue.

The E90 is retailing for P35,190 in Nokia stores; the E75, at P25,800.

• The domestic cruise ship 7101 Islands of Boracay’s Steve Tajanlangit has been seized by the Customs for some time now because of tax issues but the BusinessWorld was, until yesterday, still advertising a 3-day, 2-night cruise promo aboard the ill-fated vessel.

• The global food giant Sara Lee is moving its information technology operations to the Philippines in a bid to further reduce manpower costs.

Heard through the grapevine

The profit share of chairman Eduardo Cojuangco Jr., president Ramon Ang and the rest of the board of San Miguel Corp. from last year’s income should amount to about P415 million, give or take a few millions.

The board’s profit share is equivalent to 2 percent of the year’s profits after deducting the company’s general expenses, the remuneration to officers and employees, and cost of the depreciation of buildings, machinery, vehicles, furniture and other company properties.

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During "recession" -- ABS-CBN posts record P300-m profit

Follows GMANews' profit during "recession" of P1B
Jenniffer B. Austria
Manila Standard

BROADCASTING network ABS-CBN Broadcasting Corp. booked a record net income of P300 million in May, up 54 year-on-year.

ABS-CBN chairman Eugenio Lopez II said the company’s performance in the second quarter improved compared with a 21-percent profit drop in the first quarter.

But Lopez said the network kept its forecast of a flat growth in net income for the whole year because of the volatille economy.

“It looks good but I don’t want to make changes in our projections since the volatility of the economy is something that nobody can predict,” Lopez said. “But in the second quarter, we are experiencing the kind of growth rates that we used to experience at our height. But we don’t know if this will drop in the coming months.”

ABS-CBN chief finance officer Ronaldo Valdueza said the company expects airtime revenues in the second quarter to hit P1.2 to P1.3 billion. Airtime revenues in May exceeded P1.4 billion.

Political ads boosted the company’s airtime revenues, with sales reaching P100 million for the first six months of the year.

ABS-CBN earlier reported a 21-percent drop in first quarter net income to P191 million from P242 million on year.

Consolidated revenues grew 24 percent to P5.29 billion as the lower airtime sales were offset by contributions of P878 million from cable business SkyCable.

Despite the flat net income, Valdueza said the broadcasting firm’s cash flow increased 20 percent to P2.6 billion in the first five months of the year.

ABS-CBN plans to spend P3.3 billion in capital expenditure this year.

The company is alloting P900 million for SkyCable, which is aggressively expanding into broadband.

ABS-CBN is earmarking P700 million for film rights acquisition and P1.7 billion for equipment upgrade.

ABS-CBN’s rival, GMA Network Inc., earlier reported a P1-billion net income in the first five months of the year, up 22 percent from P890 million on year.

Forum for Philippine Presidential Elections

Salary standardization a move long overdue


AT A time when the national government is staring at what could be a record P350-billion budget deficit (by some private estimates), it would seem to be imprudent, reckless even, to start raising the salaries of government workers and officials. But that was what Congress recommended and Malacañang approved.

Shortly before she left for Japan on Thursday, President Gloria Macapagal-Arroyo signed a joint resolution of the Senate and the House of Representatives adjusting the salaries of government officials and workers.

With the government employing 854,842 civil servants and 290,877 military and police personnel, the Salary Standardization Law-3 will cost the government P18.4 billion over the remaining six months of the current year, and a total of P125.6 billion over the next four years when the staggered salary adjustments are fully implemented.

But regardless of the global financial crisis and economic slowdown facing the nation, such salary increases are long overdue.

The last time the government adjusted the salaries of its workers was 15 years ago in 1994. In the meantime, the government became the employer of last resort for the country’s best and brightest even as it lost some of its most competent workers to the private sector or foreign employers.

The result has been not only a deterioration in the quality of public services but outright deprivation of some services in some cases.

Last year, for instance, Dr. Jaime Galvez Tan, a former secretary of health, pointed out that 21 towns and seven government hospitals in Samar had no doctors. The irony was that some 10,000 Filipino doctors had become nurses in the five preceding years, with about 6,000 of them leaving for abroad.

Of course, what has been happening in the health sector may be the extreme case. But a similar pattern of avoidance of and migration from the government service has been depriving the government of the services of technocrats and other highly trained professionals. And always the overriding reason is the poor compensation government pays.

The new law seeks to rectify this competitive disadvantage, but it doesn’t put the government in a position to give the private sector “good competition,” as deputy presidential spokesperson Lorelei Fajardo believes.

That may be true in the case of nurses and teachers whose entry-level salaries will be P14,198 starting July this year and rise to P18,549 in July 2012, or the lowest paid utility men whose salaries will be adjusted to P6,682 this year and increased to P9,000 in 2012. But the same thing cannot be said of lawyers and doctors who will receive P19,514 upon being hired this year and P26,878 if they join government in 2012.

And the disparities in government and private sector compensations widen further as you go up positions that require higher skills and more training and experience such as directors and assistant secretaries, even if their present salaries will be more than doubled (to P68,428 and P73,903, respectively) with the full implementation of the new law.

Budget Secretary Rolando Andaya Jr. was more modest and realistic in his expectations about the effects of the new law. “Though talent would follow the market that would pay for it,” he said, “we cling to the hope that the new Salary Standardization Law will stop or at least delay the migration of government-trained professionals to the private sector.”

Certainly the higher salaries should help stem the hemorrhage in highly trained and skilled manpower, but the Filipino people who will ultimately foot the bill do not just expect the government to be able to maintain its pool of talent.

They will demand a wider range and a more efficient delivery of public services. And they will expect not just greater efficiency but more honesty from civil servants as well as the members of the police force and the military services.

It is not merely coincidence that countries that pay their public officials generously are known to have the cleanest governments. The Filipino people expect a similar payback from their investment.

Philippines' Megaworld still expecting higher profits


Andrew L. Tan-led property company Megaworld Corp. expects lower reservation sales this year but remains optimistic that it will close the year with higher profits.

"We feel some effect of the global crisis but we are confident that we will meet our P4 billion net income target this year," Megaworld Executive Director Kingson U. Sian told reporters at the sidelines of the company’s stockholders meeting on Friday. The P4-billion target is higher than the P3.8 billion in profits posted in 2008.

Mr. Sian however said Megaworld does not expect a repeat of last year’s reservation sales performance because of the economic slowdown, but sees the company equalling its 2007 sales.

"Last year was the best year in our over 20-year history. Reservation sales will likely be slower this year as people are nervous and tend to hold back a bit," he said. "Still, we are quite happy with the rate that we are going now and we will likely meet or exceed our reservation sales in 2007 which is another record year."

Megaworld’s reservation sales hit P24 billion last year, higher than the P19 billion posted in 2007. For the first three months of the year, Megaworld’s reservations stood at P7 billion, already higher than the P5 billion posted in 2007.

Megaworld plans to spend around P8 billion to P9 billion for projects this year, lower than the P10 billion spent last year. It also plans to launch five new residential projects worth P12 billion, namely Two Central in Makati City, another project in Eastwood City, Palmtree in Newport, and phase two of The Venice and Morgan Suites in Taguig’s Fort Bonifacio.

Mr. Sian also said Megaworld is finalizing plans for its 40-hectare project at the entertainment complex being built by the state gambling monopoly, and is already completing a plan to build an "iconic building" on a five-hectare lot at Paseo de Roxas in Makati.

Megaworld will also build two new Richmonde Hotels in Quezon City’s Eastwood commercial center and in Binondo, Manila. The company already has one in Ortigas.

The Richmonde Hotel in Eastwood will have 150 to 175 rooms and is expected to open next year while plans for the Manila-based Richmonde have yet to be finished. Mr. Sian said the project cost for each room in Richmonde would be around $70,000.

Aside from Richmonde, Megaworld, through unit Travellers International Hotel Group, Inc., will also venture into budget hotels. This will be under the Remington brand, with up to 800 rooms.

"We are already finalizing the design and hope to complete it this year. By end of next year or early 2011, we expect it to be complete," he said.

Megaworld is among the many property companies that have started venturing into "economic"-type hotels to take advantage of high demand. The SM group has already launched its SM Inns while the Gokongweis are expected to open their first Go Hotels next year.

Mr. Sian said Remington would be built along with its other high-end hotels — six-star Maxim and Marriott located near the Ninoy Aquino International Airport.

"We want to target all segments of the market," Mr. Sian said. Shares in Megaworld closed at P1 per share on Friday, 0.64% lower.

Philippines' Maynilad reports 11% growth in revenues

Jose Bimbo F. Santos

Maynilad Water Services Inc. said on Friday it posted double-digit revenue growth in the first half on the back of efforts to expand coverage.

"There was an 11% revenue growth and 17% volume growth for the first half," Rogelio L. Singson, Maynilad president, said during the last leg of public consultations in Manila for the 15-year extension of its concession agreement with the government.

From below 50%, Maynilad has reached three-quarters of its customer base since the new management took over in 2007, executives said. Maynilad earlier reported that water pressure in its west zone concession had improved to 20 pounds per square inch (psi) from seven psi.

Metro Pacific Investments Corp. (MPIC) had disclosed that the net income of affiliate Maynilad for the first quarter amounted to P685 million, accounting for P245 million of MPIC’s income.

Maynilad’s contract to operate the west zone area in Metro Manila will expire in 2022 and the utility is seeking a 15-year extension to 2037. East zone concessionaire Manila Water secured last April regulatory approval for a similar 15-year extension.

According to Maynilad, water rate increases for the next three years may be trimmed by three quarters if the concession extension is approved.

"The extension would be the only way for us to decrease tariffs due to the longer recovery period we will have," Mr. Singson said.

Construction-based DMCI Holdings owns 44.59% of Maynilad while Pangilinan-led Metro Pacific holds 55.41%. The two firms bought the utility when it was re-privatized by the government in 2007. The original owners, the Lopezes, returned the franchise to the government two years earlier.

Maynilad’s service area covers Pasay, Caloocan, Las Piñas, Parañaque, Valenzuela, Muntinlupa, Manila except Sta.Ana, some areas of Makati and Quezon City, Malabon and Navotas, as well as Cavite City, Rosario, Imus, Noveleta, Bacoor, and Kawit in Cavite.

Philippine entrepreneurs can now register by mobile phone

Jessica Anne D. Hermosa

Entrepreneurs can now pay for business name registration fees through their mobile phones under a new service offered by the Trade department to complement the online application process.

The move is another in a line of reforms the department has enacted, which include the automatic renewal of expired business registrations and lowered fees, to reduce red tape.

Entrepreneurs were advised to access the Business Name Registration System homepage of the Trade department where steps on how to make e-payments using Globe Telecoms, Inc.’s GCASH facility are detailed.

The service was first launched in late May.

After a successful application, business certificates may be claimed through mail for Metro Manila applicants or in person at the agency’s satellite offices. In January last year, a similar GCASH service was offered to exporters who needed to pay fees on warehouse licenses and accreditation.

Recent improvements in the processing of small to medium enterprises’ transactions, Trade Secretary Peter B. Favila has said, are aimed at cushioning the impact of the economic crisis.

Philippines obtains Samurai bond guarantee


The Philippines on Friday obtained a guarantee from Japan for a planned Samurai bond offer of up to $1.5 billion dollars, officials said.

The move is a step towards actual issuance of the debt papers, which will be used, based on a guarantee agreement inked by the Department of Finance and the Japan Bank for International Cooperation, for the "general budget to respond to the global financial crisis."

"The parties have agreed to engage in good faith discussions to finalize the terms and conditions of the relevant agreements for each bond issue and guarantee transaction," the memorandum of agreement (MoU) states.

Samurai bonds are yen-denominated bonds sold in Japan by non-Japanese borrowers. Officials early this week initially said the offer would be $500 million but Malacañang later said it could rise to $1.5 billion

National Treasurer Roberto B. Tan said the MoU — signed on the occasion of a working visit to Tokyo by President Gloria Macapagal Arroyo — is a nonbinding agreement.

"It provides an intent for both parties to pursue the bond issuance. Next, there might be a framework agreement, a guarantee agreement and then a [final] memorandum of agreement," he said in an interview.

"We have to know what Japan would be requiring for this. There would be more consultations."

The amount of the offer has not been finalized, Mr. Tan said, adding that the government was considering an issuance of $500 million and up which could be done in tranches.

"JBIC said it can guarantee up to $1.5 billion but we’re thinking of issuing even less than that. But the details have yet to be finalized. I have to talk to Finance Secretary [Margarito B.] Teves first," Mr. Tan sad.

The government’s last week raised its 2009 budget deficit cap to P250 billion, or 3.2% of gross domestic product, from P199.2 billion previously, citing a revenue shortfall amid a slowing economy.

Friday, 19 June 2009

Fujitsu to make the Philippines its regional hub

Ma Elisa P Osorio
Philippine Star

MANILA, Philippines - Fujitsu, a leading provider of business, information technology, and communications solutions announced it is making the Philippines its regional hub.

In a briefing, Ian Hodge, group executive director said that they are planning to increase their local revenues by 50 percent this year. Fujitsu revenue has been increasing even with the financial crisis.

In 2007, revenues grew by 50 percent and then 25 percent the following year.

Likewise, he said they will be hiring from 70 to 100 employees this year.

In April, Fujitsu announced that they have acquired Australia and South East Asia operations of Supply Chain Consulting Pty. Ltd., a market leader of SAP and Oracle Enterprises.

The acquisition will result in expanded service offerings for local clients.

The move is expected to generate additional SAP income for both companies.

“Supply Chain Consulting is a leading global provider of enterprise and software solutions and this acquisition will further improve the services we are currently offering to our clients, especially in Manila,” Raymond Licdao, director of Supply Chain Consulting said.

“We are pleased with this development because it does not only tie us up with a global IT giant and now we also have more resources dedicated to support our board range of solutions and services,” he added.

Filipinos plan Asian voyage aboard an ancient Malay boat

Jim Gomez
Manila Standard

The first Filipinos to conquer Mount Everest hope to sail around Southeast Asia and then to Africa in a replica of an ancient boat—a feat they hope will inspire unity in the politically fractious Philippines, organizers said Wednesday.

The balangay, a wooden-hulled boat used in this archipelago about 1,700 years ago, will set sail from Manila Bay on June 27, said project leader Art Valdez.

Several Badjao tribal craftsmen were flown to Manila from the southernmost province of Tawi-Tawi to painstakingly construct the 15-meter boat according to ancient traditions using primitive tools and not a single nail, Valdez said.

The adventurers plan to stop at some 75 ports in the Philippines, and then to head for Southeast Asia before considering whether to attempt the voyage across the Indian Ocean to Madagascar off the southeast coast of Africa, he said.

The Madagascar leg of the voyage will depend on the state of the vessel and its crew, Valdez said. The entire expedition is expected to last past the end of 2010.

A balangay is a fair-weather, round-bottomed sailboat with a prominent bow. In ancient times, balangays could accommodate as many as 50 people, and often entire families lived on board. Sailors sat on benches attached to the ribs of the hull, and were protected from the sun and rain by a canopy stretched over the central part of the hull.

Five Coast Guard personnel, who won the country’s praise in 2006 and 2007 as the first Filipinos to scale Mount Everest, will lead the voyage accompanied by about a dozen crew of expert mariners and Navy guards. Seafaring Badjao tribesmen will navigate guided by the stars and other natural indicators.

A Coast Guard patrol ship will tail the boat in case something unforeseen happened, Valdez said. The crew will sometimes live on the boat and sometimes lodge on land.

Janet Belarmino-Sardena, a member of the crew and the Coast Guard, said they hoped the voyage would unite Filipinos and instill courage in them to overcome poverty.

The Philippines, formerly among Southeast Asia’s most stable economies, has degenerated into one of the region’s economic laggards, often distracted by political conflicts, coup attempts and rampant corruption. Communist and Muslim separatist rebellions have raged there for 40 years.

“We were once very superior,” Sardena told The Associated Press. “We have to get that pride and confidence back.”

She said the voyage should project a message that “Filipinos can do anything.”

“When you watch the news, you see so many problems,” said crewmember Erwin Emata, who scaled Everest in 2006. “Instead of joining the rallies, we look for ways to make children realize that we have a glorious past,” said the father of three.

Rey Santiago, an archaeologist at the Philippine National Museum, said nine original balangay boats were discovered in the 1970s in southern Butuan City, three of which are on display in museums. One had been estimated to be at least 1,689 years old based on carbon dating tests, he said.

Balangays traditionally had wooden hulls reinforced with rib-like wooden frames and palm cords. They were used as dwellings, cargo boats and war ships.

Although they are no longer in use, Badjao tribesmen in Tawi Tawi and other tribes still practice the ancient building methods.

Philippine villages are called barangays in the Tagalog dialect, perhaps because boat-dwelling people were among the country’s earliest communities, Santiago said.

“It’s a time capsule,” he said. “In it, you can find the story of the Filipino people.” AP

Thursday, 18 June 2009

Philippines -- Immigration policy as economic stimulus

By Tony Lopez
Manila Times

When businessmen and investors visit the Philippines, the first person they see and meet is not their business partner or associate. Nor their banker.

It is the immigration agent. After all, the Philippines, with an archipelago of 7,107 islands, has a coastline double that of the United States. The country’s borders have a notoriety for being porous—easily penetrated by foreigners, the wrong and the right kind.

This makes the Bureau of Immigration an essential agency in attracting investments to the country.

Accordingly, Commissioner Marcelino C. Libanan has instituted major reforms at the bureau. He cut red tape drastically, reduced if not totally removed fees, many of which were ridiculous and unreasonable, employed technology to speed up paper work, and promoted job creation by offering indefinite stay or virtually permanent residence visas to foreigners who invest and pledge to create at least ten jobs.

The last reform—permanent residence visas for those who promise to create ten jobs each—promises to create 100,000 jobs almost instantly. Libanan is enthusiastic about the outcome. It has created more jobs than the number of jobs lost due to the economic slowdown as evidenced by the paltry 0.4-percent GDP growth rate in the first quarter.

The BI is an agency that is now perceived as honest, efficient, and investor-friendly. BI last December was removed from the National Competitiveness Council’s Top Ten list of government agencies plagued by red tape and delays in processing of documents.

Previously, BI was No.3 in the list because of the length of time it took to process working visas of expatriates.

The bureau’s visa-issuance-made-simple (VIMS) program cut processing time for visa applications by 80 percent and documentary requirements by 40 percent.

The Presidential Anti-Graft Commission (PAGC) also cited the BI for its success in cutting red tape through the VIMS’ implementation.

The PAGC ranked the BI No. 3 among the 100 government agencies that are periodically evaluated by the commission for their performance in fighting corruption. BI was previously No. 7.

Also, the BI is an active participant in the performance management system—office performance evaluation system (PMS-OPES) of the Civil Service Commission (CSC), which aims to institute meritocracy in the bureaucracy. BI was declared the valedictorian.

Among Libanan’s reforms are: the VIMS, or Visa Issuance Made Simple, the Pre-arranged visa upon arrival, or PVUA, the no-touch, no contact policy for investors and OFWs, the mobile immigration counters, and the Job Generation Visa which has created thousands of jobs and become a major economic stimulus program.

Investors who are of Chinese and Indian ancestry have ceased being the cash cow of corrupt immigration agents. Commissioner Libanan lifted the so-called “restricted/high risk” category of aliens for Chinese and Indian nationals in September 2007.

At the premier international airport, Commissioner Libanan has installed closed-circuit TV cameras to ensure total transparency and that no bribery takes place in contacts with arriving or departing passengers. A spanking black uniform has been mandated for all BI agents and officers. No lunch breaks are allowed, ensuring constant presence of agents at their desks.

Nonoy Libanan also opened extension offices in Parañaque City, Caloocan, Rizal and Laguna provinces, making things easy for foreigners and investors.

Libanan is not new to visionary management. As a legislator for nine years, he was one of the top two most productive members of the House, for the number of laws and bills he authored. He was a student leader and activist and some say, a former New People’s Army sympathizer if not a commander himself. After hours, Nonoy plays a mean guitar and is a regular concert performer.

Libanan, 45, finished med tech and law at the Divine Word University in Tacloban and passed the bar in 1998.

After Immigration, Nonoy should be destined for bigger and better things. It is not clear yet what his political plans are.

Yesterday, Wednesday, June 16, Nonoy was our guest at the TV talk show BizNews I co-host with Elizabeth Lee. The NBN Channel 4 show is on the air every Wednesday at 10:30 p.m.

Arroyo signs Philippine law on gov’t salaries

TJ Burgonio
Philippine Daily Inquirer

MANILA, Philippines -- President Gloria Macapagal-Arroyo has signed into law a joint congressional resolution standardizing the pay of more than one million government personnel.

Arroyo signed Resolution 4, or the Salary Standardization Law III, at the airport lounge yesterday just before leaving on a chartered Philippine Airlines flight for a working visit to Japan.

The resolution, which has the effect of law, introduces new compensation and position scale for civilian, military and uniformed personnel in government.

In essence, it “overhauls not only the pay, but [also] the plantilla,” Malacañang officials said.

It seeks to address the salary overlaps created by the current compensation system, such as varying allowances and benefits, which have distorted pay of government employees, they said.

The increase in pay could be as high as 50 percent, and will be implemented over a period of four years, beginning in July.

For instance, the salary grade of public school teachers has been raised one notch, giving them a basic pay of between P18,088 and P19,527, or a 50-percent increase when fully implemented.

“In effect, we’re giving the private sector good competition. We’re encouraging competent workers to join the government. Now government salaries can already be competitive,” said deputy presidential spokesperson Lorelei Fajardo.

A very attractive view from the top

Outside the Box
John Mangun
Business Mirror

If you climb high enough up the mountain to get a really broad perspective on the scene, the world right now looks in pretty good shape. Of course, the global economy is in tatters, but the money world is only part of our daily earth existence.

The situation in Iraq and Afghanistan that has dominated the headlines for a decade is calming down. In fact, both places seem as chaotic and dangerous as certain areas of Chicago, New York, and Manila, for that matter.

North Korea keeps setting off nuclear weapons and punching missiles through the stratosphere but that may be less of a problem than it appears. The resident crazy despot in Pyongyang is about ready to “retire” and wants to show the old military guard that he still has the fire in his pants so that they will allow his junior “crazy despot” to take over when he drops dead.

Russia has pulled back from armed invasions of its neighbors, preferring now to use the old Soviet Union style of attack by putting up puppets trying to takeover through proxies as in Georgia and the Ukraine. But most of Russia’s foreign policy right now is like China’s: how do we get out of the US dollar without killing its value? Every time either country talks about replacing the greenback with another instrument, the dollar drops, further reducing each nation’s net worth. It must be tough having a monopoly on a commodity that no one wants.

China is caught in the middle of a complex riddle. A decade of financing US consumer purchases of Chinese products has its downside. It is like the sari-sari store owner who advances credit to every one in the barangay to boost sales and then realizes he has very little power to make them pay. Sure, the USA can continue to pay, but they keep wanting to use more dollars, which are really “promises to pay” with no intrinsic value. So China is running around the world trading dollars for raw materials which at least they can use to build something. The problem is that they have so much money in dollars there is almost not enough things to buy.

China and Russia aren’t the only ones trying to get rid of dollars. Chile literally shocked the financial world by starting to sell nearly 10 percent of its $40-billion foreign reserves. The Chilean peso jumped 15 percent yesterday as that government will use the proceeds from the sale of dollars to boost the local economy. It is a brilliant strategy that breaks with the silly notion that the only wealth that counts is wealth that is dollar-denominated. I wish our finance leaders had a little more creativity like Finance Minister Andrés Velasco Brañes. Of course, he never worked for any American bank.

Locally, things are becoming better by the week. Sure, the stock market took a large correction these last two days, forcing me to cut loss on our short-term trading positions until they drop to the next support level where we will buy again. But again, the big picture honestly could not be better.

I promise that I will restrain myself from making any more comments (at least for this column) about the “experts” economic forecasts for the Philippines.

But I cannot be stopped from simply reading the local news and commenting.

It was reported yesterday that local outsourcing companies will expand this year by as much as 200 percent. Only 6 percent said they would cut back while the other 94 percent said they would be stable or will grow, expecting to add over 25,000 new jobs. I suppose that sort of makes up for the few thousands overseas Filipino workers (OFWs) forced to return home. And keep in mind that each call-center employee generates eight times as much dollar inflow as an OFW. The industry’s biggest problem is not finding clients or even good agents. It is finding middle and top management. Some time I will tell you about the 27-year-old mother of three who, five years ago, started as a call-center agent and now is head of an account employing 600 people and generating P350 million a year in revenue.

Cebu Pacific Airlines is spending $1.8 to buy five new jets because its domestic and international business is so strong, expected to be up nearly 30 percent. It might increase its order to 10 planes. Remember, I said on Tuesday the global airline industry just revised its expected 2009 losses upward by 100 percent. I “guess Cebu Pacific’s move falls under Only in da Philippines.”

And you have to love this from the Philippine Star: “The country’s unemployment rate slipped to 7.5 percent in April from 7.7 percent in January despite the economy shrinking at its fastest pace in two decades in the first three months of the year.” Or maybe, could the economic numbers be wrong?

Philippine banks are in the best shape as far as the dreaded non-performing loans since 1997. In fact, the 3.95-percent factor is better than before 1997. In 2008, the ratio was at 4.85 percent. I guess this “recession” is good for our banks.

But the best news. Finally, there is someone who agrees with me. From PhilStar: “University of Asia and the Pacific professor and economist Bernardo Villegas expects the country’s economy to grow by close to 6 percent in the fourth quarter of this year. This [economic] crisis will shift economic power to China, India, Vietnam and the Philippines.” It’s been a good day.

PSE stock market information and technical analysis tools provided by, Inc. Email comments to

Philippine Govt to invest P2.5B in R&D for nanotech development

Jonathan L. Mayuga
Business Mirror

THE government is eyeing to invest some P2.5 billion for the development of nanotechnology in the Philippines through research and development within the next 10 years.

A team of experts from the Department of Science and Technology (DOST) is now in the process of finalizing a road map for the development of nanotechnology in the Philippines.

Five areas of nanotechnology application in the Philippines which need particular focus, namely, ICT and semiconductors, energy, agriculture and food, medicine and environment, have been identified as priority areas of development for nanotechnology under the proposed road map.

The research and development of nanotechnology will be conducted by the DOST, in collaboration with public and private research institutions with technical expertise and capacities.

The group, led by Dr. Fabian Dayrit, chairman of the Philippine Council for Advanced Science and Technology Research and Development (PCASTRD), presented a proposed road map for the development of nanotechnology, or nanotech, at the Sulô Hotel in Quezon City on Wednesday.

Dayrit said the Philippines has the technical expertise and capacity to conduct extensive research and development on such nanotech areas or discipline.  He said it is only wise for the Philippines to invest now, or it may end up lagging behind other countries.

“We don’t want to be left behind,” he said.

Nanotechnology is the study of the control of matter on an atomic and molecular scale. Generally, nanotechnology deals with structures of the size 100 nanometers or smaller, and involves developing materials or devices within that size.

Nanotechnology is very diverse, ranging from novel extensions of conventional device physics, to completely new approaches based upon molecular self-assembly, to developing new materials with dimensions on the nanoscale, even to speculation on whether we can directly control matter on the atomic scale.

To jump-start research and development of nanotechnology in the Philippines, the DOST has already requested from the Department of Budget and Management (DBM) an initial amount of P50 million.

Such research and development will cover the five identified priority areas, plus education, Dayrit said.

In 2001 the United States National Nanotechnology Initiative invested about $220 million toward research and discovery. The budget for 2008 went up to $1.5 billion.

Other counties have invested for nanotechnology. The European Union allotted €1 billion in 2004. Japan invested $800 million in 2003. South Korea allotted $2 billion for 10 years, while Taiwan allotted $600 million for a period of six years. China has allotted $100 million in 2003.

As of 2008, the total worldwide investment in nanotechnology reached more than $10 billion, Dayrit said.

Dayrit said the scope of nanotechnology is not limited to miniaturization. “It involves the exploitation of new phenomena which arise at the atomic and molecular levels,” he said.

According to Dayrit, nanotechnology can be applied to biotechnology, materials science, and ICT.

“Nanotechnology is already with us,” he said. However, research in nanotechnology is essential “so that we can explore the potential of this technology.

According to Dayrit, nanotechnology is not a completely new field. As far as the Phiulippines is concerned, “we are not starting from zero capabilities.”

Survey says Philippine BPO firms growing and well managed

Business Mirror

ALTHOUGH 83 percent of executives responding to a recent survey designed to assess the state of business process outsourcing (BPO) industry said the global economic crisis has had at least some impact on their firms, 49 percent said their firms will expand headcount this year between 11 percent and 200 percent. The remaining 45 percent will expand headcount conservatively of up to 10 percent, retain their current headcount, or decrease the size of their workforces. Only 6 percent of the survey respondents said they will decrease the size of their workforces this year.

Business Processing Association of the Philippines CEO Oscar Sañez said the survey results suggest that whatever impact the global financial crisis is having on the industry, it doesn’t seem to be slowing expansion. “It’s encouraging that although the industry has been growing rapidly for several years now, almost 40 percent of respondents indicated that their firms will still grow between 16 percent and 200 percent this year,” he said.

Introducing new services was the most prevalent response to the global financial crisis, with almost 60 percent of respondents indicating that their firms have expanded their service offerings. Only 2 percent indicated that they have reduced the number of services.

More respondents said they were accelerating expansion (33 percent) than postponing expansion (26 percent). Respondents indicating that their firms are increasing recruitment efforts (23 percent) somewhat outpaced respondents indicating that their firms are moderating recruitment (20 percent).

Recent developments in the industry support the results of the survey. StarTek, a midsize value-added BPO announced that it is ramping up its Makati facility to full capacity to meet expanding demand for complex services. Convergys opened three new call centers in Cebu, Santa Rosa, and Quezon City in April which will provide almost 3,000 new jobs and increase the company’s headcount to 16,000 in the Philippines.

Miguel Garcia, chief executive officer of industry supplier DTSI forecasts that the Philippine BPO industry will grow overall by about 20 percent this year.

However, the survey did provide some signs of concern. Substantially more respondents indicated that their firms are decreasing capital investments (36 percent) than increasing capital spending (9 percent). The impact of the crisis is being felt primarily in demand according to 66 percent of respondents, but the large number of respondents whose firms have introduced new services suggests that an interesting shift in the kind of services desired by clients is taking place.

The suggestion that a shift in the kinds of services provided by the industry is supported by the large number of respondents that say their firms are providing high or very high value-added services, according to Frank Holz, chief executive of Outsource2Philippines (O2P). “The fact that 69 percent of respondents said their firms are providing high and very high value-added services is actually staggering,” Holz said. This means that the industry is providing much more complex services overall than it did in the early years of its development.”

Thomson Reuters recently announced that it has established a team to support global legal content initiatives, its most profitable division, in the Philippines. The company already provides services in five other operations areas, including the investment and advisory division, from the Philippines. “The Philippines is providing increasingly complex services for Thomson Reuters customers worldwide,” Raoul Teh, senior site officer for the company, said.

Among the sectors represented by respondents, firms providing back-office services appeared to be the most affected by the crisis, representing 63% of respondents indicating their firms had been very significantly affected by the crisis and 36% of respondents who said their firms had been significantly affected. However, the impact appears to be primarily positive, with respondents in this sector representing 60% of respondents who said their firms are accelerating expansion. Respondents representing back-office services account for 35% of respondents who said their firms are postponing expansion.

Back-office services providers (data processing, human resources, finance and accounting, document management, claims and transaction processing, editorial, procurement, professional services, research, supply chain management, etc.) are some of the largest employers involved in the survey. However, it is the smaller services providers that have been most affected by the global financial crisis, said Gillian Joyce Virata, BPA/P executive director for information and research.

“This may suggest that while smaller firms were in some ways more susceptible to the crisis, they may also have been the most responsive,” she said.

The survey was conducted online by BPA/P and O2P, with the support of TeamAsia, from March 31 to April 29.

Just about time ...

An ad from the International Herald Tribune
18 June 2009

$550-M Asia America Gateway starts soon

Manila Bulletin

[Asia America] Gateway (AAG) submarine cable network, supposed to have started carrying commercial traffic since the last quarter of 2008, will finally begin operating in August this year, announced the Philippine Long Distance Telephone Co. (PLDT), one of the project proponents.

The AAG network spans 20,000 kilometers, linking up Malaysia, Singapore, Thailand, Brunei Darussalam, Vietnam, Hong Kong, the Philippines, Guam, Hawaii, and the US West Coast. However, bad weather buffeted the laying of AAG’s deep cables in Hong Kong, delaying the project for about 9 months now.

Despite such challenges, the AAG consortium sees to it that the entire system will be properly installed and that the quality of engineering and installation work will not be compromised, PLDT stressed.

To date, the Philippine Terminal Station, as well as the other terminal stations comprising the AAG cable project, has been built. The other terminal stations are located in Malaysia, Singapore , Thailand , Brunei,Vietnam, Hong Kong, Guam, Hawaii and the US Mainland.

AAG can transform the Philippines [into] a regional and trans-Pacific connectivity hub and allow the country to meeting the exploding demand for international bandwidth to support broadband applications for video and multimedia services. The system was designed to be capable of carrying at least 1.92 terrabit per second.

For its part, the AAG consortium, formed two years ago, is composed of 3 domestic telcos, such as PLDT, which contributed US$50 million to the project, Bayan Telecommunications Inc. and Eastern Telecommunications Philippines Inc., plus 14 foreign telcos and the Government of Brunei Darussalam (Brunei).

Among the foreign telco members are: AT&T Corp. (USA), Bharti AirTel (India), , British Telecom Global Network Services (UK), CAT Telecom (Thailand), FPT Telecom (Vietnam), PT Indosat (Indonesia), PT Telkom (Indonesia), Saigon Postel Corporation (Vietnam), StarHub (Singapore), Telekom Malaysia (Malaysia), Telcotech Limited (Cambodia), Telstra (Australia), Telecom New Zealand International (New Zealand), Viettel (Vietnam) and Vietnam Post & Telecommunications Group of Vietnam (Vietnam).

Philippine BoP yields $2.14-billion surplus in May

Manila Bulletin

The country’s balance of payments (BoP) position is a surplus of $2.143 billion as of May, the central bank reported Tuesday.

Bangko Sentral ng Pilipinas (BSP) latest data show the BoP month-on-month reverted to a deficit of $55 million for the said month from April’s surplus of $466 million.

For 2009, the BSP is keeping a BoP forecast of $700 million. The BSP is relying on the National Government’s foreign exchange borrowings both donor aids and bond sales to prop up the BoP. The month of May’s BoP shortfall is lower compared to March’s $472 million deficit.

BoP summarizes the country’s economic transactions with the world and is determined by such indicators as exports/imports, foreign direct investments (FDIs) and remittances among other capital transfers.

BSP’s FDI forecast for this year is still a positive $700 million while they also expect foreign portfolio investments of $600 million despite investors risk sensitivity. Last year FDIs reached $1.4 billion but so-called hot money funds dropped to a net outflow of $3.7 billion.

Philippines' Zest Airways beefing up fleet

Jeremiah F. de Guzman with AFP

BUDGET CARRIER Zest Airways, Inc. is adding two new aircraft in preparation for the anticipated boost in passenger traffic during the next peak season.

In a telephone interview yesterday, Zest Air Chairman Alfredo M. Yao, confirmed that the airline has purchased two Airbus A320s, which would be delivered in July and in October.

"Buying two new aircraft is just part of our business’ economies of scale," he said.

At an air show in Le Bourget, France, Airbus announced that Zest Airways had placed a firm order for a medium-range Airbus A320 airliner.

The airline already operates two of these aircraft which it bought on the market for used aircraft.

Airbus did not give the value of the order, but the catalogue price for the aircraft is about $77 million (_55.4 million).

Mr. Yao said Zest Air would add more flights given that the peak season is coming.

"We had lean months in the second quarter, which is the usual case, but we expect that it will ramp up by next quarter," the Zest Air chairman said.

Zest Air operates domestically with destinations that include Cebu, Iloilo, Legaspi, Marinduque, Naga, San Jose, Mindoro, Bacolod, Calbayog, Catarman, Kalibo, Tacloban, and Virac.

"As soon as papers of the new aircraft are settled, it will be operational and will result in adding more regional flights and routes," Mr. Yao said.

Recently, budget carrier Cebu Pacific Air said it had placed orders for five more Airbus A320s, ending up with 15 pending orders.

The Gokongwei-led budget airline also said it was still studying whether it should order five more to support its continued expansion.

P40-million upgrade of GenSan airport to start in two months

R. S. Sarmiento

GENERAL SANTOS CITY — The General Santos City International Airport is set to get a major facelift worth P40 million, with work to start in the next two months, a ranking aviation official said yesterday.

This will be the first major improvement for the facility since it started operating 13 years ago, said Nathaniel Y. Nazareno, the Civil Aviation Authority’s chief here.

He said announcement of the winner of the bidding for this project is expected in 30 days.

The airport gets just P2 million monthly for its upkeep, including allocation for personnel salary, Mr. Nazareno said, adding they have not increased the P40 terminal fee charged to flyers.

President Gloria M. Arroyo said during her visit in nearby Koronadal City last week that renovation work at the airport here would cost at total of P121 million. Some P40 million of that was included in the 2009 budget of the Department of Transportation and Communication and the P81 million would be included in the department’s 2010 budget, the President said.

Mr. Nazareno said the P40 million would be used to expand the floor area of the passenger terminal and the perimeter fence of the airport as part of the security precautions.

Wednesday, 17 June 2009

Philippine economy seen growing 2.5%-4% GDP in 2009

MANILA, June 17 (PNA) -- The Philippine economy will not go into recession and is expected to grow 2.5 to 4 percent this year, according to economist Bernardo Villegas.

At the sidelines of the 40th National Marketing Conference organized by the Philippine Marketing Association, Villegas said the Philippines will be among the few countries in the world that will post positive growth despite the global financial crisis.

He said the country thus should not be bothered about the measly 0.4-percent gross domestic product (GDP) registered in the first quarter, as it is not indicative of what will be the overall growth for 2009.

Villegas said economic growth will accelerate in the succeeding quarters to a high of six percent in the fourth quarter, from 3 percent in the second quarter and around 4 to 5 percent in the second quarter.

He said this year’s overall growth will be driven by overseas Filipino workers' (OFWs) remittances, government infrastructure spending, agriculture, domestic tourism and expenditures of political candidates who will be running for the May 2010 elections.

Villegas expects OFW remittances, which comprise around 12 percent of GDP, to increase to at least $ 18 billion in 2009 from last year’s $ 16.4 billion.

The projection could go higher as the number of Filipino workers abroad will continue to rise despite the crisis, owing to their various qualities and talents, the economist added.

“Remittances from overseas Filipino workers will not decline,” he asserted.

Villegas, also a professor of University of Asia and the Pacific (UAP), further said agriculture will still be the ‘brightest sector’ in the next 10 years.

He said domestic tourism likewise would be a growth driver this year, as local travelers would be encouraged to travel around the country rather than going abroad as a result of AH1NI virus scare.

Moreover, Villegas said a lot of infrastructure spending will take place towards the end of the year which is crucial to pump-priming the economy.

“Third quarter is when a lot of infrastructure spending will already happen; it will start in September,” he said, adding “Pump-priming is the name of the game.” (PNA)


Economist sees 4% economic growth
By Amy R. Remo
Philippine Daily Inquirer
First Posted 21:21:00 04/28/2009

MANILA, Philippines -- Despite the global economic slowdown, the country can expect relatively brighter prospects this year in terms of economic growth and opportunities, according to a senior economist at the University of Asia and the Pacific.

At the general membership meeting of the Management Association of the Philippines, Bernardo M. Villegas noted that in the region, there may only be three countries that will have positive growth rates—Indonesia, Vietnam and the Philippines.

According to Villegas, the Philippine economy may even register a gross domestic product growth of 4.0 percent—contrary to forecasts and estimates made by multilateral agencies.

GDP is the value of goods produced and services rendered in an economy in a given period. It excludes remittances from overseas workers.

The government’s forecast is for a 3.1-percent growth this year in the face of a global economic downturn. The World Bank and the Asian Development Bank expect the Philippines to grow 1.9 percent and 2.5 percent, respectively.

“It is not true that the GDP of the Philippines will grow by only 1.0 percent. I strongly disagree,” Villegas said.

One factor, according to Villegas, is the fact the Philippines has a population of some 90 million—a huge domestic market to sell to—even if exports drop by 30-40 percent.

“If you take a look, the ones who will dominate are countries that have at least 50 million people,” he added.

He also noted that multilateral agencies like the World Bank are using models—especially with regards to overseas workers—that are too generic.

“They look at the whole universe of overseas workers lumped together—Indians, Mexicans, Chinese and they are not taking into account that overseas Filipino workers (OFWs) are totally superior to overseas workers from other countries,” he said.

He explained that while foreign countries like Spain and the United Arab Emirates are sending home overseas workers, “they almost pleaded to Filipino workers to stay.”

“Why? Because they found out that Filipino workers are multi-skilled—they can go from one job to another, and the [multilateral agencies] are oblivious to this situation,” he explained.

President inaugurates Las Navas Bridge in Northern Samar

Ranks of jobless down to 7.5% in April

Ronnel Domingo
With reports from Kristine L. Alave and Reuters
Philippine Daily Inquirer

MANILA, Philippines—Government and private sector efforts to provide jobs amid a global downturn helped pare down the unemployment rate to 7.5 percent in April from 8 percent in the same month last year.

The April figure was also slightly lower than that of January, when unemployment was reported at 7.7 percent.

Based on the National Statistics Office’s latest Labor Force Survey, the number of new jobs created outpaced the number of those who joined the country’s horde of workers.

There were some 1.37 million people 15 years and older who had joined the labor force—beefing it up by 3.8 percent to 37.82 million—in April from 36.45 million in the same month of 2008.

Of these, 34.99 million have jobs—about 1.458 million more than the 33.54 million seen last year.

Also, the unemployed numbered 2.83 million in April, or some 84,000 less than the 2.914 million jobless reported a year ago.

“It is worth noting that the unemployment rate in April this year was almost as good as the April 2007 unemployment rate of 7.4 percent, the year when the economy had posted a 7.1-percent growth,” Economic Planning Secretary Ralph G. Recto said.

However, the underemployment rate—those with jobs but want to work more—climbed slightly to 18.9 percent in April against 18.2 percent in January.

Analysts said the rise in the underemployment rate pointed to mounting pressures on the labor market, aggravated by returning Filipino workers who lost their jobs overseas due to the global recession.

“There is clearly pressure on the labor market, not just due to economic slowdown, but also going forward with remittance growth showing further downside,” said Simon Wong, economist at Standard Chartered Bank in Hong Kong.

The underemployed workers climbed to 6.62 million from 6.24 million in the same period. Of the total underemployed, 62.6 percent worked less than 40 hours a week in April, higher than 60.8 percent in January.

“While people seem to be busy, it is not the full 8 hours or 40 hours a week, so that is where the weakness of the recent statistics may come in,” said Jun Trinidad, economist at Citigroup. “This suggests that it can still encourage people not to spend.”

Also, the Philippines has the second highest jobless rate among the biggest Southeast Asian economies. It is behind Indonesia which reported an unemployment rate of 8.14 percent as of February.

Thailand’s jobless rate was at 1.9 percent in February, below Malaysia’s 3.3 percent at end 2008. Singapore’s first quarter seasonally adjusted jobless rate was 3.3 percent, a three-year high.

Job cuts and reduced work hours in the Philippines have been on the rise, mainly in the electronics sector, which account for over half of the country’s exports, with demand still weak.

Officials said last month the economy’s 2.3 percent contraction in the first quarter was partly due to weak personal spending as people saved their money due to the uncertainty on the depth of the global downturn.

At least 6,500 Filipino workers returned from abroad, mainly Taiwan, since October as the global recession hit the manufacturing sector, based on data from the overseas workers welfare agency.

Data from the Department of Labor and Employment show that from October 2008 to March 2009, the global financial crisis took its toll on a total of 109,429 domestic workers.

The Department of Labor and Employment was heartened by the slight dip in the unemployment rate, saying it showed that the government’s effort to mitigate the effects of the crisis on labor were effective.

Philippines' SMIC doubles bond issue to P10 billion

Manila Bulletin

SM Investments Corporation announced Monday that it upsized its retail bond issue to P10 billion from the initial issue size of P5 billion due to strong demand from both institutional and retail investors.

Last June 5, SMIC set the interest rates for its Series A, 5-years and 1 day bonds at 8.25 percent per annum, and for its Series B, 7-year bonds at 9.10 percent p.a. The bonds were made available for sale to the investing public beginning June 8.

SMIC disclosed to the Philippine Stock Exchange that, to date, investment commitments totaled P13 billion, almost 3 times the bonds’ original issue size.

This has prompted the bonds joint lead underwriters to exercise their oversubscription option for the additional P5 billion bonds.

The retail bond is SMIC’s maiden foray into the domestic public debt market. The bond is rated triple “A” by the Philippine Ratings Services Corporatin (PhilRatings), the highest credit rating on PhilRatings long-term credit rating scale.

“We are extremely pleased and grateful that investors have responded positively to the SMIC bond issue,” SMIC Executive Vice President and Chief Finance Officer Jose T. Sio.

The bonds offer period is scheduled to end June 18, while issue date is scheduled for June 25.

Philippines' Medical City reports 20% revenue growth

Manila Bulletin

The Medical City (TMC) reported a 20 percent year-on-year growth for its 2008 revenues, from P2.69 billion in the preceding year to P3.22 billion due to combined service development and aggressive
cost management strategies.

Corresponding profits from hospital operations likewise increased by 24 percent – from P440.9 million in 2007 to P544.7 million. After-tax profits of P434.4 million were posted in 2008, compared to a loss of P410.8 million in the previous year, due to a one-time write-off on the sale of investment property.

All profitability measures, most already surpassing industry benchmarks, improved even further. Despite its capital expenditures in 2008, TMC reported a respectable gross profit margin of 38 percent, up from 35 percent in 2007.

Its earnings before income, tax, depreciation and amortization (EBITDA) margin approached 26 percent, while its after-tax profit margin exceeded 13 percent.

“We continued to invest in product innovation, quality improvement and institutional marketing while aggressively managing costs to protect and even enhance profits,” explained Margaret Bengzon, Head of TMC’ Strategic Services.

“We strengthened and streamlined our supply chain processes, generating annualized savings. We also availed of incentives offered by the Board of Investments to expand healthcare institutions and enjoy tax benefits,” she added.

For the first five months of 2009, TMC posted a 10 percent revenue growth, under P100 million despite a 3 percent decline in patient admissions.

Philippine BPO sector on track for $7.5-B target

Manila Bulletin

The global crisis has dampened demand for Business Process Outsourcing (BPO) services in the country but not enough to dramatically slow down expansion.

The industry still expects to haul in $7.5 billion this year, growing 23 percent over 2008, and achieve its $12 billion original target by 2011, Business Processing Association of the Philippines (BPAP) CEO Oscar Sañez told the group’s executive breakfast briefing in Makati yesterday.

Although 83 percent of executives who responded to a recent O2P-BPA/P survey admitted that the global economic crisis affected them, 49 percent declared their firms will expand headcount this year by at least 11 percent and up to 200 percent.

A little over half, 51 percent of respondents, are expanding headcount conservatively up to 10 percent, retaining their current headcount, or de-creasing the size of their workforces.

BPA/P and O2P conducted the survey online, with the support of TeamAsia, from March 31 to April 29, 2009. They sent questionnaires to 571 BPO executives, of which 160 answered, providing a 28 percent response rate.

The respondents represented 25 BPO sectors from advertising services and legal knowledge process outsourcing to software development. A good portion, 38 percent, operate more than one BPO facility in the Philippines in more than 35 tier-one, tier-two, and tier-three urban areas.

In terms of headcount, 40 per cent of respondents employed less than 500 workers while most, or 60 percent, have 501 to more than 15,000. Some 21 percent of the respondents employ over 1,000.

Significantly, only six percent of survey respondents announced they will decrease the size of their workforces this year.

“Although the industry has been growing rapidly for several years, almost 40 percent of respondents indicated that their firms will still grow between 16 percent and 200 percent this year,” Sañez pointed out.

Philippine BPOs to keep hiring despite tough times

Ben Arnold O. De Vera
Manila Times

Almost half of business process outsourcing (BPO) firms in the country will continue hiring workers and expanding despite these hard times, the results of an industry survey show.

In a recent poll conducted by the Business Processing Association of the Philippines (BPAP), Outsource 2Philippines and TeamAsia, 49 percent of outsourcing executives surveyed said their firms would increase the number of employees by at least 11 percent to as much as 200 percent this year.

The remaining 51 percent of respondents said their companies would have to choose among three options: increase their workforce by up to 10 percent; maintain the current size of workforce; or decrease the number of their workforce.

But only 6 percent of the respondents said they would cut the number of workers.

“It’s encouraging that although the industry has been growing rapidly for several years, almost 40 percent of respondents indicated that their firms will still grow between 11 percent and 200 percent this year,” said Oscar Sañez, chief executive office of the Business Processing Association of the Philippines.

Also, the survey showed that 60 percent of respondents expanded the number of services they offer, while only 2 percent said they reduced their service offerings. Almost a third of respondents said they were pushing through with expansion plans, compared with only a fourth who said they were postponing expansion.

Twenty-three percent of respondents said their companies were jacking up recruitment efforts, while 20 percent said they were slowing down recruitment.

TeamAsia said the survey was conducted from March 31 to April 29 among 160 outsourcing leaders.

Preliminary results of this survey, which were released last month, noted that majority of outsourcing executives said the global financial crisis had minimal impact on their operations. Eighty-three percent of the executives polled said the global slowdown had “minor” or “moderate” effects on their operations, while 16 percent of respondents said the impact of the crisis was “significant,” and 5 percent said the effect was “very significant.”

Cebu Pacific ramps up fleet: Airline planning to buy 20 airplanes

Lenie Lectura
Business Mirror

GOKONGWEI-led Cebu Pacific on Tuesday said it will buy five more Airbus A320-family aircraft from its earlier planned purchase of 10 airplanes.

In addition, the company is studying whether it should order five more aircraft, said Cebu Pacific president Lance Gokongwei.

Total investment for this fleet expansion is estimated to reach $1.3 billion. Delivery of the 180-seat aircraft, said Gokongwei, is scheduled from October 2010 to November 2013.

Gokongwei said the additional orders are needed because of the airline’s expanding domestic and international operations.

The Airbus A320 family of short- to medium-range commercial passenger airliners are manufactured by France-based Airbus and are the only narrow-body aircraft in their product line. Family members include the A318, A319, A320 and A321, as well as the ACJ business jet.

With more than 3,800 aircraft of the A320 family built, it is the second best-selling jet airliner family of all time after its primary competition, the Boeing 737. “The global economic downturn notwithstanding, we are experiencing a surge in the number of passengers flying Cebu Pacific mainly because of our low fares. We expect this growth to continue, hence our decision to further expand our fleet,” he said.

Cebu Pacific carried close to 7 million passengers last year and expects to carry 9 million this year. Altogether, the airline has placed firm orders of 27 A320 aircraft, of which 12 have already been delivered. “We currently operate 21 aircraft in the A320 family, including nine leased ones, with an average age of just 1.9 years.” Gokongwei said in a statement.

The new A320s will be powered by CFM International’s CFM56-5B engines, worth $140 million, which are very efficient and have better fuel consumption. The engine also meets the latest environmental protection standards set by the International Civil Aviation Organization for its low carbon dioxide emission.

The airline had earlier signed a $100-million OnPoint solution agreement with GE Aviation’s services business. The 12-year service contract includes general maintenance and repairs, parts procurement, technology upgrades, engine leasing, and overhaul of the CFM56-5B engines. “This expansion will more than double passenger capacity and enable us to provide our trademark low fares for new domestic and international destinations. We expect to increase our passenger numbers from 9 million this year to 15 million in 2013,” Gokongwei added.

Cebu Pacific operates flights to 15 cities in Asia and 32 domestic destinations using 21 Airbus aircraft and eight ATR aircraft.

Tuesday, 16 June 2009

The new economic reality

Outside the Box
John Mangun
Business Mirror

Actions have consequences; for individuals and for nations. Sometimes, the consequences are so severe that the person is changed forever. The same can happen with the world.

I am astounded that virtually all of our political leaders, even the smart ones, have not woken up to the fact that it will never be economically “business as usual” again. It scares me and it should scare you, too.

I receive e-mail constantly telling me that I am overly concerned or simply crazy in my belief that we are entering a new, uncharted world. Just wait, they say, and the crisis will be over; it is just a normal bump on the road. The “smarter” ones even point to the 1997 Asian crisis as an example. Oh, you think so, do you?

My Fil-Am mother-in-law and her husband will retire next year. They intend to sell their big house in Los Angeles and use the money to move to a rural, cheaper area of the USA. They will use the money from the house sale also to open a small business to supplement their income. She says they will now wait a couple of years for the economy to recover so their plans can progress. Just a bump on the economic road, she tells me. Not a chance. It is a new world out there, and this is why.

The 1997 Asian crisis was a forerunner to 2009. South Korea fell in 1997 doing exactly the same thing as is being done in the USA now; bailing out, public funding of bankrupt companies. As a result, Sokor’s budget deficit skyrocketed, forcing it to borrow unprecedented amounts from the International Monetary Fund. Their economy died as money was diverted from useful purposes to paying the debt caused by diverting public and private funds to bailouts. The Korean won fell from 867 to 1,695 to the dollar in one year, 1997-1998.

Thailand went on a massive borrowing frenzy in the early 1990s, borrowing dollars from foreign sources to fund its economic expansion. Remember Thailand’s “Tiger economy”? Eventually those loans had to be repaid. But all that dollar borrowing did not create dollar revenues. So the borrowers had to sell Thai baht to buy dollars to repay the loans, thus causing the baht to move from 26 to the dollar on January 1, 1997, to 52 to a dollar in January 1998.

Back to normal? The baht now trades at 34 and the won at 1,247. Further, note this important fact: The 1997 price of crude oil was $20; in 2009 the price is $71. In January 1998, the US dollar index was over 100; now it is at 80.

The exact same scenario is playing out in the USA with the current budget deficit rising from $162 billion in 2007 to $1.7 trillion in 2009. US government debt: from 54 percent of gross domestic product (GDP) then to over 100 percent of GDP now.

As we learned from the 1997 Asian crisis, it takes a long time for things to return to “normal” and they never go back they way they were, when the consequences of policy and action are severe enough as they are now.

The Obama stimulus plan is a total failure. All the budget deficit and all the government debt has not revived the economy even a little. In fact, the unemployment, consumer-spending and economic-activity numbers are growing more negative. But all that debt has to be paid back. Further, the stimulus money combined with a falling dollar is raising prices, inflation, in the USA.

The USA must either 1) raise taxes, which will hurt economic activity even more, or 2) “monetize” the debt by printing new dollars to pay the debt, which will cause dollar devaluation. There are no other choices available. Next comes inflation fueled by excess cash in the system and a devalued dollar, which will be met with a rise in interest rates, reducing economic growth even more.

It is a global meltdown even now. Japan’s manufacturing capacity is running at 50 percent and falling, and GDP is falling at a negative-15-percent annual rate. The world air-travel industry is forecast to lose $9 billion in 2009, revised from a $4.7-billion loss just two months ago. India’s credit growth is shrinking and credit is vitally necessary for their economic growth. China’s consumer spending, despite government pump-priming, is stalling, reducing the hope that their domestic market could offset problems in the export sector. International ocean cargo shipping is operating at below break-even.

The world’s investing cash will flee from the West to countries like the Philippines just as the opposite occurred in 1997. We will read more headlines like this; “‘Hot’ money inflows surged in May,” “Remittances hit record high in March” and “Philippine call centers ring up business.” And this headline yesterday tells the truth about the Philippine economy: “GMA 7 profit up by 22 percent in January-May.” Recession? Sure. Right. Whatever you say.

Why should you be afraid of the “experts” and ignorant leaders? Because any policy based on believing that there has not been a fundamental change in the world economy, a belief that things will soon return to “normal,” will be disastrous for this nation.

And I told my mother-in-law to sell the house now because any future increase in the price will be more than offset by dollar devaluation and a $100 oil price. Then come back to the Philippines, which is one of the few places left where wealth creation will be possible in the next five years.

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

Remittances to the Philippines in First Four Months at US$5.5 Billion

Media Releases
Bangko Sentral

Remittances from overseas Filipinos (OFs) coursed through banks reached US$1.4 billion in April 2009, registering a year-on-year growth of 2.2 percent, bringing the cumulative remittances during the four-month period to US$5.5 billion. The 2.6 percent growth registered in the first four months of 2009 was supported by higher remittances from both sea-based and land-based workers of 2.5 percent and 2.6 percent, respectively.

“Steady remittance flows–averaging US$1.4 billion in 2008 and in January-April 2009–continued to be driven mainly by sustained demand by host countries for Filipino skills and competence. This, combined with expanded and easier access to enhanced banking services by overseas Filipinos and their beneficiaries helped sustain remittance flows into the country,” BSP Governor Amando M. Tetangco, Jr. stated. A report from the Philippine Overseas Employment Administration (POEA) indicated that demand for Filipino workers abroad remained broadly strong. As of 29 May 2009, a total of 758,412 active job orders has been reported, of which 37 percent have been processed while 63 percent are still to be filled up. The bulk of the job orders was in the production, services, and professional skill categories.

Demand for Filipino workers abroad is expected to be sustained by employment opportunities gained from hiring agreements forged between the Philippines and host countries in need of Filipino manpower for their development and construction needs, such as Qatar, Saudi Arabia, Canada and Australia, among others. The POEA also reported the deployment in May 2009 of 273 health workers (93 candidate-nurses and 180 candidate-caregivers) who will undergo training under the Japan-Philippines Economic Partnership Agreement (JPEPA) before taking the licensure examination that will enable them to work in Japan on a regular status.

While weaker global economic conditions continued to pose some risk to the continued strength of the deployment of Filipino workers abroad, the Philippine government remains focused on job generation programs to help displaced overseas workers find alternative jobs in emerging markets and in countries that are not severely affected by the global financial meltdown. As a result, the increase in the number of displaced OFWs has decelerated in recent weeks.

For the period January-April 2009, the major sources of remittances were the U.S., Canada, Saudi Arabia, U.K., Japan, Singapore, United Arab Emirates, Italy, and Germany.

Philippine remittances grow 2.6% in 1st 4 mos.

Jun Vallecera
Business Mirror

THE remittances of overseas Filipino workers (OFWs) rose 2.6 percent in the first four months to $5.5 billion, lifting hopes it should still rise this year despite widespread expectations to the contrary.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. refused to change the central bank’s original forecast of flattish growth for OFW remittances this year, telling reporters on Monday the zero-growth scenario remains in place.

“I would still maintain a flat growth rate. Yes, I prefer to be conservative so that the ‘revenge’ will be sweeter!” Tetangco said.

His demeanor betrayed an unveiled optimism that OFW flows, which help fund all consumption activities in the Philippines, should end the year at a level higher than last year’s $16.4-billion mark.

This, as yet another report on Monday showed mild economic stirrings, boosting hopes that consumption is improving and, with it, chances for better growth.

Consumer loans rose 1.5 percent higher in March, the BSP said, indicating that Filipino consumers engaged in an increasing number of residential real-estate loans and credit-card purchases.

The higher loans came amid government data that consumption activities as a whole grew by only 0.8 percent in the first quarter. As the Philippine economy is consumption-driven, local output—measured as the gross domestic product—grew at a tepid pace of only 0.4 percent during the period.

IMF bearish on remittances

Experts at the International Monetary Fund (IMF) just last week did not hide expectations the year’s OFW remittances were to decline before ultimately recovering next year.

“The projected recession in many of the host countries, lower commodity prices and recent trends in remittances and deployment figures underpin our projection
for a decline in total remittances this year before recovering in 2010,” IMF mission leader Il Houng Lee said at the conclusion of their staff visit.

But Tetangco said: “Steady remittance flows—averaging US$1.4 billion in 2008 and in January to April 2009—continued to be driven mainly by sustained demand by host countries for Filipino skills and competence. This, combined with expanded and easier access to enhanced banking services by overseas Filipinos and their beneficiaries, helped sustain remittance flows into the country.”

A tendency among many families of OFWs to scrimp in the first quarter had been noted, as they faced a steady stream of reports about OFWs being retrenched abroad as the global crisis started to cut deep even in labor-hosting countries.

The Philippine Overseas Employment Administration (POEA), however, reported that demand for Filipino workers abroad has remained broadly strong.

As of May 29, a total of 758,412 active job orders have been reported, of which 37 percent have been processed and 63 percent are still to be filled up. The bulk of the job orders were in the production, services, and professional skill categories, according to the POEA.

It also reported the deployment in May of 273 health workers (93 candidate-nurses and 180 candidate-caregivers) who will undergo training under the Japan-Philippines Economic Partnership Agreement before taking the licensure examination that will enable them to work in Japan on a regular status.

Tetangco said while weaker global economic conditions continued to pose some risk to the continued strength of the deployment of Filipino workers abroad, the government remains focused on job-generation programs to help displaced overseas workers find alternative jobs in emerging markets and in countries only mildly affected by the global financial meltdown.

“As a result, the increase in the number of displaced OFWs has decelerated in recent weeks,” Tetangco said.

As for the latest report on consumer loans in March the BSP said consumer loans (CLs) of universal, as well as commercial banks plus and thrift banks, reached P385.8 billion, up by 1.5 percent from last quarter’s P380.0 billion.

This was also up by 18.7 percent from year ago total of P325.1 billion.

Meantime, the ratio of total CLs to total loan portfolio (TLP), exclusive of interbank loans, went up to 15.2 percent from last quarter’s 14.8 percent.

This was 15.4 percent lower than a year ago, the BSP said.

Auto loans and other consumer loans were the next biggest loans equal to 21.1 percent or P81.6 billion and 9.6 percent or P37.0 billion of total loans, respectively.

The bulk of total loan exposure was accounted for by the big universal license as well as by the regular commercial banks, equal to 59.6 percent or P230 billion.

Thrift banks accounted for the balance of 40.4 percent or P155.8 billion.

In terms of loan quality, the ratio of nonperforming consumer loans to total consumer loans climbed to 9 percent from last quarter’s 8.6 percent and year ago of 8.1 percent ratio.

The quarter-on-quarter increase in the ratio occurred as the growth in nonperforming CLs outmatched the 1.5 percent expansion in total CLs.

Nonperforming consumer loans stood at P34.9 billion, up by 7.1 percent from previous quarter.

By industry, the ratio of nonperforming CLs to total CLs of TBs at 8.5 percent was better than the 9.4 percent ratio posted by universal and regular commercial banks.

The nonperforming consumer loans to total nonperforming loans ratio stood at 26.2 percent (up from 25.3 percent last quarter and 20.4 percent a year ago), whereas nonperforming CLs to TLP ratio settled at 1.4 percent (up from 1.3 percent last quarter and 1.2 percent a year ago), the BSP said.