The Philippines raised $1.5 billion from the sale of global bonds on Wednesday, with investors snapping up Asia's first international bond offer for the year.
Manila reopened its 6.5-percent global bonds due in January 2020 and its 6.375-percent global bonds due in October 2034.
The sale comprised a $650-million reopening of the 2020 bonds, bringing their total size to $1.4 billion; and an $850-million reopening of the 2034 bonds, bringing their total size to $1.85 billion.
“We are pleased with the strong interest shown by investors in this bond issue as this reflects continued confidence in Philippine debt papers," Finance Secretary Margarito Teves said on Thursday.
The proceeds of the bond sale, he added, would help fund infrastructure and reconstruction efforts following the devastation brought by recent typhoons.
“The transaction was heavily oversubscribed, highlighting the continued global investor support and allowing us to raise a full $1.5 billion across both tranches," National Treasurer Roberto Tan said.
He said the bond sale would further deepen the liquidity of the existing bonds and extend the duration of the country’s borrowings.
The newly issued bonds were priced at 106.25 percent and 96.5 percent, respectively. The 2020 bonds yielded 5.674 percent or an equivalent 183.7 basis points (bps) over benchmark US Treasuries, while the 2034 bonds yielded 6.664 percent or an equivalent 195.7 bps over benchmark US Treasuries.
Twenty-three percent of buyers of the 2020 debt paper came from the Philippines, a quarter from the rest of Asia, 35 percent from the US and 17 percent from Europe, Teves said.
For the 2034 bond, 19 percent came from the Philippines, 21 percent from the rest of Asia, 40 percent from the US and 20 percent from Europe.
Barclays Capital, Deutsche Bank Securities, Inc. and HSBC acted as joint lead managers and joint bookrunners for the transaction.
Friday, 8 January 2010
THE PHILIPPINE National Railways (PNR) expects deals on two major projects to be signed this year that will be funded by official development assistance totaling $350 million from South Korea and China.
PNR General Manager Manuel D. Andal said in a recent phone interview that his office expects the $92-million loan agreement with the Export-Import Bank of Korea for the 27-kilometer Phase 2 of the Northrail-Southrail Linkage project, which will run from Alabang to Calamba (phase 1 covers the 34-km stretch from Caloocan to Alabang), to be signed this September.
MANILA (PNA) -- If its motor does not falter again, the Philippines could just be the electric vehicle hub of Asia starting this year.
Already, it has locally designed and assembled the electric jeepney or e-Jeepney that is now plying select streets in Makati and elsewhere.
Its local assembler, the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) has incorporated a consortium, the Philippine Utility Vehicle (PhUV) Inc. as its business arm for the e-Jeepneys.
MVPMAP Vice President Ferdi Raquelsantos said the e-Jeepney project has given hope and marginal sales of automotive parts to the more than 24,000 workers dependent on the local auto parts making industry.
“The industry has been in doldrums for so many years as the auto industry sales have not gone anywhere near the 1996 level of 162,000 units since then. Consequently, the Philippines has lagged behind Asian neighbors Thailand, Indonesia and Malaysia. It is only now that we see hope in a proposed Motor Vehicle Development Program (MVDP) that is being crafted by the Board of Investments,” Raquelsantos said.
Under the proposed MVDP, auto parts and components development is one of seven critical success factors cited as needing full government support for the development and growth of the auto industry.
It also provides a package of incentives to encourage local CKD operations.
PhUV Inc. Vice President Rommel Juan added though that another equally-important battle is being fought in the environmental front.
“The e-Jeepney project is expected to dramatically reduce noise and air pollution in Makati as the e-Jeepney does not emit either noise or harmful exhaust emissions. Studies have shown that every liter of diesel avoided results in a reduction of 3,140 grams of CO2 (Carbon Dioxide) and 16 grams of NOx (Nitrous Oxide) that are released to the atmosphere. At excessive levels, these harmful exhaust emissions could result in climate change that has recently been blamed for the typhoons and floods that devastated not only the metropolis but most of the country. Our air pollution is probably one of the worst in the world,” he said.
“It is a good thing that some ‘green-minded entities’ have taken the initiative to take the first step in combating air pollution. Puerto Princesa, Makati City, Pasig City, Pangasinan and Ilocos Sur have all purchased e-Jeepneys. So have Congress, the Bangko Sentral ng Pilipinas, Plantation Bay, De La Salle-Dasmarinas, Embarcadero and Hacienda San Benito. They now enjoy the benefits of clean air and fuel savings at the same time,” Juan said.
At this point, the PhUV has already identified the practical applications for electric vehicles in the country.
An EV is ideal for either short routes or confined areas of operations, such as resorts, huge campuses, malls, villages, industrial parks and the like, even as a public utility vehicle.
That is why so far, the biggest single use of a fleet of e-Jeepneys is the e-Jeepney Makati Green Route launched last Nov. 10, 2009 as the Libreng Sakay para sa Kalikasan project in Makati.
Under this program, 12 e-Jeepneys offer free rides daily in two routes, the Legaspi Village loop and the Salcedo Village loop.
Both routes will start and end at the Landmark Department Store area along Makati Avenue with a 10-second dwell time in each of the 13 specially-marked stops in each loop.
The e-Jeepney can comfortably seat 14 passengers (12 at the rear and two at the front, including the driver) and can be operated for about 65 kms. after every full charge at a maximum speed of 35 kph.
It is just part of a bigger program, the Climate Friendly Cities Program of the Institute of Climate and Sustainable Cities in partnership with PhilBio and PhUV Inc.
This CFC program has three major components: a biodigester fed with biodegradable household wastes to generate electricity, a piece of land that will serve as a terminal-cum-charging-station and the end-users of the electricity generated by alternative means, a fleet of e-Jeepneys. Makati City has invested in all these components.
Juan revealed while the more developed countries are racing to make electric and hybrid cars, he believes that "we can save a bigger carbon footprint if we promote the use of EVs for public transport application."
“In the process, we use electricity from alternative sources thus lessening our dependence on imported fossil fuel and somehow, helping our economy,” Juan said. (PNA)
MANILA (PNA) -– President Gloria Macapagal-Arroyo visited on Thursday the relocated families at the National Housing Authority (NHA) Project in Southville and Northville Relocation Sites in Calauan, Laguna.
This is the place where 3,000 families displaced by Typhoons “Ondoy” and and “Pepeng” last September 2009 have been relocated.
President Arroyo also witnessed the turnover ceremony of 37 school buildings at the relocation sites.
NHA officials said students residing in the Southville and Northville projects need not worry anymore about going to and from schools nearby.
The newly-turned over schools was approved by NHA Board of Directors under Board Resolution No. 5132 dated October 23, 2008. It is part of NHA’s post relocation services to nurture resettled communities.
The newly-built school buildings follow the Department of Education (DepEd) standard design for a three-storey 15-classroom school building.
The President said the relocation expenditures for the flood victims reached almost P600 million.
With President Arroyo at the event is Vice President Noli de Castro who said except for the first batch of 3,000 evacuees, another 5,000 residents will be moved to the relocation sites.
The President also handed out checks to the residents for the their livelihood projects in the relocation sites.
President Arroyo also signed Republic Act 9903 or the SSS Condonation Law, which gives amnesty to employers who have failed to pay premium contributions to the Social Security System (SSS).
The SSS will fully condone penalties slapped on employers for unpaid dues. Installment options will also be offered for settling unpaid contributions.
Those who opt to pay in installment may initially remit 5 percent of the contributions, with the rest to be paid over three-and-a-half years at 3 percent yearly interest.
If employers fail to remit the unpaid contributions within the amnesty period, the penalties will be reimposed.
More than 164,000 delinquent employers are expected to benefit from the law, with the state pension fund for private sector employees expected to collect as much as P7.71 billion in unpaid dues.
Latest data showed that the SSS halved its net income to P8.37 billion in the first half from a year earlier, mainly due to lack of one-time gains from the sale of equities. (PNA)
Re-Enactment of the Signing of HB # 5110, "An Act Establishing the CARAGA State University in the CARAGA Region by Integrating the Northern Mindanao State Institute of Science and Technology (NORMISIST) and the Northern Mindanao Colleges of Arts, Science and Technology (NMCAST)"
NORMISIST Gym, Brgy. Ampayon, Butuan City
January 05, 2009
Inauguration of Corn Post Harvest Processing & Trading Center and Mass Graduation of Farmers' Field School on Rice Production
Brgy. Mabuhay, Bayugan City, Agusan Del Sur
January 05, 2009
Project Inspection and Briefing of Butuan City-Las Nieves-Esperanza-Bayugan Road Project
Brgy. Amparo, Butuan City
January 05, 2009
Joel P. Mapiles
CLARK FREE PORT —Nestor Mangio, an architect and chairman of the Clark International Airport Corp. (CIAC), said yesterday the CIAC board of directors had approved the proposed $1.2-billion total investment value of Almal Investment Co.
As this developed, Mangio said that upon learning of the Almal proposal, President Arroyo expressed full support as she encouraged the CIAC directors and officers to attract more investors inside Clark and for the total development of the Diosdado Macapagal International Airport (DMIA).
Mangio said the billion-dollar investment is intended for the development of all civil components of DMIA’s first three terminals, as well as the adjacent land of 1,500 hectares following the CIAC original master plan.
The CIAC head said Almal is committed to the development of Terminal 2 at a total investment of $100 million, representing Phase 1, and expected to be finished in two years time after the signing of the joint-venture agreement.
“Terminal 2 will have a total floor area of 35,000 square meters and a 7-million-passenger capacity per year,” Mangio said.
Mangio detailed the project components, such as airport equipment for DMIA Terminal 2; airport plaza, transport plaza and covered parking area; expansion of existing apron facilities; widening, improvement and construction of access roads with interchanges; demolition of some existing buildings; development of a new identity and signature; and site and utilities development.
He said Almal shares in the government vision to develop and enhance the area and create a whole new destination and a premier gateway to the Philippines.
“Almal will form a Joint Venture Co. [JVCO] with CIAC on a 70-30 sharing. CIAC is to get 30 percent of the JVCO for contributing the leasehold rights over the land. CIAC will not contribute cash or issue a government guarantee,” Mangio said.
The duration of the JVCO/JVSC is 45 years renewable for another 25 years subject to mutual agreement of the parties involved and the limitations imposed by the laws, rules and regulations of the Philippines, the CIAC boss said.
Mangio noted that upon signing, Almal will undertake a complete review of the feasibility study and develop a final business plan for the project to define the components and phases of development for the medium-and long-term agreement.
Max de Leon
THE Philippine private sector emerged as the sixth most optimistic globally as the country registered an optimism balance of 68 percent, up from 65 percent in last year’s survey of accountancy and consultancy firm Grant Thornton International.
The rise in optimism among the Philippines’ privately held businesses put the country just behind Chile (85 percent), India (84 percent), Australia (79 percent), Vietnam (72 percent) and Brazil (71 percent) in the 2010 International Business Report (IBR) optimism-pessimism index.
“It’s a small uptick, true, but we’re confident that this signals the start of a more upbeat business community,” Marivic Españo, managing partner and chief executive officer of Grant Thornton’s local partner, Punongbayan & Araullo (P&A), said.
Optimism balance refers to the difference between the percentage of respondents who indicated they are optimistic of their prospects for the next 12 months, and the percentage of those who are pessimistic.
Optimism among businesses also rose globally, with the balance shifting to positive 24 percent this year from negative 16 percent last year.
The IBR also asked respondents when they expect to see an upturn in the global economy.
Among local business leaders, 37 percent anticipate a global recovery in the second half of 2010, and 17 percent say the recovery has already taken place. Another 21 percent said they do not expect a worldwide turnaround until 2011.
Españo said business leaders are cautious about their optimism, although they are seeing signs that the country is pulling out of the financial crisis.
Consumer spending, he noted, is rebounding, partly due to strong remittances. The mining sector also expects to bounce back this year just like the semiconductor industry, that was hit hard by the recession.
“We may not be completely out of the woods yet, but the atmosphere is hopeful, and we need that attitude in order to realize a complete recovery,” Españo said.
The 2010 IBR reflected the opinions of 7,400 privately held medium to large-scale businesses from 36 economies.
The National Food Authority aims to buy 584,000 tonnes of unmilled rice locally in 2010, just over half of its target last year, amid abundant stocks following hefty imports, a senior government official said Thursday.
The world's biggest rice buyer contracted to import a total 1.82 million tonnes of milled rice from four tenders in November to December, the bulk of them from Vietnam, and is using its option to order 25 percent more from those suppliers.
That would bring the country's 2010 rice imports to 2.27 million tonnes, for delivery between January and June, near the record 2.3 million tonnes it purchased in 2008.
''Our stocks are enough to tide us during the lean months from July to September,'' Romeo Jimenez, director at state-run NFA, told Reuters in a phone interview.
''I'm confident we won't need to do another tender in the first quarter unless there's a major calamity.''
Manila advanced rice imports for 2010 after strong typhoons hit major rice-growing areas in the main Luzon island in September and October, destroying 1.3 million tonnes of paddy rice.
Asian rice prices eased this week after the Philippine tenders ended, having gone up more than 21 percent last month from 2009 lows, when Manila held three import tenders for 600,000 tonnes in a span of three weeks.
Besides tenders, the Philippines also has the option to import rice via government-to-government arrangements, the last one bein done last year with Vietnam, for 1.5 million tonnes.
Manila has offered to buy 370,000 tonnes of rice a year tariff-free from Thailand in exchange for refusing to cut rice duty fully under a regional trade agreement, according to Thailand's commerce minister on Thursday.
The NFA said it bought 450,000 tonnes of paddy from local farmers in 2009, less than half of its target of 1.05 million tonnes, because of the destruction caused by the storms.
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The country’s gross international reserves (GIR) level rose to a record-high of US$45.0 billion as of end-December 2009, higher by US$0.8 billion than the previous month’s level of US$44.2 billion, and by US$7.4 billion than the end-2008 GIR of US$37.6 billion, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. announced today.
The substantial accumulation of reserves over the 12-month period was due mainly to inflows from the net foreign exchange operations of the BSP and income from its investments abroad, deposits by the National Government (NG) and the Power Sector Assets and Liabilities Management Corporation (PSALM) of proceeds from their bond issues and other foreign borrowings, as well as revaluation gains on the BSP’s gold holdings on account of the increase in the price of gold in the international market during the year. Also contributing to the higher year-end GIR level were the allocations of Special Drawing Rights (SDRs) which were made available by the International Monetary Fund (IMF) to its member countries, including the Philippines, in August and September 2009 to boost reserves and provide liquidity to the global financial system. These receipts were in turn offset by outflows arising mainly from payments of maturing foreign currency-denominated obligations of the NG and the BSP.
The preliminary end-December 2009 GIR level could cover 9.1 months of imports of goods and payments of services and income. The year-end level was also equivalent to 9.5 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.1
Net international reserves (NIR), which include revaluation of reserve assets and reserve-related liabilities, likewise rose to US$45.0 billion as of end-December 2009, US$9.0 billion higher than the end-2008 NIR level of US$36.0 billion. NIR refers to the difference between the BSP’s GIR and total short-term liabilities.
1 Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
By Fr. Gregory D. Gaston, SThD
Philippine Daily Inquirerhttp://services.inquirer.net/mobile/10/01/07/html_output/xmlhtml/20100102-245180-xml.html
“REMEMBER the population bomb? The new threat to the planet is not too many people but too few,” Michael Meyer reports on “Birth Dearth” (in Newsweek, Sept. 27, 2004). He continues: “The world’s population will continue to grow – from today’s 6.4 billion to around 9 billion in 2050. But after that, it will go sharply into decline. Indeed, a phenomenon that we’re destined to learn much more about – depopulation – has already begun in a number of countries.”
In general, a total fertility rate (TFR or children per woman) of 2.1 is necessary to replace a country’s population. The UN Population Division (UNPD) states, “The primary consequence of fertility decline, especially if combined with increases in life expectancy, is population ageing. It adds, “Globally, the number of persons aged 60 years or over is expected almost to triple” between 2005 and 2050.
Population controllers never highlight population ageing and decline. In countries where these phenomena happen today, a huge number of elderly have to be supported by proportionally fewer working people. The pension fund and the social security system are overburdened. The local labor force grow older and less efficient, hence they need immigrants.
Having fewer and older people means a smaller market, especially for certain sectors such as baby food, clothing, vaccines and certain other medicines, sports facilities, office equipment, education, etc. –products and services the elderly employ less. More countries will soon need more coffins than cradles.
Below replacement levels
A population with an above-replacement TFR (that is, with 2.1 or more children per woman) will have a pyramid-shaped “population pyramid.” In this scenario, the economically active persons support their children and a small group of elderly dependents.
If a country’s TFR goes below replacement level, the wide bases of the pyramid are replaced by narrower bases each year, reflecting the fewer children born each year.
Continued below-replacement TFR will lead to a diamond-shaped figure.
By this time the economically active persons will have to support a relatively few children and a rapidly increasing number of elderly.
This condition contributes to the present economic boom of rich countries, since the workers will get to keep a big share of their earnings, instead of spending them for the needs of children and the elderly.
This is the situation that population controllers want us to foresee: They explain that the Philippines will become well-off when it reaches this stage. But they never explain what will happen beyond this stage, which, to say the least, is a disaster.
If the country’s TFR remains below replacement levels, the diamond-shaped population pyramid will become shaped like a toy top.
If the trend continues, the country will end up having an inverted population pyramid, with an extremely aged and shrinking population.
Because of an elderly and forthcoming collapsing population, Dr. Joseph Chamie, former UNPD director, said to the Population Association of America that governments were “adopting polices... to increase their child bearing,” including restricting or limiting contraception [and] abortion, match making, conducting public-relation campaigns for marriage, childbearing and parenthood, and giving out cash bonus for the birth of a child.
They have not succeeded so far. But if ever they do succeed in increasing birthrates, their population “pyramid” will acquire the shape of an hourglass.
In this scenario, their workers will have to care not only for their big population of elderly dependents, but also for the increasingly big batches of children they want to have, the young dependents.
This will mean a double economic burden for them. Hence, these countries will soon be in a serious predicament: Continued economic woes and the nation’s extinction if they don’t produce more children and doubled economic woes if they do.
They hope to return to the scenario they were in 50 years ago: To have many babies who would eventually replace the work force, and in turn care for both the young and the elderly dependents. That is, they seek a normal population pyramid, shaped like a real pyramid, with a wide base and a narrow tip, and not like a diamond, a toy top, an inverted pyramid, or an hourglass.
In short, they want to revert to the type of pyramid that the Philippines still has – a pyramid that it will soon lose, as its TFR continues to decline. Within two decades, our country will fall into the same trap where ageing countries find themselves in and want to escape from right now, a TFR below the 2.1 replacement level.
The UNPD figures indicate that it is not an exaggeration to say that as early as now the Philippine TFR is already dangerously low.
Whereas in the early 1970s the average Filipina had six children, today she has around three, and in another 20 years, only two.
Shortly after 2020, the Philippine TFR will sink below its specific replacement level of around 2.29 (higher than the usual 2.1 because of higher infant mortality and other factors).
It will be too late and useless to wait for the TFR to go below replacement level and then try to raise it up again. The only solution would be to try to prevent its further decline today – an effort that will probably not succeed within a few decades, but will hopefully at least lessen the impact of an ageing population. If approved, the bills promoting population control will certainly plunge the Philippine TFR further down.
The Philippine population pyramids of 2000, 2025 and 2050 (from the US Census Bureau website) reflect the TFR’s downward trend.
We can no longer sit back, relax and think of “just crossing the bridge when we get there,” because we have already reached the bridge. At the rate its TFR is declining, the Philippines will, within 20 years, join the other countries that have fallen into the river. It will be a point of no return, or at least, of extremely difficult return. Why go there in the first place?
It has to be stressed that the Philippine TFR will probably reach below replacement levels within two decades even without additional population control efforts.
Filipinos now marry later in life, marital unions have become less stable, emigration to urban centers makes rearing children more difficult, emigration to other countries is on the rise (physically subtracting members from the country, especially those of reproductive age, and reducing the number of children those left behind beget), decisions on how to spend money have left having more children out, and the mass media greatly influence spouses to have few children.
Countries that were already rich 30 to 40 years ago when their TFRs started to decline and are now ageing encounter extreme difficulty in solving their economic problems.
Their efforts to encourage their citizens to produce more children have not yielded acceptable results after a decade. They depend on immigration to maintain their population growth.
The Philippines is not a rich country and may or may not be rich within 50 years. How will it support its ageing population? Will it also invite workers from other countries to replace its dwindling workforce? Will it also pay mothers for each child born? Impossible.
Even if it becomes rich by then, it will have to face the same problems rich countries face now and will have to tell the people to raise more children.
Graphically speaking, we cannot afford to have in the future a population pyramid like the rich countries’ and then, like them, wish to regain the population pyramid we have now.
Population control has to be ruled out as a quick-fix solution to poverty. This in no way means telling the people to have as many children as they can, to uncontrollably “go forth and multiply” (as some erroneously claim the Church teaches).
Rather, parents should be guided and supported to attain the number of children they can generously and responsibly raise and educate. For some spouses, this means having one child or two and for others, 5, 10, 12, or in some cases, 15 or even more. If they could really manage to properly care for them, why not?
Neither the government nor the Church may compel, instruct or encourage spouses to raise a specified number of children, as what population control programs definitely try to do. Rather, the government and the Church should form and guide the people to reflect on their actual circumstances and to freely, generously and responsibly decide whether or not to have another child for the time being or indefinitely.
Any economic, social or political policy proposed to solve poverty should take advantage of, rather than suppress, our abundant human resources. As Dr. Gary Becker, 1992 Nobel Prize winner in economic science, says, “human capital,” which refers to the skills, education, health and training of individuals, comprises around 80 percent of the wealth of advanced countries and hence “can be neglected [only] at a country’s peril.”
Any solution to poverty, furthermore, has to take into account, support and promote our closely knit family ties, the time and dedication parents give to their children, the care children and extended families give to the elderly whom we truly love, the moral principles and holistic training children receive from their parents and all the other values that the Filipino family has until now maintained, in spite of the pressures exerted upon it by secularism.
The contribution to the national economy of these services and values that find their dynamism within the family is impossible to calculate, but they provide a key – the most important one – to good governance in the public and private sectors, a condition sine qua non to attain stability in society, reach economic development and diminish poverty.
(Gregory Gaston is a priest of the Archdiocese of Manila, professor and former dean of the Graduate School of Theology of San Carlos Seminary in Makati. He holds a doctorate in sacred theology. He presented this topic at the Society of Catholic Social Scientists’ annual meeting at the University of Mississippi School of Law on Oct. 31, 2009. This article is excerpted from “Familia et Vita” (2007), the Quarterly Review of the Pontifical Council for the Family [full text at www.safe.ph].)
Thursday, 7 January 2010
By ELENA L. ABEN
In recognition of her efforts in strengthening the bilateral defense ties between the United States and the Philippines, the Armed Forces (AFP) led by its Chief of Staff, Gen. Victor Ibrado on Wednesday paid tribute to outgoing American Ambassador Kristie Kenney in a testimonial parade held at the AFP headquarters in Camp Aguinaldo.
A testimonial parade is normally given only to retiring military officials and visiting dignitaries and heads of states.
Kenney, described as “one of the best ambassadors the Philippines has ever had,” was an exception because of the extraordinary efforts she has made for the country and for transforming the high culture of diplomacy into a hands-on diplomacy and by directly reaching out to the Filipinos.
The AFP also gave a send-off gift to the Ambassador, which Ibrado called as the “Philippine luck” noting that quite a number of American envoys who served in Manila were subsequently promoted to higher positions.
In his speech, the AFP chief noted that as global insurgency, climate change, and problems in the developing world have spawned increasing multilateralism, the challenge confronting nations remain in how to maximize bilateral partnerships to their fullest potential for the mutual benefit of all.
“We are enhancing our defense capabilities in the numerous combined training, exercises and intelligence exchange. The United States is also assisting the Philippines in its military education and equipment requirements, as well as in the government’s socio-economic development program especially in Southern Philippines,” Ibrado said, adding that the US also benefited from its deployment in Mindanao, “gaining valuable operational lessons from its deployment in Mindanao, gaining valuable operational lessons from its Philippine counterparts.”
Ibrado said Kenney, America’s first woman envoy to the Philippines, was being honored for being one of the principal catalysts of the transformed alliance between the two countries.
Outside the Box
IT is important to clearly, as completely as possible, understand the situation in the world’s most important economy.
It is important to understand what is happening to that economy, to understand what the US government policy is, and to understand why the economic polices of the last two years have been and will continue to be an unqualified failure.
The US banking system came to disaster because of bad assets. A portion of those assets were loans for properties, and those loans became nonperforming as housing prices dropped and loan defaults rose.
In 2008 the US government pumped nearly $800 billion into the banking sector through basically buying shares and ownership of the banks. The theory behind this move was that, with a massive infusion of capital to offset the nonperforming loan portfolios, the banks would then loan out money to worthy creditors who would spend and spend, and thereby stimulate the overall economy.
The government, in effect, bought many of the bad housing loans from the banks, hoping to make it more attractive for the banks to loan to home buyers. The hope was that this intense stimulation of the economy would, in turn, reach quickly into the property sector with renewed buying and renewed appreciation of houses, thereby canceling out a good portion of the nonperforming loans.
This did not happen. Here is why.
The housing industry is so vitally important to the US economy, accounting for at least 20 percent of their gross domestic product. Stimulate housing; stimulate the economy.
The $800 billion accomplished almost nothing at all to help the economy. It did, however, put a tremendous amount of cash into the hands of the banks.
Why was this program a failure at economic stimulation?
In every country, there is a limit to the number of people who can afford to buy a house under any condition. The percentage of home ownership in the US had peaked prior to the collapse of home prices. In a real sense, there was virtually no one left to borrow money to buy a house in late 2008. No property recovery; no economic recovery.
Another $1.2 trillion was put into the banking sector in 2009 through continued buyouts, bailouts and takeovers of failed banks. Here again, one would think that all this money would show some economic results. After all, in the 1980s 700 banking institutions, the savings and loan companies, were closed and the government took over the bad loans. The loans were defaulted upon, the government took any recoverable assets, and then sold them at a deep discount to financially stable companies and individuals. Crisis solved very quickly, all things considered.
But in our current case, the bad loans were never completely taken off the banks’ books. Take note of this very well: because of pressure on the US government, the banks were and are allowed to carry the loans on their books at higher values than they are realistically worth. A $100,000 loan on a house now worth only $50,000 is not a loan worth $100,000. But the accounting magic makes the banks seem financially sound.
The housing-loan crisis is only the tip of the iceberg when it comes to bad bank assets. US banks are carrying hundreds of billions of dollars of worthless assets known as derivative contracts. Derivatives are complex and varied but basically they are “bets” that the bank made on the rise in price of an asset, primarily real estate and real-estate loans.
The banks are allowed here again to carry these derivative “bets” on their books at a totally unrealistic value.
It works something like this.
Imagine last month, I let you “bet” on Mayon Volcano erupting. You gave me P10 and whenever Mayon blows off, you get P100. A month ago, that betting slip was worth at least P10, since someone else would probably be willing to buy it from you and it might be worth P100.
What is it worth today? Yes, maybe someday Mayon will erupt and you get P100. But I doubt that betting slip could be sold today for even P10.
The banks are being allowed to keep their “betting slips” valued on their books at near the purchase price even though no one in their right mind would pay them full price, if anything at all, for their derivative contracts.
If all the nonperforming loans and all the derivative contracts were carried on the banks’ books at what they are actually worth, the US banking system would completely fail.
The US government knows this as a fact.
The government believed that more lending, coupled with more economic growth, would eventually put the banks in a position to be able to write off all those bad assets.
The monetary base of the US has increased 250 percent since 2007. The monetary base is the amount of actual currency, paper and coins. That should have a massive stimulus effect on economic growth, immediate and broad based. A very large amount of this money was coursed through the banking system.
However, the money in circulation, the “money supply,” has gone up only 26 percent since 2007.
It is the money supply that can stimulate the economy, since that is the money that is actually being used in the economy.
At least $1 trillion of newly printed dollars, plus another $1.2 trillion from the budget deficit, has disappeared at least in the sense of never reaching the street-level economy.
Where has all this money destined for economic stimulation gone to, and why?
Come back next Tuesday.
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Wednesday, 6 January 2010
THERE are only nine session days left for this Congress to finish its work, and by various estimates, some 20 priority bills left to enact.
When lawmakers return to both chambers this month to complete their tasks, most of them will be quite distracted by the political fever, especially if they’re running in the May elections or are active in the campaign of a relative, friend or party mate who’s running.
Therefore, with such limited time, the leadership of both chambers should be sure to limit the agenda only to the most essential pieces of legislation, i.e., those deemed indispensable to reform, to human development and social justice, and to sustainable growth. That means eschewing completely any effort to push the envelop, even by an inch, closer to facilitating Charter change, say, by a special session in February as floated by some quarters; and shelving any bill that not only is irrelevant to the three thrusts we cited above, but could surely waste precious legislative time in pointless debate.
In the latter category, one of the first that comes to mind is the controversial reproductive-health bill which has been elaborately titled “An Act Providing for a National Policy on Reproductive Health, Responsible Parenthood and Population Development and for Other Purposes,” or House Bill (HB) 5043.
We cite this bill because of reports floating around that it may yet be resurrected in the final stretch of this Congress’s time. To those tempted to do so, please perish the thought.
The avid backers of this bill as crafted have conveniently framed the debates as simply one between superstition and science—or between a predominant Catholic Church that supposedly seeks to impose its beliefs on the entire population; and what is projected as the rock-solid, science-based argument that having more children is injurious to the national welfare per se because it leaves so many poor people scrambling for such tiny resources.
Last weekend, some Catholic priests delivering homilies on the Gospel about Herod’s order to massacre all innocents below age 2, to eliminate a potential rival in a messiah born somewhere, cited the alarming figures of illegal abortion in the country. It’s a figure that those championing artificial birth control often cite as precisely their reason for demanding that the state make available, with taxpayer money, the complete menu of birth-control devices that supposedly would cut down unwanted pregnancies, ergo, reduce abortion incidence.
Amid all these attempts at simplistically framing the arguments for and against HB 5043, it is well to go back to the scholarly, compelling paper written by Makati City Rep. Teodoro Locsin Jr., which this paper ran as a five-part series last year, titled “Culling Fields.”
There, Locsin dissected every item in the bill and concluded that it was not so much meant to boost reproductive health as to use massive resources of a cash-strapped state to promote just one school of population policy, i.e., artificial birth control, and thus achieve exactly what its advocates accuse the Catholic Church of: trying to promote only natural family planning to the exclusion of others.
The difference is stark, though: The Catholic Church uses its own set of carrots and sticks to win obedience to its set of beliefs, but not Juan’s money; the bill, contrary to the constitutional mandate to allow free choice while proscribing abortion, applies taxpayer money to further its own bias, throwing in huge sums for the humongous global business of the makers of artificial birth-control devices.
Thus would, argued the Locsin paper, the bill’s advocates attain several things in one blow: one, boost the business of the device makers, some of which, being drug manufacturers as well, were hurt by the impact of legislation in Third World countries that pushed cheaper medicine; two, push the defeatist agenda of those resisting genuine social justice by perpetuating the notion that poverty eradication is attained by “eradicating the poor,” as one newsroom wag put it; three, single out for a knockdown just one institution, the Catholic Church.
Achieving these three things wouldn’t do this Congress proud, especially not when it only has limited time to deal with so much backlog. In the end, it should just occupy itself with those that matter most.
To operate, manage and maintain toll road
By BERNIE CAHILES-MAGKILAT
Pangilinan-led Manila North Tollways Corp. and Northlink Toll Management Inc., a joint venture between San Miguel Corp. and STAR Tollways Corp., are vying for the 33 and half-year contract to operate, manage and maintain Subic-Clark-Tarlac Expressway.
Rolando C. Manalo, acting head for the technical working group for SCTEX of the Bases Conversion Development Authority, said the two beat Tuesday’s deadline, (Jan. 5), for submission of bid documents out of the original six contenders.
The other four interested bidders that did not show up include the Citra Group, San Miguel Corporation, Amicus Holdings, Inc. and IL&FS Transportation Networks Ltd.
MNTC, which is led by businessman Manny Pangilinan of Metro Pacific Investments Corp., is the current operator of the North Luzon Expressway.
This would be the first for San Miguel to operate a tollway if it wins the SCTEX contract over MNTC. STAR Tollways, on the other hand, is the current operator of the Southern Tagalog Arterial Road.
Manalo said that under the revised schedule, the Issuance of Notice of Award would be this January 22. The subsequent contract signing and Issuance of Notice to Proceed will be on February 22, 2010.
On November 16, 2009, BCDA opened the SCTEX data room at the Bonifacio Technology Center in Taguig City, following the bidders request that they be provided all the information needed to come up with an accurate and realistic offer.
Five out of six bidders have visited the place and gathered such relevant data as the actual traffic volume and revenue, traffic study and operations manual. A separate data room for engineering plans, drawings and technical specifications is also available at the BCDA construction and engineering project management office in Clark.
Both the BCDA Taguig and Clark SCTEX data rooms are open to the bidders until December 23, 2009, except Sundays and holidays.
Under the SCTEX privatization program, the winning bidder will enter into a lease or concession agreement with BCDA to manage, operate and maintain the SCTEX on “as is, where is,” basis for a period of 33 and a half years until 2043.
The winning bidder will be responsible for the operational funding requirements in running the country’s longest tollway, including periodic maintenance and emergency works, which will be covered by a performance security.
The private sector partner will also arrange for the insurance of the 93.77-kilometer toll road.
BCDA will receive a semi-annual lease/concession fee from the winning bidder, amounting to either: the peso equivalent of yen-dominated JBIC/JICA loan debt servicing as well as all financing charges payable to BCDA 10 days prior to its due dates secured by a rolling five-year letter of credit; or twenty percent of audited gross revenues whichever is higher.
By ANJO PEREZ
A Filipino-American girl who overcame physical limitations to become the very first pilot without arms is in the country, carrying with her the hope of inspiring her “kababayans.”
Jessica Cox, a 26-year-old native of Arizona, gained fame in the United States after she earned her wings in 2008 and was given her pilot’s license by the US Federal Aviation Administration despite having no arms.
Jessica was born without arms and has used her feet in doing just about anything.
She arrived last Monday aboard a Hawaiian Airlines flight together with her parents Inez and Bill and eldest brother Jason.
After earning her wings and proving that she can achieve great things even with her physical limitations, Jessica became a motivational speaker and began inspiring people around the world.
Jessica is in the country for two weeks to visit relatives in Eastern Samar, her mom’s hometown. She is also scheduled for several television appearances while in the country.
“I would like to inspire and encourage Filipinos to do more things,” Jessica said. “I want them to realize, ‘Hey, if she can do a lot of things without arms, then I can do so much more with my life.”
Jessica’s mother exposed her to all kinds of normal activities since she was young. Jessica took swimming lessons, gymnastics, tap dancing and even Tae Kwon-Do where she earned a black belt.
“I don’t care what other people think; I just let her have a normal life,” Inez said.
Recounting how she got into flying, Jessica revealed how she feared it at first.
“Flying was my greatest fear in life, and therefore I was motivated to conquer my fear by flying a plane. It is one of my greatest achievements in life and I really worked hard for it,” she said.
Jessica said she spent three years to log in 89 flying hours instead of the usual six-month training to acquire her license. She was certified by the FAA as a certified Sport Pilot and was given her license after her successful solo flight on October 10, 2008.
“I hope my story inspires a lot of Filipinos. To inspire the people that have the same roots as I have is a great honor for me. The only limitations in our lives are the ones that we create,” she said.
MANILA, Dec. 5 (PNA) – The average rate of Philippines three-year Treasury bond (T-bond) rose to 5.27 percent on Tuesday's auction, higher than the 4.91 percent posted on Sept. 15, 2009.
The highest rate stood at 5.37 percent while the lowest was at five percent.
Investors swamped the auction after total tenders reached more than two-fold at P18.325 billion.
The auction committee, on the other hand, awarded P8.5 billion as offered.
Finance Undersecretary Gil Beltran told reporters after the auction that the country had “a very stable market” as proven by investors’ confidence to get more debt papers.
He echoed statements of economists and governments worldwide that the “world economy is on its way to recovery.”
“Many investors are interested in the Philippines because of its stable policies,” Beltran said.
Beltran also quoted ratings agency Standard and Poors (S&P) as saying that "...higher deficit won’t affect credit rating of the country (Philippines).”
The government already breached its P250 billion budget deficit target for 2009 last October after it reached P266.1 billion. Last November, the deficit reached P272.5 billion.
Finance Secretary Margarito Teves earlier said the government was now looking at P300 billion deficit for 2009 after the target had been breached. (PNA)
Tuesday, 5 January 2010
B. V. Buco, Jr.
THE GOVERNMENT plans to identify at least P100 billion from the 2010 budget and other sources to be used for continued stimulus funding this year, the country’s economic planning chief said yesterday.
Specifically, Acting National Economic Development Authority (NEDA) Director General Augusto B. Santos told reporters yesterday that the government plans to set aside "more than P100 billion but less than P330 billion" in stimulus spending this year.
"World Bank Chief Economist Justin Li says governments should continue stimulus spending until 2012-2013...We do not want to remove stimulus [this year] but will continue it [although] at a reduced rate. It will be less than P330 billion but more than P100 billion," he said.
Mr. Santos said that part of this year’s fiscal stimulus, this time called the Reloading Economic Acceleration Plan (REAP), will be the planned P100-billion private-public sector infrastructure fund for 2009 that failed to materialize due to these sectors’ failure to agree on projects to be funded.
"It’s [P100-billion public-private sector fund] not totally scrapped," Mr. Santos said. "The president authorized fund raising by the National Development Co. (NDC) by selling bonds to the tune of P50 billion which will be used for that."
President Gloria Macapagal-Arroyo in August last year signed EO 824, authorizing NDC to issue P50 billion worth of "infrastructure bonds." It was eventually decided, however, that proceeds from the bond issue, which was originally earmarked for new infrastructure, will be used to fund rebuilding of public structures damaged or destroyed by storms and Ondoy and Pepeng in the last quarter of 2009.
"Basically, REAP is already part of [the proposed P1.54-trillion] 2010 national budget. As soon as the President signs it, the NPPS (National Planning and Policy Staff) can calculate the [exact] amount of [this year’s] fiscal stimulus," Mr. Santos added.
As regards last year’s fiscal stimulus, how much was actually spent on infrastructure has yet to be determined as various implementing agencies have yet to submit reports to the Department of Budget and Management (DBM), the NEDA chief said. "There’s lag time of two months from December 31. We still need to get the report from the DBM."
University of the Philippines economist Benjamin E. Diokno said via e-mail yesterday that "the real fiscal stimulus program last year was not P330 billion. It included items that are not real stimulus -- for example, the private-public partnership fund of about P100 billion. From the latter, very little was actually released."
A. B. Nepomuceno
DOMESTIC AIRLINE passenger traffic rose by a faster 20% during the Christmas and New Year holidays, driven by lower airfare and increased frequency of flights, according to the Manila International Airport Authority (MIAA).
The preliminary figure for holiday airline travel for 2009 was faster than the 15% growth recorded during the 2008 holidays, the MIAA chief said.
Driven by promos
"Passenger traffic during the holiday season was higher than last year. For domestic travel, I think there was a 20% increment in the number of Filipinos who traveled during the holiday season," MIAA General Manager Alfonso G. Cusi said in an interview.
"Promos of different airlines undoubtedly have affected the appetite of Filipinos to travel," he added.
He pointed out, however, that estimates for international airline passenger traffic have yet to be drawn up.
Aside from lower seat rates for domestic airline travel, "another factor is the increase in number of flights of airlines which accommodated more passengers," Mr. Cusi explained.
Major carriers, Cebu Pacific and Philippine Airlines could not be reached yesterday to confirm his observations.
Aboitiz Transport System Corp’s Superferry, the country’s largest interisland water transport operator, noted increased passenger traffic despite a government order to ground most of its fleet.
"As expected, our ships were full-bound [sic] starting Dec. 16; this is the same scenario as last year," Superferry assistant vice-president for sales and marketing Andrew D. Deyto said in a text message yesterday.
"The only difference is that we had two ships on dry dock this year."
The government had ordered the grounding of much of Aboitiz Transport’s fleet in September last year in order to give way to an investigation of the sinking of Superferry 9 and an audit of all other vessels.
The Maritime Industry Authority has already allowed seven Superferry vessels that passed inspections to accept passengers and cargo.
Less packaged tours
Philippine Travel Agencies Association (PTAA) President Ma. Paz R. Alberto, however, noted fewer take-up of packaged tours this year.
"Though flights were very full this holiday season, I can still say that there was a slight decrease in traveling Filipinos that availed packages, meaning air fare plus board and lodging," Ms. Alberto said in a phone interview yesterday.
This decrease, which she did not elaborate on, may be attributed to the seasonal increase in prices of accommodations.
"Resorts as well as hotels are charging much higher than their usual rates," she explained. -- D.
Outside the Box
The Christmas tree has been taken down and the colorful lights packed away for another year. For me, though, the holiday season is not officially over until the Christmas hams at the supermarkets are selling at “Buy 1, Take 1”. That is about the same time that I expect to see the Philippine stock market begin booming again, building on 2009 gains.
It was wonderful for me to see the stock market down yesterday, not only to counter all the experts in yesterday’s newspaper hyping you to buy in now, as they sell to raise cash. But also because so many individual issues are ready to explode once the weak players get out. As last year’s market rally left 80 percent of investors sitting with their mouths open, wondering what happened and how they missed the rally, this year is going to be more of the same only better.
What issues should you consider buying? Ask your stock adviser for a list of those shares that are the most below the 2009 high price. Eliminate the ones that rose or fell significantly based on one-time news or continuing confusion. In fact, those issues that grabbed the business headlines in 2009 probably should be at the bottom of your To-Buy list. Choose first those companies in industries that were flat in 2009. Property is No.1 on that list. Then ask your advisor for the projected Price Earnings Ratio for 2010. Pick the most attractive here, and you will now have a list of 10 or so buy-and-hold issues that will be up by at least 30 percent before 2011.
You want more money in 2010? Then buy more stocks.
2010 is going to be the year of “much more,” in many different ways.
I think we are going to see more new faces around the country this year as ten of thousands of balikbayan decide they have had enough of the “Great Recession” in the US and come home where their retirement dollars will actually be able to have some purchasing power. The last 18 months have been a disaster for those balikbayan Filipinos who are in or near retirement. The majority of Filipinos in the US populate those areas, California, Florida, Chicago, New Jersey/New York, that have been hit hardest by the economic meltdown. Most Filipinos are not as ignorant and naïve as their naïve-born American counterparts. They are not foolish enough to believe all the propaganda coming from the Obama administration that the economy is recovering. These repatriated Filipinos are going to quickly bring millions and millions of dollars into the Philippines during the next 18 months.
There will be much more outsourcing to the Philippines in 2010. The expansion plans that are being implemented to open new call centers around the country are moving forward as quickly as possible. One substantial player will add some 8,000 new employees by the middle of the year, simply because they have clients waiting in line to do business in the Philippines. These large US companies cannot afford to employ Americans to do a job that Filipinos can do better and more economically.
Anyone who characterizes this industry as not being beneficial for the country is either a fool or an economic traitor. Anyone who forecasts a slowdown for this sector is either ignorant or blind. There has never been a self-sustaining industry like this in the Philippines employing the numbers that it does, since independence. Foreign companies are now outsourcing to survive. But these jobs will never return to the West and when economic recovery does come, the industry growth rate will rocket up from where it is today. Much more foreign-currency inflows for this industry will mark 2010.
More is the forecast of overseas Filipino remittances also. The experts are calling for a 6-percent to 8-percent increase based on the global economic recovery. Wrong. In fact, wrong on both points. The Western economic recovery is a fantasy, since nothing can recover without the US economy recovering, and my growth estimate for remittances is 10 percent to 12 percent. More money coming in means more profits and excess cash for local companies and here also, we will see more.
Capital expenditures and business expansion in 2009 were minimal in the sense that companies spent just enough to remain stable without actually spending for growth. Local companies are sitting on a mountain of liquid funds and, in 2010, we will see more local business expanding.
A business cannot afford to miss opportunities as the clock is always ticking, and missed opportunities cannot be recaptured. The consumer- spending slowdown in the first half, particularly the first quarter of 2009, scared everyone. As a result, expansion plans were unfortunately put on the back burner. Now 2010 will be a catch-up year to get these projects to open as quickly as possible. Look at Shoemart. SM’s food retail group of SM Hypermarkets, Supermarkets, as well as Save More and Makro outlets, will open as many as 30 locations nationwide in 2010.
Hopefully, more common sense will prevail in 2010. Let us pray that the electorate will choose wisely and vote as if their future depended on it, which, of course, is true. That would be the best thing that could happen in 2010.
Erik de la Cruz
THE peso shot higher on Monday, rallying back into the 45 territory on the first trading day of 2010 as emerging Asian currencies strengthened against the US dollar on expectations for a sustained recovery in exports this year, traders said.
The local unit was also given a boost by remittance inflows during the four-day New Year trading break, they said.
Advancing 0.5 percent from its end-2009 level of 46.20 against the dollar, the peso closed at 45.95, near the day’s high of 45.93. A total of $991.65 million changed hands on the trading platform of the Philippine Dealing & Exchange Corp., a much bigger volume compared with the $604.52-million turnover on the last trading day of 2009.
Although it hit an intraday high of 45.855 on December 8, it was the first time since August 2008 for the peso to close at the 45 level.
Traders at Metropolitan Bank & Trust Co. initially saw the dollar supported at 46.00 but for this week they set a trading range of 45.80 and 46.20.
Emmanuel Ng, a currency strategist in Singapore at OCBC Bank, said the start of the year usually sees Asian data releases coming in “thick and fast.” Thus, he said “markets will have a steady stream of data to chew on, especially with respect to the economic recovery and expectations toward Asian central bank interventions.”
Emerging markets, including those in Asia, are widely expected to lead the global recovery this year. Expectations for a rebound in developed markets also bring hope for an upturn for Asian exports this year.
“Near term we think that further confirmation of the continued improvement in Asian economic numbers will see positive sentiment toward Asian currencies accumulating,” Ng said in a note.
But this week all eyes will also be glued on fresh US data, particularly the unemployment report that will come out on Friday, traders said.
Markets “will be keen to see if there will be a follow-through after last month’s upside surprise in the nonfarm payrolls data,” said Philip Wee, a currency strategist at DBS Bank. Last month’s data helped propel the dollar as markets speculated that with a recovering US economy, the Federal Reserve was moving closer to withdrawing stimulus measures and raising interest rates.
“The dollar bulls will need another upside surprise to extend the dollar’s recovery,” Wee said. “Similarly, there is scope for the dollar to give back its gains should the number disappoint instead.”
He said the unemployment report on Friday was expected to show a rise to 9.9 percent in December from 9.8 percent in the previous month, “confirming the widely held view that the pause in the rising trend in unemployment in October was temporary.”
OCBC’s Ng said he remained “wary of a market trading prematurely on Fed rate hike prospects.”
THE improving global economic outlook and the unrelenting industry of millions of overseas Filipinos were seen on Monday to boost the country’s balance-of-payments (BOP) surplus beyond $5 billion in 2009.
According to Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., the latest numbers indicate the original BOP forecast of just under $5 billion will be exceeded instead.
“There is a good chance the BOP surplus will exceed $5 billion in 2009,” he told reporters.
The 11-month BOP surplus stood at only $4.08 billion, an indication of an economy that generated far more foreign-exchange earnings than it paid during the period.
According to Tetangco, the higher-than-expected surplus will draw strength from the business-process outsourcing sector, which continues to expand each month.
It should also draw strength from OFW remittances that as of end-October already grew by 4.5 percent to $14.32 billion.
This was the same sector that many experts, including those from the International Monetary Fund/World Bank Group, predicted would contract in 2009 by 20 percent as a result of the global financial downturn.
That OFW remittances instead grew in excess of 4 percent later validated an earlier BSP forecast that the foreign-exchange earnings of millions of overseas Filipinos should prove resilient, Tetangco said.
He also said the gross international reserves, which relates to the country’s capacity to pay for imports and pay for maturing external debt, should also exceed its forecast goal in 2009.
Tetangco had said the GIR in 2009 should end the year between $44.5 billion up to $45 billion.
On Monday he told reporters this was likely also to exceed $45 billion.
As for this year, the GIR was seen to range from $47 billion up to $48 billion.
“We expect the external liquidity position of the government to further improve with the projected balance of payments surplus last year,” Tetangco said.
The GIR gets a boost from the borrowing activities of both the National Government, the BSP and even the private sector.
The inward flow of foreign investments also helps fortify its level.
More important, the GIR level at present is sufficient to pay for more than eight months worth of imports or way past the global norm of just five months.
Monday, 4 January 2010
If you build it, they will come.
Almost four million tourists, lured by better infrastructure, a liberalized airline industry and improved facilities, flocked to the Philippines in the first semester of 2009 alone. Only half of that number came in the whole 2001.
The country will thus have to forgive President Gloria Macapagal-Arroyo for taking an almost inordinate pride in the growth of the tourism industry. After all, she has always believed that tourism is a major creator of jobs and livelihood opportunities.
As early as her first State of the Nation Address in 2001, the President let on the country in her field of dreams. She said the Philippines, with its natural wonders and warmth of its people, has an edge over its neighbors. She added then that she would provide roads to those wonders and the means to take the tourists there. She also talked boldly about liberalizing the airline industry.
At that time, the world had known the Philippines only for Boracay, Palawan and Cebu.
Feeling a need to reintroduce the country to the world, the President ordered the Department of Tourism to find a way of increasing market share in the booming tourism industry of Southeast Asia. She insisted that the agency develop the Southeast and Far East Asian markets in addition to the traditional U.S. market.
The strategy has paid off. The biggest numbers of tourists now come from neighboring Asian countries, with Koreans topping the list for several years. Also impressive is the 500 percent growth since 2001 of tourists from China.
Domestic tourism also increased, along with foreign tourism due in part to the efforts of the government in partnership with the private sector to provide tourism infrastructure and facilities.
P555 BILLION WORTH OF INVESTMENT
From 2004 to August this year, P555 billion worth of investment went to the development of transportation, tourism eco-zones, accommodation and other related facilities. It is these investments that have enabled the country to increase its share in the Southeast Asian tourism industry.
Of course, the construction of roads, bridges, airports, and seaports, which falls under the President’s Super Regions Economic Strategy, was undertaken to spur and sustain growth primarily in industry and agriculture, but the tourism sector has benefited immensely from the ambitious infrastructure development program.
The liberalization of the airline industry has resulted in the opening of air routes to and from major tourist markets, including Incheon, Busan, Shanghai, Guangzhou, and Kaohsiung.
While national government created the infrastructure, the Department of Tourism escalated its tourism investment promotions, encouraging establishments to build more hotels and other facilities. A variety of financing schemes and a stronger pitch for tourism investments facilitated the building of new hotels and other facilities in favorite destinations and in up-and-coming tourist attractions.
With the rise in the number of tourist arrivals comes an increase in job opportunities. Employment in tourism and related industries accounts for almost 10 percent of total employment. The industry directly employs more than three million Filipinos now, up from one million it did in 2001.The industry has merely doubled but it has created three times the number of jobs.
TOURISM ACT CONSOLIDATES GAINS
The National Tourism Act of 2009 seeks to achieve what President Arroyo has long dreamed of since Day One of her presidency: to make the tourism industry an engine of growth.
Otherwise known as Republic Act (RA) 9593, the Act is designed to strengthen the strategic partnership between the government and the private sector.
Signed into law by the President in May, the Act reorganizes the Philippine Convention and Visitors Corporation (PCVC) into the Tourism Promotions Board (TPB), a corporate body responsible for the marketing and promotion of the country as a global tourism destination by highlighting its tourism products and services.
It also reorganizes the Philippine Tourism Authority (PTA) into the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), a body corporate mandated to designate, regulate and supervise tourism enterprise zones (TEZs) as well as develop, manage and supervise tourism projects in the country.
Meanwhile, the Duty Free Philippines (DFP) will become the Duty Free Philippines Corporation (DFPC), a body corporate mandated to operate the duty and tax-free merchandising system in the country.
The Act provides that the TPB and TIEZA will each have a capitalization of P250 million to be subscribed by the national government. It establishes "tourism enterprise zones" in strategic areas, including Cebu, Davao, Bohol, Laguna, Cavite, Boracay, Palawan and Iloilo, to lure foreign investors and tourists to visit places rich in history and culture.
AFP, MANNY T. UGALDE, RHAYDZ B. BARCIA AND ANGELO S. SAMONTE
Legazpi City. Disaster relief officials in the Philippines launched a massive clean-up on Sunday as tens of thousands of villagers began returning home after the restive Mayon volcano showed signs of calming down. Gov. Joey Salceda of Albay province, southeast of Manila where Mayon is located, said that he expected all 29 public schools converted into temporary shelters would reopen for classes today.
“What we are doing now is conducting damage assessment. We are on an early recovery stage,” Salceda told reporters. “We are cleaning up schools and classrooms so that classes can resume tomorrow [Monday].”
He said that fire trucks had been brought in to hose down sanitation facilities that were overwhelmed when more than 50,000 people were evacuated over the past three weeks for fear of a possible major eruption.
“It’s a massive clean up-operation,” he said.
Salceda, meanwhile, ordered the provincial social welfare department to distribute half sack of rice to each of the families who left the evacuation shelters on Saturday. On Sunday morning, at least 250 tons, or 5,000 bags of rice from World Food Program arrived at the Provincial Disaster Coordinating Council for distribution.
Exequiel Rieza, Albay’s information officer, said that the province spent about P24 million for the evacuees’ food supply for 16 days—about P1.5 million daily.
On the other hand, the 2,400 or so tourists who visited the province daily to get a closer look at Mayon reportedly spent P2.4 million a day.
Mayon began rumbling and spewing lava and ash in early December, leading authorities to declare a Level 4 alert out of a scale of 5, meaning that a major hazardous eruption was about to take place.
But Mayon has since shown signs it was calming down, and on Saturday the Philippine Institute of Volcanology and Seismology (Phivolcs) lowered the alert level to 3.
The provincial government said more than 46,000 people living some 7 to 8 kilometers from Mount Mayon, the country’s most active volcano, had been given the green light to return home.
But more than 3,000 others who live in a 6-kilometer zone will have to remain in evacuation centers.
“Right now we are not seeing a new rise of magma,” chief volcanologist Renato Solidum said in a radio interview.
Warning to locals
However, Solidum warned villagers returning to their farms on the foothills of Mayon to remain wary of lava flows or heavy rains that could dislodge volcanic debris from the slopes.
Resident volcanologist Ed Laguerta said that under alert Level 3, Mayon is still in danger of erupting and that the 6-kilometer permanent danger zone, as well as the 7- to 8-kilometer extended danger zone, should remain free from any human activity.
“We’re still closely watching the activity of Mayon Volcano, because based on the history Mayon has the habit of getting lull for a weeks or months before the explosive explosion,” he said.
Gov. Salceda said that about 900 families from within the 6-kilometer permanent danger zone and the extended danger zone on the south flank have not been allowed to return home yet.
He added that the evacuees were allowed to return home only temporarily until the alert is lowered to Level 2.
An August 2006 eruption caused no immediate deaths but the following December a passing typhoon unleashed an avalanche of volcanic mud from the mountain’s slopes that left 1,000 people dead.
The 2,460-meter Mayon has erupted 48 times in recorded history. In 1814, more than 1,200 people were killed when lava flows buried the town of Cagsawa.
Praise from Palace
Also on Sunday, Malacañang praised the Albay government for its handling of the Mayon situation.
Press Secretary Cerge Remonde said that the Provincial Disaster Coordinating Council (PDCC) of the province, headed by Gov. Salceda, lived up to expectations.
“We have always considered that the PDCC of Albay as one of the best and the most efficient in the country,” Remonde added. “And once again, the Albay PDCC has shown its capability to handle emergency situation like the threat of Mayon Volcanao eruption. We would like to congratulate Albay PDCC for that.”
JESSICA ANNE D. HERMOSA
LOCAL FIRMS are gearing up for further liberalization this year as the Philippines and 10 other economies in the region grant duty-free entry to more goods.
Under regional and bilateral trade pacts, Philippine tariffs on nearly all imports from five other Association of Southeast Asian Nations (ASEAN) members and China dropped to 0% as of Jan. 1, as did those levied on a number of products from Australia, New Zealand, Korea, and Japan.
The tariff cut round for 2010 will boost consumers’ purchasing power and make imported raw materials cheaper for manufacturers, industry groups told BusinessWorld, but may also hurt industries that can’t keep up with foreign competition.
Likely gainers this year include hog exporters, plastic and soap makers, and other manufacturers that use imported inputs, according to interviews with business leaders and previous reports. Philippine-based car assemblers and steel mills, meanwhile, were among those apprehensive.
"The usual vulnerable industries, those that are labor-intensive, will find they will have to compete with low-cost products coming in. Our domestic manufacturers must improve their products," Philippine Chamber of Commerce and Industry Chairman Emeritus Donald G. Dee said in a telephone interview.
"[But the deals] will help consumers because the cost of goods will be lower. These might indirectly help our members -- those in banking, real estate and telecommunications -- because it increases purchasing power," Makati Business Club Executive Director Alberto A. Lim said in a separate phone interview.
Exporters, meanwhile, are looking forward to increased access to other economies especially Japan and China, an industry group leader said. The two Asian giants accounted for 26.8% of 2008’s $49.026 billion in exports and ranked as the Philippines’ third and fourth largest markets behind the US and the EU.
"Any agreement we enter into should be positive for exports," Confederation of Philippine Exporters President Sergio R. Ortiz-Luis, Jr. said.
Under the ASEAN-China free trade deal, China should have removed tariffs on 90% of goods from the Philippines, Indonesia, Brunei, Malaysia, Singapore and Thailand (ASEAN-6) by Jan. 1.
Manila did the same through Executive Order 814 issued in July 2009 and added certain marine products, vegetables, fruits, edible oils, grains, liquor, textiles, garments, and building materials as among the imports granted duty-free entry this year.
For Japan, the Philippines is supposed to drop tariffs on imported cars and auto parts this year under the Japan-Philippines Economic Partnership Agreement but these have not budged as negotiations are stalled.
Both Japan and the Philippines are also to reduce other tariffs in line with annual commitments that will eventually eliminate 95% of duties by 2018.
Regional deals among ASEAN, Australia and New Zealand, and one between ASEAN and Korea likewise require a round of tariff cuts this year.
In contrast, tariff elimination among the ASEAN-6 under a separate deal, the ASEAN Trade in Goods Agreement (ATIGA), will be swifter.
Roughly 17% of the remaining tariff lines representing automotives and parts, certain fruits, vegetables, coffee beans, tobacco, spirits, processed meat, chemicals, fuel, as well as steel and plywood should now be at 0%.
Hog farmers, for instance, are looking forward to selling to Singapore this year, said Albert R. T. Lim, Jr., president of the National Federation of Hog Farmers.
But the Federation of Philippine Industries (FPI) was more apprehensive.
"We’re worried about ATIGA because [most tariffs] will be at zero already and we have more similar exports among ASEAN," said Mario Jose E. Sereno, head of the FPI’s international trade policy committee.
He conceded, however, that manufacturers might benefit from cheaper imported inputs and that firms are "exploring now which sources will yield cheaper freight costs."
Plastic and soap manufacturers, for instance, will get what they have earlier petitioned the Tariff Commission for: duty-free resins and acids.
Other manufacturers similarly expressed anxiety over this year’s tariff cuts.
"Japan is a very significant exporter of high-end steel products [like] tin plates, heavy plates, pipes, automotive-grade steel sheets... Thailand and Vietnam are [also] active in steel material exports but not yet in significant numbers," Arthur M. Florendo, president of Union Galvasteel Corp., said in an e-mail.
Groups representing other building materials -- cement and ceramic tiles -- also said in interviews that they were bracing for increased competition.
For her part, Chamber of Automotive Manufacturers of the Philippines, Inc. President Elizabeth H. Lee said in an e-mail: "ASEAN neighbors and Japan are significant car exporters not only to the Philippines but globally as well."
Ms. Lee noted that imports have been eating up more market share over the years. Local assemblers, she added, are counting on import bans on used vehicles and other measures favoring Philippine-made cars to cope.
Other industry groups meanwhile cited indirect benefits to their sectors.
The electronics industry is expected to lure more Japanese investors as the free trade deal makes foreign firms more comfortable with the Philippines, Semiconductors and Electronic Industries in the Philippines, Inc. Chairman Arthur J. Young, Jr. said.
Raul V. Fabella
It took 30 hours on a "superferry" to reach Bohol from Manila. Unlike our interisland transport that seems to have retrograded, however, Bohol appears in some hurry to the future. Once synonymous with a promenade into the past, you hear a lot more about Bohol these days. The province in general and Panglao Island is giving Boracay a run for its tourist money.
Bea Zobel’s missionary effort in its behalf is beginning to deliver a ringing harvest of delicately appointed spots to visit and savor. The Dauis Church chancery renovation and transformation has the clawmarks of high-minded discernment and solicitude. Smallish Amarella, easily a favorite of well-heeled family vacationers wanting privacy, fascinates with its manicured floral landscape, stunning panoramic view, and its celebration of local artistic talents. One will be hard put finding anywhere else in the Philippines the equal in delicacy of cuisine and elegance of ambiance on offer at Old Heidelberg Restaurant owned by resident German Hans Hoff and located in Baclayon town. Startler number one is the sudden apparition of Peacock Garden, a vast menagerie of manicured walks, coiffured mango trees and flowerbeds, and top-caliber accommodations at the end of a nondescript suggestion of a road. Just when you thought your quota for wonder exhausted, you enter a restaurant having the appointment of a mini-museum and featuring a rich private collection of German cultural memorabilia that transports visitors to Heidelberg, Germany. No tacky imitations here; just pure authentic delights! Foremost among these: the sofa that our hero, Dr Jose Rizal, used while visiting Heidelberg, Germany. These and other "pleasant shockers" give the impression that Bohol has come of age and has begun to set the standard.
The development most promising as regards economic prospects is the completion of the Bohol Circumferential Road, which now rings the province with a uniformly specified all-weather concrete highway, a tribute to outgoing Governor Erico Aumentado. The Bohol road system of 10 years ago was just a patchwork of gravel and sprinkled asphalt that wash away with the rains. Back then, Bohol’s claims to fame included "Loboc’s half-a-bridge," a legendary homage to incompetence (corruption some claim) located at Loboc town. The bridge was started without the right of way being secured: the right of way, believe it or not, called for relocating the whole Loboc Church! As if to signal the new "can do" mood, this eyesore has been magically transformed into a stage for the famous Loboc Children’s Choir. Now you can view two humming tributes, one to human audacity and the other to human folly, in one evening. Talk about turning adversity into opportunity!
The speedy road system now means that whole province will begin to share the fruits of the burgeoning tourist trade. Farther flung attractions such the Loay-Loboc River Cruise and Firefly Watching and the Peacock Garden will host more than just hardy adventurers as the time and inconvenience cost of travel falls. And jobs will follow in their wake. Not that Bohol will lose its appetite for OCW jobs anytime soon. Everyone agrees that a very high proportion of families here has a foreign exchange lifeline.
The boon as expected is not without its cost and its detractors. Locals grumble that land prices have become prohibitive. Tourists come, get captivated, and decide to convert their romance into a long-term investment. As the cost of transport falls, local products once locked in for local demand now beckon buyers from far afield. Fish landed in Bongamar, Jagna, routinely get snapped up by buyers from Cebu or Tagbilaran. The well-heeled tourists of Panglao Island will pay unheard of premia for a rack of fresh "isdang bato." No wonder that townspeople everywhere demur as one the high fish prices. Our taxi driver, otherwise a wholly sensible fellow, declared for restricting local fish catch to local markets! Seems like common sense at first blush. Except that that would harm the fisher folk and the fish industry employing a good portion of the poor population in this sea-hugged island. No matter, he returned with true Boholano grit, the fishpond owners are outsiders. Such restrictions remind one of Ramon Magsaysay’s famous directive: "Repeal the law of supply and demand!" However well-meaning, they are quixotic but don’t count on common sense to vanish them. With the 2010 elections knocking, quick-fix remedies are being trafficked. Picturesque Bohol is not immune from bouts of hubris. The soon-to-begin construction of an international airport on Panglao Island is an example. Being just 20 minutes away by air from Mactan International Airport suggests awful waste! Perhaps Bohol Republic sometimes feels the urge to punctuate its autonomy from imperial Cebu.
That disputes germane to economic progress hug public discourse only point out that Bohol is generally headed in the right direction. Here’s hoping that the New Year will usher in a new crop of elected officials who will stay the course through the next decade.
Raul V. Fabella is the vice chairman of the Institute for Development and Econometric Analysis, a professor at the UP School of Economics, and a member of the National Academy of Science and Technology.
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