by Eileen A. Mencias
OPPOSITON lawmakers on Thursday urged President Gloria Arroyo to call a special session so that Congress can declare a state of emergency in Mindanao to deal with an energy crisis that they said could doom the May elections.
“How about a state of emergency to solve the problem in Mindanao? We need the power right now,” said Cagayan de Oro Rep. Rufus Rodriguez, who is running for re-election under the banner of ousted President Joseph Estrada.
“I want the [House] committee [on energy] to call on the President to solve [the problem in] Mindanao...we can have a failure of elections when you cannot count 12 million votes,” he said.
The House committee on energy led by Pampanga 2nd District Rep. Mikey Arroyo conducted a hearing Thursday to look into the frequent brownouts in the Visayas and Mindanao and how those could affect the coming elections.
Speaking at the hearing, Rodriguez said power outages in Mindanao were now occurring three times a day for two to three hours each time. In Surigao, he said, outages lasted eight hours.
Cavite Rep. Jesus Crispin Remulla, a senatorial candidate and spokesman for the opposition Nacionalista Party, supported Remulla’s call for direct action by the Energy Department.
“We have to face reality... it’s a bitter pill,” he said.
Parañaque Rep. Roilo Golez said power barges from Singapore and Taiwan could be mobilized in the short term, but long-term solutions must be found.
“The power supply could fluctuate, a four-megawatt margin is not a comfortable allowance,” Golez said.
Remulla and several other legislators are seeking a review of the Electric Power Industry Reform Act in light of the country’s power supply problems. The law prohibits the debt-saddled National Power Corp. from taking on new obligations, which will happen if it contracts power on its own.
Under the law, Congress must acknowledge that there is an “imminent crisis” and declare a region to be in a state of emergency before the government or Napocor can enter into new energy supply agreements.
Energy Secretary Angelo Reyes was not at the hearing because he was in Mindanao, talking to stakeholders there, Arroyo said.
He added that a new hearing would be held so that Reyes could attend.
At Thursday’s hearing, the National Grid Corp. of the Philippines assured the committee that there would be enough power on election day.
“The reserves vary from 214 megawatts up to as high as 1,000 megawatts on May 10. We have scheduled maintenance and repairs the previous months so that the power plants will provide power during the election month of May,” the company’s deputy assistant chief technical officer, Carlito Claudio, said.
“The problem is in Mindanao. Because of El Niño, there’s not enough power generated by the hydroelectric power plants...On May 10, there will be a shortage of four megawatts, but we can offset it if we can tap into the generators [held by private companies and individuals in the region].”
Energy officials estimate that the government can tap an extra 80 megawatts from private power generators in the region.
Power Sector Assets and Liabilities Management Corp. president Jose Ibazeta blamed the shortage in Mindanao on its heavy reliance on hydroelectric power. The hydroelectric power plants could not supply as much energy during a drought, and one way to solve the problem was to expand the region’s power sources to include coal and diesel, Ibazeta said.
“The problem that’s happening in Mindanao is [due to] the total dependence of Mindanao on the Agus complex. It relies only on hydro,’’ Ibazeta said.
“If there is drought, there is a deficit. The answer to the problem is not to rely on hydro solely and have a mix.”
Saturday, 20 February 2010
by Eileen A. Mencias
By JAMES A. LOYOLA
SM Prime Holdings, Inc. (SM Prime), the Philippines’ dominant shopping mall developer and operator, reported a 10 percent growth in consolidated net income last year to P7.0 billion from P6.4 billion in 2008.
In a disclosure to the Philippine Stock Exchange (PSE) Friday, SM Prime said its revenues grew by 15 percent to P20.5 billion in 2009 while EBITDA (earnings before interest, taxes, depreciation and amortization) rose 14 percent to P14.0 billion, for an EBITDA margin of 68 percent.
These results include the operations of the three SM malls in China, which are located in the cities of Xiamen and Jinjiang in Southern China, and Chengdu in Central China.
“Due to the continued support and patronage of our customers, SM Prime again met its targets for 2009 despite the challenges brought about by the global recession and a series of natural calamities that affected most of Luzon in the latter part of the year,” said SM Prime president Hans T. Sy.
Rental fees, which accounted for 86 percent of total revenues, reached P17.7 billion, for a 15 percent increase year-on-year. Growth was driven mainly by new malls and the expansion of existing malls, although same store sales also grew 5 percent.
In 2009, SM Prime opened SM City Naga in Camarines Sur, SM Center Las Piñas in Metro Manila, and SM City Rosario in Cavite . It also expanded SM City Rosales in Pangasinan, SM City Fairview, and SM North EDSA through its Sky Garden.
Combined, the new malls and expansions in 2009 added 226,000 square meters (sqm) to the company’s total gross floor area (GFA), bringing it to 4.5 million sqm, for a 5 percent increase.
Operating expenses increased 19 percent to P9.7 billion last year, largely due to expenses related to mall expansion. Income from operations posted a 12 percent growth from P9.6 billion in 2008 to P10.8 billion in 2009.
For 2010, SM Prime plans to open SM City Novaliches in Quezon City; SM City Tarlac; SM Supercenter Masinag in Antipolo City, Rizal; and SM City Calamba and SM Supercenter San Pablo, both of which will be in the province of Laguna.
SM Prime is also scheduled to open SM Suzhou in fourth quarter, its fourth mall in China, which is located in the province of Jiangsu. SM Suzhou will have a GFA of approximately 70,000 sqm.
Davao City (18 February) -- President Gloria Macapagal-Arroyo immediately asked Budget Secretary Rolando Andaya for the release of the P300 million budget intended to finish the Surigao-Davao Coastal Road after conducting a road inspection in the area Tuesday as part of her Agribusiness Legacy Tour in some parts of Mindanao.
Hosting a dinner for the media at the Waterfront Insular Hotel, President Arroyo reported to the media how their travel time was cut by half because of the recently established road network that connects Surigao to Davao Oriental.
However, she admitted that another P600 million is still needed to finish the remaining network that would connect Lingig to Boston.
The Surigao-Davao Coastal Road Project links the eastern towns of Bacuag, Surigao del Norte and Mati, Davao Oriental.
She said, its completion could speed up the transport of products and services in these areas.
"I am happy to have visited the area especially that it was known to have peace and order issues. This is so far the biggest road infrastructure projects under my administration, except of course the express highways which have their own contracts," PGMA said.
National and Davao media were invited to the dinner since President Arroyo wanted to tap the media as channel to let the public know on the major projects under her administration.
She stressed her administration's priority of making Mindanao as the center for agriculture and business.
The road network is considered the biggest anti-poverty project. This would also, in turn, bring in developments in the peace aspect of the region.
"Serving as your President, I have gone to all provinces of Mindanao," she said.
The present administration claimed that it is investing in Mindanao at every level, and puts the needs of Mindanao front and center.
The President also believed that all these efforts are starting to pay off. Records showed that gross regional domestic product (GRDP) of the Mindanao Super Region grew by 42.977 percent, from P175.93 billion in 2000 to P251.53 billion in 2008. The GRDP growth rate of the Super Region expanded by 14.29 percent from an average of 6.02 percent in 2000 to 6.88 percent in 2007. In 2008, Mindanao's GRDP contributed 17.71 percent to national GDP. (PIA XI)
Some 40 journalists based in the Visayas and other areas with rich tourism potentials will be given a media briefing tomorrow (Friday, Feb. 19) at the Heroes Hall of Malacañang as the launching event for President Gloria Macapagal-Arroyo’s week-long tour next week of the Tourism Super Region, one of 5 growth corridors defined in her 2006 “super region” strategic development plan.
“We have invited media personalities to the briefing, which will include an open forum with ranking officials of government agencies and presentations on Philippine economy in general, tourism and other Super Regions,” the Office of the Press Secretary (OPS) said.
The Tourism Super Region tour is the fourth leg of her five-Super Region tour started three weeks ago with her visit to the Cyber Corridor, which consists of major cities nationwide with large information and communication firms and business process outsourcing corporations.
The second Super Region visited was the Urban Luzon Beltway consisting of South Luzon, CALABARZON, Metro Manila and Central Luzon regions envisioned as a major logistics and services hub in the Pacific-Asia rim that accounts for about $1 trillion of the estimated $3.5 trillion global logistics market. Early this week, the Chief Executive traveled through Agribusiness Mindanao Super Region, to project the region as “breadbasket of the Philippines.”
Malacañang officials described Philippine tourism as a sunshine industry that can be optimized through private sector intervention. (PND)
The seven-man Independent Commission Against Private Armies, also known as the Zenarosa Commission, has stepped up meetings and liaison with the Philippine National Police (PNP) and other law enforcement groups to firm up urgent action plans against private armed groups, which now number 117 nationwide.
“Just like candidates and political parties, we too are in a race with time because the private armed groups (PAGs), by their nature and intentions, are principally election accessories and are very disruptive ones,” said Commissioner Herman Z. Basbaño, spokesman of the presidential body. President Arroyo created the Commission last December 8.
Basbaño said that upon directives issued by Commission chairman, retired Justice Monina Arevalo Zenarosa, the Commission has been holding daily meetings and consultations to coordinate its action plans with law enforcement agencies, including the military, the prosecution arm of government and anti-crime groups and non-governmental organizations.
He said the Commission has been briefed by PNP Intelligence about the existence of 117 PAGs in all the regions, with members running close to 5,000 many of them with arms.
The PNP said the Autonomous Region for Muslim Mindanao (ARMM), which includes Maguindanao province, scene of the gruesome massacre of 58 persons last November, accounts for 25 PAGs, the biggest for any of the country’s 13 regions.
Although individually operating and not exactly linked to each other, the PAGS constitute a significant threat to peace and order, especially during the election period.
He said the Commission, whose members are Bishop Juan de Dios M. Pueblos, Mahmod L. Adilao of the Ulama League of the Philippines, Army Gen. Jaime Echeverria (ret), Dante L. Jimenez of the Volunteer Against Crime and Corruption, and Police Director General Virtus V. Gil (ret), met again Monday through Wednesday this week to receive intelligence updates from PNP and to assess the reports.
PNP Intelligence officials said that while a number of PAGs have already been neutralized, and its members disarmed and charged in court, many of these groups remain active and at the sides, waiting for possible election engagements.
PNP officials said 117 special police task forces, one for every active PAG, have been formed to intensify monitoring of PAG movements, checkpoint operations, and intelligence build up.
Former Armed Forces General Edilberto Adan, a permanent adviser to the Commission, said the body will press for the detailed inventory of PAGs, a sort of an “order of battle” to enable the commission to determine PAG profiles, membership, and capability. Adan said it is not remote that some PAGs could be employing not only private bodyguards of politicians, but also retired, inactive, and even active policemen and soldiers.
According to Basbaño, the whole Commission is slated again to go to another Mindanao province for another consultative dialogue with various sectors.
Zenarosa declared earlier that Commission was bent on exhausting all means so that none of the reported PAGs can possibly disrupt the forthcoming elections. (PND)
Thursday, 18 February 2010
by Alena Mae S. Flores
The Energy Department converted Forum Energy Plc’s geophysical survey exploration contract into a service agreement that will allow the British firm to start drilling operations over the disputed Reed Bank area off west Palawan in the South China Sea.
“We are very pleased to have finally secured the service contract over the GSEC 101 area in what is a company-changing development for Forum Energy. We intend to push forward with the appraisal of this gas field to commerciality and ultimately to the delivery of material value to our shareholders,” Walter Brown, Forum Energy Philippines chief executive, said.
“Given the potential size of the resource and proximity to the Asian markets, we believe this project is an ideal candidate for an LNG [liquefied natural gas] facility,” Brown added in a statement posted on the company’s Web site.
The local unit of Forum Energy earlier held the GSEC 101 license. The Reed Bank area, which includes the Sampaguita gas field, is estimated to contain a minimum of 3.4 trillion cubic feet of proven gas in place.
Results from the 3D seismic program and an analysis done by independent consultant Count Geophysics Ltd. showed that the maximum reserves could go up to 20 trillion cubic feet of gas.
The Reed Bank concession is located at the southwest of the Shell-operated Malampaya gas field in northwest Palawan, the country’s only gas production field to date.
Forum Energy holds a 70- percent stake in GSEC 101, which is the company’s principal asset, while Monte Oro Resources & Energy Inc. owns the balance.
The government initially awarded GSEC 101 to Sterling Energy Plc in June 2002. Sterling drilled four wells at the southwest end of the structure. Two of the wells tested gas at rates of 3.6 million cubic feet and 3.2 million cubic feet per day, respectively.
Forum Energy, meanwhile, said Noble & Co. Ltd., its nominated adviser and broker, had changed its name to Execution Noble & Co. Ltd.
Malacañang last year stepped in to discuss the application of Forum Energy to convert GSEC 101 into a service contract.
A high-level Cabinet meeting was held a few weeks ago to discuss the application of Forum Energy, whose GSEC conversion has been delayed due to concerns over territorial boundaries.
The Reed Bank is part of the disputed area in the South China Sea. China and Vietnam has staked their claims over the Spratly Islands.
by Roderick T. dela Cruz
Strong remittances, investment inflows and proceeds from a $1.5-billion global bond float pushed the country’s balance of payments position to a surplus of $1.233 billion in January this year, the highest in 12 months, data from the Bangko Sentral showed Wednesday.
It marked the second time that the monthly BoP surplus topped the $1-billion mark, after reaching $1.215 billion in December.
The January BoP surplus, however, lower than $1.735 billion recorded during the same month in 2009.
Bangko Sentral expects the BoP surplus this year to hit a range of $3 billion to $4 billion, slightly down from $5.295 billion in 2009.
Remittances from migrant Filipino workers last year rose 5.6 percent to $17.348 billion while foreign portfolio investments posted net inflows of $388 million despite the global economic crisis.
Foreign portfolio investments, or overseas funds temporarily invested in local stocks and securities, recorded net inflow of $170 million in January.
Standard Chartered Bank economist Nicholas Kwan said he expected remittances to go up by 6 percent this year.
Frederic Neumann, economist of the Hong Kong and Shanghai Banking Corp., predicted that remittances would remain robust, growing by at least 5.8 percent in 2010.
A strong BoP surplus is expected to protect the economy from external shocks, said World Bank senior economist Eric Le Borgne.
This would also support the value of the peso this year, which is expected to end at a range of 43 to 44 per dollar by the fourth quarter, said Kwan.
Bangko Sentral has been accumulating foreign exchange reserves over the past eight years to take advantage of strong dollar inflows. The gross international reserves hit $45.4 billion in January this year.
The reserves are expected to receive a boost after the Philippines said it planned to borrow $2.5 billion from foreign creditors this year to help plug a widening budget deficit. It successfully sold $1.5 billion worth of global bonds in January this year.
By Abac Cordero
The Philippine Star
MANILA, Philippines - With no fanfare, boxer Z “The Dream” Gorres arrived home yesterday, more than three months after he nearly lost his life for winning what proved to be his last fight on the ring.
He flew in from Las Vegas under cover of darkness and was wheeled to a VIP room. He looked happy shaking the hands of some of his well-wishers as he made his way out of the immigration line.
Gorres granted an early interview with GMA-7. He held on to the microphone and stammered as he fielded simple questions. But he sounded very happy that he’s finally home and will get to see his children
“By God’s mercy, I’m okay,” said Gorres in Filipino as he sat on a wheelchair and often wiped his face with a white towel.
“Good morning,” he said. “I’m very happy being able to return to see my kids. I have four kids.”
Gorres, who underwent brain surgery after collapsing on the ring just moments after winning his bout against Luis Melendez last Nov. 13 at the Mandalay Bay in Las Vegas, was flown straight to his home province of Cebu.
He held a press conference later in the day, and again showed his happiness being able to return home, when three months ago there was great doubt whether he would live.
Gorres thanked his family and friends as well as his fans for providing all the support, and singled out Sen. Lito Lapid as the only government official to visit him while he was fighting for his life.
“He was the only one who visited me, and I’d like to thank him for helping me,” said Gorres.
Manny Pacquiao, the greatest boxer in the planet today, has vowed to provide financial support for Gorres, now that he’s home, and never to fight again.
Gorres’ hospital bills in Las Vegas totalled more than half a million dollars. His promoter, Top Rank, shouldered $50,000 and the rest was paid for by the state of Nevada.
Now, he needs to continue with his rehabilitation, and his personal doctor, US-based physician Benito Calderon, said there’s a very good chance Gorres will be able to walk again.
“His improvement was so fast, we did not expect it,” Calderon said, adding that Gorres, who suffered paralysis on the left side of his body, is now able to move freely and can even get up with the help of a walker.
It will take time before Gorres fully recovers. But what’s important, to him, his family and friends, is that he’s finally home.
DAVAO CITY—President Gloria Arroyo said Tuesday 10 major infrastructure projects in Mindanao worth P13.95 billion will be finished before she steps down on June 30.
Those projects will spur growth in Mindanao and develop its human and natural resources, she said.
“We must free our young people in Mindanao from the scourge of poverty so that they may look to a brighter future,” Mrs. Arroyo said.
“This future will be built on education, good roads and infrastructure, and jobs for them and their families.”
The projects to be build are the following:
• the P3.96-billion Sibuco-Sirawai-Siocon-Baliguian road that will connect Zamboanga del Norte and Zamboanga del Sur
• the P363.09-Iligan City circumferential road
• the P504 million Dinagat Island road network
• the P6.68-billion Surigao del Sur-Davao del Sur coastal road
• the P451-million Zamboanga Airporthttp://www.manilastandardtoday.com/insideNews.htm?f=2010/february/17/news7.isx&d=2010/february/17
• the P478.05-million Dipolog Airport
• the P375.46-million Pagadian Airport
• the P212.12-million Ozamiz Airport
• the P592.74-million Butuan Airport
• the P327-million Cotabato Airport.
Mrs. Arroyo said Mindanao could only have lasting peace through development.
“Peace and development goes hand in hand,” she said.
“With agribusiness underpinning our unstoppable march toward peace and development in Mindanao, we are optimistic that the attainment of our development vision is at hand.” Joyce Pangco Pañares
Rizal Raoul Reyes
DMCI Homes, the property development unit of construction heavyweight DMCI, is adopting a bullish outlook on its 10th year as it has allocated P5 billion for the development of ongoing and new projects
In a press briefing on Wednesday at the Rockwell complex, DMCI Homes managing director Alfredo Austria said the amount will include the development of three new projects, namely, Cedar Crest, The Redwoods and the Iris Tower at the Tivoli Garden Residences. The company is riding on the momentum of a good performance in 2009 as it is set to launch four new projects for this year.
“The company is also confident that our products will do well this year. In fact, we have a projection that our revenue growth will be on a significant level this year which is around 25 percent,” he said in an interview.
Austria said the company will capitalize on the growth of the Taguig area by launching Cedar Crest, a themed medium-rise community, along with Rosewood Pointe and Royal Palm Residences.
He said Taguig City offers good opportunities to DMCI Homes because of the continuous ongoing developments, primarily at the Bonifacio Global City (BGC).
Austria said Cedar Crest will offer medium-rise clusters for families with two-bedroom and three-bedroom unit options. He said the first building will be ready for turnover by May 2011.
After successfully developing The Manors and the Magnolia Place, Austria said DMCI Homes will pursue its third venture in Quezon City by developing The Redwoods. It is a resort-themed, Neo-Asian inspired mid-rise condominium village found in central Fairview. Scheduled ready-for-occupancy status of the first building is on March 2011.
Austria said the Iris Tower project within the Tivoli Garden Residences has shown another facet of the company’s development skills by building the 42-storey project. Iris Tower, according to a company executive, is the company’s response to people who want to live and work in Makati.
At the briefing, DMCI Homes marketing manager Cherrie Lyn Cruz also said the company will pursue projects in northern Metro Manila in anticipation of an increase in the demand for middle-income condominiums.
“We are further expanding our scope by entering new territories such as the Northern Quezon City and their adjacent neighbors, such as Camanava (Caloocan, Malabon, Navotas and Valenzuela) and Bulacan for The Redwoods,” she said.
“At the same time, we are always improving on our projects by providing home spaces that are secure, modern, yet conducive for harmonious relationships within the community. Our target market of young families and upgraders from the area don’t have to worry about acquiring their first home. DMCI Homes is here to give them the home that they deserve,” she added.
THE best Hobie cat sailors in Asia and the Pacific will test each other’s sailing prowess in the waters off Batangas, as the Philippine National Hobie Championships unfolds from February 19 to 22 at Tali Beach and Club Punta Fuego, Nasugbu.
Organized by the Philippine Hobie Challenge Foundation (PHCF), the National Championships will gather multiawarded sailors from Hong Kong, Thailand, Australia, Fiji, New Zealand, Korea and the Philippines.
Participants will compete for top honors in the different categories—Open Class, Philippine National Championship, Masters (over 45), Grand Masters (over 55), Youth (under 21) and Ladies.
According to Jerry Rollin, the regatta’s race director, the Nationals will highlight the importance of the Philippines as a sailing haven in the Asia-Pacific region because of its beautiful bodies of water and ideal wind conditions.
Rollin added that the hosting of the Nationals will bring the country closer to bagging the right to stage the Hobie Worlds Championships, which will gather the world’s best sailors in 2011.
A Hobie cat is a twin-hulled, wind-powered sailboat, crewed by two persons and is capable of interisland sailing.
Teams to watch out for are the Philippine Sailing Association teams of Mark Gil Francisco with Richly Magsanay, and Joel Mejarito with Ashly Escalante, who will represent the country in the Asian Sailing Championships in Shanwe, China, in March and the Asian Games in November.
The regatta is a unique opportunity for the national players to compete against world-class sailors such as Aaron Worral of Australia, Grahame Southwick of Fiji and Tong Shing of Hong Kong.
The PHCF is the exponent of Hobie sailing in the country and organizes the annual Philippine Hobie Challenge and Travelers’ Series, which sails around different destinations across the country to promote sailing, as well as sports and adventure tourism.
Outside the Box
The recent presidential-candidate forum hosted by the Philippine Chamber of Commerce and Industry harvested the typical answers about the economy that we have heard for a decade.
Everyone said the normal mantras. Stop corruption and smuggling. Increase food production. More help for the poor. Peace and order. Really nothing new.
Yes, Gordon talked about the same three economic drivers I have been writing about for more than a decade; tourism, agriculture, and mining. Villar spoke of the fact that small and medium businesses are the engines of the economy and that the banks would rather loan money to the government than to you. I said that a few weeks ago. Estrada wants to improve the agricultural sector. Teodoro spoke of the lack of public confidence in government.
All good answers. All from the same decades-old script.
I would have liked a little more insight into the understanding these men have of the Philippine economy. Each comes from a different business background with a variety of experiences and, therefore, the potential of a variety of perceptions. I personally would have liked to have asked each what they think is different about the Philippine economy.
It is a valid question because no economy is exactly the same as another. Therefore, every economy reacts to situations differently. Why, for example, did the Philippines miss the worst of the global financial crisis in 2009?
Look at what happened in other countries. China went into this global meltdown with a trillion dollars in its savings account in the form of foreign currency reserves. Singapore, although suffering a massive recession and contraction in 2009, carries virtually no foreign debt. Russia has only a little foreign debt and is nearly self-sufficient in both basic commodities and consumer goods. Thailand is stable because of small debt and a well-diversified economic base.
France, Germany, and Great Britain are suffering greatly because they depend on the US market. Italy and Greece are bankrupt because they sell very little to the world markets. All have a large debt obligation also.
So therefore, what is unique about the Philippines?
I can almost guess the answers to my question from the presidential candidates. All would have talked about remittances. Another would have mentioned outsourcing. One might have said something about the country being at the bottom so the Philippines cannot go any lower. Another would have lauded the current administration for its economic policies.
From an article in BusinessMirror with “expert” analysis: “World Bank country director Bert Hofman told members of the Foreign Correspondents Association of the Philippines that monetary authorities, led by Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., at present can be cited for providing the stabilizing force that enabled the Philippines to post a modest 0.9-percent growth in 2009. The Philippines has restored macroeconomic stability and, as important, a reputation for macroeconomic stability, mainly on the back of rapidly growing remittances that provide a strong basis for currency stability and international-reserve buildup,” Hofman said.
I do not think the World Bank has a clue either about what makes the Philippine economy stable and growing in this environment. My opinion is this. It is not the macroeconomics that makes this economy resilient. It is the microeconomics. By that, I mean the way you and 90 million other Filipinos conduct our financial affairs.
Simply put, the global meltdown started because both the private sector—ordinary people and businesses—and the public sector—governments—have too much debt. The housing collapse in the US and Europe started because individuals borrowed too much money. Now we are in a full-blown disaster because governments also have too much debt. If only the “people” and businesses had debt problems, and the governments had practiced sound financial policy, the governments could have easily solved the problem.
If the young student spends his money for candy, instead of buying supplies for his school project, the father can always step in financially to “bail out” the child. But if both have wasted all their money, the whole family suffers a financial meltdown.
If you look at the total amount of both public and private debt in countries such as Iceland, Greece, the US, Ireland, Spain, and the United Kingdom, private (individual and business) debt is equal to or even greater than the public government debt. In effect, both the private and the government sectors in these countries are bankrupt and are having great problems paying their bills. Their entire economies are bankrupt and insolvent.
Here in the Philippines, it is only the public sector that carries large amounts of debt. And because the private sector is very solvent, it can in effect “bail out” the government if necessary.
Look at our banks and corporations. Credit-rating companies like Moody’s, Fitch, and Standard & Poor’s will not give a nation’s businesses a credit rating higher than that of the country’s government. In fact, firms such as San Miguel, Ayala Group, Shoemart, and the Gokongwei companies are better credit risks than the Philippine government. But their ratings cannot be higher than the Philippine government by the formulas these credit agencies use.
In the Western nations, the government gets the highest rating and companies are lower. And it is all a fraud because both the private and the public sector are broke.
So what makes for the residency and strength of the Philippines? It is because Filipinos and Filipino companies are not heavily in debt and overextended. And this fact should be the primary focus of government economic policy, which is what the candidates need to understand and act on. Every policy action from Malacañang and the legislature should have one goal and one goal only—helping and strengthening private business interests, not the government treasury.
Unfortunately, it seems like that when even a successful businessperson becomes a public official, he starts thinking like “government” and protecting government interests instead of private-sector priorities. I hope it will be different in this election.
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Wednesday, 17 February 2010
THIS time, there’s nothing vague about the accounts coming out of Malacañang Palace. President Arroyo, declared her aides, on Tuesday signed into law Republic Act 9994, or the Expanded Senior Citizens Act, which grants more benefits to senior citizens and restores their full 20-percent discount on goods and services that had been diminished by the imposition of the expanded value-added tax (E-VAT).
The 20 percent provided in the original law for seniors was effectively whittled down to 8 percent when the VAT was expanded to 12 percent and imposed on their purchases several years ago.
The Chief Executive has never tried to play down the huge fiscal cost of the new measure—estimated by the Department of Finance (DOF) at P1.68 billion per year—in a year when the government can least afford it, given the projections that the deficit may hit anywhere from P290 billion to P300 billion. And yet, as she instinctively replied when asked at a media lunch two weeks ago, on what she would do to the seniors’ bill, she replied, “As much as possible I don’t veto a measure like that. At the very least I’ll let it lapse into law.” She was aware of the serious fiscal impact the new law would have, but then wondered aloud, “Why didn’t they catch it when it was still in Congress?” Meaning, the fierce battles should have been fought there, with supposed congressional allies of the administration fighting it out with fellow lawmakers whose tendency might be to simply pander to the gallery to score brownie points for the election. So, she signaled after that lunch, the die had been cast, and she wasn’t about to let them just dump it on her lap for her to kill—and be the villain for it.
If the accounts by Palace officials were correct, she, however, took her time signing it, given the understandable agitation of the finance department, and then decided in the end after hearing the final arguments from two senior Cabinet members—one for veto, Finance Secretary Gary Teves; and one for signing the bill, former social-welfare chief now Health Secretary Esperanza Cabral.
As we said in an earlier space, perhaps the feared administrative nightmare by the Bureau of Internal Revenue (BIR) and the merchants involved in effecting the discounts would have been avoided if the lawmakers had simply stuck to the original plea of the elderly—to restore the discounts to 20 percent—and not tucked in so many other freebies that, while sure to be appreciated by the old folk, could pose difficulties in implementation, like the discounts on water and other utility bills. But all that is water under the bridge now, pun unintended, and all those involved—DOF, BIR, utility firms and the merchants of medicine and other goods covered by the new law—must bite the bullet.
Meantime, we would counsel all the presidential aspirants to review very well the particularly tedious process this piece of legislation took, if only to learn from it, especially on how to balance public-welfare issues with fiscal considerations. This is crucial to them, because the revenue to be forgone by this new law would form part of the new president’s problems. As the forum of presidential aspirants hosted by the Foreign Correspondents Association of the Philippines showed on Monday, while most of the bets shared the consensus that the fiscal challenge is serious this year, they provided very disparate views and strategies in coping with it.
It simply means the genius hasn’t been born yet who could lick the deficit and related problems in one fell swoop. Most of the fare we’ve heard so far comprises part angry rhetoric about jailing plunderers and smugglers, and part wish list. They still have over 10 weeks to go back to their agenda-planning and study very well the fiscal challenge faced by the country they want to lead. This far in the debate game, we haven’t even scratched the surface yet of all the interrelated issues that a new leader must understand. For one, the spaghetti bowl of trade and tariff agreements coming into force this year by itself already presents an entirely new subset of problems—for the state, for industry and labor.
One can only hope whoever wins on May 10 has set his mind to really reckoning with all these challenges.
Paul Anthony A. Isla
CONSUMERS can rest assured that power supply in Luzon will remain uninterrupted up to June.
This assurance was made after Energy Secretary Angelo Reyes said on Tuesday that the 620-megaWatt (mW) Limay combined-cycle power plant was coming online yesterday (Tuesday) following an agreement signed by San Miguel Energy Corp. and Alstom Philippines Inc.
“We can rest assured that there will be no brownouts up to June in Luzon. Unless you have two power plants suddenly conking out, and this is very unlikely. But if only one power plant conks out, we still can handle the situation,” Reyes said in a press conference.
Initially feeding 55 mW to the Luzon grid, according to the energy chief, the Limay will eventually romp up its capacity until it reaches its full capacity.
Reyes also noted that there have been some developments, such as the Magat and the Kalayaan hydro power plants, which produced additional power partly owing to the cooler weather.
“The demand for cooling had been less. And this helps alleviate the problem, and these are factors that have contributed to the situation having been addressed,” he added.
In a separate press conference, lawyer Francis Saturnino Juan, executive director and spokesman for the Energy Regulatory Commission (ERC), said the price of power generated from Limay will depend on what SMEC and a distribution utility will agree on.
“However, if the Limay will sell the power it produces to the Wholesale Electricity Spot Market, then the rate to be applied will be based on the market price,” he added.
Juan said Limay could also be dispatched as a must-run unit.
A must-run unit, according to Juan, refers to a power plant that is required to run even without the need to make an offer to the market but will paid based on the market price of power.
Juan warned that Limay can even haggle for an additional compensation if asked to operate as a must-run unit.
Reyes said if Limay is declared a must-run unit, there must be a mechanism for it to be properly compensated through the filing of appropriate documents with both the Philippine Electricity Market Corp. (PEMC) and ERC.
PEMC and ERC, Reyes said, have assured him to act expeditiously on any petition for additional compensation to be asked by SMEC.
“Definitely, it will have an impact on the rates to consumers, as you cannot have electricity at no cost. But I’m certain the ERC will act on it and make sure that the cost burden will be distributed equitably,” Reyes said.
Carlito Claudio, deputy assistant chief technical officer of the National Grid Corp. of the Philippines (NGCP), said on Tuesday the available capacity is 7,100 mW, the projected peak demand is 6,600 mW, and the reserve is estimated to be about 500 mW even with the Limay out.
So if Limay comes in at 540 mW at its full capacity, Claudio said the reserve will be more than 1,000 mW.
Claudio said demand-side management will have an impact in making the supply stable.
“With residential customers accounting for 30 percent of the consumption, a reduction in their consumption will be a big help in bringing down the demand,” he said.
Reyes also said the Luzon grid is on white alert or having enough reserves to address a contingency brought about by one plant conking out.
There are two types of reserves such as regulating reserves (spinning), which ensures the uninterrupted, quality supply of power; and contingency reserve, which ensures a power could be immediately brought in case any power plant conks out, he explained.
President Gloria Macapagal Arroyo today signed into law the bill exempting the country’s estimated 4.6 million senior citizens from paying the 12 percent expanded value added tax (EVAT) on basic purchases and other essential goods and services.
This was announced today by Deputy Presidential Spokesman Gary Olivar.
Called the Expanded Senior Citizens Act of 2010 (Republic Act 9994), the new law enables senior citizens to enjoy fully the 20-percent discount on consumer goods and services provided under a 2003 legislation known as RA 7342, otherwise known as “An Act to Maximize the Contributions of Senior Citizens to Nation Building, Grant Benefits and Special Privileges, and for Other Purposes.”
The EVAT exemption for the senior citizens, or those who are 60 years old and above, applies to purchases of medicines and essential medical supplies, accessories and equipment; fees of attending physicians; medical, dental fees and diagnostic and laboratory fees; fares for buses, jeepneys, taxis, AUVs, shuttle services, public railways, domestic air and sea transport craft.
The tax privilege also applies to services in hotels, restaurants and similar establishments; admission fees in cinemas, theaters and other places of culture, leisure and amusement; and funeral and burial services.
Additionally, the bill provides each senior citizen a monthly stipend of P500, subject to the periodic review of Congress in coordination with the Department of Social Work and Development (DSWD).
In case of death of an indigent senior citizen, the amount of P2,000 will be awarded to his or her nearest kin as benefit assistance.
Under the bill, senior citizens may also enjoy a five-percent discount on their water and electric bills, on condition that the utilities are in the name of senior citizen and that the consumption is below 100 kilowatt-hours of electricity and 30 cubic meters water a month.
The measure also expands the penalties for those who refuse to grant the benefits. Establishments and their owners, managers, and personnel found violating any provision of the law face a penalty of between P10,000 and P50,000, or imprisonment of at least one month but not more than six months.
Administration congressmen led by House Speaker Prospero Nograles, one of the bill’s sponsors, described the measure as a significant legislation that will form part of President Arroyo’s legacy to the Filipino people after she bows out of office in June.
Rep. Reynaldo Uy (Samar), and Rep. Eduardo Zialcita (Parañaque) and Sen. Pia Cayetano, principal sponsors of the bill in the House and in the Senate, hailed the measure as a tangible recognition of the role senior citizens play in Philippine society.
Cayetano explained that the senior citizen’s discount under the original law passed in 2003, had effectively translated to only eight percent since seniors were also required to pay the 12-percent EVAT in their purchase of medicines, good and services. (PND)
MAINIT, Surigao del Norte (PND) --- President Gloria Macapagal-Arroyo today vowed to "liberate" this province, the tenth poorest in the country, from poverty by improving the productivity and incomes of rural farmers and opening markets through ports and other vital infrastructures.
Surigao del Norte is part of Agribusiness Mindanao, one of five super regions mapped out by the Arroyo administration in 2006 to spur the country's economic development.
Addressing students, teachers, and government, business and civic leaders at the Surigao del Norte College of Agriculture and Technology, the President also cited the need to liberate the youth from violence and poverty which she called the "twin scourges of society," through education and by expanding their opportunities to a better life.
In the Bisayan dialect, she called Mindanao the bread basket of the country. She said: "We need to beef up the region's productivity some more through the provision of 300 composting facilities; giving MRFs (Material Recovery Facilities) so that garbage becomes fertilizers; building irrigation for 400,000 hectares in Mindanao and spending P9 billion in farm to market roads and highways, including the Surigao-Davao coastal roads and ports."
The President was accompanied here by Press Secretary Crispulo Icban Jr., Transportation and Communication Secretary Leandro Mendoza, Environment and Natural Resources Secretary Horace Ramos, Public Works and Highways Secretary Victor Domingo, Commission Hadja Luningning Omar of the Commission on Higher Education, Mindano Agribusiness Super-region Champion Secretary Jesus Dureza, and Agusan del Norte 1st District Rep. Jose Aquino.
Prior to the President's arrival, the DENR held a composting demonstration for students and farmers using used truck tires, carabao manure, farm wastes and farm or garden soil. Impressed, the President tasked the DENR to coordinate with all LGUs to adopt the recovery facilities in all barangays as required by law.
The President cited the help of Land Bank of the Philippines which has so far provided P161 billion in countryside loans of which P46 billion went to Mindanao. Most of these loans went to driers and post harvest facilities to improve the quality of farm produce so they can command better prices in the market.
Tuesday, 16 February 2010
President Gloria Macapagal Arroyo flies tomorrow (Tuesday) to Mindanao for the third leg of her Super Regions tour, beginning with on-site inspection of an ongoing upgrading of the Surigao-Davao Coastal Road.
The road project links the eastern towns of Bacuag, Surigao del Norte and Mati, Davao Oriental. When completed, travel time between the two towns will be cut by one-half or from the usual eight hours to only four hours.
Necessarily, this will speed up the transport of products and services in these areas, notably from the Caraga region and Davao Oriental to the Davao Port and nearby ports.
The Arroyo administration has mapped out several development projects for Mindanao to spur the southern regions’ economic growth under the Super Region strategy.
President Arroyo said she had identified two overriding objectives of her mission and visions for Mindanao.
First is to “unlock” the human and natural resource potentials of Mindanao and free the people from the threat of violence.
“We must free our young people in Mindanao from the scourge of poverty so that they may look to a brighter future. This future will be built on education, good roads and infrastructure, and jobs for them and their families,” the Chief Executive stressed.
The second is to restore peace and prosperity in the region. The President pointed out that the people of Mindanao have suffered long enough.
”I have made sure that every single day as President, I put the needs of Mindanao front and center. We are investing in Mindanao at every level, for only investment in hope—not fear—will set the region free to grow and prosper,” she said.
According to the President, the Mindanao Super Region is host to a number of companies, including multinationals that produce high value crops, fruits, vegetables for the domestic and global markets.
Mindanao produces also 100 percent of rubber and pineapple production, and 50 percent of coconut, considered as three of the country’s top agricultural commodities.
Government peace initiatives under the Arroyo leadership have also attained breakthroughs towards the conclusion of a peace accord with the Moro Islamic Liberation Front (MILF), notably the resumption of the on Dec. 8-9, 2009 in Kuala Lumpur, Malaysia.
The MILF strength has decreased by about 10 percent, or from 12,570 armed combatants nine years ago to 11, 352 as of third quarter last year. On the other hand, the manpower strength of the Abu Sayyaf Group was cut by almost one-half, or from 800 in 2001 to only 345 as of May last year.
“Peace and development go hand in hand. With agribusiness underpinning our unstoppable march towards peace and development in Mindanao, we are optimistic that the attainment of our development vision is at hand,” President Arroyo emphasized.
Reaping the fruits of peace and development.
The gross regional domestic product (GRDP) of the Mindanao Super Region grew by 42.977 percent, from P175.93 billion in 2000 to P251.53 billion in 2008. The GRDP growth rate of the Super Region expanded by 14.29 percent from an average of 6.02 percent in 2000 to 6.88 percent in 2007. In 2008, Mindanao’s GRDP contributed 17.71 percent to national GDP.
The gross value added (GVA) of the Mindanao Super Region in agriculture and fishery increased by 38.95 percent from P64.52 billion in 2000 to P89.65 billion in 2008.
The inflow of investments and growth of the economy led to the increase in jobs and income in the Mindanao Super Region.
Employment rate increased from 92.5 percent in 2000 to 95.1 percent in 2009. More than half were employed in agriculture and other related sectors as of October 2007.
The average daily income of private sector workers increased from P110-P180 in 2000 to P195-P265 in 2009.
Citing government records, the President asserted that the much-improved peace and order situation in Mindanao has already resulted to growth of the agribusiness sector.
Supply of commercial fisheries grew by 28 percent from 737,600 metric tons (MT) in 2001 to 922,500 MT in 2008, accounting for 75.23 percent of the 1.23 million MT national production last year. On the other hand, chicken and hog industries grew by 28.3 percent and 18.64 percent, respectively, from 2001 to 2009.
Total banana exports increased by 13 percent from 418,654 MT in 2001 to 473,301 MT in 2009. Moreover, two giant banana exporting companies joined the Mindanao-based Pilipino Banana Growers and Exporters Association.
Mindanao palay production increased from 3.14 million metric tons in 2001 to 3.79 million MT in 2008. This accounts for 23 percent of the 16.8 million MT national production in 2008. In addition, corn production went up by 32 percent, while coconut by 19.25 percent in 2008.
Approved investments in the Mindanao Super Region more than doubled from P23.01 billion in 2007 to P79.33 billion in 2009. Share of Mindanao investments to national Board of Investments-Philippine Export Processing Zone approved investment increased by three times from 6.5 percent in 2007 to 26.47 percent in 2009.
Cumulative remittances of overseas Filipinos (OF) coursed through banks were stronger-than-expected in 2009, growing year-on-year by 5.6 percent to US$17.3 billion, Bangko Sentral ng Pilipinas (BSP) Officer-In-Charge Diwa C. Guinigundo announced today. The 2009 level exceeded the BSP’s forecast of US$17.1 billion remittance flows or a 4.0 percent growth for the year. Remittances from sea-based and land-based workers rose by 12.1 percent and 4.2 percent, respectively. For the month of December 2009 alone, remittances grew by 11.4 percent, registering the highest level at US$1.6 billion.
Remittances remained resilient amid the recent global financial crisis, providing strong support to domestic demand. The remittance level for the year accounted for 10.8 percent of the country’s Gross Domestic Product. The steady remittance flows from overseas Filipinos were underpinned by the following factors: i) the sustained demand for Filipino workers overseas, specifically the skilled workers such as engineers, medical practitioners and teachers; ii) the conduct of bilateral talks with host countries which continue to open up new employment opportunities abroad for Filipinos and facilitate hiring of displaced workers who were affected by the global economic difficulties; and iii) the continued expansion of bank and non-bank service providers’ international and domestic market coverage to capture a larger share of the global remittance market as well as the introduction of innovative products and services that cater to remitters’ specific needs. As of end-December 2009, commercial banks’ established tie-ups, remittance centers, correspondent banks and branches/representative offices abroad increased to 4,192 from 3,015 at end-2008.
The Philippine Overseas Employment Administration (POEA) reported that 41.6 percent (or 221,548) of the total approved job orders of 532,214 in 2009 were processed during the year, possibly adding to the stock of remitters. Processed job orders comprised mainly of service, production, and professional, technical and related job categories needed in Saudi Arabia, Qatar, UAE, Kuwait and Hong Kong. The remaining 58.4 percent are still to be filled up. The geographical diversification of overseas Filipino workers (OFWs) has also contributed to the resilience of remittance flows. Since not all host countries were severely affected by the global financial crisis, Middle East countries (Saudi Arabia, in particular, which is the major destination of OFWs) continue to absorb a significant number of deployed OFWs, including those that have been displaced elsewhere.
For the period January-December 2009, the major sources of remittances were the U.S., Canada, Saudi Arabia, U.K., Japan, Singapore, United Arab Emirates, Italy, and Germany.
Jenniffer B. Austria
TKC Steel Corp., the only publicly- listed steel company in the Philippines, plans to raise as much as $1 billion to establish the largest integrated steel manufacturing facility in the country.
TKC Steel said in a disclosure to the stock exchange it appointed Pricewaterhouse Coopers Financial Advisors Inc. as financial adviser to help raise the funds.
Pricewaterhouse will identify prospective strategic partners and investors and prepare a work program, including the acquisition of mining interests related to iron ore.
TKC Steel will use the raw material feedstock for the blast furnace project of subsidiary Treasure Steelworks Corp., which is nearing completion in Iligan City.
“The program is envisioned to provide the investment environment for further steel expansion of the steel manufacturing and the mining industry sectors,” TKC Steel said.
TKC Steel chairman Ben Tiu said in a text message that family-owned mining areas could be transferred to TKC Steel. The Tiu family has one mining claim each in Mindanao and Visayas.
The transfer of the company’s mining claims to TKC Steel is expected to ensure the steady supply of iron ore for its blast furnace.
TKC Steel earlier tied up with Zamboanga-based Mikro-Tech Inc. and Karanglan Resources and Mining Corp. to conduct exploration of more than 8,700 hectares of mining prospects in Zamboanga del Sur.
It is also in talks with Vinc Vita Mining Corp. for the supply of up to three million of iron ore over the next five years.
Tiu said the blast furnace would be operational within the next few weeks. The facility is expected to double the company’s billet annual production to 600,000 metric tons from the current level of 300,000 MT.
Roderick T. dela Cruz
A fast and sustained annual growth of 7 percent or higher is possible for the Philippines with the “right mix of ingredients,” World Bank country director Bert Hofman said Monday.
Hofman said the growth level could help the Philippines catch up with its high-income neighbors and also benefit more people.
Hofman referred to the performance of China, Taiwan, Thailand, Hong Kong, Indonesia, Japan, South Korea and Taiwan, which experienced average growth rates of 7 percent or more over a period of 25 years or longer.
Citing a World Bank study titled “The Growth Report: Strategies for Sustained Growth and Inclusive Development,” Hofman said a fast and sustained growth was not a miracle.
“It is attainable for developing countries with the right mix of ingredients,” he said.
The study looked into the policies adopted by 13 economies that led to sustained high growth rates for long periods since 1950.
Hofman said policies that allowed economic growth to be shared by all sectors of society, especially the poorest of the poor, along with “the right mix of ingredients,” usually resulted in broad-based development.
He said the rapidly-growing economies of Asia achieved their status by fully engaging with the global economy, maintaining macroeconomic stability, mustering high rates of savings and investment, letting markets allocate resources and electing committed, credible and capable governments.
By BERNARDO M. VILLEGAS
It is a foregone conclusion that consumption will drive the Philippine economy during the first semester of 2010, thanks to election-related spending, the momentum of the pump priming initiated by the Government in 2010, and the continuing flow of OFW remittances. Some forecasters are already projecting at least a 5 percent GDP growth for the first semester. From recent data on the relationship between GDP and GNP (Gross National Product), that could mean a growth of 6 percent or more in GNP. In the Philippine setting, GNP is a more accurate predictor of consumption spending. It includes income earned by Filipinos abroad and remitted to their relatives in the Philippines. GNP is, therefore, a more complete measure of what is available for spending by Filipinos in the Philippines.
A good first semester may encourage Philippine firms to invest more in the second semester in expanding their production by purchasing more equipment and machinery and by building up their inventories. Will that mean that we can expect an investment-led recovery in the second semester? The answer will depend on whether or not we can successfully hold elections on May 10, 2010. There are enough political analysts who are considering the probability that there could be a failure of elections because of the breakdown of the automated system or because of wholesale cheating. I am glad that these possibilities are thoroughly analyzed in public because they are increasing the vigilance of numerous groups committed to the common good who will do everything possible to thwart the evil intentions of those wanting to perpetuate themselves in power through manipulative practices. I am absolutely convinced that the Filipinos will rise to the occasion of protecting the sanctity of the ballot and will reduce the probability of a failure in elections to practically nil.
Among the initiatives that convince me that we will have a successful election is the series of electronic town hall meetings entitled "Electoral Risks," spearheaded by the Coalition for Voter Empowerment, composed of members of the Management Association of the Philippines, Kilosbayan, the Movement for Good Governance and Youth Vote Philippines; in cooperation with ANC, DZMM, Weber Shandwick Worldwide, Yellow Brick Road and Snapworx. Their aim is to empower the electorate with substantive and quality information on gut issues critical to the welfare of the voters and to the state of the nation to enable them to cast informed votes in May. There are also parallel initiatives of the Makati Business Club, the Bishop-Businessmen Conference, NAMFREL and other NGOs that will mobilize the citizenry to safeguard the vote against malevolent forces of society. Having interacted closely with the top officers of the Philippine National Police, I am completely convinced of the patriotism of the current leaders who will root out among their ranks any collaborators with corrupt officials who have the intention to perpetrate cheating in the next elections.
As regards an unintentional breakdown of the automated machines, I am convinced that there are enough principled members of COMELEC (I can cite a personal friend, Rene Sarmiento) who will have in place a contingency plan of shifting to manual in the last minute. As long as we can control the activities of the cheaters through voters' vigilance, manual voting can still come out with credible results. While in Spain in April 2007, I witnessed the last national elections. I went from precinct to precinct in Barcelona and saw that the voting was manual. They also had a long list of names in the printed ballot that included national, regional, provincial and local candidates. I was totally impressed because, despite the manual procedure they used, the results were out in less than twenty four hours. There is nothing inherently problematic with manual voting as long as we can minimize the influence of the evil doers who want to prostitute democracy. I repeat: Filipinos are sufficiently mature in democratic processes so that we can defeat the evil minority who will try to make a mockery of our next elections.
As long as there will be honest, orderly and peaceful elections, we can see an upsurge in investment in the second semester of 2010. Among the most winnable Presidential candidates, I see very little difference in their approach to the economy. They all talk of reducing the budget deficit, building countryside infrastructures, improving the quality of basic education, improving governance and addressing the problem of mass poverty. As long as the elections are credible, investors will give whoever is elected President the benefit of the doubt, at least during the first twelve months, that he will follow the example of the Indonesian President in fighting corruption in government.
I am also convinced that the incumbent President, even if she is elected into Congress, will wield very little influence on the next Government. Having seen at very close range the utter failure of the present Government's desperate attempt to introduce Charter Change, I see no reason why charter change can prosper at least in the first three years of the next Administration. Once things stabilize for the next President, I will be one of the first to recommend a Constitutional Convention to coincide with the elections in 2013 so that we can start the process of removing the many restrictions in our Constitution that discourage Foreign Direct Investments. In the meantime, though, the Philippines has enough inherent attractions so that starting in the second semester of 2010, we shall see an increase of both local and foreign direct investments in mining, tourism, business process outsourcing, transport and logistics, infrastructures, energy, education and high-value agribusiness. We just have to cross the bridge of holding an honest, orderly, and peaceful election (HOPE). Since May – when elections will be held-- is the month of Our Lady, let us pray especially to Our Lady of Peace and Good Voyage for HOPE. For comments, my email address is email@example.com.
Outside the Box
Here I go again, talking about subjects that you need to know about but which are ignored in the local press and media. It is a thankless job and nobody really cares, but somebody has to do it.
“Pigs” stands for Portugal, Ireland/Italy, Greece and Spain. The farm-animal pig has a bad reputation, probably undeserved, for being lazy, sloppy, messy, eating everything it can while producing very little. The European Pigs have the same reputation and they most certainly deserve it.
The euro zone and the euro currency were created back in the good old days of economic prosperity as a way to compete with the United States and, to a lesser extent, China. The Europeans figured that if they formed one economic union larger than the US, they could export and import much more effectively. But in order to form this union they had to have a single currency along with complete free trade across their borders.
The free-trade idea would not have worked if there were multiple currencies with different exchange rates. The problem with this union is sort of like inviting all of your “economically disadvantaged” relatives to live with you. The richer nations such as Germany and France had to help the poorer nations. It worked sort of well as long as the rich are still making enough money to support the poor.
Meanwhile, countries like Greece (just like poor relatives) believed that they could do whatever they wanted to economically because there was always the rich relative nations standing by to help them out and give them a few bucks whenever they need it. And if you have ever been feeding a live-in relative while they have been visiting the 5/6 man too often, you will understand the current situation.
In 2009, Greece owed an amount equal to 108 percent of gross domestic product, and its budget deficit is about 12 percent of its GDP. Euro zone rules say a country cannot have a budget deficit-to-GDP ratio of more than 3 percent, but poorer relatives do not always follow the rules. Plus, you know how hard it is to kick people out of your house once they move in.
Now, Greece cannot pay creditors and it is running to France and Germany for a bailout. Problem is that the German people are not happy with having to put a few billion of their own money for Greece. The problem with Greece is that it does not do very much economically. It manufactures very little for the world markets and consumes much more than it produces. Oh, and its birth-rate growth is about 1.3 percent, so there are a lot of old Greeks in comparison to the total population that produce nothing.
So now, the rich Europeans do not want to pay the bills that Greece has piled up, but Greece is still a part of the euro. The easy answer might be to just kick Greece out, but then, that might mean kicking Italy, with a debt-to-GDP of 115 percent, and Portugal out, too. That would sort of make the euro zone a silly joke and the debt problems of these countries would still not be solved. For example, US banks are owed well over $100 billion and if they lose, that could create a major problem in the US banking system. The debt exposure of the European banks is even greater.
Either way, the currency-trader sharks smell blood in the water and they are circling right now, taking big chunks out of the value of the euro. If the euro system fails, they will come after all of these smaller currencies one by one and we will see a larger global financial disaster. If Germany and France do not bail out Greece, all the weak euro currencies will fall in order and you will see a general collapse of confidence in paper money unseen since post-World War I.
Last week also almost saw the financial apocalypse in the US. A relatively small $16-billion Treasury auction nearly failed. The US must borrow large amounts on a regular basis or it will default on its loans.
By fail, I mean that it appeared that no one wanted to loan money to the US at a low interest rate. The US cannot afford to have interest rates go higher, or that economy will go from serious-but-stable into the ICU and “critical” condition.
The interest rate the US government had to pay was 4.72 percent, instead of an expected 4.687 percent. That is not good. But here is where the “failure” part comes in. Foreign and what is called “indirect” (meaning non-US government entities) participation in the auction was only 28 percent, instead of the average of 41 percent. Something is very wrong when the US government, supposedly the safest debt on the planet, has problems getting others to buy it.
It would be sort of like this. The Philippine government wants to borrow money and the only institutions that are willing to loan to it are the Social Security System, Government Service Insurance System and Pag-IBIG. When the last person on earth that will loan you money is your spouse, you are in deep financial trouble.
Watch the situation in Greece carefully because the ramifications are global and very serious. Two scenarios are unfolding and they are both worst-case. One is that the euro zone bails out Greece and then Italy, Spain, Portugal and on and on. The only way the euro zone can do this is by printing euros, which will lead to very high inflation.
The other choice is to effectively break up the euro, which leaves these other countries to the financial wolves and that will send a shockwave through the financial markets that will make 1997 and 2009 seem tame.
You need to keep your money right here at home in pesos and in Philippine banks and in Philippine companies through the local stock market. Anyone who believes that this current global financial situation is not critical and serious probably also thought that typhoon Ondoy was going to be a rainshower.
THEY always knew their goal would be exceeded, and sure enough, on Monday, the Bangko Sentral ng Pilipinas (BSP) said overseas Filipino worker (OFW) remittances grew at an annual clip of 5.6 percent to hit $17.3 billion in 2009.
This was faster than the hoped-for growth of just 4 percent in a year when such flows were to suffer along with many others because of the global economic crisis.
BSP Governor Amando Tetangco Jr. never doubted the OFW remittances would remain resilient, no matter the dour forecasts that this important source of foreign exchange would fall victim to the global crisis as well.
But according to BSP Deputy Governor and officer in charge Diwa Guinigundo, the cumulative remittances of overseas Filipinos coursed through banks were stronger than expected in 2009.
Instead of growth of just 4 percent as expected, these grew instead by 5.6 percent year-on-year to $17.3 billion, or $200 million more than target.
The 2009 level exceeded the BSP’s forecast of $17.1-billion remittance flows, or a 4-percent growth for the year.
Remittances from sea-based and land-based workers rose by 12.1 percent and 4.2 percent, respectively.
For December 2009 alone, remittances grew by 11.4 percent, registering the highest level at $1.6 billion, he said in a statement.
These flows provided strong support to domestic demand, allowing the country to evade a feared recession by actually growing 0.9 percent in terms of the gross domestic product (GDP).
The remittance level for the year accounted for 10.8 percent of GDP as it proved resilient amid the recent global financial crisis.
Guinigundo said the remittance flows were underpinned by factors, such as the sustained demand for Filipino workers overseas, specifically the skilled workers such as engineers, medical practitioners and teachers; and the conduct of bilateral talks with host countries which continue to open up new employment opportunities abroad for Filipinos and facilitate hiring of displaced workers who were affected by the global economic difficulties.
The remittance flows were also affected by the continued expansion of bank and nonbank service providers’ international and domestic market coverage to capture a larger share of the global remittance market, as well as the introduction of innovative products and services that cater to remitters’ specific needs.
The Philippine Overseas Employment Administration said 41.6 percent or 221,548 of the total approved job orders of 532,214 in 2009 were processed during the year, possibly adding to the stock of remitters.
Processed job orders comprised mainly of service, production, and professional, technical and related job categories needed in Saudi Arabia, Qatar, the UAE, Kuwait and Hong Kong.
The remaining 58.4 percent are still to be filled up.
The geographical diversification of OFWs has also contributed to the resilience of remittance flows.
Since not all host countries were severely affected by the global financial crisis, Middle East countries (Saudi Arabia, in particular, which is the major destination of OFWs) continue to absorb a significant number of deployed OFWs, including those that have been displaced elsewhere, Guinigundo said.