Saturday, 13 February 2010

The Working President (439)



For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.


The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.


Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $15,000bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

Photo updates: Metro Manila Skyway


SLTC taking over SLEX operations

Malaysians to take over SLEX in two months
Manila Times

THE South Luzon Tollways Corp. (SLTC) said it will take over the operations of the South Luzon Expressway (SLEX) by April, after a regional trial court denied the request of state-led Philippine National Construction Corp. (PNCC) to extend a stay order on the looming takeover of the Philippine capital’s gateway to the industry-heavy export processing zones south of Manila.

Isaac David, president of SLTC and Manila Toll Expressway Systems Inc. (MATES) said they will push through with the completion of the SLEX rehabilitation.

He, however, said that PNCC is still running the toll way as both parties are discussing the date of the takeover.

“There is no point in objecting [to] the takeover. By completing the project, we are now entitled to take over the SLEX. Within a month or two, we will be able to take over,” David said.

Under a 30-year Supplemental Toll Operation Agreement approved by Malacañang in 2006, SLTC must take over the SLEX if two conditions are met: when the rehabilitation and expansion of the thoroughfare nears completion, and should PNCC fail to get an extension of its franchise in Congress.

David earlier said the SLEX is already 98-percent complete and that Congress failed to extend PNCC’s franchise.

“We should have completed the project in March this year and collecting revenues, but because of the PNCC’s refusal we failed to do that. We have already lost P1.5 billion in revenues because of the delay,” he had said.

PNCC collects about P3 million a day, or P90 million a month from operating the SLEX.

SLTC widened the 1.2-kilometer Alabang Viaduct and the 27-kilometer stretch of the SLEX from Alabang to Calamba, Laguna.

The former 29-kilometer four-lane expressway, which starts at the approach to the Alabang viaduct in Muntinlupa City and ends at Barangay Turbina in Calamba, has been widened to eight lanes from the viaduct to Santa Rosa, Laguna, and to six lanes from Santa Rosa to Barangay Turbina.

SLEX would also be extended by another eight kilometers from Barangay Turbina to Santo Tomas, Batangas, thus linking the highway to the Southern Tagalog Arterial Road, the main thoroughfare leading to the international seaport of Batangas.

MTD Capital Berhad of Malaysia, which controls MATES, also owns 80 percent of SLTC, with PNCC holding the remaining 20 percent.

Keep the reforms moving

Manila Times

THE growth in exports for the second month in a row augurs well for the Philippine economy, as it slowly recovers from the effects of the worst global slump in decades. Our economy luckily escaped experiencing a recession. This has placed us among the positively rated dozen of countries (mostly Asian) that experts see as the economies that will lead the world into full recovery.

This week, the National Statistics Office (NSO) announced that December exports grew by double digits, up from the single digit increase the month before.

The December growth was the fastest in nearly four years, led by the double-digit expansion in electronics shipments abroad.

The strong showing by the electronics sector, which accounts for at least 60 percent of Philippine merchandise sales abroad, validates the improvement in the book-to-bill ratio, which had shown earlier that orders outpaced deliveries as early as November last year.

Besides electronics, transport equipment—particularly ignition wiring sets—also surged by double digits last December, pointing to the possible recovery in the Philippines’ auto parts industry.

Indeed, the government had announced that imports last November woke up from a 14-month slide, indicating that exports going forward may turn for the better.

Another sign of a possible recovery in external trade is the improvement in the US’ purchases of Philippine-made goods. The US after all is our biggest export market.

Industry sector also positive

The rebound in exports also coincides with the positive showing of the industry sector. The NSO earlier said that factory output grew last November, rousing from a 12-month contraction.
Similarly, the average capacity utilization of local factories picked up, an indication that manufacturers are switching on previously idled machinery.

Industries responsible for the up tick in factory output were miscellaneous manufactures, basic metals, tobacco products, electrical machinery, petroleum products, non-metallic mineral products, rubber and plastic products and transport equipment.

The stock market welcomed the December exports figure, breaking several sessions of losses stemming from Europe’s fiscal woes.

But it remains to be seen whether the recovery in the export sector would be sustained, and if so, whether it would be faster than earlier expected.

Before the release of the December exports figures, many pundits were expecting domestic factors—remittance-led household and election-related spending—to prop up the Philippine economy in the first half.

This explains the Bangko Sentral ng Pilipinas’ (BSP) reluctance to pursue an exit from the liquidity enhancing measures it put in place at the height of the global financial turmoil.

So far, the BSP has wound up its generous rediscounting facility. Many observers expect a hike in bank reserve requirements to follow, especially after the surprise inflation last month showing price increases averaged below the central bank’s forecast.

Monetary authorities, however, are signaling that any further step to terminate its package of crisis measures may have to wait, pending the turnout of external developments such as the fiscal crisis of a growing number of European economies.

Caution should prevail

We agree that caution should prevail, as the global recovery is clearly not yet firmly underway.
The Arroyo administration’s passage of the 2010 national budget—with provisions for continued pump priming—indicates the government’s readiness to keep up spending despite the bullish outlook for personal consumption expenditures.

But fiscal authorities have to step up borrowings amid the uncertain outlook for tax revenues, especially since the election season would discourage new tax measures.

The El Niño dry spell obviously would dampen this year’s farm output, which accounts for a fifth of the Philippine economy. Likewise, the near capacity situation in the power sector would temper economic expansion.

In this regard, the government should complete the reforms mandated under the Electric Power Industry Reform Act, particularly the state’s divestment from the sector, to allow the free play of market forces, which is key to jump-starting private investment in additional capacity.

Economic recovery this year—the return to something like half of the 2006-2007 record-setting growth we enjoyed in 2006 and 2007—is far from guaranteed. A lot depends on the continued recuperation of the economies of our rich customer-countries.

The completion of our own pending reforms and initiatives is also just as essential. This in turn requires their insulation from the oncoming onslaught of partisan electoral activity.

Transport department revives plan to build MRT 9 (formerly MRT 4)

Darwin G. Amojelar
Manila Times

THE Department of Transportation and Communications (DOTC) said it plans to revive the proposal to construct a rail system going to Rizal Park in Manila from Quezon City.

In an interview, Guiling Mamondiong, undersecretary for rail transportation said his agency will pursue the construction of the 11-kilometer Metro Rail Transit (MRT) Line 9.

The railway system would begin at the North-EDSA in Quezon City intersection and would be linked with the other MRT 3, MRT 7 and Light Rail Transit (LRT) North Extension.

The line will traverse West Avenue and Quezon Avenue in Quezon City and would end in Manila via España.

The MRT 9 will then be interconnected to LRT 2 in Recto and LRT 1 Central Terminal in Manila via the Quezon Boulevard route. This line will be extended to Intramuros Rizal Park up to Port Area.

“The proposed line will be constructed with the majority of elevated sections along the line using the U-shape viaduct, at-grade and depressed sections along the West Avenue route to allow access to the proposed depot located at the east side of the existing MRT 3 depot, adjacent to TriNoma Mall,” the department said.

The agency said the MRT 9 stations include Baler, Timog, Roosevelt, Araneta, Welcome Rotonda Central Terminal, Antipolo (España), A.H. Lacson (España), Morayta, Quezon Boulevard (Quiapo), Taft Avenue (City Hall) and Rizal Park (Manila Hotel).

Mamondiong said the department will conduct a study to determine the cost of the project that would be implemented through a Build-Operate-Transfer scheme.

The project was previously dubbed as MRT 4, but this was not pursued by the proponent even after it obtained the “First Pass” as Build-and-Transfer-Build-Own-and-Operate project by the National Economic and Development Authority Board.

Other rail projects that the government plans to construct are the MRT 7, MRT Line 2 extension and the LRT Line 1 South extension project.

Mamondiong had said that the DOTC is pushing for the creation of a trust fund to finance future mass rail projects. Portions of road and sin taxes and an increase in the real property tax would constitute this fund.

SMC eyes $200-m Clark jet hub in Clark

Joyce Pangco Pañares
Manila Standard

Food and beverage company San Miguel Corp. plans to invest an initial $200 million for a corporate jet hub inside Clark Freeport Zone, Clark International Airport Corp. president Victor Luciano said Thursday.

Luciano told Malacañang reporters during a motorcade at the Diosdado Macapagal International Airport with President Gloria Arroyo that San Miguel president Ramon Ang called him up earlier this week to confirm the company’s plan to build a hub in Clark.

“Initially we are looking for at least half a hectare for the SMC corporate jet hub, which will cost around $200 million,” Luciano said.

He said Malaysian budget airline Air Asia would also put up a logistics hub and a terminal inside the free port.

Mrs. Arroyo said the entry of the new locators would bring the total number of logistics and services hubs in Clark to 10.

The President noted that the $1-billion Global Gateway Logistics by the Kuwait Gulf and Link Investment Co., the largest single logistics hub in the Philippines, was nearing completion.

Singapore Airlines, Lufthansa, Air Philippines and Cebu Pacific are among the airline companies that have set up logistics and services hubs in the country.

Luciano also announced that local airline Spirit of Manila would start its maiden flight to Taipei today at the DMIA.

Spirit of Manila Airlines has just acquired its second McDonnell Douglas MD-83 aircraft, which has a seating capacity of 160 for three flights weekly to Taiwan.

Luciano said traffic at DMIA had increased to 2,600 flights last year, with close to 600,000 passengers arriving in the airport.

Arrivals in DMIA now accounted for almost 10 percent of the total passenger arrivals in the country, he said.

San Miguel, meanwhile, has embarked on expansions and new acquisitions as the conglomerate diversifies into heavy industry such as power, infrastructure and utilities.

San Miguel earlier submitted a bid for the privatization of the 246-megawatt Angat hydroelectric power plant in Norzagaray, Bulacan.

The company has also expressed interest in the operation and management of the Subic-Clark-Tarlac Expressway.

San Miguel Brewery Inc., its brewery unit, has completed the acquisition of the international beer business of its parent for $300 million.

San Miguel Brewery signed a share-purchase agreement in December with San Miguel Corp. for the acquisition.

San Miguel Brewery, which is 51-percent owned by San Miguel Corp. and 48 percent held by Tokyo-based Kirin Holdings Co., said the transaction would be funded through borrowings. The company last week hired 10 banks to arrange a $300-million borrowing.

Palace says power shortage manageable

Malacañang today expressed optimism that the prospects of two-hour to three-hour rotating power interruptions in Luzon, including Metro Manila, will be manageable and will not hamper the operations of key sectors.

"The Department of Energy (DOE) is doing all it can to lessen, if not totally avoid the inconvenience," Presidential Deputy Spokesperson Gary Olivar said in a press briefing today.

Reports said the power interruptions in Luzon next week is due to the projected supply shortfall of at least 500 megawatts in the Luzon grid.

Power supply in the Luzon grid is expected to fall critically short by Feb. 16, as the 650-MW Malaya plant run by Korea Electric and Power Corp. runs out of fuel at roughly the same time that the 2,700-MW Malampaya deep-water gas-to-power facility will undergo preventive maintenance.

The 620-MW Limay plant is also under preventive maintenance and is scheduled to resume operations only by the end of the month.

Moreover, Olivar said, the El Niño phenomenon is also affecting hydropower plants.

Olivar stressed the power problem will not be a major threat to business, as the problem will be "nowhere near the level of power interruptions" that bedeviled the Aquino administration, when Metro Manila experienced at least six hours of brownout every day.

He said renewable sources of energy, which are abundant in the country, is a better option as it is clean and cheaper. (PND)

Friday, 12 February 2010

Urban Luzon Beltway Tour Motorcade to C5 NLEX Connection

Segment 8 1 Pangilinan Project with project inspection and briefing along Congressional Ave to Mindanao Ave Brgy Ugong, Valenzuela City

Inauguration & Turn over Ceremonies of the Northville 8 Resettlement Livelihood Productivity & Training Center Brgy Bangkal, Malolos City, Bulacan

Robinsons Land building 10 new malls

by Jenniffer B. Austria
Manila Standard

Robinsons Land Corp., the property unit of business tycoon John Gokongwei, plans to build 10 new shopping malls over the next two to three years in a bid to catch up with SM Prime Holdings Inc., the country’s leading retail operator and developer.

SM Prime currently operates 36 malls in the Philippines and three in China.

Robinsons Land said in a filing with the Philippine Stock Exchange that it planned to sustain growth momentum through the development of new shopping malls and expansion of existing ones.

The company did not identify the sites of the new malls.

Robinsons Land as of end-September last year had 26 shopping malls after opening five new outlets in Pulilan in Bulacan, Tagaytay, Davao, Tacloban and General Santos.

Six of the malls are found in Metro Manila while 20 are situated in urban areas across the country. The 26 have a gross floor area of approximately 1.430 million square meters.

“Historically, revenues from lease rentals have been a steady source of operating cash flows for the company. RLC expects that the revenues and operating cash flows generated by the commercial centers business shall continue to be the driver for the company’s growth in the future,” Robinsons Land said.

Robinsons Land reported a net income of P3.27 billion for the fiscal year ending September 2009, up 4 percent from the previous year.

The commercial centers division accounted for P4.21 billion of the real estate revenues for the year, up 14 percent from P3.69 billion due to newly-opened malls.

Share price of Robinsons Land closed unchanged at P10.75 per share Wednesday.

SM Prime earlier said it would spend P12 billion this year to open five new malls and for landbanking. The five new malls are located in Calamba (Laguna), Masinag (Antipolo), San Pablo (Laguna), Novaliches and Tarlac.

SM Prime plans to open next at least three new malls in Commonwealth Avenue (Quezon City), Davao City and General Santos City.

Expressway extended to Lucena from Laguna

Joyce Pangco Pañares
Manila Standard

PRESIDENT Gloria Arroyo on Wednesday said the South Luzon Expressway will be extended to Lucena City from Laguna as part of the Urban Luzon Beltway super region.

Construction of the 54-kilometer extension will start three months from now, she said.

In May, Mrs. Arroyo said she would inaugurate the expressway, which would have been completed by that time, and break ground for the extension to Lucena City.

“This is the way to modernize a nation. You really need a beltway to ease the movement of people and the transfer of goods,” Mrs. Arroyo said.

The extension will be built through a P10-billion build-operate-transfer agreement with Manila Toll Expressway Systems Inc., a company owned 40 percent by Philippine National Construction Corp. The rest is shared equally by the local firm Alloy Manila Expressway Inc. and the Malaysian subsidiary MTD Manila Expressways Inc.

Meanwhile, Mrs. Arroyo has approved a P1-billion aid to 26 food-poor provinces that are expected to be hit hard by the drought brought by El Niño.

She ordered Social Welfare and the National Nutrition Council to start identifying the one million families who will be given rice subsidies.

Thursday, 11 February 2010

82,200 election machines ready to be shipped in

Manila Times

A high-ranking Commission on Elections (Comelec) official on Wednesday said that the joint venture of Smartmatic and Total Information Management (TIM) has finished the production of some 82,200 Precinct Count Optical Scan (PCOS) machines that would be used for the automation of the May 2010 national elections.

Comelec Commissioner Gregorio Larrazabal said that the joint venture finished the manufacturing of the election machines on Monday.

“We have the picture of the last PCOS [machines], and we are just making arrangements so that all PCOS [machines] will be here by February 21. So, tapos na [it’s all finished]. Smartmatic-TIM has already produced all the machines required for the elections,” Larrazabal told reporters in a press briefing.

Earlier reports showed that the poll body had some 48,900 PCOS machines stored in a warehouse in Cabuyao, Laguna.

There are also some 7,200 PCOS machines still with the Bureau of Customs while 800 are in transit and some 25,300 are ready for shipment to the country.

February 21 delivery

Smartmatic-TIM is scheduled to deliver the balance of the PCOS machines on or before February 21. The poll body will sanction the firm if it fails to deliver the machines on time.

In December, Smartmatic-TIM said that there was a problem with the shipment of the machines because of the holiday rush.

They were, however, able to deliver some 7,200 machines before 2009 ended.

Larrazabal also earlier said that some of the PCOS machines have undergone laboratory and field testing. The poll body also conducted mock elections last week, which Comelec Chairman Jose Melo described as “almost perfect.”

Upon the delivery of the 82,200 PCOS machines, the joint venture of Smartmatic-TIM will start customizing the equipment. The machines will then be delivered to the different provinces by mid-April.

On Tuesday, Systest Labs—an internationally accredited software testing and control company—submitted the source code to Comelec, which was then turned over to the Bangko Sentral ng Pilipinas for safekeeping.

The source code is a set of machine-readable languages that would be installed in the PCOS machines. The code is crucial in instructing the machines on how to count the ballots.

Overseas voting

Also on Wednesday, Comelec Commissioner Armando Velasco said that they have finished printing the manual ballots that will be used for overseas absentee voters (OAVs).

The commission earlier decided that OAVs would make use of postal voting rather than the automated elections system.

“What we are doing now is preparing the mailing pockets, so that these ballots together with the mailing pockets will be mailed to the [countries],” Velasco said, adding that there are special groups in each host country that will be responsible for receiving the ballots.

“As regards to the automation in Singapore and Hong Kong, as of this time, the PM [prime minister] will decide whether to fully automate in Hong Kong and Singapore,” the commissioner added.

The poll body has chosen Singapore and Hong Kong as countries where they can pilot-test the automated elections system since these are countries with the highest number of overseas Filipino workers.

Elections for overseas Filipinos will be held one month before the May 10 elections.

Velasco said that ballots for personal voters, or those who will troop to Philippine embassies in their host countries, would be printed starting Thursday.

Postal voting will involve around 138,000 voters while there will be 589,830 personal voters. The planned automated elections in Hong Kong and Singapore will involve some 95,000 and 31,000 voters, respectively.

Compliance with rules

Meanwhile, Comelec spokesman James Jimenez said that the poll body’s education and information department would inspect major thoroughfares on Friday to check if candidates are complying with campaign rules.

He added that they would be taking videos and photos of posters that have not been taken down. Earlier, the poll body reminded candidates that they should dismantle or take down printed materials posted before the start of the campaign period.

Under the fair elections law, the size of posters of candidates should be two feet by three feet.

Campaign period for national candidates started Tuesday while local candidates can start campaigning starting March 26. The campaign period ends May 8.

“We’ll see what’s the status of compliance is and from that we’ll be able to issue more friendly reminders for compliance,” Jimenez said.

Intensified security

The Philippine National Police (PNP) also launched simultaneous operations in some 3.500 Comelec checkpoints across the country to intensify its election security operations with the official campaign kicking off Tuesday.

National-police chief Director Gen. Jesus Verzosa said National Task Force HOPE 2010 would have at its disposal the tactical units of the PNP such as the Special Action Force, Regional Public Safety Management Battalions and Provincial Public Safety Management Companies for police interdiction.

In hostile territories, the police units will be backed by light armor support and waterborne and air assets, including newly acquired helicopters with night flying capability. Police commandos capable of rapid deployment will also be fielded.

As the nationwide Comelec-imposed gunban entered its 30th day on Wednesday, a total of 743 gunban violators have been arrested consisting 52 policemen, 29 soldiers, 31 government officials and 631 civilians. The national police also confiscated 618 firearms, 23 explosive devices, 164 knives and 762 gun replicas in checkpoints and weapons check operations.


HSBC sees 5.1% growth

Roderick T. dela Cruz
Manila Standard

Recovery in emerging markets is expected to push the country’s gross domestic product up by over 5 percent this year, an official of Hong Kong and Shanghai Banking Corp. Ltd. said Tuesday.

Junie Veloso, senior vice president and head of corporate banking division of HSBC in the Philippines, told reporters in a news briefing at Makati Shangri- La Hotel that the Philippines’ GDP could grow up to 5.1 percent in 2010, after posting a sluggish 0.9-percent expansion last year.

“So far, the Philippine economy has held up well. We expect that to even improve this year,” Veloso said during the launch of the HSBC Emerging Markets Index.

The Philippines was not among the 14 countries included in the index but Veloso said the surge of the measure in the fourth quarter was reflective of the performance of the Philippine economy.

“We are pretty well placed to capitalize on emerging markets’ growth,” he said.

Veloso noted that the GDP grew 1.8 percent in the fourth quarter and could have posted a faster growth if not for the recent typhoons that affected the agriculture sector.

After experiencing three quarters of contraction, the industry sector grew 1.1 percent in the fourth quarter. Exports also rose for the first time in 2009 at 5.1 percent in November.

Veloso said the bank saw a “strong upside for the first quarter,” citing the growth in remittances, recovery of exports and manufacturing, as well as increased consumer spending as interest rates remained low.

Remittances, he said, were expected to rise 5 percent to 10 percent this year from a year ago. Veloso said the Philippines was also expected to get a boost from the growth in other emerging markets, especially China, which is now driving global growth.

Veloso also cited the bright prospects for business process outsourcing sector and tourism industry this year.

The HSBC Emerging Markets index jumped to 56.1 in the fourth quarter of 2009, up from 55.3 in the third quarter and significantly higher than 43.8 a year ago. An index above 50 means positive growth in output of manufacturing and services.

The fourth-quarter index registered the fastest growth in the past two years, driven by exports and rising demand. The quarterly index is based on 19 manufacturing and service sector data among 14 emerging markets and provides an early and reliable indication of economic trend.

“Manufacturing has grown the fastest in terms of output and new orders,” Veloso said.

Exports bounce back 23.6% in December

Manila Bulletin

The country’s exports bounced back in December 2009 with a 23.6 percent growth to $3.304 billion compared to $2.675 billion in December 2008.

The National Statistics Office (NSO), however, noted that export earnings on a monthly basis declined by 11 percent from $3.712 billion in November 2009.

Total exports in 2009 also dropped by 21.9 percent from $49.078 billion to $38.327 billion registered during the same period in 2008.

Electronic products remained the country’s top export in December 2009 with total export revenue of $1.881 billion, up by 41 percent from $1.335 billion in December 2008.

Semiconductors which comprised 39.2 percent of the total exports amounted to $1.295 billion, an annual increase of 36.9 percent. Month-on-month, electronic products went down by 12.4 percent from $2.148 billion in November 2009.

Earnings from apparel dropped by 18 percent to $131.54 million from $159.96 million in December 2008.

Coconut oil posted total export earnings of $87.40 million in December 2009 rose by 14.4 percent from $76.40 million in December 2008.

Ignition wiring sets grew by 85.3 percent from its year ago level of $46.22 million. Furniture exports declined by 16.1 percent to $68.16 million from $81.25 million registered in December 2008.

The other top exports in December 2009 were metal components with export earnings of $47.41 million up by 21.1 percent; copper concentrates with $35.33 million in revenue, up by 739.2 percent, the highest increase among the top ten exports in December 2009; petroleum products recorded sales amounting to $32.00 million, up by 118.9 percent; and cathodes with export revenue of $26.89 million, down by 49.4 percent.

The US which comprised 19 percent of the total exports in December 2009 remained the country's top export market with revenue amounting to $627.86 million, up by 9.4 percent from $573.98 million recorded a year ago.

Japan was the second top market with export earnings of $507.46 million. up by 11 percent from $457.68 million reported in December 2008.

Automated overseas voting approved


THE COMMISSION on Elections (Comelec) has approved the automation of polls in Hong Kong and Singapore, home to a fifth of the 589,000 overseas absentee voters (OAV), a poll official yesterday said.

Comelec would push through with the automated overseas absentee voting in Hong Kong and Singapore following the recommendation of the poll technology provider and the technical evaluation committee, Commissioner Armando C. Velasco said in an interview with reporters after the en banc session yesterday afternoon.

"On the 20th, we will be going to Hong Kong not only for a consultative dialogue but also to give them an orientation on automated elections," he said.

He added Smartmatic/Total Information Management Corp., the automated election system technology provider, will be conducting within the month a site survey at the Philippine embassy in Hong Kong embassy and consulate in Singapore.

A total of 31,851 overseas absentee voters are registered in Singapore and 95,365 in Hong Kong, figures from the Comelec OAV office show.

Mr. Velasco said seven precinct count optical scan machines would be sent to Hong Kong and 26 to Singapore, with six voting machines on stand-by for the two areas.

He said 138,113 overseas absentee voters would be voting via mail while 324,511 overseas absentee voters would be casting their votes personally.

"The commission allotted P188 million for OAV," he said, adding the Comelec and the Foreign Affairs department would be sharing the separate P40 million estimated cost of automated polls in Hong Kong and Singapore.

The 30-day OAV, wherein voters are only allowed to vote for national posts, would start on April 10.

The first overseas absentee voting was held in the 2004 presidential elections pursuant to Republic Act 9189 or the Overseas Absentee Voting Act of 2003.

Hanjin to start building ultralarge vessels

Henry Empeño
Business Mirror

SUBIC BAY FREE PORT—South Korean shipbuilder Hanjin Heavy Industries and Construction Philippines Inc. (HHIC) is taking the shipbuilding industry here to the next level—the construction of ultra-large oil tankers and Capesize-type bulk carriers.

Company officials said in a statement that the firm has signed a contract with Taiwanese shipping company Hsin Chien Marine Co. Ltd. for the construction of two 180,000-ton Capesize bulk carrier vessels that it agreed to deliver starting September next year.

Just last month HHIC delivered to a Turkish firm the 114,000-deadweight ton MT Leyla K, the first oil tanker to be built in this free port.

The firm also completed recently the APL Bahrain, which has a capacity of 4,330 twenty-foot-equivalent units, and said to be the largest vessel to ever dock in the country.

The Capesize contract signals yet another milestone for Hanjin, which completed the expansion of its $1.7-billion shipyard at Subic’s Redondo Peninsula last year.

Capesize vessels, which typically weigh around 175,000 deadweight tons (DWT), are considered the biggest among dry- bulk carriers and because of their size, are incapable of passing through the Panama or Suez canals. Instead, they are forced to transit via the Cape of Good Hope in South Africa or Cape Horn in South America, hence their classification.

The production of Capesize vessels in Subic followed the firm’s program to diversify vessel type from high-profit vessels to high-valued, or ultra-large ships, following the expansion of its Subic facility from a capacity of 220,000 tons a year to 450,000 tons.

Before this, Hanjin could not compete in the ultra-large carrier class against the top three shipbuilders Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering, due to limited space at its Yeongdo shipyard in Busan, Korea.

Last year, as it was still completing the expansion project, Hanjin already announced signing a contract to deliver two Subic-built very large crude containers by June 2011.

Both vessels will weigh 320,000-DWT and measure 333 meters long, 60 meters wide and 30.5 meters deep.

Meanwhile, Subic Bay Metropolitan Authority (SBMA) Administrator Armand Arreza said Hanjin has become the fourth-biggest shipbuilder in the world because of its highly skilled Filipino workers in the Subic shipyard.

He added that Subic’s well-trained work force, combined with Hanjin’s state-of-the-art technology and highly efficient shipbuilding processes, has resulted in a cost-efficient shipbuilding business here.

“What many foreign investors like about Subic is the competitive work force,” Arreza said. “The Philippine labor force is more competitive than those in other Asian countries. And here in Subic Bay, we take pride in our talented and high-quality workers.”

Arreza said local workers have “high-quality motor and technical skills, are quick learners and hard working, and they put into practice what they learn in trainings.”

As of December 2009, shipbuilding and marine-related businesses in this free port accounted for some 25,186 workers. About 68 percent or 17,000 of these are employed by HHIC and its subcontractors.

Arreza said the highly skilled Filipino craftsmen enabled Hanjin to expand its operations and start producing 10,000-TEU and 4,000-TEU container ships, oil tankers and bulk carriers. He added that the firm now eyes production of 260,000-ton Q-Max Class coal-bed methane-liquefied natural-gas carriers, drill ships, floating production storage and off-loading and marine plants

He also said that with the entry of labor-intensive firms like Hanjin, the Subic Bay free port started realizing its mission to create more jobs and alleviate poverty among Filipinos, especially in the Central Luzon region.

RP’s time to say: Shut up, fool!

John Mangun
Outside the Box
Business Mirror

The country suffered for about decade after the Edsa revolution with continual references to the former first lady’s shoes found in Malacañang. Even now you can find 300,000 references to “Imelda’s shoes” on Google.

Then there was the period when Filipinas living abroad were obviously domestic servants or worse. And all overseas workers were obviously in the lowest-paying and most menial jobs possible.

Now because of the economic impact of the money sent back to the country, in virtually every article about the Philippine economy in the last decade, we learn that all there is to this economy is remittances, remittances, remittances.

“Two things are infinite: the universe and human stupidity; I’m not sure about the universe,” said Albert Einstein. Do you want proof of the limitlessness of human stupidity and ignorance? Just read a few foreign commentaries about the Philippines.

Here is one from last week found on The Economist web site. Let me say that I knew I was going to be annoyed, no, angry, from the very first sentence. “I have been in Manila where it’s clear that the most successful export of the Philippines remains its people.” Immediately I knew that this was another foreign “expert” on the Philippines. This is a story I have heard before. Most of the time “I have been in Manila” means “I saw a squatter’s camp on the way to the hotel from the airport, spent a night in one of the girlie bars on Roxas Boulevard, and wasted two hours in rush-hour traffic in Edsa on the way to Megamall.”

But this is from The Economist so I want to give the author the benefit of the doubt about his “expertness.” Except I can’t because he then writes, “It’s clear that the most successful export of the Philippines remains its people.”

The one-of-a-kind actor, Mr. T, playing the gold-draped character B. A. Baracus in the 1980s TV show The A-Team, owes part of his fame for the line “Shut up, fool!”

Without wanting to create the impression that the Philippines is populated with rude people, I do believe it is time for the country to stand up and start saying “Shut up, fool!” to those who continuously mischaracterize this nation and its economy.

The Philippines was not “Imelda’s shoes” and the Philippine economy is not overseas workers’ remittances.

“Remittances are now equivalent to 11 percent of the economy. Remittances are the force behind powerful consumption growth of more than 5 percent.” That data are correct. But the conclusion is wrong, just like the other misconceptions about the Philippines. “Manila malls are full to bursting, while blocks of flats [condos] are going up that are being marketed solely to OFWs, that is, overseas Filipino workers.”

If remittances make up 11 percent of the economy, what about the other 89 percent? Maybe 89 percent of the bursting Manila malls (see, I told you he had been to Megamall) is due to something besides remittances.

And about those condominium sales, certainly overseas workers have bought millions of dollars of condominiums. But OFW money did not build Eastwood, Filinvest or the huge SM Development projects going up around the Mall of Asia. These were all funded and are from the 89 percent of the economy not produced by remittances. Nor are these developments even designed for overseas workers’ families. They are the natural extensions of the growth of that 89 percent that you create every business day. Fool.

“So, remittances will continue to be the chief bright spot for the Philippines, whose domestic economic affairs are colored by corruption, sloth and poor governance. Still, actively exporting your best and brightest is hardly the best long-term policy.” Fool.

This last paragraph is so false in its conclusions that I can only believe that the author had a very unpleasant experience during his trip to Roxas Boulevard, or perhaps he is taking his analysis from the pages of one of our local, foreign-funded, left-wing socialist “think tanks.”

From the All Headline News (AHN) web site: “The business-process outsourcing [BPO] sector continued to lead the Philippine economy by earning $7.2 billion in 2009. The amount is a 19-percent hike from the $6.2 billion the sector earned in 2008. Aside from bringing in $7.2 billion to the national economy, the BPO sector generated additional 70,000 jobs in 2009, bringing to over 442,000 jobs it has created.”

Notwithstanding a global business disaster in 2009, our outsourcing business, all funded through “overseas remittances,” grew nearly 20 percent. In spite of “corruption, sloth and poor governance,” 70,000 new high-paying (P15,000 to P25,000 per month) jobs were created for our “best and brightest.”

The Economist writes that remittance growth is so much greater than overall economic growth (6 percent vs 1.5 percent). Yet outsourcing remittances grew by 19 percent in 2009 and the five-year (since 2004) growth rate of outsourcing remittances is 46 percent per year. India’s growth during the same period is 38 percent. Fool.

The title of The Economist article is “People, the Philippines’ best export.” That is just plain stupid. Remittances in 2009 were about $18 billion. Other goods that were exported brought in $38 billion. But why let the facts confuse a “great” article that continues a false, misleading and insulting stereotype about the Philippines and this economy? After all, who is going to complain, especially when local writers are just as clueless and write things just as offensive about the Philippines? Fools.

It is about time to take the agenda back and go on the offensive. It is wrong to allow the international press to continue to represent the Philippines in this manner. It is degrading and disrespectful, and economically, it makes the Philippines look foolish to the rest of the world.

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Wednesday, 10 February 2010

North Luzon Railway Phase 1 may be operational by 2012

Ramon Efren R. Lazaro
Business Mirror

GUIGUINTO, Bulacan—The first stage of the North Luzon Railways Corp. (Northrail) system, a modern-day railway that will be running to and from Caloocan City to Clark Economic Zone in Pampanga, is expected to be operational by 2012.

This was the assessment of Zoilo Andin, president and chief operating officer of Northrail.

Northrail is a government entity tasked to build, manage and operate the railway project that is divided into four phases. Phase 1 is from Caloocan to Clark that is divided into two sections: Section 1 is from Caloocan to Malolos. Section 2 is from Malolos to Clark.

Phase 2 is a branch line to Subic, Zambales; Phase 3 is from Caloocan to Fort Bonifacio; and Phase 4 is the extension line to San Fernando, La Union.

Andin said during a press briefing on Friday afternoon at the Northrail’s Coupler Conference Room in St. Agatha Subdivision in this town, “We have gained momentum in our undertaking to build a modern-day railway system from Caloocan to Clark in Pampanga. Based on our 2009 performance and lessons learned, we are now certain of having our trains running on the 82-kilometer track from Caloocan to Clark in the next two years or so.”

He added the project was almost stopped after encountering several problems.

“After surmounting recurring difficulties encountered in previous years, our physical achievements for Section 1 in 2009 have even surpassed cumulative accomplishments since construction work commenced in 2007,” Andin said. He added that accomplishment rate last year alone was 17 percent.

He said accomplishment rate in the coming months is expected to rise dramatically because Northrail has already attained a higher degree of functional synergy among the contractors, engineers, technical and support personnel that translated to faster and effective application of engineering and construction approaches.

The train test run on its track in the Caloocan portion of the project is expected to be made in June before President Arroyo steps down from office. All civil works may be completed in the middle of 2011, barring any major problems in the construction stages, Andin said.

He said preliminary work of some tedious and critical undertakings, such as construction design and drawings, has either been completed or already being implemented.

It took some time before Northrail and its Chinese counterpart finally agreed on what designs and standards are to be used.

The project was funded through a loan by the Chinese government on the condition that a Chinese contractor, China Machinery and Equiptment Group (CNMeg), was tapped for its construction.

Andin said CNMeg and Northrail inked the agreement on Dec. 30, 2003, and signed the construction agreement later.

The design of Northrail is “rail-over-road” where the trains will be traveling above major road crossings that will allow for the continuous and uninterrupted flow of vehicular traffic.

PGMA in Batangas

Automotive sales up 33.8% in January

J. A. D. Hermosa

THE AUTOMOTIVE industry kicked off 2010 with a hefty sales growth in January, much improved from when sales flattened in the same month last year, data released yesterday showed.

Twenty car firms sold 11,763 units last month, up 33.8% from the 8,791 vehicles sold by 18 distributors a year earlier. The January growth comes to 32.7% if CATS Motors and Focus Ventures, Inc. -- not listed in last year’s report -- are excluded.

Last month’s sales were even better than the 8,809 units sold in January 2008 before the economic downturn deepened, but were less than the 13,000 monthly average seen in the last quarter of 2009 when buyers sought to replace flood-damaged cars.

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) pointed to brighter economic prospects as spurring the increase.

Trucks, vans and other commercial vehicles (CV) drove sales with a 46% rise to 7,907. This segment continued to corner more than two-thirds of total sales.

Passenger car sales, meanwhile, improved by 14.3% to 3,856 units.

"To a certain extent, strong vehicle sales is reflective of a stronger economic environment," CAMPI President Elizabeth H. Lee said in a statement.

"With the robust growth of CV sales ... Filipinos are now showing more aggressiveness in either starting a business or expanding their current businesses," she added.

But despite the good head-start, CAMPI will be maintaining its 4% growth outlook for 2010 in the meantime.

"We will revise accordingly but [only when] first quarter [figures are in] to see the trend," Ms. Lee said in a text message.

Industry leader Toyota Motors Philippines Corp. remained the top seller, accounting for nearly a third of total sales. The firm sold 3,871 vehicles, up 20.9%.

Mitsubishi Motor Philippines Corp. enjoyed a 56.5% uptick to 2,411 units.

Third-placed Honda Cars Philippines, Inc. sold 1,319 units, down 11.9%.

Presidential road rage

Genalyn Kabiling
Manila Bulletin

It was supposed to be a fast joy ride showcasing the modern roads built in Urban Luzon Beltway (ULB) during her administration until the bus tour encountered traffic congestion.

President Arroyo displayed her famous temper Tuesday when the road trip along South Luzon Expressway (SLEX) in Laguna to C-5 in Quezon City veered off course and encountered traffic, delaying the hour-long bus ride by more than 45 minutes.

The President’s road trip started on a high note in Calamba City, Laguna, shortly after she visited Real Elementary School where she announced the signing of the 2010 national budget.

At 10:30 a.m. in Calamba, the President boarded an airconditioned Victory Liner bus and joined the several journalists and government officials for a motorcade along SLEX to C5 as part of the ULB tour.

Mrs. Arroyo, on a week-long tour in ULB, also wanted to show the media the planned interconnection of C5 to North Luzon Expressway towards the end of the motorcade.

At first, the President, seated in the middle of the bus, was all too giddy about the growth of the Urban Luzon Beltway, praising the 99 percent completion of the SLEX that has paved the way for faster transportation of goods and people.

The SLEX, according to South Luzon Tollway Corp president Isaac David, would be fully operational by April when the toll plaza system is established.

The presidential motorcade then made its first stop along the construction of the STAR-SLEX (Southern Tagalog Arterial Road-South Luzon Expressway) interconnection.

The President and her entourage went down the bus to inspect the construction, which she ordered should be completed by end of March.

Back on the bus, the President took pride of the modern road network in the Urban Luzon Beltway, saying people could look forward to quick travel when they tour the southern provinces during summer season.

Along the way, Mrs. Arroyo also hailed the brisk business activities particularly information technology and business process outsourcing companies in Laguna, which she hailed as the country’s Detroit and Silicon Valley.

An hour into the bus ride, the President’s mood turned sour when she noticed the traffic jam along Katipunan Avenue. The traffic jam was apparently caused by the vehicles coming out from the schools along Katipunan road.

She insisted that the Katipunan road should have no intersection since it is an expressway connected to C-5 highway and immediately directed public works officials to find a solution to the traffic congestion.

A few minutes later, the President blew her top when she found out the inspection of new interconnection project between C-5 and North Luzon Expressway, the last stop of the bus tour, would be held at the end of the road project.

Mrs. Arroyo insisted that the inspection of the road project should have taken place at the start of the construction along Tandang Sora and not in Mindanao Avenue in Novaliches, Quezon City.

As a result, the President's motorcade went through traffic jams while traversing Congressional Avenue and then Mindanao Avenue. The President said the government was building the interconnection from C5 to NLEX precisely to skip the heavy traffic gridlock along Quezon City.

"We are going to waste our time in things we should not see. We should have stopped at the place where the connection begins. The construction begins there," she said, referring to the road somewhere in Tandang Sora.

"We are going to spend so much traffic in the place," she added, while her close aides aboard the bus appeared frantic over the President's latest tirade.

Half an hour later, the President's motorcade ended near the inspection site of the underpass construction along Mindanao Avenue. But the President and her entourage had to walk some 50 meters to the briefing area since the bus was stuck in the mud.

Mrs. Arroyo was then heard reprimanding her protocol staff to arrange another briefing of the interconnection of C5 and NLEX in Tandang Sora on Wednesday.

In previous years, the President also took journalists on train rides and tours on the nautical highway in an effort to project her infrastructure transportation projects. But Tuesday’s bus ride was a new tactic to attract media attention to her government’s accomplishments in the Urban Luzon Beltway.

GMA signs P1.54-trillion budget

Education, public works receive lion’s share
Manila Bulletin

CALAMBA, Laguna – President Arroyo has signed into law the proposed P1.54-trillion national budget for the year, with the education sector getting the lion's share.

In Republic Act 9970, the President also approved the P64-billion insertion made by lawmakers but on the condition new revenues should cover such expenditure.

Mrs. Arroyo inked her government's new operating budget for the year without fanfare last Monday but announced the signing of the law only last Tuesday during a visit at Real Elementary School in Calamba, Laguna.

In her budget message, the President hailed the P1.54-trillion spending measure as “culmination of the administration’s commitment to reform and responsible development.”

She said the 2010 national budget also marked “the end of years of hard work and fiscal reforms” but also “the beginning from which the next president can build on the accomplishments of this administration" since it matches scarce resources with growing requirements.”

“I signed the 2010 national budget with vetoes,” she later told reporters aboard bus tour along South Luzon Expressway to C-5 in Quezon City.

Budget Secretary Rolando Andaya Jr., however, explained that the President did not necessarily veto expenditure items but only “special provisions created special accounts or the debt cap.” “When we talk about absolute numbers, the President did not veto anything,” he said.

Andaya said the congressional earmarks worth P64.6 billion would only be released if Congress could identify new revenue measures that can support such spending. Lawmakers earlier imposed P64-billion realignment from debt service to social expenditure in the 2010 budget proposal which has not sit well on the executive branch.

“Applying fiscal discipline, the President decided that these items can only be spent or used when there are new revenue measures or available cash to support the P64 billion-expenditure,” Andaya said in a separate interview with reporters prior to the Cabinet meeting in Novaliches, Quezon City..

If Congress fails to come up with P64-billion revenue measure to cover the expenditure, Andaya said the country's deficit could expand from 3.5 to 4.2 percent of GDP “which is way beyond, way above the tolerable limit of around 3.9 of GDP.”

“At this ratio, the next administration will find it hard to balance the budget. It is also out of courtesy to the next president that we are doing this. We don’t want him to be saddled with a heavy load of unsupportable expenses right at the starting line,” Andaya said.

He said the President wants to keep the deficit level to around 3.5 percent to 3.6 percent of GDP.

Andaya said the 2010 national budget, which is 8 percent or P115 billion higher than last year’s P1.426 trillion budget, seeks to balance social responsibility with fiscal responsibility.” He acknowledged such level could prompt a deficit of P233.4 billion “but still within the manageable range of 2.8 percent of the GDP.”

“In this budget, we are saying that we will not break our vow to ramp up social spending, but in doing so we will not be breaking the bank,” he said.

By agency, the biggest recipient of this year’s budget is the Department of Education (DepEd) with a budget of P174. 9 billion.

Next is the Department of Public Works and Highways (DPWH) with P135.6 billion, followed by the Department of the Interior and Local Government (DILG) with P66.45 billion, and the Department of National Defense (DND), P57.84 billion. To sustain food security programs, the Department of Agriculture (DA) is fifth in the list of top recipients, with a budget of P41.17 billion.

Tuesday, 9 February 2010

The candidates are not ready to lead

John Mangun
Business Mirror

Global polities and global economics seem so very far away from our daily lives. Attention in the Philippines is, of course, centered on the upcoming national elections.

The presidential candidates are parading to the various forums, choosing to appear when they believe it will gain them some positive coverage.

I realize I have said this so many times that it is becoming boring, but our leaders seem to be completely out of touch of what is going on in the rest of the world. The closest they seem to get to some understanding of the outside world is only when it might affect Filipino overseas workers’ jobs, as in the case of the Dubai debt failure. I find it amazing that someone who wants to lead the Philippines does not have an adviser on the staff that can bring the candidate up to speed about the dynamics of the global economic situation and what it means to the Philippines.

Over the last week, the peso depreciated against the dollar by about 50 centavos. The comments from “experts” and candidates alike had no basis in reality.

The euro came under massive selling last week in what can only be described as an attack on that currency. This is completely reminiscent of the attack on the British pound by George Soros nearly 20 years ago. Contrary to what we believe in Asia, there are only three major currencies in the world; the US dollar, the euro and gold. Nothing else—yen, yuan, Swiss franc—matters.

Last week’s fall of the euro created a rising dollar because hundred-billion-dollar hedge funds are able to borrow dollars for zero interest and sell euros. Late in 2009, a slow, steady attack on the dollar created rising gold and rising euro.

The peso fell last week because local bank currency traders reacted as they always have when the dollar goes up in the international markets: sell the peso. These traders do make money for their employers but, unfortunately, they too do not have a clue about the financial world of 2010.

The insular, provincial and narrow mindset is pervasive.

One candidate for vice president has a great idea every couple of days to provide another government program to end poverty, save the environment or increase the “quality of life for all Filipinos.” No mention, of course, is ever made how the government would pay for all these blessings. The reason for that is, previously, the government could borrow a ton of money from the international bankers because they wanted to loan to the Philippines as the interest rates we were paying were much higher than in the West. Those days are over. Regardless of what you might think, global banks are out of the lending business. Now what they do is speculate because the profit potential is great and, more important, if their gambling fails, their governments will bail them out.

Despite the impression you may get from the newspapers, the government has significantly increased its borrowings from the domestic market, which is one of the reasons this economy has stalled. Local banks would much prefer to lend to the Philippine government rather than to you to expand your business. You are too risky.

Every new government program that takes money out of the economy is counterproductive because the private sector can do more in the long term to increase the standard of living than the government could ever do. This VP hopeful does not have a clue about the financial world of 2010.

Global warming/climate change (GW/CC) is a hoax without any unmanipulated, unbiased or verifiable data to support its claims. The recent summit meeting in Copenhagen had nothing to do with this discredited theory. It was about Western governments raising taxes to bail out a completely failed banking system and complexly failed government financial policies. The people would not accept new taxation so the West hoped that the GW/CC scare might get the sheep into paying more.

Notice what happened. Governments like the Philippines, China and India understood that new taxes in the West would further hurt non-Western economies. So they demanded that they either be excluded from the new rules (China, India) or get a piece of the money pie (Philippines). The Western leaders that were screaming GW/CC doom suddenly walked away. Raising taxes to fight GW/CC and then giving that money to Manila was not part of their global plan. And I am still getting political e-mail telling me that Antipolo will be beachside property soon unless you pay more taxes to “fight” GW/CC.

Candidates jumping to take credit for the Philippines’ success in outsourcing are clueless, too. The No.1 reason outsourcing is thriving in the country is you. Because you did not feed your children the nonsense
nationalism that speaking English was anti-Filipino. Because you paid for that computer and Internet. Because you encourage a broader global view. And if you asked any of the candidates about the future of outsourcing and, specifically, what the country should do better, I doubt if you would hear one creative thought like using publicly owned broadcasting stations to actually teach better English a few times a day.

I will not predict who will lead this nation for the next six years, but I will guarantee you this: Before the new administration has been on the job for one year, there will be another global financial crisis that will make 2008/2009 seem gentle. Based on what they are saying and doing today, my confident prediction is that they will not be ready for it.

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NDC takes ownership of ailing MRT-3

Joyce Pangco Pañares
Manila Standard

PRESIDENT Gloria Arroyo has ordered state-run National Development Co. to acquire the shares of two state banks in Metro Rail Transit Corp. worth $750 million to speed up the government’s takeover of the 17-kilometer MRT-3 line.

She said NDC will buy the shares owned by Land Bank of the Philippines and Development Bank of the Philippines, and by using the proceeds from a bond float or money raised from loans that come with a sovereign guarantee.

Finance Undersecretary Rosalia de Leon said NDC would need about $300 million for the first stage of the acquisition, which was expected be completed in the first quarter.

The MRT-3 line runs to Taft Avenue in Pasay City from North Avenue in Quezon City and operates under a deal that expires in 2025.

But the build, lease and transfer agreement had been mired in conflict, including questions over the expansion of the train system and the government’s 48-peso subsidy to every passenger using the line. That conflict prompted the state’s takeover of the train system.

DBP and Land Bank own 80 percent of MRT Corp., the company operating the train system, while the remaining 20 percent is held by other banks that had bought MRT bonds for a stake in the company.

DBP president Reynaldo David said his bank and Land bank held equal stakes in Metro Rail Transit Corp., which was formerly owned by the Sobrepeña-led consortium that built the line.

“NDC on its own, or in partnership with other entities, is hereby directed to acquire economic interest in MRT Corp. in the form of shares,” Mrs. Arroyo said in Executive Order 855.

“NDC is also authorized to issue bonds or request loan facilities in order to acquire and purchase the shares, provided that the cost to NDC of such borrowings will not dilute the savings of the national government envisioned from such acquisition.”

The President authorized the Finance Department to issue a sovereign guarantee for NDC’s borrowings, and at the same time ordered NDC to do due diligence on how much the purchase price of the shares should be. The Commission on Audit should verify the price, she said.

“The purchase price shall be mutually agreed upon among the NDC, Land Bank and DBP, with the end view of obtaining savings for the government,” Mrs. Arroyo said.

She ordered the Finance and Budget Departments to ensure that NDC’s borrowings are repaid, and to facilitate the acquisition of the shares by gaining Monetary Board approval.

She ordered officials to “review and amend” the build, lease and-transfer agreement on the MRT- line so NDC could operate the railway and to privatize it if necessary.

Manila Water in joint venture to supply water to Indian states

J. B. F. Santos

EAST ZONE water concessionaire Manila Water Co., Inc. has entered into a partnership with an Indian company to provide water services in a number of states in India.

In a disclosure, Manila Water said it had signed a joint venture agreement with Jindal Water Infrastructure Ltd. “which [embodies] their commitments to jointly develop new business in the field of water supply, wastewater and other environmental services in the states of [Rajasthan], Gujarat and [Maharashtra] in India.”

The two companies will form a joint venture, the disclosure said. Key officers of both parties will compose the joint venture company’s management and project team “where business development initiatives shall be carried out through a pre-agreed development project.”

“Though this partnership, Manila Water and [Jindal Water] seek to leverage on their key strengths and core competencies and eventually provide synergies in establishing a regional presence in India,” Manila Water said.

Jindal Water is part of the O.P. Jindal Group in India, a $10-billion business conglomerate.

Manila Water officials did not return calls for further details on the project.

The utility has been aggressive in its expansion plans, although it withdrew from a bidding for bulk water services in Iloilo last December as “conditions the company requires for such investment were not present.”

In September 2009, the Cebu provincial government accepted a joint venture proposal by Manila Water for a bulk water supply project.

Manila Water also completed the acquisition of AAA Water Corp. that month. AAA Water owns 70% of Laguna AAA Water Corp., a joint venture with the province of Laguna which has a 25-year concession for water supply services to Sta. Rosa and the towns of Biñan and Cabuyao in Laguna.

Manila Water also has a joint venture deal with the government to run the water utility in Boracay, one of the country’s top tourist destinations.

Manila Water provides water and wastewater services to nearly six million people in 23 cities and municipalities covering the east zone concession of Metro Manila, which includes Pasig, Mandaluyong, Marikina, Taguig, Pateros, and parts of Manila and Quezon City.

The publicly listed utility secured last year regulatory approval to extend by 15 years its east zone concession to 2037.

Profits of Manila Water grew by 14% in the third quarter of 2009 to P2.3 billion from P1.99 billion on account of higher revenues.

Shares in Manila Water declined by 1.61% to P15.25 apiece yesterday.

Challenges facing the new president

Manny Villar
The Entrepreneur
Business Mirror

I AM taking temporary leave from this weekly column, in line with the policy and rules on campaigning being implemented by the Commission on Elections (Comelec). And so this will be my last piece before voters go to the polls to choose the next president of the Philippines.

I am presenting the challenges that the new Chief Executive of the land will face beginning in the second half of 2010, particularly with respect to the economy.

True, the prospects for growth for the Philippine economy are a lot brighter this year than in 2009, when it closed below 1 percent in terms of gross domestic product (GDP).

Standard & Poor’s (S&P) has projected that the Philippine economy will grow by 3.7 percent this year, a significant jump from the drowsy 0.9-percent growth last year, and higher than the government’s target of 2.6-percent to 3.6-percent growth.

S&P cites sustained growth in domestic consumption, fueled by remittances from overseas Filipinos, as one of the country’s strengths, which offset the impact of the decline in exports.

The government is now considering raising its target for GDP growth for 2010, as exports have started to recover, and remittances continue to increase. Add to that the projected recovery of the global economy.

That’s the good news, and that may help the next president in coping with what I consider as the most serious and immediate challenge facing his administration: the fiscal deficit.

Official figures have not been released, but estimates point to a deficit of more than P290 billion for 2009, a historical high, following the P210.7-billion deficit recorded in 2002.

The huge gap between revenue and spending has compelled the government to postpone its goal of balancing the budget to 2013 (the original target was 2008) under the Medium-Term Philippine Development Plan.

On the surface, the easy and quick way out of the fiscal hole is new taxes, but that approach is both narrow-minded and counterproductive and, in the end, self-defeating. And the reason is that raising taxes deters new investments and discourages economic activities, which, in turn, reduce tax revenues.

I don’t want to say categorically that there should be no new taxes. However, if I will win the presidency, I will consider raising taxes as a last resort. That is to say, I will exhaust all options to maximize collections from existing taxes before I will even consider imposing new ones. This is a commitment I know I can keep, and I will.

Another serious challenge facing the new president is increasing unemployment reported at 7.1 percent last October. The actual figure is probably higher, and I also believe that underemployment is even bigger.

I mentioned the fiscal-deficit problem first because solving it will provide the government the resources to tackle the unemployment and underemployment problem. For with more revenues the government can be more aggressive in stimulus spending—which creates jobs directly and encourages private-sector activities that also provide

While I mentioned that our growth prospects, in general, are brighter this year than last year, agriculture, which feeds majority of our people, is still reeling from the impact of last year’s disasters. Weather experts are predicting the El Niño phenomenon this year, which means water shortage in contrast to last year’s massive floods.

The next president must move fast to help farmers recover from their losses caused by typhoons Ondoy and Pepeng (in a previous column I suggested direct cash transfers to farmers who lost their crops) and to prepare for the anticipated drought. The first task should be to repair agricultural infrastructure that were damaged or destroyed, like irrigation systems (which will also build up water supplies to cope with El Niño). As much as possible, the manpower requirements for these activities should come from the rural areas, to generate income for farmers while waiting to harvest new crops.

Next, we have the elections during which we will be doing an experiment on a new system: automation. Criticisms and concerns have been raised since the start of the bidding for the company that will install the facilities for automated elections. Actually, automation is limited to counting of votes and transmittal of results, as voters will still use pens to choose their candidates from the ballot.

The latest, of course, is the reported shipment into the country of 5,000 jamming devices that could be used to prevent electronic transmittal of election results. I have heard assurances from the Comelec, the contractor for the election automation and telecom providers that they will be able to cope with this threat.

I hope they do, and that the elections will be clean, both in the national and local levels. Otherwise, it will be a big headache for the economy. Worse, it may lead to a political crisis.

Then, we have the Mindanao problem, not only the insurgency, but also the peace and order situation in southern Philippines.

Add to that a skeptical bureaucracy. Many of the officials and employees of the government will adopt a wait-and-see attitude, and will be wary of the new CEO. That’s understandable. So I believe the new president must promptly move to relay his agenda to the bureaucracy and enlist their cooperation and support toward that agenda.

Traditionally, it is said that a new administration enjoys a honeymoon before it settles down to work. This time, the honeymoon may just be a period during which businessmen give the new president the benefit of the doubt.

Considering the serious challenges and the magnitude of the tasks facing the government, I don’t think the new president will have a honeymoon. He must start working as soon as he takes his oath of office.

As I said before, there’s no time for on-the-job training. The new president must hit the ground running on Day One.

So, let’s choose our country’s CEO very well.

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LBP’s profit hits P6.76B; assets balloon to P510B

Erik de la Cruz
Business Mirror

State-owned Land Bank of the Philippines (LandBank) posted a record-high net income of P6.76 billion and expanded its asset base to P510.64 billion in 2009, fortifying its rank as one of the country’s top five banks.

In a statement on Monday, LandBank said its net profit in 2009, which was 35 percent higher compared with the 2008 figure, topped by 22.909 percent the original target of P5.5 billion. Its profitability boosted its return on equity to 15.7 percent.

The improved profit reflected the “significant” growth in resources and deposits, it said.

“Amid the economic challenges and the spate of calamities that hit the country, 2009 proved to be another banner year for LandBank,” said Gilda Pico, LBP president and CEO. “With prudent management and a clear institutional focus, we were able to register a solid performance last year.”

Driven by continued increase in income from loans and investments, the bank’s top-line figure reached P31.4 billion, reflecting an 18-percent increase over the previous year.

The bank—the fourth-largest local bank in terms of assets, loans and deposits at the end of September 2009—posted an 18-percent increase in total assets over the previous year.

Its deposit base expanded 19 percent to P396.7 billion, while capital accounts grew 34 percent to P47.82 billion.

Regular loans increased 9 percent to P194.7 billion.

“These results further strengthen our financial standing, making LandBank well-positioned for continued growth in order to support our priority sectors,” Pico said.

In an interview in January, Pico said the bank was looking to boost its bottom line this year to P7.2 billion. Interest income should remain robust this year, she said, after the bank booked more loans in the past year.

The bank also planned to beef up its capital to be able to lend more this year.

Pico had said the bank would revive its plan to sell up to $150 million in hybrid Tier 1 notes within the first quarter. The capital-raising exercise was approved by the central bank in 2008, but was delayed due to the global financial crisis.

Hybrid notes are a debt instrument but have equity-like features, making them acceptable as Tier 1, or core, capital under the internationally accepted capital-adequacy framework of the Basel II accord.

LandBank has tapped Deutsche Bank and Citigroup to manage the debt issue.

According to Pico, proceeds from the notes sale will likely lift LandBank’s capital-adequacy ratio by about two percentage points from between 17 percent and 18 percent reported before the end of 2009. This level was already well above the minimum regulatory requirement of 10 percent.

PNB’s net income doubles to P2.2 billion in 2009

Erik de la Cruz
Business Mirror

PHILIPPINE National Bank (PNB) reported a net income of P2.2 billion in 2009, double the figure it posted in 2008, and on Monday said it was looking to deliver a more solid performance this year as it gets bigger and stronger with its possible merger with Allied Banking Corp.

“Strong gains in its core businesses, improvement in asset quality and higher operating efficiencies drove the bank’s banner performance in 2009,” PNB, formerly government-owned but which is now controlled by businessman Lucio Tan, said in a statement.

PNB closed trading on Monday unchanged at P21 after dropping to its lowest at P20.75 on December 22, 2009. It hit its peak at P24.75 on December 29, 2009.

The bank, which is controlled by businessman Lucio Tan, said its net interest margin rose 18 percent to P7.8 billion on increased lending, while net gains from trading and investment securities hit P1.4 billion following the improvement in mark-to-market valuation of securities held for investment.

In a filing posted on the web site of the Philippine Stock Exchange, PNB said Tan is the beneficial owner of 462.70 million PNB shares, or 69.868 percent. His holdings are listed in the name of various corporate stockholders, which belong to the Tan group of companies. The list also shows foreigners owning 43.748 million shares, or 6.61 percent, which are held by Standard Chartered Bank as depository bank or record stockholder.

The market value of these investments was significantly eroded in 2008 when the global financial crisis rattled investors.

PNB expanded its loan and investment portfolios and participated as either lead or coarranger of several landmark debt issuances of big-name companies and the government in 2009.

The bank said its consumer-loan portfolio also grew “briskly” as it actively marketed its auto, housing and multipurpose loan products.

Its deposit liabilities rose 7 percent to P215 billion as of end-2009. Its offer of five-year long-term negotiable certificates of deposits in March raised P3.25 billion in additional funds.

PNB also launched last year medium-term dollar and peso time deposit products and renminbi savings and time deposit products.

Boosting the bank’s top and bottom-line figures were P1.9 billion in miscellaneous income, which improved 22 percent due largely to increased revenue from the sale of foreclosed properties.

In line with its prudent risk-management policies, PNB made additional provision for impairment and credit losses, pushing its nonperforming-loan (NPL) coverage ratio to 88 percent, from 82 percent in 2008.

Its NPL ratio further dropped to 5.9 percent as of end-2009, from 8.5 percent a year earlier and from more than 50 percent several years ago before it underwent a government-supported rehabilitation program.

The bank’s consolidated resources grew 3 percent to P284.5 billion. Aside from increased asset allocation toward loans, it built up other earning assets, including a P2.8-billion equity investment in Allied Commercial Bank (ACB) in Xiamen, China.

The asset growth, it said, came from the expansion in deposit base (7 percent) and stockholders’ equity (9 percent).

PNB also said its capital-adequacy ratio remained at 19 percent as of end-2009, well above the minimum regulatory requirement of 10 percent.

The bank said it expects to finally merge this year with Allied Bank, which Tan also owns, after the merger has finally hurdled regulatory and legal impediments. With the merger, PNB, as the surviving entity, expects to become the fourth-largest private local bank.

Legal issues have prevented the two banks from merging their operations, including the need for Allied Bank to divest itself of 28-percent equity interest in California-based Oceanic Bank before merging with PNB, which is required under US banking regulations.

Omar Byron Mier, PNB president and CEO, last month said the Tan group was hoping to complete the share sale by the middle of this year.

PNB was upbeat on prospects for 2010, saying it “expects to further build up on its solid achievements the past year [and] looks forward to the consummation of its legal merger with Allied Bank.”

“This [merger] will further fortify PNB’s franchise and enable it to better take advantage of the business opportunities in the new decade,” it said.

Preparing for the next administration

Sen. Edgardo J. Angara
Business Mirror

Last week marked the end of the third regular session of the 14th Congress, which will reconvene in May but only as a canvassing board of the presidential and vice-presidential election.

According to Standard & Poor’s latest report “Asia-Pacific Sovereign Report Card: 2010 Will Be Testing for Policymakers,” this year’s presidential election is crucial to the Philippine economy. The next administration’s priorities, especially with regard to fiscal reform, will determine whether foreign and domestic investment will flourish.

But while the credibility and capability of the next administration are certainly pivotal, its success equally depends on what they’re given to start with. Public policymaking, after all, never starts with a clean slate, but builds on the successes and challenges of the past.

During the 14th Congress we endeavored to lay down the groundwork for sustainable economic growth, with particular focus on banking and financial reform, and on science and technology.

The 2010 national budget sets out a second stimulus package that focuses on sustaining growth through green technology.

Throughout the 14th Congress, we have enacted measures that will strengthen the financial system and build up our capital market.

We shielded our financial system from the strains of the financial crisis through the charter reforms of two key financial institutions: the Philippine Deposit Insurance Corp. (PDIC) and the Pag-IBIG Fund. We amended the PDIC charter to expand and extend its protection to bank depositors, providing wider deposit-insurance coverage, from P250,000 to P500,000. This boosted public confidence in the local banking system amid the global financial crisis. The Pag-IBIG Fund Charter was also amended to allow it to provide more loans for the huge housing backlog. The amendments restored the fund’s tax-exemption privilege, granted its board of trustees the power to set contribution rates, and provided Pag-IBIG employees a compensation plan comparable with the ones prevailing in the private financial sector.

We have also introduced measures to deepen capital markets in the country, through the Personal Equity Retirement Act, or Pera, and the Real-Estate Investment Trust (REIT). Pera is a pension scheme that supplements existing government pension plans, and aims to encourage Filipinos to save more by providing tax incentives to its contributors, such as income-tax credits equivalent to 5 percent of total Pera contribution, and tax exemptions in the income and eventual distribution of the Pera. Pera then channels these domestic savings into financial instruments. The REIT, on the other hand, is a stock corporation that invests in income-producing real-estate assets such as apartments, office buildings, warehouses and the like. It allows the direct returns of real estate in a securitized form by providing a structure for real-estate investments similar to how mutual funds manage stock investments. The introduction of the Reit will hopefully increase investments in realty assets, and allow both large and small investors to invest in real estate.

The “Preneed Code and the Credit Information System” are also now in place. The former establishes rules to govern the operations of preneed firms and provide protection to consumers, while the latter gathers credit information from financial institutions such as banks, credit-card companies and government lending institutions, and makes it available to lenders. Armed with reliable credit information, lenders can now manage credit risks better, which, in effect, can lower the cost of credit and reduce the reliance on physical collateral. Its greatest benefit is making credit more available, especially to small yet responsible borrowers, as their good track record in paying their obligations will be made known to the financial institutions.

Congress also passed the Business Recovery and Insolvency Act, which creates a more systematic framework for insolvency proceedings and provides equitable treatment of all parties involved in financial restructuring or rehabilitation.

Policy proposals recommended by the Congressional Commission on Science, Technology and Engineering (Comste), which I chair, have received budget allocations for 2010. These include the Renewable Energy Research and Development (R&D) Institute and the Philippine Industrial R&D Institute, research institutions that will spur R&D and link it to industries to produce innovative products and services.

Yet another Comste proposal allotted funding is the National Telehealth System, which, through information and communications technology, will allow long-distance consultation with experts in the Philippine General Hospital. An electronic health record system for poison and trauma patients will also be developed to provide relevant information and health education to the public, and facilitate continuous learning for health professionals. The National Telehealth System will eventually bring the best health care to the most remote barangays, and bridge the urban-rural divide in health care.

Another is a Disaster Management Center, in order to manage risks and prepare the populace and public officials to cope with disasters. Typhoons Ondoy and Pepeng and Haiti underscore its national urgency. But we didn’t neglect social protection, we have passed laws that provide social safety nets, especially in response to the economic crisis and the typhoons last year. We enacted a P12-billion emergency fund, intended to rehabilitate areas destroyed and damaged by Ondoy and Pepeng in 2009 and those by Frank in 2008.

We have passed a salary-standardization law, which substantially increased salaries of government employees.

And the Expanded Senior Citizens’ Act of 2009 now awaits the signature of the President. By exempting senior citizens from the value-added tax, the expanded Senior Citizens’ Act will allow them to fully enjoy the discounts granted to them by the Angara Law.

E-mail: edgardo_angara@hotmail.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it . Web site:

Monday, 8 February 2010

PGMA to launch 'legacy of accomplishment' tour of Luzon Urban Beltway Super Region

LIPA CITY, Batangas – President Gloria Macapagal-Arroyo continues her “legacy of accomplishment” tour of her Super Regions program by appraising this time, the Luzon Urban Beltway, during her visit to this province tomorrow (Monday, Feb. 8).

The Super Regions program, which according to the President was designed to spread development away from an inequitable concentration in Manila, is composed of the North Luzon Agribusiness Quadrangle, Tourism Central Philippines, Agribusiness Mindanao, Cyber Corridor and the Luzon Urban Beltway.

The President had launched the tour of the Super Regions beginning with the NLAQ in Batac, Ilocos Norte last month and had recently wrapped-up her visit to the “next wave cities” of the Cyber Corridor last week. Tomorrow, the President will launch the LUB Super Region tour at the University of Batangas Campus here.

The LUB Super Region is composed of the southern part of Central Luzon, the entire Metro Manila, CALABARZON, and half of Region IV-B, specifically the islands of Mindoro and Marinduque, which are the country’s bases of industry, manufacturing, and trade and commerce. It is one of the five (5) Super Regions created by the President in 2006 pursuant to Executive Order No. 561.

After the launching ceremony, the President will proceed to the Batangas Seaport to conduct a windshield inspection of the completed Batangas Port Development Project (BPDP), an undertaking aimed at converting the Batangas Port into a major international container terminal.

She will then proceed to the Philippine Ports Authority Building located within the Batangas Port where she will be briefed on the BPDP.

The completed Batangas Port Development Project (BPDP), which consists of Phase I (domestic) and Phase II (international) will serve the Mindoro Island and other islands within the economic range but will respond to the demand of the burgeoning trade and commerce resulting from the regional developments. The port is expected to complement the Port of Manila.

From the Batangas Port, the President and her convoy will traverse the 42-kilometer long Southern Tagalog Arterial Road (STAR) to Sto. Tomas, also in Batangas, to personally inspect the on-going construction work that will link the STAR to the South Luzon Expressway (SLEX) once completed.

The construction work includes:

Scope of Work

1.   Original
•   Construction of 19.74km
P 1.5 B
•  Completed and open

     2-lane (southbound) expressway

    to traffic in April 2008.

     from Lipa City to Batangas City

     (Stage 2)

•  Currently in operation

•   Operation and maintenance of

     the entire 41.90 kms STAR from

     Sto. Tomas to Batangas City

2.  Additional Works
•   Construction of a new toll Plaza
P 53.7 M
•  30% - Accomplishment

    at Sto. Tomas.

•   Scheduled  for completion

•   Construction of two (2)
P 19.48 M
    in May 2010

    pedestrian overpasses at

    Pakalat and Malainen

•   Improvement of the STAR Rotonda
P21.23 M

    at Balagtas