Philippine remittances to grow — S&P

PAOLO LUIS G. MONTECILLO
BusinessWorld

GLOBAL DEBT WATCHER Standard & Poor’s (S&P) expects overseas Filipino worker (OFW) remittances to grow this year even as multilateral institutions anticipate a contraction for this key prop of the Philippine economy.

S&P, which last week affirmed its below investment grade ratings for the country along with a "stable" outlook, said the government’s zero growth forecast for OFW remittances would be the "worst case scenario."

"We do not envisage a contraction in remittance flows this year," S&P senior analyst Agost Benard said in an e-mail to BusinessWorld.

Remittances continued to grow in the first four months of the year. Money sent home by OFWs totalled $5.5 billion in the January to April period, up 2.6% from the same period last year.

"[N]umbers at the beginning of the year indicated that the deployment of new workers is still growing at a fast pace," Mr. Benard said.

"Hence we believe that flat growth of remittances for the year as a whole is the worst case scenario, and that based on current trends, a contraction is unlikely."

OFW remittances hit a record high of $16.4 billion last year, up 13.7% from 2007. Since the start of 2009, however, growth has slowed to single digits.

The Bangko Sentral ng Pilipinas officially expects zero growth in remittances this year as OFWs suffer pay cuts or are laid off due to the global downturn Last week, however, the central bank said its forecast could be too "conservative" but did not offer a revision.

The world financial crisis has prompted the International Monetary Fund and the World Bank to forecast a 4% contraction in remittances.

Given the BSP’s apparent optimism, ATR KimEng economist Luz L. Lorenzo yesterday said "If even the BSP says their own estimates are conservative, then I guess things are pointing to [growth]."

She forecast a 6% uptick, saying many OFWs work in the health care and education sectors which are relatively resilient.

Another local analyst said growth would at the very least be sustained for the rest of the year given signs the global slowdown had reached bottom.

"More people are convinced that we have reached the bottom," Rizal Commercial Banking Corp. Senior Vice-President Marcelo E. Ayes said.

"OFWs are also employed in many countries and not just the US," he said, noting that slowdowns in individual countries will not likely dent the country’s stock of migrant workers.

OFW remittances made up about a tenth of gross domestic product last year. Analysts have said a contraction could help tip the country into a recession this year.

Remittances are also a large source of foreign exchange, which helps stabilize and strengthen the peso.

The economy grew by just 0.4% in the first quarter from a year earlier. Seasonally adjusted, it contracted by 2.3% from the fourth quarter of 2008, prompting some officials to warn that the country was teetering on the brink of a recession.

The result prompted the government to recently revise its macroeconomic forecasts: it now expects the country to grow by just 0.8-1.8%, instead of 3.1-4.1% previously. The zero remittance growth forecast, however, was maintained.

S&P has also cut its growth forecast for the Philippines, to 1-1.5% from 1.5-2% previously.

Why poverty will never end

Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/home/opinion/12775-why-poverty-will-never-end.html

One of the most philosophically challenging passages in the Bible relates a short discussion between Our Lord and His disciples. A woman, in the custom of the time, pours expensive perfume on Jesus. The disciples are amazed that He allowed this to be done, calling this use of the perfume “a waste.” They scolded that the perfume could have been sold at a high price and the money given to the poor.

Jesus responds that, “The poor you will always have with you,” and thus begins a 2,000-year controversy.

Those few words have been used as an excuse by some to ignore the teachings of the Church and justify that it is a waste of money to be charitable to the poor. Some in the Church have used the words to say that the care and feeding of the poor is a never-ending task that is somewhat like a punishment because poverty can never be eliminated. Others see these words as a basis to attack Christianity as a hypocritical way of thinking as it goes through useless motions knowing that it can never succeed; further, that the Church believes helping the poor is a waste of time but gives it an excuse to take money from the faithful.

If Jesus had been the head of an international think tank or nongovernment organization, presiding over a multiyear, multimillion-dollar study that finally concluded that poverty is a never-ending condition, there would be Senate hearings and calls from the “pro-poor” that more tax money must be immediately spent to solve the problem.

The “pro-poor” and even well-intentioned people firmly believe that the problem of poverty is, at the end, a situation of wealth distribution, the distribution of a finite resource. Because I have more, then you will have less. If the “rich” give up their wealth, then the poor will no longer be poor. If that were true, then the disciples were correct and Jesus was wrong not distributing the perfume to the poor. I doubt that is the case.

If wealth distribution were the problem, then poverty should have been solved decades ago, as countless amounts of money, of wealth, have been redistributed to the poor around the world.



In 2002, the Philippine government spent P720 billion, the equivalent of P84,000 for a family of six living in poverty. After nearly 40 years of US President Lyndon Johnson’s Great Society, social spending costing literally trillions of dollars, incidence of poverty in the USA has not significantly reduced. The overall percentage of the population considered “poor” is about the same.

Because of the brevity of the Bible, we often tend to think that His words are little more than like a five-minute, shallow homily from some priest who seems more interested in being invited out for Sunday brunch than teaching and educating. For a man that people called Rabbi, Teacher, it is likely that there was more to the conversation than is recorded by Saint Matthew. It is likely that Jesus spoke at length to the disciples as to why the poor would always be with us.

Rarely do any studies of poverty look at the personal use of resources, as opposed to the public use and redistribution of resources. The thesis is that if only enough public funding could be made available to the poor, then poverty would be eliminated. No one seems to want to study what happens after the wealth has been redistributed to these poor. I think my son Chris found the answer after working two days at a local fast-food restaurant.

He came home from his job amazed at the amount of food that is wasted. Half-eaten hamburgers, chicken with plenty of meat still on the bones, spaghetti that was barely touched, all wasted and thrown away. This particular restaurant is at a busy intersection frequented by jeepney riders and also by people driving Mercedeses. Economic class means nothing. They all throw away literally tons of food every year. The same people who leave P50 of uneaten food are the same ones who feel they are doing their antipoverty wealth distribution by giving P1 or P2 to the street children in front of the fast-food outlet.

And when many of the street children have collected enough pesos, they run into the food outlet to buy ice cream, not rice for the family table.

My son told me that a politician of national stature comes in every day or so. This is a name and face that you would immediately recognize. Chris remarked to me that the politician never wastes a single bite of food. The politician’s background is humble, born in a far-flung province and raised in a low-cost government housing project and attending public school in Manila.

And something else. The customers who drive Mercedeses and wear the expensive jewelry tend to be the customers that waste the least. Maybe that is one reason they are not “poor.”

Perhaps what Jesus meant and what He told His disciples that was not recorded was that one reason the poor will always be with us is that their personal use of resources may be a factor in why they are poor. Maybe a nation is the same way. It might not be how wealthy you are that makes you rich or poor, but how you use the wealth that you have.



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

Red Ribbon, 7-Eleven to put up more stores this year

With Cheryl M. Arcibal
GMANews.TV
http://www.gmanews.tv/story/166733/(Updated)-Red-Ribbon-7-Eleven-to-put-up-more-stores-this-year

MANILA, Philippines - Red Ribbon, the bakeshop operator owned by the Jollibee group, and the Philippine Seven Corp., which runs local 7-Eleven stores, will both put up more domestic outlets within the next two years.

Of Red Ribbon’s 24 stores to be opened this year, eight will be run by its franchisees while the rest will be owned by the company, Froilan Manotok, Red Ribbon South Luzon operations head, told GMANews.TV.

Depending on type, size and location, each store will cost anywhere between P7 million and P11 million, he added.

“A full store will cost between P7 million and P8 million while a free standing store will cost between P9 million and P11 million," said Manotok.

By year-end, the company will have a total of 240 stores.

Red Ribbon, which also serves set meals, will be establishing ten more stores in South Luzon.

Although the company currently runs 30 stores in the US, no plans have been made to increase stores overseas, Manotok said.

Jollibee Foods Corp. (JFC), the country's largest owner and operator of fast food chains, is seeking to be global player in the fast food industry, targeting to source half of its total revenues from offshore operations and the other half from the domestic market.

Shares of JFC stayed unchanged at during Monday’s trading at the Philippine Stock Exchange (PSE).

7-Eleven sets Visayas, Mindanao expansion

For its part, the Philippines’ exclusive franchise holder of 7-Eleven stores said it plans to establish “hundreds of outlets" in Visayas and Mindanao within the next two years.

By 2010, the company expects to open 90 stores in the country’s second- and third-largest islands, Francis S. Medina, Philippine Seven Corp.’s division manager for business development, told reporters.

Half of these new stores will be company-owned while the rest will be run by franchisees, Medina said.

The company may need P180 million for its expansion although a franchise for a store is estimated at P3 million, he added.

By year-end, Philippine Seven Corp. expects to have 450 outlets all over Luzon. Thirty-five percent of these stores are company-owned.

Majority of its stores are in Luzon because of logistics issues, Medina said, adding that these concerns will soon be addressed to support its Visayas and Mindanao expansion.

Despite heightened competition provided by rivals such as the Gokongwei’s Mini Stop, Philippine Seven continued to grow its revenues last year.

Revenues are expected to expand by 15 percent by year-end, even as June sales fell because of “the rains and the delayed school opening due to the flu virus," Medina said.

Besides being considered as the world’s largest chain store in any category, it has surpassed McDonald’s branches by 1,000 outlets.

7-Eleven stores can be found in 18 countries including the United States, Canada, Taiwan, and Thailand.

Shares of Philippine Seven Corp. remained unchanged at P2.50 apiece during Monday’s trading at the PSE.

RCBC to launch ATM card for Manila MRT commuters

Erik de la Cruz
Business Mirror
http://www.businessmirror.com.ph/home/banking-a-finance/12696-rcbc-to-launch-atm-card-for-mrt-commuters.html

RIZAL Commercial Banking Corp. (RCBC) is hoping to boost its earnings starting this year by offering a reloadable cash card that can be used by Metro Rail Transit (MRT) commuters.

The Yuchengco-led bank, the seventh-largest in the country, will launch on July 15 its MyWallet MRT card, which functions like a regular ATM card but without requiring customers to maintain a minimum balance in their accounts.

“We see the potential of the MyWallet MRT card as an additional source of fee-based income for the bank,” bank president Lorenzo Tan said.

Card holders are allowed fast and easy access to the MRT, with their fares debited automatically from their account balances, and can also pay bills and do cashless shopping, he said.

The new card product is the first of its kind in the banking industry, according to RCBC.

The elevated railway transport system is operated by a company that is now controlled by state-owned Development Bank of the Philippines and Land Bank of the Philippines following a buy-in transaction early this year.

“Beyond traditional bricks and mortar, RCBC continues to expand its customer reach via electronic channels,” Tan said.

The bank has close to 2 million customers as of the first quarter and Tan dreams of expanding its customer base to 5 million by 2012.

The bank, he said, has also put up and is establishing more eBiz—or electronic business—centers to help unclog its 330 branches of over-the-counter transactions.

“Equipped with self-service machines, the eBiz Center is the future of electronic banking,” he said.

Tan said the bank will spend P800 million to beef up and improve its information-technology infrastructure this year.

The bank is looking to acquire medium-sized banks with strong presence in Metro Manila and rural banks, particularly those operating in northern Luzon and the Visayas, to expand its operations. The goal is to expand its network to 400 branches the soonest time possible, and have at least 200 branches in Metro Manila.

After meeting these targets, however, Tan said RCBC will try to do banking business with its customers mainly through electronic channels given that more and more people are now embracing information technology.

The bank is projecting a 10- to 15-percent increase in net income this year over last year’s P2.15 billion, which it said will be driven mainly by higher interest income given an expanding loan portfolio.

Philippines still a growth story

Cai U. Ordinario
Business Mirror
http://www.businessmirror.com.ph/home/top-news/12720-still-a-growth-storyrecto.html

“THE Philippines is still a growth story. Our message today for investors is for them to continue to believe in the Philippines and invest in the Philippines.”

This was the proud statement of Director General Ralph Recto of the National Economic and Development Authority (Neda) after international credit-rating agency Standard & Poor’s (S&P) gave a stable outlook for the country’s long-term ratings.

The rating service affirmed its long-term “BB-” and short-term “B” foreign-currency sovereign credit rating on the Philippines, and the Philippines’ “BB+” long-term and “B” short-term local-currency sovereign credit ratings.

“The message of S&P’s affirmation of the Philippines’ credit ratings and the stable outlook on the ratings is that the country is relatively resilent to the global financial crisis,” said Recto.

Neda Deputy Director General Rolando Tungpalan, also presidential economic affairs spokesman, said the credit-rating agency was able to see through the “tough” economic decision and policies recently adopted by the government.

Tungpalan said in the June 2009 Asia-Pacific Sovereign Report Card, S&P forecast a 1.3-percent real gross domestic product (GDP) growth for the Philippines this year, which is within the government’s 0.8-percent to 1.8-percent growth forecast.

He also said among the 21 countries mentioned in the report, only nine countries were seen to post positive growth this year, and this includes the Philippines.

The other Asia-Pacific countries projected to post positive growth are China, India, Indonesia, Mongolia, Pakistan, Papua New Guinea, Sri Lanka and Vietnam.

“These [economic measures and policies] are what enabled the country to post growth and remain resilient amid the global economic downturn. We are working even harder now to sustain growth and create more jobs for our people,” added Tungpalan.

Renminbi growing in Philippine forex reserves

Jun Vallecera
Business Mirror
http://www.businessmirror.com.ph/home/top-news/12723-yuan-in-rp-reserves-growing-.html

THE country’s international reserves of some $39 billion at the moment is increasingly denominated in Chinese renminbi, also called the yuan.

Since allowing full convertibility of the renminbi with the peso two years ago, the currency holdings of the Bangko Sentral ng Pilipinas (BSP) in China’s medium of exchange has grown in stature and importance.

“We have more non-US-dollar assets now,” BSP Governor Amando Tetangco Jr. said on Friday at the sidelines of ceremonies marking the BSP’s 16th anniversary as the new central bank.

While he did not reveal the exact proportion of reserves denominated in Chinese renminbi, Tetangco said prudent central banks always diversify their holdings of currency to approximate trade data.

“Well, the trend really, and I think this is going to continue, is for central banks, including emerging central banks, to diversify more.

“Rather than looking at the possibility of a unipolar world where you only have one reserve currency, we will probably see a multipolar world where you have more than one reserve currency,” Tetangco said.

He noted that Philippine trade with countries in the region, particularly with China, has risen in recent years although this continues to be settled in US dollars.

While the bulk of international reserves is in US dollars, about a third of it is in Japanese yen and a little less in euro, the currency of the European Union.

A few years ago, the government sold euro-denominated bonds to help it bridge finance a yawning budget deficit. But according to Tetangco, the US dollar and its debt markets “will continue to be the key reserve currency for some time to come because trade transactions and investments continue to be denominated mainly in US dollar and settled in the US dollar.”

“There is a big and deep financial market in the US and the liquidity in the financial markets is such that it provides greater flexibility to US dollar asset holders to continue holding the US dollar,” he said.

Additionally, he said, there is a robust payment and settlement system for the US dollar at this time.

But in the years to come, central banks around the world, the Philippines included, will diversify their assets holdings more into non-US dollar assets, Tetangco said.

Philippines fields team for International Maths Olympiad

Inquirer
http://globalnation.inquirer.net/news/breakingnews/view/20090703-213702/RP-to-join-in-international-math-contest

MANILA, Philippines—Four Filipino students are flying to Bremen, Germany to compete in the 50th International Mathematical Olympiad, a world championship mathematics competition for high school students, to be held from July 10 to 22, the German embassy in the country said Friday.

The four who passed a rigorous selection process from among 2,000 high school students are: Carlo Francisco Adajar of Paref Southridge School, Earl John Chua of Grace Christian College, Carmela Antoinette Lao of Saint Jude Catholic School, and Jonathan Wong of Grace Christian College.

The students will be accompanied by Dr. Julius Basilla of the University of the Philippines-Diliman and Dr. Ian June Garces of Ateneo de Manila University.

The Philippine participation to the Olympiad is a joint project of the Department of Science and Technology-Science Education Institute and the Mathematical Society of the Philippines.

The IMO 2009 is supported by the Federal Ministry of Education and Research and organized by the Bildung und Begabung e.V. (Education and Talent), a national agency for talent development in Germany, and in cooperation with the international private university Jacobs University.

Before their departure for Germany, the team met with German Ambassador Christian-Ludwig Weber-Lortsch.

What could go wrong

By BERNARDO M. VILLEGAS
Manila Bulletin
http://mb.com.ph/articles/209393/what-could-go-wrong

As usual, I would like to see the glass as being half-filled. There are signs that the ongoing global economic crises is coming to an end and that we can see the light at the end of the tunnel. As I discussed in last week’s column, there are evidences of “green shoots” all over the global economy, particularly in the U.S.

I would like, however, to alert the readers about the so-called downside risks. There is always Parkinson’s law: What could go wrong will go wrong. As a part-time gardener, I find the reference to "green shoots" suggestive of what could go wrong with the recovery, even if indeed it starts by September of 2009. Anyone with a minimum acquaintance with nurturing green shoots to healthy and mature plants know that green shoots can still die because of too much water, too much chemicals either in the form of insecticides or fertilizers, the appearance of worms and insects that eat the green shoots or over-exposure to the sun. Let me draw the parallel between botany and economic recovery.

Too much water obviously suggests the excessive liquidity that has resulted from the trillions of dollars from the aggressive pump priming of the Obama government and the constant decrease in interest rate engineered by the Federal Reserve System of the U.S. to stimulate economic activity. This interest cutting is not limited only to the U.S. As reported by the Economist Intelligence Unit last May 17, interest rates have been cut dramatically in all major countries and unorthodox measures such as quantitative easing (increased central bank purchases of various types of assets to increase the money supply) are now a cornerstone of policy in the U.S., and other developed economies are following suit. The major economies will all implement significant fiscal stimulus packages. The developed world's budget deficits will, on average, reach almost 9% of GDP in 2010, six times higher than before the crisis. In February 2009, the U.S. government approved a stimulus package of US$787 billion, or 5.5% of GDP (to be disbursed mainly over the next two years). In December 2008 the EU reached an agreement to provide a fiscal stimulus package worth around US $266 billion, or around 1.5% of the region's GDP. In early April this year, the Japanese government announced new stimulus measures worth some 2% of GDP, in addition to already approved measures of 2.4% of GDP. A number of emerging markets, most notably China, have also taken aggressive fiscal policy action.

There is a risk that the recovery may be nipped in the bud by runaway inflation if the U.S. and other governments are unable to siphon off effectively the excess liquidity. Last June 8, in a forum in Montreal, IMF chief Dominique Strauss-Kahn and World Bank President Robert Zoellick talked about the major risks to the recovery. Strauss-Kahn reminded policy makers that the same policies that helped them through the crisis will cost them dearly in years to come as fiscal and monetary stimulus is withdrawn. The threat of spiraling inflation tops the list of concerns: "The risk of very rapid inflation at the end of the crisis is a real risk. How are we going to dry up all the markets?" he asked. "The world after the crisis is not that simple."

In fact, Marc Faber, the famous investor, believes that the United States is going to enter a period of hyperinflation because the Federal Reserve will be reluctant to raise interest rates: "I am 100% sure that the United States will go into hyperinflation," Faber told Bloomberg News on May 27. "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."

A related problem is the rising price of oil. Already in early June 2009, West Texas crude rose above $65. This means that its price has risen by more than 40% this year. Since oil closed at its lowest price of US$33.98 last February 12, it has risen by more than 80%. Something similar is happening to Brent, which is followed in Europe. Since January, its price has risen by more than 35%, and it has risen about 55% since its low for the year. According to Professor Rafael Pampillon of the IE Business School in Madrid, Spain, three factors explain the rise in the price of crude. "Demand for petroleum in China, the second-largest consumer in the world; consistent speculation about buying now, given the prospects for future increases; and the depreciation of the dollar." The devaluation of the dollar, which will be an inevitable result of the excessive supply of dollars in the global market (already a source of serious concern among the Chinese leaders), will lead to speculative purchases of oil and other commodities, exacerbating the hyperinflational pressures which could threaten the economic recovery.

The damage done to green shoots by chemicals can be compared to the uncontrolled rise of toxic assets in the financial system. IMF Chief Strauss-Kahn warned that the biggest risk to the economic recovery is countries taking too long to cleanse toxic assets from their banking systems: "You never recover until the cleansing of the balance sheet of the financial sector has been completed." He said that banks should disclose not only losses related to U.S. subprime mortgages but other losses linked to the economic slowdown. "What we are noticing is that there still is a system of credits, or of losses that are not made public. These are not things that are linked today to the original subprime crisis, but to the fact that the economic slowdown has rendered a certain number of assets of poor quality and that new losses were registered. The loss of confidence comes from the fact that we do not know exactly where the losses are and what they are."

This lack of transparency may also be included in the overall problem of dishonesty, corruption, and bad governance that may persist in both developed and emerging markets. These moral evils can derail the economic recovery. They can be compared to the worms and insects that destroy the green shoots, preventing them from growing into healthy and mature plants. There can still be unscrupulous bankers, corporate executives and regulators who may lower the confidence of investors and of the consuming public at large in the economic system and can lead to another downturn after a short recovery. We can call this as the moral threat to the recovery.

Finally, the reference to too much sun--which can also cause green shoots to wither--brings to mind the possible scorching heat of over-regulation. There is a possibility that Governments may swing to the other side and suffocate the private sector with too many restrictions and regulations. There are already signs in some Latin American countries of the return to the so-called commanding heights of socialism or mercantilism that caused the downfall of India, China, Russia and a host of Latin American countries in the last century. A related threat is the return to protectionist measures, which explained the backwardness of most of today's emerging markets during the 1950s all the way to the 1970s. The Economist Intelligence Unit, reporting on the global business environment in its Executive Summary of May 19, 2009, zeroed in on this real danger that can derail the global recovery in 2010.

The EIU reports: "The weakening of the global economy has led to a rise in protectionist sentiment and some protectionist policies are being implemented. A number of factors are expected to mute protectionist pressures. Countries today are far more interdependent than in the past, export lobbies now wield more power, and successive GATT/WTO agreements provide greater legal stability for trading relations. The business environment rankings embody the baseline assumption that globalisation will stall over the next five years. However, there is also a significant risk of even worse outcomes--that globalisation could suffer more severe setbacks. Even before the current crisis, globalisation was under threat from a variety of sources. The danger to globalisation has now increased many times over. In particular, the potential damage to the global business environment and to longer-term economic growth prospects cannot be underestimated, were there to be a descent into significant and sustained protectionism around the world."

Considering all these threats to the recovery, it is essential that our policy makers and business executives continue to explore the many opportunities within our own domestic market as well as intensifying our trade and investment relations with such emerging markets as China, India, Indonesia, Vietnam, South Korea and other countries that are still growing positively during the ongoing crisis. If the U.S. economy relapses into another recession after a brief recovery, we must be ready with our contingency plans.

For comments, my e-mail is bvillegas@uap.edu.ph.

Philippines has secured its place in outsourcing space, according to top BPO players

By MELVIN G. CALIMAG
Manila Bulletin
http://mb.com.ph/articles/209411/rp-has-secured-its-place-outsourcing-space-according-top-bpo-players

The global financial crisis may have slightly slowed the growth of the local outsourcing sector, but the outlook and actual activities happening on the ground continue to be robust and upbeat.

This was the consensus of industry players who attended the recent “State of the BPO Industry: Mid-Year Report” conference organized by the Business Processing Association of the Philippines (BPAP) in Makati City.

Though some of the forum participants acknowledged that the Philippines is still mired with image problems, a number of BPO executives said the country has firmly nailed its place among the outsourcing heavyweights.

“If a company does not offshore to the Philippines, then that company does not have an outsourcing strategy,” said Mike Henderson, vice president and managing director for Asia Pacific of Sykes, a call center operator.

Noshir Kaka, an outsourcing and off-shoring executive at consulting firm McKinsey, said the Philippines has undoubtedly taken its place among the outsourcing giants like India.

“Now, it’s not longer about India versus the Philippines. Rather, it’s India and the Philippines,” he said, adding that the two countries must endeavor to help each other in order to grow the global outsourcing market.

Neil Elias, country manager of outsourcing firm Logica, said the fourth quarter of 2008 was its best ever and that recent months were not that bad either.

During the forum, it was also mentioned the hiring rate for local talents is also said to have improved to 9-10 percent from 4-5 percent.

Convergys Philippines head Marife and Accenture Philippines country manager Beth Lui, who were part of the panel of reactors in the forum, said a number of technology trends and developments are pushing the growth of the BPO sector to new heights.

Zamora said the recent shift of the US from analog to digital TV would likely keep the lines of call center agents busy. Lui, whose company is focused on non-voice services, said Software as-a-Service would “change the ballgame” and that the Philippines would like play a major role in nurturing this trend.

UPS equipment supplier APC, however, said during a presentation that the red-hot growth of the BPO industry is also requiring a huge amount of energy. The company said it is important for local BPO companies to embark on data center assessment initiatives to help their businesses.

Palace elated over resolution of poll automation snags

http://www.gov.ph/index.php?option=com_content&task=view&id=2001020&Itemid=1

Malacañang today expressed elation over the smooth resolution of the snags in poll automation for next year following the compromise reached between winning bidders Total Information Management and foreign partner, SmartMatic of Colombia.

In an interview over Radyo ng Bayan, Deputy Presidential Spokesperson Lorelei Fajardo said “this is good news as everyone, President Gloria Macapagal Arroyo and the entire nation, is waiting for poll automation to happen.”

“We are very happy and we hope that our countrymen will have complete faith and trust in the Commission on Elections now. They saw that we are doing everything possible to ensure that our 2010 polls will be smooth and orderly,” she said.

Fajardo called on everyone’s support to put an end to all speculations and criticisms.” What we need now is for us to work together and put our trust in our institutions.”

“Let us be vigilant in protecting our right of suffrage, with or without automation. The success of our election in 2010 rests on the hands of our countrymen, so their full support is very vital. We must watch our vote even if there is poll automation,” she said.

Fajardo expressed hopes that the scheduled signing of the contract between TIM and SmartMatic on the implementation of the poll automation will “push through without snags.”

“I’m sure they also have their social responsibility to fulfill their commitment. We are hoping and I suppose that there’ll be no more problems. If there will be problems along the way, then these can be settled. We should hope for the best and be optimistic about it,” she said. (PND)

DOTC Sec. Mendoza inspects Laguindingan Airport project

PIA Press Release
2009/07/03

Cagayan de Oro City (3 July) -- Department of Transportation and Communications (DOTC) Secretary Leandro R. Mendoza with DOTC high ranking officials led the inspection of the Laguindingan Airport Development Project at Laguindingan, Misamis Oriental in a bid to fast track the completion of the project.

Secretary Mendoza said the airport when completed in year 2012 will serve as the gateway to Northern Mindanao. It will be of international standard and is being built to cater the increasing number of passenger and cargo traffic in the Cagayan-Iligan corridor and its influence areas to boost the economic development in the region and improve air transportation safety.

The airport development project, approved by the NEDA-ICC on August 30, 2007, will cost to about Php7.853 billion with funding sources from the Economic Development Cooperation Fund (EDCF) of the Republic of Korea, KEXIM Bank, and the Government of the Philippines.

The airport is designed with a control tower to handle an all weather and night landing operations. Its air navigation facilities will include Instrument Landing System, VOR/DME, Meteorological Observing System, Precision Approach Lighting System, Precision Approach Path Indicators.

The airport will be equipped with crash, fire and rescue vehicles. It will also have utility service facilities such as maintenance building, cold water receiving station, power house building and sewage treatment plant.

The runway can accommodate an Airbus A-330 airplane which can seat 302 passengers, while the Apron is design to hold 5 aircrafts at a time.

The passenger terminal building with a floor area of 7,184 square meters, can cater up to 1.20 million passengers per annum with a vehicle parking of 240 spaces. The cargo terminal building has a floor area of 736 square meters with expansion capability at east and west side.

The resettlement of affected families, which has been implemented by the National Housing Authority (NHA) for the site development of phase 2 residential site has been completed last September 15 2008 as well as the construction of 109 duplex-type core housing units.

In another development, the Control Tower at the Phividec was turned over to the Philippine Coast Guard (PCG) through a Memorandum of Agreement (MOA) signed between the Administrator of Phividec and PCG Commandant, Addmiral Wilfredo Tamayo. Under the MOA the PCG will operate the Vessel Traffic Management System (VTMS) at the Control Tower inside the Phividec to ensure maritime safety in Northern Mindanao area.

Maritime Transport Undersecretary Thompson C. Lantion said that the operation by the PCG of the VTMS will enhance maritime safety in the region.

The Mindanao Railways Project Office (MRPO), created by virtue of executive Order No. 536 dated May 25, 2006, located at 2nd and 3rd Floor Forever Books Building, Bulua Highway, Cagayan de Oro, was also inaugurated. It will serve as the office of the officials and staff that will work for the realization of the Mindanao Railway System.

Railways Undersecretary Guiling A. Mamondiong said that the setting up of the railway office in Cagayan de Oro jumpstarts the building of the railway system in Mindanao to boost its development. (DOTC)

Philippine presidential elections 2010 -- The upcoming Manny Villar - Noli de Castro rivalry

INSIDE CONGRESS
By Efren L. Danao
Manila Times
http://www.manilatimes.net/national/2009/july/04/yehey/opinion/20090704opi3.html

The Philippines will definitely have a refreshingly new kind of election campaign should Vice President Noli de Castro and Sen. Manny Villar be the only presidential candidates in 2010.

Black propaganda and mud slinging have been par for the course in the hustings, but I don’t see them rearing their ugly heads in a fight limited to the two bosom friends. At the roundtable with Manila Times staffers, Senator Villar said he expects a friendly rivalry should de Castro run against him. (The two are members of the Wednesday Group that also includes Sen. Joker Arroyo, Sen. Kiko Pangilinan, Sen. Lito Lapid and former senator, now Socioeconomic Planning Secretary Ralph Recto.)

“I told Noli that even if we would become rivals, there is no reason for us to become enemies. I assured him that should he win, I will immediately concede on Day One. I value friendship,” Villar said.

There! That also removes a heated protest in a post-election scenario. How wonderful it would be to have such a peaceful election period from campaigning to post-proclamation! But remember, this is only if they are the only presidential candidates in 2010, which may not happen at all.

Kid gloves off vs. other rivals

Villar believes there would be up to four serious presidential candidates in 2010. Of course, he is one of the four, no ifs, ands or buts about it. And definitely, the gloves would be off should his rivals include Sen. Mar Roxas and Sen. Loren Legarda. The two had made no bones on wanting him out of the Senate Presidency since the First Regular Session of the Fourteenth Congress “to level the 2010 playing field.” And when they succeeded in installing Sen. Juan Ponce Enrile as primus inter pares at the Senate, they cited Villar’s alleged conflict of interest in pursuing the C-5 road extension project as one of the reasons why Villar should go.

“They should be explaining what they had done in their provinces instead of asking me why I had built the C-5 road extension project,” he said.

He prides himself in pushing for the project that he said would benefit millions of commuters from Southern Tagalog, especially Cavite, and Metro Manila. He said he has no intention of attending the hearing by the Committee of the Whole of the alleged double funding of the C-5 road extension project after the committee adopted the rules of the Senate Committee on Ethics headed by Sen. Ping Lacson.

Incidentally, Villar remains high in surveys despite that charge. A survey conducted by the Issues and Advocacy Center on May 18-25 gave this explanation: “Respondents have a hard time reconciling the stature of Sen. Villar as the richest member of the legislature with the charges that he pocketed an amount which is considered minuscule if ranged against his admitted assets. That fact that Sen. Villar’s accusers themselves lack credibility helped in allowing Sen. Villar to continue enjoying the sympathy of the public.”

Villar’s high poll rating

Some may question the legitimacy of Villar’s high rating but I say we in media have no right to do the questioning, not while The Star and Inquirer are both claiming to be the Number One newspaper; not while GMA 7 and ABS-CBN are both claiming to be the top television station.

Villar gave an inkling at the roundtable with The Manila Times that he would not back off from a bare-knuckled fight with rivals other than Noli. To be fair, he still has actually to name names in hitting at his potential rivals. On second thought, is this being fair? Anyway, readers could immediately identify the one he was referring to when he said: “Anybody can say ‘I will radically change society.’ But the question is, has he done anything radical? He has been living with his mother for a long time, and he will be getting married only at age 50.” Ouch! Boy Padyak, a.k.a Boy Bawang, would not like that.

I completely agree with him when he said the electorate should get out of their personality orientation and consider managerial ability, leadership and ability to implement plans as main consideration in voting for a presidential candidate. A change in orientation needs some doing, however.

At the roundtable, he also confessed that he was getting confused by all the rumors circulating around the country—no election, failure of election, declaration of martial law. But there is one thing that this confusion would not prevent him from doing—campaign. He has been going all over the country while saturating the air lanes with his ads. This early, he has already secured the pledges of several followers of President Arroyo. Will these pledges hold until May 2010? Abangan!

efrendanao2003@yahoo.com

Biggest coverage of Philippine 2010 polls set

PDI joins ‘biggest coverage’ of 2010 polls
By Cathy C. Yamsuan
Philippine Daily Inquirerhttp://newsinfo.inquirer.net/inquirerheadlines/nation/view/20090704-213777/PDI-joins-biggest-coverage-of-2010-polls

MANILA, Philippines — Top Philippine companies, media entities, civic groups and academic institutions Friday banded themselves into a powerhouse pledging to provide the “biggest and most comprehensive” coverage of the 2010 elections, while helping protect the polls against fraud and ensure the results are delivered fast.

Leaders of the project said the group will field experienced journalists and use state-of-the-art technology as part of a nationwide effort to also urge Filipinos, including the young, to vote wisely.

The group is led by the Philippine Daily Inquirer (PDI), GMA News, Philippine Long Distance Telephone Co. (PLDT) and Smart Communications Inc.

The other partners include INQUIRER.net, Philippine Center for Investigative Journalism (PCIJ), Catholic Media Network (CMN), AMA Education System, Ateneo School of Government, De La Salle University, San Beda College, University of Santo Tomas, University of the Philippines School of Economics, Youth Vote Philippines, RockEd Philippines, Institute for Public and Electoral Reforms, Solar Entertainment Corp., Philippine Bar Association, National Citizens’ Movement for Free Elections and the Parish Pastoral Council for Responsible Voting.

Resources of 20 entities

The newly minted partnership signed a historic agreement that would combine the resources of 20 entities to deliver election results in the quickest possible time.

Election Commissioner Rene Sarmiento called the partnership “an impressive assembly of companies and institutions.” He hoped its efforts would prove to be “a providential collaboration that very good things will happen to our country.”

Optimism pervaded the signing of the agreement at the cavernous Studio 6 of the newly constructed GMA Network Studios in Quezon City.

Representatives of all the partners agreed that aside from quick transmission of results, voter education and a more comprehensive understanding of issues would be crucial.

Rooting for best

“I hope that this time, we will not just be rooting for the least of all evils but for the best for the country,” Marixi Prieto, chair of the PDI board of directors, said.

To do this, lawyer Felipe Gozon, president and chief executive officer of GMA, said the group planned “to educate, inform and empower voters to vote, and to vote wisely.”

“We are fortunate that the best of the best will be partners with us as coworkers in the biggest, widest and most comprehensive coverage of the 2010 elections,” Gozon added.

Manuel V. Pangilinan, chair of PLDT/Smart, said “devices have well advanced through the years and we are going to make them available” in the coverage of next year’s elections.

“We have to undertake a focused coverage especially because fears have been expressed that some people might resort to cheating to make their candidates win and thus extend their hold on power,” PDI publisher Isagani Yambot said in a statement.

Yambot added: “We in the media have to take the lead in exercising vigilance every step of the way—from the registration of voters, to the casting of ballots, to the canvassing and the reporting of the results.”

10,000 volunteers

Ambassador Amable Aguiluz V, chair of AMA Education System, announced he was committing “the entire resources of AMA” which would include “more than 10,000 dedicated and IT-competent student volunteers in major precincts and capitals” around the country.

More than 200 AMA campuses and over 10,000 computers and software will “act as hubs in transmitting critical data all over to the GMA operations center,” Aguiluz said.

“We will relay in real time the unofficial and partial tally as it is counted (in precincts) … We will give the correct tally, unofficial and partial, faster than you can say Kapuso,” he vowed.

54 broadcast stations

CMN’s Fr. Francis Lucas said his group was offering its 54 broadcast stations all over the country to help in the coverage.

Inquirer Interactive Inc. president Paolo Prieto said online news service would play a significant role especially since a huge percentage of overseas Filipino workers would rely on it for information on election issues and candidates.

“One objective is to get overseas Filipinos to exercise their right to vote. We want to get voters to feel they can make a difference,” Prieto said.

Bitter lessons

Representatives of academic partners stressed the need for an issue-based information program targeting voters.

“Transforming the politics of the country is a priority … We have to make the knowledge of issues available to a wider public,” said Dean Antonio GM La Vina, JSD, of the Ateneo School of Government.

DLSU’s Br. Armin Luistro said the project would help prevent “wholesale fraud,” adding that pubic awareness also meant the people “will avoid a repeat of the bitter lessons in the past.”

PCIJ executive director Malou Mangahas said the media were a crucial element in the elections because majority of the the voters were exposed to them.

Young voters

“It would be from what good or bad information media will dish out that our mostly young and mostly poor voters will build their impressions, biases, choices,” Mangahas said.

She said there would be 45 million voters next year.

“The total number of polling stations will be 82,000 precinct clusters, if we could conduct automated elections, or up to 220,000 precincts if we must return to manual elections,” she said.

Christine Jane Jorge, lead convenor of Youth Vote Philippines, said the majority of the young voters in the 2007 election failed to exercise their right of suffrage because they did not know they had to register before voting.

She pointed out that 54 percent of the voters at present are between 15 and 34 years old.

Philippines optimistic, positions for economic rebound

http://www.gov.ph/index.php?option=com_content&task=view&id=2001010&Itemid=2

Tacloban City (PIA) -- The Philippine economy is on the rebound and is seen to be "moving upwards" towards the end of the year based on the conservative gross domestic product (GDP) growth forecast of 0.8 to 1.8 percent.

This report was first heard at the end of April during the media briefing conducted in Tacloban after the Cabinet Meeting presided by President Arroyo at the Tacloban City Airport's VIP Lounge on April 28.

This good news was presented by Deputy Director Rolando Tungpalan of NEDA who was assisted by Director Dennis Arroyo, also of NEDA, who reported the results of the Global Recession Impact Monitor (GRIM), a monitoring system set up on the instructions of the President to ensure that the global recession would not become a Philippine recession.

The formation of the Global Recession Impact Monitor (GRIM) is in line with the government's efforts to make sure that the Philippines would not slip into recession like two-thirds of the world.

In a joint press briefing on June 26 with Cabinet Secretary Bello, Deputy Director General Rolando Tungpalan said that in the first quarter, "we already saw a growth of positive 0.4 percent, which is expected to rise further until the end of the year".

Talking about the first quarter performance which some quarters claimed there would be declining overseas remittances, official statistics do not confirm what these projections are saying. Nevertheless, the government will not be complacent and will continue with its infrastructure investments, Deputy Director General Tungpalan said.

Business and consumer surveys indicate a growing upbeat sentiment. The precautionary savings that was felt in the first quarter was a very natural reaction of households because during uncertain times you don't know to what extent people take those precautionary measures, the Deputy Director General added.

The warning made by former Budget Secretary Benjamin Diokno of a 30 percent contraction in exports, is higher than the assumptions made by the International Monetary Fund in predicting the recession for the Philippines, the NEDA Official said.

"Based on the report of the exporters and the export captains, we are seeing a decline lower than what we expected. The numbers we are reading are about 13 and 15 percent, rather than the 18 percent (we projected) on the high side."

"The import figure of April increased, the contraction was greater than the previous month of 37 percent versus 36 percent. Again, the export sector was surprised why the numbers were lower. The imports contracted whereas they were expecting it to grow over the exports. Orders have been made in April and May," he said.

On credit rating agency, Moody's rethinking its credit rating for the Philippines in view of the decline in GDP rates, Tungpalan said, that "most of these assessments are based on the first quarter modest growth and we keep stressing the fact that the first quarter does not reflect the rest of the year's performance."

"We expect the economy to move upward. Even China has a very impressive first quarter growth at 6.1 GDP. In fact, Asia itself is now a very strong market for the Philippines. President Gloria Macapagal Arroyo has been instructing the economic managers to look at the opportunity of relating more with China than with our usual dependence with the North," he said.

Asia, widely considered as a very rich area, has prospects of expanding its economy. With a strong domestic economy, a strong export market, this means well for our sustainable growth, Deputy DG Tungpalan added.

With the measures the government has meticulously put in place, the Philippines is optimistic that the economy will continue to grow.

Franchising in the Philippines: Progress and Prospects

IDEA Corkboard
BY RENZ ADRIAN CALUB
BusinessWorld
http://www.bworldonline.com/BW070409/content.php?id=idea

FRANCHISING has become an easy and convenient way to deliver goods and services to consumers. Aside from usual food and beverage establishments, other services such as salons, hotels, and many others are now also open for franchising.

Clearly, consumers are not the only ones benefiting from the welcome convenience offered by quick services or from the wider range of products and services made available to them.

Franchisers, in turn, also reap the benefits through profit.

It would be interesting to know what is behind franchising and how it exploded in the market.

Origins

Franchising has had a long history, but the concept is widely believed to have started from sewing manufacturer, Albert Singer.

The idea came about to address one common problem in business: funding.

In the 1850s, the Singer Company produced sewing machines, but could not pay its salesmen their salaries. As an alternative, the company created a network of dealers who paid Singer a fee to sell the machines. These first franchise owners made money for each sewing machine they bought from Singer and eventually resold within their particular territories.

Other prominent examples abound in history. Coca-Cola, for example, was originally created as a fountain drink until Benjamin Thomas and Joseph Whitehead obtained permission in 1899 to bottle the soda. Upon realizing that they alone could not afford to create a bottling company, the two created a franchise company that sold the right to bottle the cola to individual plants.

In the Philippines, franchising also traces its roots to the Singer Sewing Machine. In that period franchising was limited only to foreign businesses and public utilities services until the Philippine Franchising Association was created in 1995. During that time, there were only 111 franchise concepts which eventually grew to 967 concepts in 2007.

Lucrative business

Over the years, franchising has become a lucrative enterprise.

In the Philippines, the number of franchise concepts has grown by 19.8% in a span of 12 years to 2007.

In the same year, of the total number of franchise concepts, 43% are in the food sector, 28% and 21% involve retail and services, respectively, and 3% are engaged in specialized services such as hotel services and memorial services.

According to Philippine Chamber of Commerce and Industry President Samie Lim, franchising is a promising venture given the country’s growing consumer market and rising per capita incomes and rate of urbanization.

The emergence of the business-process outsourcing industry also gives opportunities for establishments to extend their operating hours to cater to different workers throughout the day, especially to those working in graveyard shifts.

According to Philippine Franchise Association (PFA) President Robert F. Trota, franchising remains a good business option amid the economic slowdown.

The continued inflow of OFW remittances also provides adequate support from both the supply and demand side. Remittances enable some households or persons to venture into franchising; at the same time, remittances also boost the consumption of goods and the patronage of various services that franchised establishments offer.

The overall effects on the economy have been substantial. In the latest PFA study presented by the chairman emeritus Samie Lim, income from franchising represents some five percent of the country’s gross domestic product from 2005 to 2007, which translates to approximately P106.75 billion for the economy. It is also an important means to create enterprise and generate employment, creating an estimated 200,000 franchise outlets and employing almost a million of Filipinos nationwide.

Department of Trade and Industry Undersecretary Zenaida Maglaya has noted that franchising is a sure and secure way to a successful business due to the availability of technology, formula, and the process, giving the entrepreneur an advantage since he or she will not necessarily start from scratch.

Prospects

In addition to the emergence of the business process outsourcing units, the franchising industry also sees tourism as a road to market expansion for local businesses.

According to Franchising in the Philippines in 2008: Country Report, tourist inflows afford franchisers an opportunity to acquire concepts from the country where these foreigners come from to cater their needs and preferences.

In addition, the franchising industry can capture more investment in the forward and backward linkages in the tourism industry; in this case, they can venture into travel and transport services, hotel and other accommodation services, food and beverage, and others.

The franchising industry also boasts a competitive stance in franchising operations abroad. In fact, the Philippines ranked 4th in the world when it comes to franchising concepts (and 1st among ASEAN nations). With its success in the local market, some brands such as Jolibee, Bench, Max’s Restaurant, etc. have penetrated and established their grounds in the foreign market.

Indeed, the franchising industry has proven to be a successful business in the country, surviving even in tough economic times. Further, this business has indeed provided starting entrepreneurs a good head start in the world of business, given the readily available technology and process of running the franchise. With its growth in the local market and penetration in the international market, this venture is indeed a good business prospect.

References:

* Rubio, Ruby Anne. RP leads ASEAN in franchising. BusinessWorld, 05 Jul 2007. Retrieved August http://codex.bworldonline.com/php/new_webget.php?htm=07/07070560.htm&uid=IDEA
* “Franchising seen weathering down.” BusinessWorld. Volume XXI, issue 242. S1/1 “Franchising in the Philippines in 2008: Country Report”
* Seid, Michael H. History of Franchising: Where it all began…The evolution of franchising. Retrieved June 23, 2009 http://www.whichfranchise.org/article.cfm?articleID=255
* Younger, Bill. The History of Franchising � The Creation of the Franchise Business. Retrieved August 28, 2008 http://ezinearticles.com/?The-History-of-Franchising—-The-Creation-of-the-Franchise- Business&id=113608

For inquiries on IDEA, please contact Eduard Robleza at edjrobleza@idea.org.ph.

Philippine bank lending and domestic liquidity up in May

Bangko Sentral
Media Releases
Bank Lending Continues to Grow in May
07.03.2009
http://www.bsp.gov.ph/publications/media.asp?id=2106

Outstanding loans of commercial banks including reverse repurchase agreements (RRPs) reached P2.1 trillion as it grew by 10.2 percent year-on-year in May, lower than the 13.4 percent increase registered in April. Net of RRP placements with the BSP, bank lending at P2.0 trillion also grew at a slower pace of 17.3 percent in May from 19.0 percent in the previous month. On a month-on-month basis, seasonally-adjusted data on commercial banks’ lending grew by 0.6 percent (for loans inclusive of RRP) and 0.4 percent (net of RRP) in May.

Preliminary data indicated that loans for production activities expanded year-on-year by 17.1 percent in May, slightly lower than the 18.1 percent growth reported in the previous month. Loans extended to the following productive sectors, which comprised nearly half of total loans, were major contributors to lending growth: agriculture, hunting, and forestry (which grew by 42.0 percent); real estate, renting and business services (26.5 percent); financial intermediation (32.4 percent); transportation, storage & communication (45.9 percent); and electricity, gas and water (35.5 percent). Loans to the following sectors likewise expanded, albeit marginally: other community, social and personal services; public administration and defense; health and social work; wholesale and retail trade; fishing; and mining and quarrying. Meanwhile, bank lending to manufacturing, construction, and education registered contractions during the month. In particular, manufacturing loans—which account for 16.3 percent of total loans—contracted by 32.8 percent.

Growth in consumption loans also moderated to 9.6 percent this month from 13.5 percent in the previous month, following the slower growth in auto loans and credit card lending, and the contraction in other types of loans.

BSP Governor Amando M. Tetangco, Jr. noted that bank lending growth has remained healthy despite indications that banks have tightened their credit standards and that more firms may have turned to the bond market for funding. The Governor affirmed the BSP’s commitment to ensure that liquidity conditions are supportive of the spending and investment needs of firms and households, while keeping a watchful eye on price stability.

===


Domestic Liquidity Continues to Expand in May
07.03.2009
http://www.bsp.gov.ph/publications/media.asp?id=2107

Domestic liquidity or M3 continued to post double-digit growth in May 2009 as it rose by 15.0 percent year-on-year, higher than the 13.7 percent recorded in the previous month. On a monthly basis, seasonally-adjusted M3 rose by 1.0 percent in May, a reversal of the 0.4 percent (revised) contraction in April.

The robust expansion in net foreign assets (NFA) at 19.8 percent in May continued to drive liquidity growth. This can be attributed primarily to the sustained growth in the NFA position of the BSP as well as of banks at 15.7 percent and 42.5 percent, respectively. Net foreign assets rose as the BSP continued to build up its international reserves, while banks reduced their foreign liabilities possibly as they paid off maturing obligations.

The growth in net domestic assets (NDA) also contributed to the expansion in domestic liquidity. NDA growth year-on-year accelerated to 8.4 percent in May from 4.2 percent in April as net domestic credits expanded by 18.3 percent. Growth in credits extended to the private sector remained strong at 18.2 percent, broadly similar to the 19.0 percent expansion posted in the preceding month. Meanwhile, growth in credits extended to the public sector accelerated to 18.7 percent from 11.3 percent, reflecting the double-digit growth in both lending to the National Government (18.7 percent) and to local government units and other public entities (18.5 percent).

BSP Governor Amando M. Tetangco, Jr. assured that the BSP remains committed to maintaining an appropriate level of liquidity to ensure the orderly functioning of the financial system and support the economy’s growth requirements, while guarding against any build-up in price pressures.

Philippine election automation a go

Emilia Narni J. David with Bernardette S. Sto. Domingo
BusinessWorld
http://www.bworldonline.com/BW070409/content.php?id=071

After a week of suspense, the automation of the 2010 national elections is going to push through as the joint venture of Total Information Management (TIM) and Smartmatic Corp. has been rebuilt.

In a press briefing after a meeting with the two companies, Commission on Elections (Comelec) chairman Jose A.R. Melo said that TIM and Smartmatic have ironed out their issues and would be continuing their partnership.

"They threshed out everything. TIM and Smartmatic have signed the joint venture incorporation papers and the Comelec will be having a contract with the joint venture of both companies," said Mr. Melo.

Earlier yesterday, Press Secretary Cerge M. Remonde hinted at possibly shifting back to a manual process just to ensure the polls happen next year.

"The President has committed herself to full poll automation. But the Palace will continue to support Comelec. With or without automation, elections must push through," he said, citing President Gloria Macapagal-Arroyo’s speech during the celebration of Filipino-American Friendship Day.

Contract negotiations between the Comelec and the two companies were halted when both companies were unable to provide a certificate for incorporation of the joint venture. Later that same day, TIM announced that it is pulling out of its joint venture with Smartmatic on Monday citing disagreements on the control of disbursements.

On Tuesday, the Comelec brokered a meeting between both companies and gave a Friday deadline for a resolution.

Mr. Melo said that contract negotiations will continue but that "there are only one or two issues that are being threshed out so it is basically okay."

Both companies would be filing their papers for incorporation at the Securities and Exchange Commission on Monday.

"They will file [the incorporation] by Monday so maybe by Wednesday the joint venture will be incorporated already. By Friday we can sign the contract," said Mr. Melo.

He added that the Comelec is confident that both companies would any more misunderstandings because they would have signed a contract and would be criminally liable.

In a statement, TIM/Smartmatic said that it is committed to continue with the automation project.

"Smartmatic and TIM would like to manifest our assurance that the automation of the 2010 elections will push through, and that we stand behind the Comelec," the statement read.

Several options were laid before the Comelec if the contract with TIM/Smartmatic did not push through, including serious consideration to go back to manual elections.

Ramon C. Casiple, executive director of the Institute for Political and Electoral Reforms, told BusinessWorld that while the resolution is welcome there should be close watch in the interactions of both companies.

"All’s well that ends well but until next time. I am not optimistic that there will be no opposition and blockades anymore but it may be through other means," said Mr. Casiple in a telephone interview.

"We hope that all parties take [what happened] as a lesson and be very alert against [any] means of sabotage," he added.

Philippine overseas workers up 15% in 2008

Michael Paolo T. Jamias
BusinessWorld
http://www.bworldonline.com/BW070409/content.php?id=051

The number of overseas Filipino workers (OFWs) who worked abroad rose 14.6% to 2.002 million last year from 1.747 million in 2007, data released on Friday by the National Statistics Office (NSO) shows.

Total remittance sent by these workers rose nearly a third (29%) to P141.904 billion from P109.806 billion.

Overseas contract workers (OCWs), or those with existing work contracts abroad, comprised 94% at 1.9 million of total OFWs, up 16.6% from the 1.6 million OCWs recorded in 2007.

A little more than a third (32.4%) of the OFWs were laborers and unskilled workers, which include domestic helpers, cleaners and manufacturing laborers. Those who worked in trade and related fields comprised 15.7%; service workers and shop and market sales workers, 14.3%; and plant and machine operators and assemblers, 13.0%.

Professionals accounted for 9.6%; technicians, 6.2%; as well as government officials, corporate executives, managers and supervisors, 2.7%.

OFWs from the Cavite-Laguna-Batangas-Rizal-Quezon, or Calabarzon, region accounted for 18.4%, Central Luzon, 14.5%; and the National Capital Region 14.0% — meaning that Metro Manila and surrounding regions made up almost half of the total number of OFWs.

On the other hand, Caraga reported the smallest share of OFWs at 1.2%, while the Autonomous Region in Muslim Mindanao, one of the country’s poorest, accounted for just 3.3%.

An NSO statement accompanying the data said that one out of five (20.4%) OFWs worked in Saudi Arabia, while one in every seven worked in the United Arab Emirates. Singapore, Hong Kong, Japan, Qatar and Taiwan were also popular destinations of OFWs. OFWs who worked in Europe comprised 9.4%, while those who worked in North and South America accounted for 8.4%.

Of the total cash remittances sent, 76.1% were coursed through banks and 11.8% through door-to-door services.

OFWs working in Asia, comprising 78.2% of all OFWs, sent the biggest cash remittance of P69.9 billion.

Among occupation groups, OFWs working as laborers or unskilled workers posted the highest cash remittance of P19.5 billion.

Philippine Overseas Employment Administration chief Jennifer J. Manalili said in a phone interview on Friday that her agency is "closely monitoring the situation [since] many countries are experiencing varying degrees of financial crisis" that has led their governments to "limit the number of foreign workers admitted to their territories."

University of Asia and the Pacific economist Victor A. Abola said OFW deployment should continue to grow despite the global economic slowdown. "I think, in absolute numbers, there will still be an increase," he said in a phone interview on Friday.

But Mr. Abola expects OFW remittances to be flat this year as well as next year, though "it could go down slightly by no more than 2%-3% [in 2010]."

He explained there is usually a "one-year lag" before remittances reflect the slowdown in the global market, which is expected to be hit hard this year.

Update on Philippine SONA projects (1st of 5)

http://www.gov.ph/index.php?option=com_content&task=view&id=2000997&Itemid=2

Manila (PNA) -– President Gloria Macapagal-Arroyo's flagship projects designed to "close the loop" between the Philippines' Super Regions are nearing completion, while her other State-of-the-Nation Address (SONA) commitment programs such as economic reforms and poverty alleviation are gaining significant headway.

To start off, the "closing the loop" program under President Arroyo's Super Regions strategy is more than 80 percent complete. These are the priority infrastructure projects in the North Luzon Agribusiness Quadrangle (NLAQ), Luzon Urban Beltway (LUB), Central Philippines, and Mindanao Super Regions.

One such priority project is located within the Luzon Urban Beltway, wherein the North Luzon Expressway (NLEX) and Subic-Clark-Tarlac Expressway (SCTEX) has been interconnected.

"President Arroyo ordered the front-loading of infrastructure development projects with a specific directive that all infrastructure programs must be bid out during the first semester of the current year," says Deputy Presidential Spokesperson Lorelei Fajardo and Presidential Assistant for Region 3, in an interview with the Philippines News Agency (PNA).

Fajardo said that once the interconnection of SCTEX, NLEX and South Luzon Expressway (SLEX) is realized, the travel time between Subic in Zambales and Metro Manila will only take one hour and a half. "It used to be three hours, but now, it's a shorter time," she added.

"Travel time between Clark in Angeles City, Pampanga and Subic Naval Base in Olongapo City, Zambales will take 30 minutes, thanks to the North Luzon Beltway Hub of the Philippines," Fajardo said.

"Central Luzon is situated in the heart of Asia and it has so much potential," she said, adding this is the reason President Arroyo is hastening the completion of infrastructure projects such as the road networks.

The Malacañang official also said that SCTEX would eventually connect La Union province from Poro Point in San Fernando City to Baguio City in Benguet province, and also Quezon and Batangas provinces in the Southern Tagalog region through the NLE-SLEX linkage.

'Closing the loop'

"It's what you call 'closing the loop'. It's also known as Luzon Urban Beltway (LUB)," Fajardo said.

The priority infrastructure projects which "close the loop" are classified under the North Luzon Agribusiness Agricultural Quadrangle (NLAQ), the LUB's Transport and Logistics Infrastructure, Central Philippines Super Region Enhanced Central Philippines' Competitive Advantage in Tourism, and Mindanao Super Region Enhanced Agribusiness Development in Mindanao.

The NLAQ, according to Fajardo, involves the Dingalan Port Project in Aurora province and the La Trinidad Fruit and Vegetable Minimal Processing Plant in Benguet.

The LUB Transport and Logistics Infrastructure consists of Subic Bay Port Development Project, Batangas Port Development Project, Lucena Port, and Cawit Port in Boac, Marinduque.

Found in the Central Philippines Super Region Enhanced Central Philippines' Competitive Advantage in Tourism are access roads to the Bacolod-Silay Airport and Bohol Circumferential Road; Pantao Port in Albay, Jagna Port in Jagna, Bohol; Ubay Port in Ubay, Bohol; Siquijor Port in Siquijor; Maasin Port in Southern Leyte; Limasawa Port in Southern Leyte; New Iloilo Airport in Iloilo, and New Bacolod-Silay Airport in Negros Occidental.

Mindanao Super Region Enhanced Agribusiness Development in Mindanao covers the Diosdado Macapagal Bridge in Butuan City, 210-megawatt Clean Coal-Fired Power Plant in Misamis Oriental and Solar Power Plant in Cagayan de Oro City.

SLEX-STAR linkages

At present, the SLEX project is 76.87 percent accomplished. The Alabang viaduct in Muntinlupa City was opened to the public late last year, while Toll Roads 2 and 3 are scheduled to be completed in June and December 2009, respectively.

The SLEX project, costing P8.5 billion, involves the rehabilitation and upgrading of the existing 28.54-kilometer length of the expressway starting from the Alabang viaduct up to Calamba City in Laguna, and an additional 7.6-kilometer highway to be constructed from Calamba to Sto. Tomas in Batangas that will connect to the Southern Tagalog Arterial Road (STAR) 2.

Once completed, the SLEX-STAR linkage will provide access to the Port of Batangas and offer a seamless nautical and land highway that will save both time and transport cost for both passengers and freight.

It will relieve traffic on the old highway and significantly reduce travel from 46 minutes to 26 minutes when traveling from Sto. Tomas, Batangas to Alabang, according to a statement from the Presidential Management Staff (PMS).

"The extension of the SLEX is a major infrastructure project. It will not only ease and speed up travel to and from Batangas and Laguna but also connect the CALABARZON (Cavite-Laguna-Batangas-Rizal-Quezon) to the Luzon Urban Beltway and NLAQ through other priority infrastructure projects such as the C5-NLEX-SLEX Link, Subic-Clark-Tarlac Expressway (SCTEX) project and Tarlac-Pangasinan-La Union Expressway (TPLEX) project," the PMS reported.

"With this project, new centers of business and commerce in the South are expected to open, which would help decongest Metro Manila," PMS Secretary Hermogenes Esperon Jr. said in a report, adding "this would provide our exporters faster and safer access to the Free Port Zone in Subic and the airport in Clark and the Ninoy Aquino International Airport (NAIA)."

To make sure that the project is completed on time, Esperon said "the Pro-Performance Team is pressing the adoption of a 24-hour work shift and constant monitoring of the rate of accomplishment of the remaining sections of SLEX."

C5-NLEX-SLEX interconnection

Fajardo said the Department of Public Works and Highways (DPWH) recently kicked off the construction of the P520-million Tandang Sora-Luzon Avenue flyover crossing Commonwealth Avenue in Old Balara, Quezon City that will interconnect the North Luzon Expressway (NLEX) and the South Luzon Expressway (SLEX).

The infrastructure is one of the vital links in the 41-kilometer NLEX-SLEX project of President Arroyo.

"DPWH has started the implementation of this project which is in line with the instructions of the President to interconnect the two expressways and eventually to the Manila-Cavite Coastal Road in Las Pinas City via C-5," Fajardo said.

On the other hand, DPWH Undersecretary Romeo Momo, in charge for Luzon operations, explained in a report that the construction involves the completion of a flyover that would directly connect Tandang Sora Avenue (Old Balara side) to Luzon Avenue in Quezon City. It measures more than 500 lineal meters, including approaches with four lanes at two lanes per direction.

He said the structure also has access or service roads on both sides for vehicles coming from and going to Commonwealth Avenue and C-5 and vice versa.

"Once the project is completed, it will be beneficial to all motorists and businessmen in the area," Momo said.

Motorists, especially those coming from Katipunan Avenue would no longer use U-turn slots in Commonwealth Avenue to go to Luzon Avenue as the project directly connects both ways.

The implementation of the project is in coordination with the Quezon City government and the Metropolitan Manila Development Authority (MMDA).

In August 2008, Public Works and Highways Secretary Hermogenes Ebdane Jr. signed an agreement with Quezon City Mayor Feliciano Belmonte, wherein the latter assumed the responsibility of securing road right-of-way and some civil works.

Meanwhile, two multi-billion-peso flood control projects –- the Agno River Flood Control Project Phase II and the CAMANAVA (Caloocan-Malabon-Navotas-Valenzuela) Flood Control Project -- are nearing completion with 90 percent accomplishment. The CAMANAVA project is expected to ease flood problems in Metro Manila.

Two-minute check-in at Manila airport

Vito Barcelo and Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/?page=police4_july2_2009

Using bar code technology, checking in at the Ninoy Aquino International Airport can take as little as two minutes, said a port operator official.

General manager Alfonso Cusi, of the Manila International Airport Authority, said starting yesterday, international operations at Terminals 1 and 2 (new wing) have been upgraded from magnetic tape to bar code for both boarding passes and baggage tagging.

Records show that the two terminals on the average have a combined load of 69 outbound flights daily.

“We would like to improve and shorten the business process at the airport by replacing the outdated technology with a more modern, efficient system,” he said, noting that the neighboring airports in Singapore, Hong Kong, Macau and Guam have already installed their own versions.

Arinc Inc. was awarded a three-year contract to supply, install, operate and provide maintenance support of the new common use check-in at the two terminals for departing flights and passengers.

Arinc managing director Randy Pizzi said MIAA would have enough flexibility to further improve services particularly in cutting queuing time.

MIAA assistant general manager Tirson Serrano said the system would handle almost four million outbound passengers at the Naia 1 and 1.6 million passengers at Naia 2, using the 85 check-in counters and 15 boarding gates at Terminal 1 along with 40 check-in counters and 16 boarding gates at Terminal 2.

Philippine unofficial reserves increased sharply to $4.17b in May

Eileen A. Mencias
Manila Standard
http://www.manilastandardtoday.com/?page=business5_july2_2009

THE Bangko Sentral’s unofficial reserves nearly doubled to $4.172 billion at the end of May from $2.366 billion reported at the end of April, according to data released by the central bank.

The central bank’s unofficial reserves refer to dollars and other foreign currencies that the central bank earned in foreign exchange swaps. They are not counted as part of the gross international reserves.

The central bank started the foreign exchange swaps in 2007, when huge foreign exchange inflows boosted the value of the peso. The swaps prevented the release of too much liquidity in the system.

Steady remittances, an inflow of $497.58 in stock market investments and the proceeds from official development assistance loans were not enough to offset the $1.248 billion the country had to pay for maturing foreign loans in May, causing the $55-million shortfall in the balance of payments.

Despite the month-on-month deficit, however, the balance of payments still yielded a surplus of $2.143 billion in the first five months of the year, just slightly lower than the $2.182-billion surplus reported for the same period last year.

A surplus in the BoP helps support the local currency because it means the economy generated more foreign exchange than it had to pay. A deficit in the BoP means the economy did not generate enough from exports, investments and remittances or loans to pay its imports and foreign loans.

The central bank had forecast a $700-million surplus in the BoP this year, suggesting that there will be significant outflows by the end of the year.

The national government, however, is reviewing its borrowing strategy for the year after it increased its budget deficit target. An increase in foreign borrowings will significantly shore up the BoP.

The central bank expects remittances to amount to some $16.4 billion this year, the same as last year’s, but some sectors have warned of a contraction.

Cebu Pacific now mounts more flights than Philippine Airlines

Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/?page=news4_july2_2009

CEBU Pacific yesterday claimed that it has overtaken Philippine Airlines as the largest airline in the country in the number of weekly flights, citing data from Official Airline Guide, a global flight information and data solutions company.

The Gokongwei-owned budget carrier said it now ranked 65th among the world’s airlines in having the most weekly flights based on the June 2009 Official Airline Guide data.

“This new leadership milestone was a result of the airline’s sustained focus on offering the newest planes and the lowest possible fares to its passengers,” said Candice Iyog, Cebu Pacific vice president for marketing and distribution.

Cebu Pacific had 1,665 weekly flights compared to PAL’s 1,566. PAL was ranked 72nd in the list of 100 largest airlines.

Delta Airlines topped the list with 26,898 weekly flights, followed by American Airlines with 24,893 and United Airlines with 23,996.

Among Asian airlines, China Southern Airlines had the highest ranking at 11th place with 9,440 weekly flights.

Cebu Pacific said it was now Asia’s third largest low-cost carrier as it served 32 domestic destinations and 14 cities in Asia.

Iyog said the airline was poised to further expand its reach as it took delivery of more new aircraft. It had ordered 15 new Airbus A320s for delivery from 2010 until 2013 and was considering to buy five more.

By 2013, Cebu Pacific should have 27 Airbus aircraft and 10 turbo-prop ATRs, the youngest aircraft fleet in the Philippines, she said.

“We are about 40 percent cheaper on average than the other airlines,” Iyog said.

“So with low fares, new planes, and the convenience we offer by flying from four hubs—which allowed direct flights within regions and did away with flying via Manila—we in effect are offering what the people want and need.”

Cebu Pacific uses its four hubs in Manila, Cebu, Davao and Clark to fly 1,401-times weekly within the Philippines and 264 times weekly in Asia.

“We will continue to seek ways to expand and make more people fly,” Iyog said.

“We have a great business model that has shown domestic growth despite the present global downturn. We are confident that our march to further growth will continue.”

Cebu Pacific carried 6.7-million passengers in 2008, and it expects to carry close to nine million this year.

Philippine External Debt Drops by US$1.4 Billion in First Quarter of 2009

Bangko Sentral
Media Releases
06.30.2009
http://www.bsp.gov.ph/publications/media.asp?id=2103
CLICK HERE TO VIEW TABLE

As of end-March 2009, outstanding Philippine external debt declined by US$1.4 billion to US$52.5 billion, from the US$53.9 billion recorded in December 2008. On a year on year basis, the debt stock dropped by nearly 4 percent to US$2.1 billion from US$54.6 billion in March 2008.

External debt refers to all types of borrowings by Philippine residents from non-residents that were approved/registered by the Bangko Sentral ng Pilipinas (BSP).

Major External Debt Ratios

BSP Governor Amando M. Tetangco, Jr. observed that: “Major external debt indicators remained at prudent levels in the first quarter of the year.” Gross international reserves (GIR) stood at US$39.0 billion at the close of the quarter bringing the ratio of reserves to short-term external debt to 6.0 based on original maturity, from 5.4 in December last year, and maintaining a comfortable level of 3.4 based on remaining maturity. Short-term accounts under the second concept pertain to obligations with original maturities of one year or less, plus amortizations on medium and long-term accounts falling due within the next 12 months, i.e., from April 2009 to March 2010.

The Governor also cited the continuing improvement in the country’s external debt ratios which relate total outstanding debt to Gross National Product (GNP ). During the first quarter, a moderate improvement was noted from 29.0 percent to 28.8 percent. The present ratio is also much lower than the 32.6 percent recorded a year ago. Using Gross Domestic Product (GDP1 ), the ratio remained stable at 32.3 percent since end-2008. As an indicator of solvency, the ratios have been observed to be generally declining since 2002, and are currently at their lowest levels since their peak in 1986 when they reached 99.8 percent for debt to GNP and 97.7 percent for debt to GDP.

The external debt service ratio (DSR), on the other hand, was estimated at 10.3 percent 2 during the first quarter, slightly higher than the 9.6 percent recorded in December 2008 and 9.8 percent in March 2008. The ratio, which relates total principal and interest payments to exports of goods and receipts from services and income (which include remittances by overseas Filipino workers), is a measure of liquidity, or the adequacy of the country’s foreign exchange earnings to meet maturing principal and interest payments. It has consistently remained below the 20 to 25 percent international benchmark.

Please refer to the attached table for the time series data from 2000.

Changes in External Debt Stock

The US$1.4 billion contraction in debt stock during the first quarter resulted from the US$1.3 billion negative foreign exchange revaluation adjustment largely on account of the weakening of the Japanese yen against the U.S. dollar. The currency of reporting for Philippine external debt statistics is the U.S. dollar and the debt stock is revalued using exchange rates as of end of the report quarter.

Residents’ investments in Philippine debt papers issued abroad increased by about US$540 million during the quarter, correspondingly reducing the external debt stock. This was, however, partially negated by net availments of foreign borrowings of less than US$270 million, and upward audit adjustments of more than US$200 million.

Debt Profile

The external debt portfolio remained predominantly medium to long term (MLT) in nature at the close of the first quarter, with MLT accounts representing 88 percent of total. The weighted average maturity for all MLT accounts (those with maturities longer than one year) was estimated at 20 years; public sector borrowings had longer average tenors of nearly 22 years, compared to 11 years for the private sector. Short term external debt, which accounted for 12 percent of debt stock, consisted largely of inter-bank borrowings and trade-related obligations.

Total public sector external debt dropped to US$39.3 billion, or by US$1.0 billion from US$40.3 billion in December 2008, mainly as a result of negative foreign exchange revaluation adjustments (US$1.2 billion), with yen-denominated debts accounting for the bulk (US$960 million).

Private sector external debt similarly declined to US$13.2 billion by the first quarter of the year from US$13.5 billion in December 2008. With the decline in both public and private sector borrowings, their share to total remained at the end-2008 levels of 75 percent and 25 percent, respectively.

The creditor profile also remained unchanged: official creditors (consisting of multilateral institutions and bilateral creditors) continued to have the largest exposures at 45 percent of total, followed by foreign holders of bonds and notes with 33 percent, and foreign banks and other financial institutions, 16 percent. The rest of the creditors were mostly foreign suppliers and buyers.

The currency composition of external debt was likewise the same as of end-2008: U.S. dollar-denominated accounts represented 51 percent of total; Japanese yen-denominated accounts, 29 percent; multi-currency loans from the Asian Development Bank and the World Bank, 10 percent; and the rest of the accounts comprising the 10 percent balance were denominated in 16 other currencies.

---------------------

1 Based on annual GNP/GDP (annualized for March 2008 and March 2009)
2 Based on annual Debt Service Burden and Exports of Goods and Receipts from Services and Income (annualized for March 2008 and March 2009)

Thomson Reuters opens call center in the Philippines, vows to be a ‘long-term’ investor

Jeremiah F. de Guzman
BusinessWorld
http://www.bworldonline.com/BW070209/content.php?id=047

DATA PROVIDER Thomson Reuters Corp. yesterday opened a customer service facility in Taguig that will serve as the company’s primary English-language support center for clients all over the world.

The new 500-seat customer support center at Megaworld Corp.’s McKinley Hill will provide 24-hour global support and serve as a "single point of contact to pre- and post-sales support."

"This will complement our non-English support centers in Geneva and Sydney. Also, our global head directing our technical support teams nationwide will [be based] here in Manila," Thomas Frossel, Thomson Reuters global head of customer service, told reporters.

More than 80 professionals have already been trained to man the call center.

"Having a background in finance and other business matters is an advantage but we also provide extensive training so that the quality of service is ensured," Mr. Frossel said.

The site started operations on May 25 with agents taking calls from businessmen, investors, and traders all over the world.

Thomson Reuters’ Philippine site operations manager Raoul Teh said the site is expected to be "fully maximized" in two years.

"We are currently coordinating with local universities such as the University of the Philippines, De La Salle University, Ateneo de Manila University, and University of Santo Tomas for recruitment," Mr. Teh said.

"[Aside from this site] there are a lot in the pipeline, but we still cannot disclose details at this point. Manila has been the epicenter of foreign businesses in offshoring their services," Mr. Teh added.

Mr. Teh also said Thomson Reuters’ legal content operation training programs have started.

"There are roughly 50 people being trained for six to eight weeks and the facility for this project is expected to be opened around the third quarter of this year," he stated.

"Thomson Reuters is committed to having a long-term relationship with the Philippines and we will continue to roll out significant investments in terms of facilities, premises and training," Mr. Frossel said.

New York-based Thomson Reuters provides information to decision makers in the financial, legal, tax and accounting, scientific, health care, and media markets. The company employs more than 50,000 employees in 93 countries worldwide.

It has contact centers in Bangalore, Gdynia, Beijing, Geneva and Sydney.

Thomson Reuters reported $3.12 billion in revenues in the first quarter, with $224 million in profits from continuing operations. This was an increase from $1.8 billion and $193 million, respectively, in the same period last year.

The erstwhile Thomson Corp., the family-owned Canadian publisher, bought the British news service Reuters for $17.2 billion in 2007.

Philippine central bank says remittance growth possible

P. G. MONTECILLO, Reporter
BusinessWorld
http://www.bworldonline.com/BW070209/content.php?id=003

THE AMOUNT of money sent home by Filipinos working abroad could rise this year, bucking observers’ expectations of a contraction and official forecasts of zero growth.

Continued demand for overseas Filipino workers (OFW) in other countries, which is expected to offset a downturn in the United States, could lead to a positive remittance result, the Bangko Sentral ng Pilipinas (BSP) said.

"Remittances for the full year 2009 are expected to exhibit a flat growth even with the mounting concerns about the effects of the recessionary conditions in the global economy," the central bank said in a newsletter released yesterday.

"[But] with the continued growth in remittances for the first four months of 2009, the projected flat growth for the full year 2009 is turning out to be relatively conservative," it read.

"While there are expectations that remittances could contract in 2009, there are favorable developments that provide some reason for optimism."

The BSP cited data from the Philippine Overseas Employment Administration which showed demand for OFWs from countries such as Canada, Bulgaria, Australia, the United Arab Emirates and Qatar.

The BSP also noted a trend of countries shifting to higher-skilled OFWs who receive better pay and conceivably will send more money home.

Latest central bank data showed remittances up by 2.6% to $5.5 billion in the January-to-April period from a year earlier. They reached a record high of $16.4 billion last year, or a 13.7% growth over 2007.

Both the International Monetary Fund and the World Bank expect remittances to the Philippines to decline by 4% this year as the global economic downturn threatens OFW employment.

Philippine franchising industry seen to grow 10% in ’09

MORE "RECESSION" NEWS
Max V. de Leon
Business Mirror
http://www.businessmirror.com.ph/home/economy/12582-franchising-industry-seen-to-grow-10-in-09.html

THE Philippine franchising industry is poised to grow by up to 10 percent this year, driven by the rapid expansion of locally bred concepts both here and abroad.

Robert Trota, president of the Philippine Franchise Association (PFA), said even with the crisis, none of the group’s members have indicated that they will be experiencing decline in sales this year.

“No one came and said, ‘We are down this year.’ Some are saying they are up 3 percent at the minimum to as high as double digit,” Trota told reporters.

With this, local brands such as Mang Inasal and Generics Drug Store have set impressive expansion targets of more than doubling their current number of stores.

Some have also set their sights abroad such as Tokyo Tokyo and Potato Corner. Other homegrown concepts such as Max’s Restaurant, Jollibee, Reyes Haircutters and some fashion brands like Bench are also increasing their presence in other countries.

Trota said the industry has lots of reasons to be bullish, especially with more prospective franchisees expected to come in to their fold as a result of the early retirement and retrenchment that was precipitated by the crisis.

Also, Trota said remittances from overseas Filipino workers are still growing.

Aside from this, Trota said the banks in the country are willing to lend to the franchise industry, with the Bank of the Philippine Islands (BPI) promising to give loans to those that will get recommendation from the PFA.

Samie Lim, PFA chairman emeritus, said when the economy is bad, more people are buying franchises, particularly those who were retired or retrenched.

“They have the money, the time, the training as some of them were former managers, and they have the connections. These are the recipes that you need to succeed in franchising,” Lim said.

Trota said the PFA currently has about 240 member-brands. About 65 percent of them are homegrown. In 1995, he said, the industry was 85-percent foreign concepts.

Lim said there are 30 more local brands that are going international.

Cultural differences; biz vs politics

Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/home/opinion/12597-cultural-differences-biz-vs-politics.html

Cable Television is great for the person who is obsessed with a particular subject. You can watch 24/7 news, weather, cartoons, fashion, sports, business, science fiction, crime, history, almost anything under the sun. And now coming to the Philippines, although not on cable television, will be 24/7 coverage of politics.

I would be the last one to complain about wall-to-wall coverage of the political scene. The problem I do see is that the average person does not understand how different politics is from the rest of our world.

Last Tuesday, I spoke of the inherent differences between the “business model” and the “political model” of doing things. It is not necessarily a judgment call as such of which thought process and model are best. It is just that we need to understand that although politicians often walk and talk like their business counterparts, they are far removed from what might be best described as the “business culture.”

Although we want to believe that government and politics are not the same animal, in truth, they are because the underlying driving force of all government—from the executive and legislature to the department that processes your driver’s license—is politics. In business, any type of business, the profit motive is the driving force. Even your local charitable “non-profit” organization is driven by a type of profit motive in that they must bring in enough revenue and spend less than that revenue in order to survive and thrive.

I am a student of politics, having obtained a couple of degrees in the subject. In my idealistic youth, I thought that politics was all about the administration of power and the ideology of how to administer that power for the public good. I realized though that politics was not about ideology any more than business is but simply another way to gain and control wealth.

The purpose of a business is also to gain and control wealth, and this is accomplished by providing a product or a service. San Miguel says give us your money, we will give you beer and, according to its core purpose, by doing so, “Making everyday life a celebration.” San Miguel sells the idea that its beer makes life a celebration.

Government attempts to gain and control wealth by selling an ideology. All governments basically say, give us your money and in return, we will give you a better life, because you need government to “Make your life better.”

From many years of study, I concluded that, after a few hundred years of experience, the world’s beer brewers did a better job of living up to their promises than the world’s governments.

You see, most politicians and government people, deep in the hearts, know that “business” is more successful than “government.” How many politicians do we hear telling us that they intend to run government like a business? However, it never happens and governments continue to be unsuccessful. Why is the political model usually unsuccessful? The cultures are inherently and forever different.

Within any business, everyone must work together for that business to be successful. A great business is made up of great team players. But in politics and government, ultimately, there are only winners and losers; there is no such thing as a team. On a team, sometimes a player must make a personal sacrifice so that the team can prosper. That would never happen in government. A team does not exist and every player is looking to be the next superstar, and does everything possible to hold that position.

Even the language is different. Notice that in government, stealing is called corruption. The word corruption means perverted, infected, tainted, almost like having a disease over which the individual has no control. In business, stealing is called stealing; taking something that does not belong to you. Stealing is a conscience act, not like getting the swine flu because you did not wash your hands properly.

In government, the objective is to get a consensus or general agreement of opinion. A business rarely operates by consensus. Usually decisions are ultimately made by one person or, at the most, one small team. But more important, that person or team is held accountable and takes reasonability for the decision. In government and politics, there is little personal responsibility because the decision was reached by a consensus. And the power of decision-making is always divided. The President blames Congress; Congress blames the President.

But you might say, a government has to answer to the electorate in the same way that a company must answer to its shareholders as San Miguel does. A couple of points:

At San Miguel, the shareholders cannot directly fire the president of the company as with the government. Further, shareholders look at the performance of the company, not directly at the performance of its president. A company president might resign, saying that his bad decisions hurt the company. Even in basketball, a player might bench himself because his performance is hurting the team. When was the last time you heard of a nation’s president resigning, saying his bad decision hurt the government? I think the answer is never.

We often say that things could be different if different people were running government. I think not. There are many great people in government, so the problem must not always be the people. Maybe it is the flawed culture of government.


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