Friday, 4 June 2010

BPO industry seen to grow by 26% this year

MANILA (PNA) -- The business process outsourcing industry in the country is expected to grow by 26 percent this year, a Cabinet official said Wednesday.

"This year, we're expecting a 26-percent growth... we're definitely building a name for ourselves as the preferred site for the offshoring industry," Commission on Information and Communications Technology Sec. Ray Anthony Roxas-Chua said in a press briefing.

Roxas-Chua said despite the global recession last year, the BPO sector grew by 19 percent and infused 7.2 billion dollars to the economy and employed 440,000 employees.

"The global demand continues to grow... the market is there so the challenge for us is to keep the supply, we have to make sure that we remain competitive," he said.

Both the Philippines and India are considered the location of choice for BPOs due to less expensive operational and labor costs and having an English-speaking workforce.

Palace to DepEd: Consult bishops first before teaching sex education

Manila (PIA) -- The Department of Education (DepEd) should first hold a dialogue with bishops before including sex education in the curriculum of elementary and high school students this school year, a Palace official said on Wednesday.

The agency should consult and clear issues first with the Catholic Bishops Conference of the Philippines (CBCP) before implementing its plan to teach sex education in schools, Executive Secretary Leandro Mendoza said in a press briefing on Wednesday.

He added that the DepEd has to address the CBCP’s reservations on teaching sex education, especially to elementary pupils.

The CBCP on Tuesday renewed its opposition on the teaching of sex education in schools, saying that it is the responsibility of parents and guardians to teach this to their children.

However, Education Secretary Mona Valisno has consistently said that the DepEd is determined to include sex education in school’s basic curriculum, even down to the elementary level.

Mendoza advised Valisno to hear the opinion of all stakeholders before proceeding with the department’s plan. He added that Malacanang will depend on issues to be presented before it makes it stand on the matter.

$1-b Subic resort cleared

by Cecille Garcia
Manila Standard

SUBIC BAY FREEPORT—A Korean property developer has obtained the go-signal of the Subic Bay Metropolitan Authority to develop a $1-billion resort complex in a 615-hectare beach front property between the free port and Morong town. Construction will start next month.

M Castle chairman Sang Soo Shin said shortly after signing a contract with SBMA administrator Armand Arreza that the project would change the landscape of Subic and adjacent areas in Morong, Bataan province.

Authorities said M Castle is known for eco-friendly tourism-related projects after the successful opening of several world-class island resorts and health spas in different scenic locations in Korea.

The Subic project includes the development of beach and forest condominiums, villas, a five-star hotel with 2,400 rooms, a 36-hole golf course, marina club, medical center for oriental and western medicine, water park, shopping mall and an English-language learning house.

Joining the signing ceremony were SBMA senior deputy administrator Stefani Sano and M Castle chief financial officer Ho Gyeong Kim, vice chairman Sang Gon Kim and SBMA director Amando Lagdameo Jr.

“These will be major employment-boosters,” Arreza said. “Aside from the jobs that would be directly created by these projects, there will be thousands of employment opportunities to be generated downstream.”

Arreza said investor confidence, especially of Korean companies, in the Subic Bay Freeport would help double the number of workers here in just two years.

Shin said his group would need around 7,000 workers to build the luxury resort.

Shin said that the company aimed to duplicate its successful projects in Korea in Subic and draw both local and foreign tourists.

M Castle’s first successful project was the Ocean Castle in Anmyeondo in Korea, which showcases the well-preserved beauty of the island resort.

Anmyeondo is a scenic island located on the west coast of South Korea. The island is known for its spectacular beaches and Anmyeondo stretches over 232.5 kilometers long.

M Castle opened in July 2005 the Duksan Spa Castle, a world-class spa resort. Stretched over 18 acres of tropical landscapes, Duksan Spa Castle is an all-inclusive natural hideaway with first-class service and hospitality.

Electronics can snare $10B in yearly investments

Written by Max V. de Leon
Business Mirror

THE country’s electronics sector can attract up to $10 billion in fresh investments yearly as long as the government supports its programs, particularly in the area of international promotions, leaders said.

Arthur Young, chairman of the Semiconductor and Electronics Industries of the Philippines Inc. (Seipi), said getting $1 billion in fresh investments annually would be easy because even the existing firms needed to infuse more funds for expansion and to maintain their competitive edge.

“But why should we just be content with getting $1 billion, when we can also get $5 billion to $10 billion in investments annually just like Vietnam?” Young said.

But Ernie Santiago, Seipi president, said that in order to achieve these goals, their organization must seek fresh support programs from the incoming administration, including a P200-million yearly allocation for international promotions.

Seipi officials are seeking a meeting with apparent President-elect Benigno Aquino III next month to present the concerns of the sector and the support measures it would need from the government.

An immediate need, Santiago said, was in the area of international promotions to enable Seipi to “sell” the country better to more foreign investors.

“We will need P200 million annually for promotional funds to get the big-time players,” Santiago told the BusinessMirror.

He said aside from trade fairs, Seipi needed to post advertisements in big global networks such as CNN and CNBC.

“What we would be advertising is not just the industry but the Philippines as an investment destination. I believe the new administration can also use the good image of our electronics industry in projecting to the world the positive developments in the country,” Santiago said.

The industry needs to do a lot of promotional work, especially now that the big global players have come up with an assessment that they would need another country in Asia outside of China as a manufacturing hub, he said.

Aside from an extensive international promotion campaign, Young said Seipi was also formulating a medium-term master plan to help guide the industry and the government in charting the growth of semiconductor and electronics manufacturing in the country.

“This will be a five- to 10-year roadmap identifying where technology is going, what would be the next business models and where the Philippines should position itself,” Young said.

Santiago said the Seipi team now crafting the road map will meet again in July. It hopes to finish by October.

The underground economy

Written by John Mangun
Outside the Box
Business Mirror

While the politicians grab at each others’ throats to take credit for (or take credit from) the economic results, the truth is that the government may have very little to do with economic activity outside of the broad framework of regulation and incentives.

The probable president-in-waiting says the prior administration did not do a good job of sustainable economic growth. The past administration challenges the new one to meet or beat its numbers. In fact, evidence shows that government may be almost useless in “managing the economy” in a country like the Philippines.

The World Bank estimates that more than 40 percent of the Philippine economy is underground, in the shadows, off the books. This is an important fact for several reasons.

Have you noticed how often the “experts” both in and out of government are surprised by the economic activity numbers? While there are those who say that the numbers are invented, most thinking people agree that the National Statistics Office does a pretty good and accurate job of counting. What the experts cannot figure out is how the numbers can be so far up or down from what they expect.

But the experts cannot see all the economic activity that eventually makes up the economic numbers just as has occurred with the first-quarter 2010 results. How could the economy grow at 7 percent when there does not seem to be the drivers that the economists look at?

Let’s use San Miguel Corp. as an example. The first-quarter 2010 results were amazing. Revenues were up 7 percent from 2009. Operating income grew by 35 percent. How could that be? Where did the consumer money come from to generate those numbers?

Government and private experts looked at export revenue, remittances and investment funding, among other factors, and concluded that economic growth would be about half of the official numbers. But what they could not measure was the underground economy of the taho venders, the taxi and jeepney drivers, the tuberos, and all the rest of the economy that never issues an official receipt; these receipts being used to measure the economy.

But eventually all that underground-economy activity does show up in the final official numbers, such as in the amount of San Mig beer and Ginebra San Miguel that were purchased.

Read this from the first week of March 2010: ‘The domestic economy is projected to grow below 3 percent in the first quarter of 2010 with a 2-percent to 3-percent decline in agriculture output due to El Niño and a strong peso that would limit the stimulative effect of overseas Filipino workers.” This is from the “experts” at Metro Bank and the University of Asia and the Pacific Capital Markets Research, and, honestly, those groups are not foolish or unintelligent. They just never asked one of the sari-sari store owners, who sell 85 percent of the beer in the Philippines, how their businesses were doing.

So exactly how does government intend to manage the economic activity of ten of thousands of sari-sari stores and do a good job of it?

Several studies have shown that more government “managing” and more government policy tend to grow the underground economy. Higher taxes and higher mandated government minimum wages grow the underground economy. More government regulation, from environmental regulations to licensing requirements, pushes businesses to do their business off the books.

The underground economy exists and flourishes as a result of government attempting to manage the economy and not doing it well.

Government economic-policy planners do not have a clue on a real-time basis what is happening off the books. The underground economy grows larger, and perhaps stronger and more profitable, as a reaction to the government not being able to manage the economy well, if at all.

Now here is where it gets interesting. I am sure you have heard countless times the complaint that Thailand is so much better economically than the Philippines, and how we should do whatever the Thai government has done. Which has the larger underground economy? Thailand’s, of course, at over 50 percent of the total economy. We also wrongly assume that it is only “basket case” countries like the Philippines that have a shadow economy. Taiwan does 20 percent of its business activity off the record. Malaysia is over 30 percent. India, over 20 percent. South Korea matches Malaysia’s percentage. Russia is at 45 percent.

Now look at the other side: the US, 9 percent; Japan, 11 percent; the UK, 13 percent; Ireland, 15 percent; Spain, 20 percent, Greece, 2 percent. Notice the names. So they sound familiar? They are the nations that have the worst economic track record in the last two years. The conclusion may be that those countries with a substantial underground economy may be able to adjust more quickly and more effectively to changing times.

Most nations with small shadow economies and economic growth are like China and Singapore, where the economy and many other aspects of individual and corporate life are very closely and stringently controlled.

It is a simple truth that too few in government and too few in the academic world would want to hear or admit; the free market is ultimately the best driver for economic success. The underground economy is perhaps the freest market, responding to a nation’s economic needs more efficiently, effectively, smarter and profitably.

Instead of the politicians and leaders promising to have all the solutions, maybe we should hope that they promise not to interfere in the economy too much.

Perhaps, if government did a little less in trying to manage the economy, it would be the balut vendors driving Mercedes and SUVs, instead of the economic-policy experts.

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Wednesday, 2 June 2010

3 transmission projects pushed

Written by Paul Anthony A. Isla
Business Mirror

THE National Grid Corp. of the Philippines (NGCP), the power lines concessionaire, wants to start building the 230-kilovolt (kV) Kalayaan-New Makban transmission upgrading project, the 230-kV New Antipolo substation project, and the 230-kV San Esteban-Laoag transmission project, among others.

It has sought the Energy Regulatory Commission’s (ERC) go-ahead for a total P4.5-billion transmission projects.

The Kalayaan-New Makban project, projected to cost P2.089 billion, aims to accommodate the full dispatch of existing baseload power plants and the commissioning of future power-generation projects in South Luzon.

The 230-kV New Antipolo project is estimated to cost P1.749 billion, and involves the construction of a new 230/115-kV substation; the San Esteban-Laoag transmission project, about P456.56 million, is intended to accommodate the installation of the connection facility for an 86-MW wind project of Energy Development Corp. and 82-megawatt wind power project of Northern Luzon UPC Asia Corp.

Also submitted for approval is its P267.98-million Visayas substation reliability project that will improve the reliability of the Visayas grid; its 600 megavolt-ampere Dasmariñas EHV substation project intended to maintain the provision for “single outage or N-1 contingency” for the maximum dispatch of the 1,200-MW Ilijan natural gas plants, 600-MW Quezon Power Philippines coal plant, and the 700-MW Pagbilao coal-fired power plant.

Roque Corpuz, NGCP president, earlier said his company has programmed P10 billion to complete priority transmission projects this year.

He noted the capital expenditure will be used to rehabilitate transmission lines and to ensure the delivery of power to its customers this year.

PGMA visit to Sagnay, Camarines Sur

PGMA says thank you to countrymen

MANILA, June 1 (PNA) -- With only 29 days remaining to the end of her term, President Gloria Macapagal Arroyo continues to go around the country to check on the various government projects and to thank the people for their support to her administration, a Palace official said on Tuesday.

"It's still business as usual for the President... she visits the provinces to look into projects especially infrastructures, more notably school rooms in time for the opening of classes next week," Press Undersecretary Rogelio Peyuan said.

"Hindi niya nakakalimutang magpasalamat sa bawat lugar na pinupuntahan niya. Dahil umikli ang kanyang calendar of activities, nagkakaroon siya ng 5-10 minutes na pagkakataon na kausapin ang mga kababayan natin (She never forgets to thank the people in every place she visits. Because of her tight schedule, she sees to it that she has at least 5-10 minutes to talk to them)," he added.

Aside from the usual activities, Peyuan said the President is also monitoring the transition report of the transition team.

"The President is also going through the report submitted by the different agencies in time for a smooth transition to the incoming administration," he said.

Peyuan said the President and her family have yet to pack their personal belongings.

"There's enough time to do that," he said.

President Arroyo will step down at noon of June 30 when presidential frontrunner Sen. Benigno "Noynoy" Aquino III will take his oath as the country's 15th president. (PNA)

Tuesday, 1 June 2010

Ban the gun

Tough on guns
Philippine Daily Inquirer

The Philippine National Police recently disclosed a plan to extend the gun ban imposed during the election season to curb violence due to the unrestricted use of firearms. We would go further than that: We strongly propose the enforcement of a permanent gun ban of the type suggested by Nandy Pacheco of the Gunless Society.

These are the salient features of the gun policy proposed by Pacheco:

—Declare as contrary to public policy, public morals, public order, good customs and public interest the glorification of guns and the culture of violence in the movies, television, radio, print media, billboards, pro-gun stickers, etc.

—Make it a criminal offense for anyone to carry firearms in public unless the bearer is authorized, in uniform and on duty. This will put a stop to the issuance of “permits to carry firearms outside residence” except to authorized law enforcement officers in uniform and on duty. Violation of this rule should be penalized with a long prison term with no possibility of pardon or parole.

—Melt down all smuggled, illegal and confiscated guns for conversion figuratively into plowshares and literally into manhole covers and other useful things.

—Regulate the importation of firearms for private use.

Pacheco said the underlying principle of the proposed gun policy is that “you cannot control crime without controlling the criminal, and you cannot control the criminal without controlling the gun.”

He added: “The point of gun-control legislation is to make the harmless act of carrying a gun in public a criminal offense before such act turns into a violent one like murder, homicide, robbery, kidnapping, etc. It seeks to stop gun violence before it begins.”

Pacheco’s proposal makes a lot of sense, and we recommend it to the incoming president for adoption through an executive order, if that is legally possible, or, if not, for legislation by Congress. We believe that the enforcement of the proposed gun ban would help correct the culture of violence and lawlessness and pave the way to peace and law and order in our country.

Actually, what is being proposed is not a total gun ban but gun control, as explained by PNP Director-General Jesus Verzosa and Pacheco himself. Verzosa said some persons will still be allowed to carry guns but under strict controls and conditions.

The statistics in two past elections tell the story of the effectiveness of gun control. In 2003, the crime rate for index crimes per 100,000 population was 52.1 percent, whereas in 2004, an election year, the crime rate decreased by 1 percentage point to 51.1 percent. In 2006, the crime rate for index crimes was 47.8 percent whereas in 2007, an election year, it decreased by 6 percentage points to 41.8 percent. A Comelec gun ban is imposed during the election period. (Index crimes include crimes against persons such as murder, homicide, physical injury and rape and crimes against property such as robbery and theft.)

The PNP said that the last elections were “the most peaceful” compared to the 2004 and 2007 elections (although 18 persons were killed). Many of the election-related attacks took place in the Autonomous Region in Muslim Mindanao, an area historically notorious for election violence and mayhem.

To be very effective, the proposed gun ban would have to be undertaken together with:

—An intensive campaign to dismantle about 170 private armies across the country, most of them in the restive ARMM.

—An intensified campaign against crime syndicates, including robbery gangs and kidnapping, car theft and drug smuggling syndicates.

—Increased police visibility, with more patrol cars cruising the streets and foot patrols pounding the pavements. Director Roberto Rosales of the National Capital Region Police Office attributed a 35 percent decrease in robberies, an 18 percent reduction in car theft incidents, a 74 percent decrease in physical injury cases and an 8 percent drop in murder and rape cases in the first three months of this year to the Comelec gun ban and increased police visibility program.

The challenge before the next administration, Congress and the PNP is to get tough on guns and to get serious about crime prevention.

Chinese miner Zijin conducts due diligence on Tampakan

Romer S. Sarmiento

GENERAL SANTOS -- A major Chinese miner took its interest to acquire the massive Tampakan copper and gold project in Central Mindanao a step further by visiting the mine development site despite security risks.

John B. Arnaldo, Sagittarius Mines, Inc. corporate communications manager, said yesterday top executives of Zijin Mining Group Co. Ltd., China’s largest gold producer and third-largest copper producer, were recently given a briefing as well as a tour of the development site.

“The top [Sagittarius Mines] management welcomed them,” said Mr. Arnaldo when asked if the visit would end up in the entry of Zijin in Sagittarius Mines, which is controlled by Xstrata Copper, the world’s fourth-largest copper producer.

“The site visit was part of Zijin’s due diligence,” he added.

Mr. Arnaldo said the briefing and inspection would hopefully help Zijin understand better the project, which straddles the towns of Tampakan in South Cotabato, Columbio in Sultan Kudarat, and Kiblawan in Davao del Sur.

The Tampakan project, which has been named by the Regional Development Council and the Regional Mineral Development Council as Central Mindanao’s flagship project, is facing stiff opposition from the Catholic Church and the communist New People’s Army. The latter had launched two violent attacks against the company since 2008.

Zijin’s entry into the Tampakan project, if ever, would be through a takeover of Australian firm Indophil Resources NL, which owns 37.5% of Sagittarius Mines’ 40% controlling equity in the Tampakan project.

The rest of the 40% is held by Xstrata Copper.

The 60% non-controlling equity shareholders of Sagittarius Mines are the Tampakan Mining Corp. and Southcot Mining Corp. (known as the Tampakan Group of Companies). Zijin Mining has set a July 9 deadline for its A$1.28 cash offer per Indophil Resources share.

In a recent statement, the Indophil Resources directors noted that the takeover process is taking longer than originally anticipated, largely due to the extended process required of Zijin in obtaining the necessary approvals from Chinese regulators.

Richard Laufmann, Indophil Resources chief executive officer, said that based on the company’s ongoing communications with Zijin, it was clear the Chinese miner remains fully committed to successfully completing the transaction.

Mr. Laufmann expressed optimism the site visit three weeks ago would lead to Zijin obtaining the necessary approvals from Chinese authorities.

He said the site visit provided officials with the opportunity to discuss the project with various Philippine government agencies, local community representatives, local project staff, and Xstrata as lead manager of the Tampakan copper-gold project.

“I appreciate that Indophil shareholders have shown considerable patience to date. I am confident that all parties are focused on obtaining the required approvals and successfully completing the transaction, which values Indophil at approximately A$545 million,” Mr. Laufmann said.

Accordingly, Indophil Resources’ directors continue to unanimously recommend that shareholders accept the Zijin offer, in the absence of a superior proposal. In April, Sagittarius Mines confirmed it had delivered Tampakan’s Mining Project Feasibility Study, which was undertaken at the cost US$74 million, to the Philippine government.

Based on the company’s latest resource estimates, the Tampakan project involves 2.4 billion tons of minerals, containing 13.5 million tons of copper and 15.8 million ounces of gold. It is touted as the largest undeveloped copper deposit in Southeast Asia.

Continuing development and sustainable growth

Written by John Mangun / Outside the Box
Business Mirror

It seems like that every time good, higher-than-expected economic numbers come out, they create a controversy. It gives an opportunity for the local “Philippine bashers” to have their voices heard. It gives a chance for officials from past administrations to voice an opinion on how things are being done wrong. It allows the propoor advocates to complain.

Those who assure us that the good first-quarter numbers for 2010 are mainly attributable to election spending may have a point. If that’s true, then maybe, the solution for the economic problems of the Philippines is to have yearly national elections. If you look at the economic growth for the last 20 years, it is obvious that it really did not matter who was the president. There were good times and there were bad times. But overall economic growth remained relatively stable. Perhaps, what these experts are really saying about election spending is that the outcome of the election is not the important factor for the economy. It is the election process and spending itself that matter, apparently not the results.

Because weather conditions adversely affected the agricultural sector, many of the comments we have been reading relate to the miserable condition of this important industry, upon which so many Filipinos rely for their livelihood. The primary thrust of the Philippine government for agricultural reform has been land reform. Even after so many years, no one is willing to admit that land reform is a complete failure both in increasing productivity and increasing agrarian workers’ income.

The only truly effective land-reform program happened in Taiwan. But the purpose of Taiwan’s land reform was not to keep people on the farms and raise their incomes. It was to increase the productivity of what, in effect, was a nonperforming asset held by large landowners. The government bought the land with cash and required that the former landowners reinvest those funds in other more productive businesses. In the Philippines landowners were not paid in full and most of the money went to nonproductive purposes, like buying condos in the US.

Small family-owned farms have never been good wealth creators, either for the farmers or the nation, without massive government subsidies as in the US and Europe. In fact, one of the interesting positive offshoots of the Great Depression that saw the demise of small family-owned farms was that millions of agricultural workers, forced off the land, became a massive labor pool for industry. And land productivity increased dramatically on the larger pooled farms because of the economy of scale efficiency that resulted in having to manage a very large farm.

I wonder how many of our farmers would prefer (and benefit) from being able to sell their land- reform property for a fair price and get the training and financing to own a 7-Eleven.

What the country needs is continuing development and sustainable growth.

Continuing development means that the particular industry is constantly being improved to yield greater productivity. The opposite of continuing development are the “get rich quick” schemes that we have developed for the last 20 years. Prawn farming was supposed to be the cure-all for the Philippines’ economic problems. That lasted about five years because there was not a broad, long-term plan. The last inadequate scheme I remember was growing jatropha. Perhaps a great idea in principle, except that none of the jatropha species have been properly domesticated and, as a result, its productivity is variable, and the long-term impact of its large-scale use on soil quality and the environment is unknown.

A good example of continuing development has been the overseas Filipino worker. Heavily criticized, deployment of Filipino workers has been hugely successful from both a national and an individual economic standpoint. From maids and drivers, Filipino works have evolved into a highly competent, required and skilled global work force. Of course, there are social costs. Be honest. There are social costs working at any job. And successive governments have not done enough to reduce those social costs of the overseas Filipino workers. There are social costs of working nights in a call center which are partly offset by increased night-differential wages.

Achieving sustainable growth means preparing far ahead to keep the industry running profitably. Rubber-shoe factories in the Philippines employed many thousands. But no thought was given to improving efficiency and profitably to fight against the threat of lower wages in China. So the industry died.

Philippine outsourcing runs the risk of contraction because of government neglect and bad policy that may hurt the industry’s sustainable growth. The government has addressed the capital side of the industry by offering incentives for the multinationals to set up in the Philippines. But this is a labor-intensive business, and nothing has been done on that side. While tax benefits are given to the companies, nothing has been done for the workers. This is an industry that employs over 500,000, growing at a minimum of 20 percent per year. Where is the law exempting these workers from income tax on their night-differential wages to encourage employment? Government English-language programs, although successful, have had very minor impact because the programs are so small. Where is the five-year, the 10-year plan to get this industry growing?

All the talk about continuing development and sustainable growth has never been matched with continuing and sustainable action. Our political leaders have a tendency to have problems quickly making the transition from campaign rhetoric to leadership. And that is not favorable to making the economy work and keeping it growing. The rest of 2010 is going to be interesting.

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Philippine Q2 GNP may reach double digits

Full-year growth seen higher
Written by Cai U. Ordinario and Mia Gonzalez
Business Mirror

WITH the stunning 7.3-percent gross domestic product (GDP) growth registered in the first quarter, the First Metro Investment Corp. and University of Asia and the Pacific Capital Markets Research (FMIC and UA&P Capital Markets Research) said on Monday their 4.2-percent growth forecast for 2010 may be breached.

In a separate development, Palace officials also said on Monday the economic managers are confident of reaching double-digit GNP growth levels in the second quarter based on the “encouraging trend” set in the first quarter, when the gross national product grew by 9.5 percent, and on indications that the global rebound would be sustained.

In the May issue of The Market Call, the FMIC and UA&P Capital Markets Research said the economyís growth momentum in the first quarter will continue in the succeeding quarters with the beginning of the Aquino administration.

The 7.3-percent GDP growth in the January-to-March period was attributed to the recovery in the manufacturing sector and election spending due to the May 10 polls.

“The economyís growth momentum will likely carry through the succeeding quarters, as more new jobs give fresh impetus to consumption spending, while a new president may spur investments, and exports remain robust. GDP growth may slow down a little as the industrial sector normalizes, but the agricultural sector should recover from El Niño in H1 [first half], and so our full-year forecast of 4.2 percent will probably be exceeded,” FMIC and UA&P Capital Markets Research said.

Factors that would support this growth include benign inflation. The research group said low inflation will likely be sustained since crude-oil prices have stayed below $70 per barrel in the first two weeks of May, something not seen since September 2009.

With this, the FMIC and UA&P Capital Markets Research remains confident the Bangko Sentral ng Pilipinas (BSP) inflation target of 4.5 percent +/- 1 percent for 2010 will be met.

“Monetary policy will remain on hold for Q3 and even up to Q4, as inflation remains on target, while growth is threatened by the euro-zone crisis. Nonetheless, the BSP has room to cut deposit rates on SDAs [special deposit accounts] if it wants more of these funds to move into infrastructure and housing spending,” the group said.

The agriculture sector is also on its way to recovery as El Niño ends, said the research group. It noted that El Niño had accounted for the farm sectorís 2.5-percent contraction in the first quarter.

Data showed that the contraction of palay, corn and sugar cane were the major contributors to the contraction in the growth of the sector. Palay shrank by 11.4 percent; corn, 16.8 percent; and sugar cane, 4.6 percent.

The FMIC and UA&P Capital Markets Research also said despite the higher-than-expected first-quarter deficit of P134.2 billion, the full-year budget deficit of P293 billion “remains attainable.”

The group explained that with the 7.3-percent GDP growth in the first quarter, tax revenues would also increase. The group also said the focus of the incoming administration of ìplugging leakagesî will help keep the deficit within the target set by the interagency Development Budget Coordination Committee.

In the second half of the year, the FMIC and UA&P Capital Markets Research sees exports maintaining its double-digit growth and overseas Filipino worker (OFW) remittance growth growing at around 5 percent to 8 percent.

Investments will also likely pour in in the second half, owing to the change in administration and the introduction of new economic policies. This, however, will cause a slight appreciation in the peso.

“Foreign investmentsóboth portfolio and directóare likely to perk up later in the second half as the economic policies of the new administration becomes better defined,” the group said.

“The peso will remain under siege as long as the euro-zone instability remains and risk aversion reigns, but foreign investments in H2 may again bring it to an appreciation mode,” it added.

Palace upbeat on GNP growth in Q2

Elaborating on the Arroyo administration’s upbeat outlook about hitting double-digit growth in the GNP in the second quarter of the year, Deputy Presidential Spokesman Gary Olivar said: “I would think that the pace of the global recovery would be a major determinant there. Right now, the global recovery seems to be moving and perhaps even accelerating although there are some bumps on the road like the debt crisis in some European countries, but hopefully the trend will continue to be upbeat and upward,” he said.

Director Raymundo Talento of the National Statistical Coordination Board (NSCB) Economic Statistics Office said the impact of campaign spending, which contributed 0.4 percentage point to the GDP in the first quarter, is expected to be felt in the second-quarter as well, since April and the first week of May are part of that period.

”If we will try to observe how the second quarter went, you will notice that April is part of the second quarter and that is still the campaign period and definitely I think it will boost the second-quarter growth. Plus the...positive attitude that our industry players now are having,” Talento said.

Asked whether second-quarter GDP growth is likely to surpass the 7.3-percent growth in the first quarter, the NSCB official said: “The way we see it, it might be but we still have to see the information.”

Olivar said the economic momentum is “something we are bequeathing to the next administration, whether they recognize it or not, whether they would credit us for it or not, it’s already there.”

On skepticism about the 7.3-percent GDP growth in the first quarter, Talento stressed that the NSCB is a professional and “apolitical” organization using an internationally-prescribed methodology to monitor the economy, and that it has a “history of  actually understating our own estimates.”

Sunday, 30 May 2010

Coast Guard to public: We’re ready for rainy season

by Joel E. Zurbano
Manila Standard

The Coast Guard has assured passengers traveling by ship of safe and unhampered passage before the opening of classes in June and the start of the rainy season.

Coast Guard commandant Admiral Wilfredo Tamayo said the agency’s personnel and equipment are ready and in full alert.

As part of the Coast Guard’s proactive measures, Tamayo said that they wouldimplement strict and proper conduct of mandatory pre-departure inspections; adequate and proper cargo lashing on board vessels; making sure that lifesaving appliances and firefighting equipment on board are complete; and ensuring the safe and orderly conduct of embarkation of passengers and loading of cargo strictly within the vessel’s authorized capacity.

The Coast Guard will also consider the good operating condition of the vessels’ main and auxiliary machines/engines; close monitoring of maritime incidents by respective command center and high state of preparedness to promptly and effective respond to such incidents; obtain latest weather forecast from the Philippine Atmospheric, Geophysical and Astronomical Service Administration (Pagasa) and strictly implement the guidelines on movement of vessels during heavy weather; and the setting up of the help desks.

Tamayo said since they are 19,600 personnel short from achieving their ideal number of 25,000, they are maximizing on their equipment and relying on the cooperation of the Coast Guard Auxiliary, shipping lines and the Bureau of Customs to help boost their preparation.

“The Coast Guard strength remains at 5,400. But what is important in our preparations is that our vessels and all our aircrafts are prepared. It is not necessary that we improve on our number but improve the Coast Guard capability,” Tamayo said.

At present, the Coast Guard has two islander planes and two helicopters, they also have about 80 to 100 rubber boats and three units of Rigid-Hull Inflatable Boats.

National Red Cross chairman Sen. Richard Gordon also contacted Tamayo and the two agencies agreed to coordinate fully in search and rescue operations. The Red Cross has amphibian vehicles, which can function in land and water.

“Senator Gordon told me that I should send him personnel who could operate the amphibian trucks,” Tamayo said.

He added that they also had to consider that from the month of June the country annually hosts 20 typhoons, producing heavy rains, strong winds and flooding. The Coast Guard has often been called on to respond to lend search and rescue missions in times of disasters.

After the devastation brought about the storms last year, communities have begun preparing for the rainy season and have asked the Coast Guard to provide crash courses on search and rescue operations in Metro Manila.

Coast Guard spokesman Lt. Cdr. Armando Balilo said since last month they have been receiving requests to provide training to communities from different parts in Metro Manila.

“The first request came from community leaders from Paranaque City . There are also barangays from Quezon City , such as Barangay Bahay Toro, which were affected by last year’s floods. We also receive requests from some parts in Caloocan and Taguig City ,” said Balilo.

RP may host SEA Games earlier than expected

MAnila Standard

THE Philippines may host the Southeast Asian Games earlier than scheduled.

This possibility loomed after Singapore backed out from hosting the 27th SEA Games in 2013 due to infrastructure problems.

This is actually one of the topics on the agenda when the 26th SEA Games organizers and members of the SEA Games Federation meet this weekend in Jakarta.

The Indonesian Olympic Committee, the lead organizer for the 2011 SEA Games, will likewise seek the advice of the federation of its plans to include the martial art of kempo, wall climbing, roller skating and the card game of bridge in the regional tournament.

They will also consult member-countries of the federation on what disciplines may be included in the list of 40 events, which they plan to calendar in next year’s games.

Philippine Olympic Committee president Jose “Peping” Cojuangco Jr., who will leave for Jakarta with a six-man team to attend the meeting, said the Philippines is among those interested in getting the hosting rights from Singapore, along with Myanmar and Vietnam.

“We will see what the conditions are,” Cojuangco said.

POC sports and rules committee chief Go Teng Kok is looking forward to the inclusion of nine to 12 sports disciplines which were removed when the games were held in Laos last December.

According to organizers, if Myanmar backs out, Vietnam will be next in line for the bidding, with the Philippines, which last hosted it in 2005, also in contention.

If Vietnam backs out, then the country will take its turn in 2017 or in 2019. Peter Atencio

Robust growth in manufacturing, services

Boost dramatic increase in GDP

Manila Bulletin

Improved business and consumer confidence lifted the manufacturing and services sector to post significant upward adjustments, pushing the domestic economy to jump to 7.3 percent in the first quarter of the year.

According to Deputy Presidential Spokesman Gary Olivar, a combination of astounding growth in the manufacturing and services sector and improved business and consumer confidence amid a global economic recovery lifted gross domestic product (GDP) to 7.3 percent for the first three months of the year to 7.3 from 0.5 percent a year ago.

Olivar gave this explanation as the Palace refused to yield that election spending was the sole major factor that drove GDP up as has been alleged by President- apparent Benigno Aquino III.

Rather than “shooting from the hip,” Olivar said the incoming leadership should not squander the record-high economic growth that it would inherit from the Arroyo government and build on these gains to benefit the people.

“If Senator Aquino thinks our economic growth only came from campaign spending, all I can say is this--that's a lot of tarpaulin, senator,” he said.

“For now, these are salient findings: One, agriculture actually shrank by -2.5 percent mainly because of El Niño. Two, services as the other large sector of our economy contributed half of total growth, effectively making up for negative growth in agric. Three, industry-even if the smallest of the three sectors- contributed the other half of total growth because industry itself expanded by 15 percent.

Within this sector, manufacturing alone grew by a whopping 20 percent,” he said.

Olivar admitted that they expected election spending to help prop up domestic economy in the first quarter but its contribution was fairly small due to the advent of modern campaign methods. He said the P47 billion worth of direct foreign investments recorded, improved exports and imports, lower inflation, among others, have also contributed to the domestic economic growth.

Olivar meantime encouraged the next leadership to use this “wind on their back” to propel the economy to greater heights.

“This is good news so we have to monitor closely the next administration. They have the wind on their back, let’s hope they will not waste this,” he said. “If the economic growth slows down, they would have to answer to the people,” he added.

Olivar said they still hope people will rally behind the Aquino administration despite his doubts on the Arroyo government economic gains. “The President has repeatedly said she is leaving the government at his full disposal,” he said.

Mining inflows hit $2.9-billion of as of May

Manila Bulletin

Cumulative investments in the mining sector already have reached $2.885 billion as of May this year and are expected to hit $4.314 billion investment by the end of the year and $13.581 billion by 2013, data from the Mines and Geosciences Bureau (MGB) showed.

The $2.885 billion figure represents the cumulative investments generation since the government embarked on a revitalization program for the mining sector in 2004, the MGB said.

From only $200.5 million mining investment in 2004, MGB record showed investments rose to $457.15 million in 2005, dropped to $190 million in 2006, and then up sharply to $708 million in 2007.

By 2011, mining investment for the year is projected to reach to $3.416 billion; 2012, $3.86 billion; and 2013, $1.99 billion.

For this year alone, MGB said that five projects under the construction and development stage would bring in $892.17 million in additional investments.

Major investments include the Sumitomo Metals high pressure acid leach project in Surigao. The company has allocated $800 million for the project construction this year Another project under construction is Siana Gold Project of Red 5 with $65 million as it just signed a contract with for the development in the Surigao del Norte site. The three other projects under construction are Iligan Ferronickel Smelter plant, $12 million; Manticao Ferronickel Smelter Plant, $7 million; and Didipio Copper-Gold in Nueva Vizcaya, $7.35 million.

Other mining investment sources for this year are 17 mining projects, which are on their various stages of development.

There are also 19 other priority exploration projects. Projects under the feasibility-financing stage are also expected to boost investments in the mining sector.

The Working President (453)