Saturday, 28 August 2010

HK tourist holds no anger, thanks doctor

By Jeannette Andrade
Philippine Daily Inquirer

MANILA, Philippines—Bullets from an automatic rifle shattered the jaw and broke all the fingers of Hong Kong tourist Yik Siu Ling during the Monday bloodbath at Quirino Grandstand in Manila.

But despite her injuries, 32-year-old Yik held no anger for the tragedy inflicted on her and her compatriots by a desperate Filipino policeman whose cause they did not understand.

On Wednesday night, she struggled through broken fingers to write a note to her Filipino nurses and doctors at the Philippine General Hospital (PGH) in her own language: “Thank you, doctor and nurse. Please relay the message.”

Before she headed to the airport for a flight back to her homeland, accompanied by members of her family and People’s Republic of China consul Wu Zheng Ping, she handed the note to Dr. Tong Hon Kuan of Hong Kong’s Queen Mary Hospital, who translated it and passed it on to PGH resident Dr. Alduz Cabasa.

Yik’s simple note thanking her healers touched the medical community.

Step toward healing

Dr. Michael Tee, PGH assistant director for public affairs, e-mailed the note to the Inquirer on Thursday along with his message: “Neither a shattered jaw nor broken fingers prevented our patient from expressing her gratitude. I hope this is a major step toward healing the wounds created by this tragedy between the people of China and the Philippines.”

In a phone interview yesterday, Tee said writing was the only means by which Yik could communicate.

“All her fingers were broken. It was impossible for her to talk because of her shattered jaw. She could only write her requests, although it was difficult for her to do so,” Tee said.

He said the hospital staff had provided the Chinese patient bond paper and a pen at her bedside.

Yik endured medical procedures for two days—a debridement (to reconstruct her shattered jaw) and a tracheostomy (to ease her breathing).

Her fingers were repaired by doctors from Hong Kong and the PGH trauma team composed of anesthesiologist Dr. Orlando Ocampo, orthopedic surgeon Dr. Severino Tanbonliong, and plastic surgeon Dr. Jose Joven Cruz.

Yik neither speaks nor understands English or Filipino.

Tee recalled that when Yik was admitted to the PGH late Monday night, surgery resident Dr. Nathaniel Tan helped the trauma team communicate with her.

She was able to communicate through writing after her fingers were put in splints.


“She had no voice. But it did not stop her from expressing her gratitude to us despite what happened,” Tee pointed out.

Cabasa was equally pleased.

“Initially, I was embarrassed to even approach the Chinese group because of what had happened. I was surprised when Dr. Tong handed me the note,” Cabasa told the Inquirer.

“I was happy. The victims could still be grateful to us despite what a fellow Filipino did ... It was the first time someone from a foreign country who happened to be a victim of our compatriot did that. It was gratifying to know that our efforts were appreciated,” he said.

In a statement issued on Wednesday, PGH Director Dr. Enrique Domingo said: “The PGH appreciates the trust of the Chinese people, who tirelessly coordinated with us. We hope that with the safe repatriation of Ms Yik Siu Ling, we have contributed to the healing of relations between our two nations.”

HSBC survey: Small firms bullish, plan expansion

Roderick T. dela Cruz
Manila Standard

Business confidence in the Philippines is healthy, with many small and medium enterprises considering expansion and even going international, according to a survey by Hong Kong and Shanghai Banking Corp.

HSBC, in its semi-annual Global Small Business Confidence Monitor, said business confidence in the Philippines was healthy with an index of 115, above the neutral level of 100 but reflecting guarded optimism when compared with other emerging markets in Asia.

The survey gauges the outlook of SMEs on local economic growth, capital investment plans and recruitment.

The survey covered 6,300 small businesses in 21 markets, including 300 business owners in the Philippines, in the second quarter of 2010, or during the election period in the country. It was the first time the Philippines was included in the study.

“I would suspect that if we the survey was held after the elections, this would have shown better results,” Veloso said.

HSBC Philippines president and chief executive Tony Cripps confirmed the results of the survey, noting the strong 7.9 percent gross domestic product growth in the second quarter. HSBC expects the Philippine economy to post an annual growth of 5 percent in 2010 and 2011.

“We have lately been upgrading our growth forecast. This result today generally confirms the trend of improvement,” Cripps said.

Results of the survey showed that 43 percent of SMEs in the Philippines expect the economy to maintain same pace of growth, while 33 percent expect the economy to improve.

“About 40 percent of SMEs in the Philippines plan to increase their capital expenditure spending, 27 percent plan to expand their workforce, while 66 percent plan to maintain their existing staff count,” Veloso said.

Veloso said one out of five SMEs included in the survey had international trade or operations. But one out of three have plans to engage in international trade or operations in the next two years.

HSBC has a client base of 4,000 SMEs in the Philippines.

The survey showed that Vietnam was the most confident country in Asia with an index of 164, followed by Singapore (136), China (123) and India (121).

Global index increased from 111 to 118, led by emerging markets.

Thursday, 26 August 2010

7.9% growth for Q2

Philippine Economy Posts a Scintillating 7.9 Percent GDP Growth
Posted 26 August 2010
National Statistical Coordinating Board

Despite the El Niño phenomenon that scorched the Agriculture sector, a synergistic confluence of factors resulted in two consecutive quarters of GDP growth of over 7.0 percent. The peaceful national elections, improved investors confidence especially among local investors, the global economic recovery, increased capital expenditure of government and a low base fueled the domestic economy to a scintillating 7.9 percent growth in the second quarter of 2010 from 1.2 percent last year. The last time we experienced two consecutive quarters of more than 7 percent GDP growth was in the first and second quarters 2004 (7,2 percent and 7.1 percent, respectively), also preceding a presidential election. Together with an upwardly revised first quarter GDP growth of 7.8 percent (from 7.3 percent), the first semester sizzled to a 7.9 percent GDP growth, the highest semestral growth since 9.3 percent in the second semester of 1988.

For the second consecutive quarter, the Industry sector strongly supported by Services was the main driver of economic growth. Manufacturing sustained its first quarter production in response to the improved domestic and external demand and was shored up by Construction, Trade, and Mining & Quarrying.

On the demand side, increased consumer and government spending, increased investments in Construction and Durable Equipment, and the second consecutive quarter of immense growth in external trade contributed to the highest quarterly growth since the second quarter of 2007.

The continued inflow of compensation of our overseas workers sustained the NFIA, but at a much lower growth of 7.7 percent from 30.4 percent last year, pulling GNP growth to 7.9 percent from 4.4 percent in 2010.

For the first semester, GNP grew by 8.2 percent, its highest since 8.9 percent in the second semester of 1988.

However, removing the base effect and comparing 2010 with 2008 and 2008 with 2006, the first semester GDP growth from 2008 to 2010 is 8.8 percent, lower than the 11.6 percent first semester growth from 2006 to 2008.

The seasonally adjusted estimate of the GDP grew by 1.3 percent from 3.8 percent the previous quarter slowed down by the continuing decline of AFF. The Agriculture, Fishery and Forestry sector declined by 0.2 percent while Industry, the main growth driver for two consecutive quarters, grew at a slower pace of 3.5 percent from 5.1 percent the previous quarter. Services likewise decelerated to 0.4 percent from 4.4 percent. GNP slowed down as well to a 1.8 percent quarter on quarter growth from 2.0 percent.

Industry revved up the economy with a double-digit growth for the second consecutive quarter at 15.8 percent supported by Services which posted 6.4 percent while AFF declined by 3.0 percent for the third consecutive quarter. For the first semester, Industry grew by 15.9 percent, the highest semestral growth ever.

As population reached an estimated 93.8 million, per capita GDP rebounded by 5.9 percent, the highest since the second quarter of 2007, from negative 0.8 percent in the previous year while per capita GNP accelerated to 5.8 percent from 2.4 percent. On the other hand, Per capita PCE slowed down to 2.9 percent from 3.4 percent. At current prices, the per capita GNP now stands at P49,532 or US$ 1,082 for the first semester.

On the expenditure side, consumer spending grew at slower pace of 4.9 percent from 5.5 percent in the previous year.

With continued disbursement for ongoing projects, increased provision for pro-poor programs and the additional requirements of the 2010 national automated elections, Government Consumption Expenditure (GCE) grew, albeit at a slower pace, by 5.6 percent from 11.9 percent.

Investments in Fixed Capital Formation in the second quarter of 2010 rebounded to 25.5 percent from negative 0.3 percent boosted by increased investments in Durable Equipment and Construction.

Public Construction maintained its double-digit growth of 28.7 percent from 39.1 percent largely due to the carry-over disbursement for Ondoy rehabilitation and reconstruction activities and settlement of on-going and completed projects. Likewise, Infrastructure investments by the private sector managed to reverse the growth of Private Construction to 13.8 percent from negative 4.9 percent resulting to the expansion of Construction by 22.5 percent from 16.6 percent. Meanwhile, Investments in Durable Equipment rebounded to a roaring growth of 34.1 percent from negative 19.7 percent year ago as investments poured in to sixteen (16) out of the twenty (20) types of equipment. The growth in the investments in durable equipment was the highest registered since the second quarter of 1994.

Total Exports soared to 27.4 percent, the highest since the third quarter of 1986, from negative 18.0 percent last year as Total Merchandise Exports rebounded while Non Merchandise Exports accelerated. The country’s total merchandise exports rebounded to 30.2 percent, the highest ever, from negative 22.3 percent registered in 2009. On the other hand, Exports of Non-Factor Services accelerated to 17.2 percent in the second quarter of 2010 from 3.0 percent recorded last year.

Total imports rebounded to 23.9 percent from the negative 2.1 percent registered in the previous year, with robust performance from both Merchandise Imports and Non Merchandise Imports. Total Merchandise Imports rebounded to 25.3 percent from negative 2.1 percent posted last year. Likewise, Imports of non-factor services rebounded to 6.5 percent from negative 1.7 percent recorded in the second quarter of 2009.

Total Exports (Merchandise and Non-factor Services), valued at P760.9 billion pesos fell behind Total Imports (Merchandise and Non-factor Services), valued at P771.8 billion pesos at current prices, resulting in a trade deficit of P10.9 billion. In the same period last year, trade balance posted a surplus of 16.5 billion pesos. The current trade deficit is 0.5 percent of GNP compared to last year’s surplus of 0.8 percent.

The terms of trade during the quarter posted a trade index of 95.1 percent. This was lower than the trade index of 102.0 percent a year ago. Trading loss for the quarter amounted to 9,531 million pesos.

GNP Implicit Price Index (IPIN) stood at 541.9 percent from 520.6 percent in the previous year or 4.09 percent inflation.

Secretary General, NSCB



We just heard how the Philippine economy remained strong along with the robust growth momentum in the Southeast Asian region and other Asian economies. Real gross domestic product (GDP) expanded significantly by 7.9 percent in the second quarter following an equally strong revised 7.8 percent growth in the first quarter. These are two consecutive periods of above-trend growth.

Philippine GDP grew faster in the second quarter than Indonesia and Vietnam but slower than Malaysia, Thailand, and Singapore.

Meanwhile, the gross national product (GNP) grew by 7.9 percent on account of the 7.7 percent growth in net factor income from abroad.

The industry sector maintained its strong growth momentum in the second quarter. All sub-sectors expanded vigorously, led by the 12.4 percent growth in manufacturing and the 22.6 percent rise in construction activities. The 36.3 percent growth of the mining sector, mainly coming from nickel, gold and other non-metallic minerals, was driven by higher demand from a recovering global economy and the continued high metal prices in the world market. In addition, the 13.8 percent growth in private construction activities benefited the quarrying subsector as it expanded by 20.3 percent vis-a-vis the 4.2 percent growth in the same period in 2009. Lending support to overall growth is the utilities sub-sector, which grew by 19.1 percent on account of stable consumption and brisk pace of commercial services.

Growth in the services sector was led by trade, private services, and ownership of dwellings and real estate due to improved market sentiment, continued recovery in the global economy, and election-related spending.

As expected, growth in total agricultural production remained negative. The 3.6 percent growth in livestock, poultry, and other crops, which accounted for 40 percent of total gross value added in agriculture, failed to make up for the losses in major crops, particularly palay and corn which continued to be adversely affected by the El Niño episode.

On the demand side, domestic demand continued to significantly support overall economic growth as both consumer and investor confidence held up well in the second quarter. Investment in fixed capital grew by 25 percent, outpacing private consumption as the major source of growth. Considering the prevailing positive business sentiment, overall investment spending continued to strengthen in the second quarter. Growth was mainly driven by the private sector since investment in durable equipment rose by a hefty 34.1 percent. Further pick up in public construction contributed to the 22.5 percent increase in construction expenditure. More importantly, significant improvement in private construction spending was noted as total gross value added in private construction grew by 13.8 percent in the second quarter. Private consumption remained upbeat as evidenced by the sustained increase in spending on essentials such as food, transportation and communication, utilities, and beverages.

External demand on the other hand mainly reflected the continuing recovery of the global economy with many economies in Asia, including the Philippines, growing robustly. The country's net exports substantially improved, thus providing more contribution to growth. For instance, merchandise exports remained vibrant in the second quarter, growing by 30.2 percent in real terms as the country benefited from the strong growth in many of its Asian trading partners and the uptick in import demand of the United States. Exports of services, likewise, maintained its strong growth with a 17.2 percent expansion in the second quarter given the still vibrant BPO industry and other IT-enabled services in the country. The increase in merchandise trade flows also provided firm support to the export of transportation services including cargo handling, storage and warehousing, and packing services.

Looking forward, we still expect the agriculture sector to remain sluggish given the possibility that a transition to La Niña will materialize in the second half of 2010. However, given the stronger than expected performance of industry and services sectors and the robust investment growth in the first two quarters, it is likely that full year GDP growth in 2010 will be leaning towards the upper end of the 5-6 percent GDP target, perhaps, even higher than that.

We have once again shown that a high economic growth is attainable for the Philippines and all of us must work harder to maintain, if not surpass, this high economic growth achievement of almost 8 percent for the first semester of 2010.

Thank you very much and good morning.

Arroyo writes letters of condolences to Chinese leaders

By Lira Dalangin-Fernandez, Norman Bordadora, Philippine Daily Inquirer

MANILA, Philippines – A snub is definitely not what Hong Kong Chief Executive Donald Tsang will get from the predecessor of President Benigno Aquino III, who purportedly did not take his call at the height of the Manila hostage crisis, which killed several Hong Kong tourists.

Former President Gloria Macapagal-Arroyo, now Pampanga congresswoman, personally wrote Tsang a letter expressing her condolences to the families of the victims and expressing hope that goodwill between the two countries would remain despite the tragedy.

A separate letter, also dated August 26, was sent to Chinese Prime Minister Wen Jiabao ....

"With great sadness, I wish to express my deepest sympathy to you and to the people of the People's Republic of China, especially to the families of your eight Hong Kong compatriots who were slain during the hostage-taking incident in Manila,'' Arroyo said in her letter to Wen.

"In strongest terms, I condemn the brutal slaying which has stirred outrage and has caused much pain to the Chinese nation,'' she added.

In both letters, Arroyo vowed to “closely follow” the outcome of the investigation.

“Whoever may be held accountable for the violent turn in the negotiations should be penalized accordingly. This is the only way by which we could truly honor the memory of the victims and give justice to the families in their hour of bereavement,” she said in her letter to Tsang.

“It is my earnest hope that despite this deplorable incident, the goodwill that exists between the people of Hong Kong and the Filipino people will remain undiminished,” Arroyo added.

Elena Bautista-Horn said the letters were sent on Wednesday.

Reports said that Tsang called up Aquino on Monday night, but could not reach him.

RP flag flies proudly in overseas plants

Written by Lito U. Gagni / Market Files

It was a sight to behold: the Philippine tricolor flying proudly in a 20-hectare complex in Shanghai, headquarters of the hugely successful Oishi brand that has become associated with the kind of marketing savvy that catapulted a Filipino entrepreneur to the hall of China Famous Brands. Contrast that with the small Philippine flag at the Philippine Pavilion at the Shanghai World Expo, put there at the performing stage more like an afterthought, and the disconnect registers.

Indeed, the patriotic fervor with which Oishi founder Carlos Chan conducts himself in China is much more profound than thought. The man, very unassuming and soft-spoken, has his heart very close to the Motherland. It shows in various ways: Philippine flags waving high on poles in various China plants and sales offices that include Harbin, Hubei, Zhengzhou, Xuzhou, Jiangxi, Xinjiang, Beijing, Chengdu; Filipino engineers lord it over their Chinese counterparts; and the Filipino flag flutters at the hood of Mr. Chan’s car.

There is an unmistakable glint in the eye of the Oishi founder as he played host to the Tuesday Club, headed by Philippine Star managing editor Tony Katigbak, in a six-day swing of Shanghai, Yangzhou and Nanjing last week. And the pride shows in a complex way of revealing to the visitors the sea change in the economic landscapes of these places and hinting at the possibility of having these changes incorporated in the Philippines for the benefit of the country and its people.

The love for country is very much evident when Mr. Chan talks of how, some five years ago, a progressive place in China was considered a backwater of sort until government bureaucrats and businessmen charted a course for a vibrant economy. Then there is that sigh and optimistic tone that someday the Philippines will wake up from its long slumber and draw up a similar road map that would thrust it to the 21st century. He has solid ideas and if the government only cares to listen, the time is now, lest Vietnam, where Oishi is an emerging brand, overtakes us.

We understand that the Philippine flag also flies proudly in Vietnam, much like in Myanmar, Indonesia and Thailand. Mr. Chan’s heart is firmly rooted on Philippine soil and where he can be a factor, he makes sure that Chinese businessmen get to invest in the country. There have been overtures from big conglomerates in China but some legal hurdles proved pesky for the entry of renminbis. Nonetheless, the Oishi founder continues to promote the Philippines’ investment potentials even as he strives for newer places to promote the company’s expanding product base.

To get a glimpse of the patriotic zeal of the Oishi founder, one only has to go beyond the invites that he makes to Filipino professionals for them to catch firsthand the many changes that have happened in China. While on the surface, Mr. Chan only wants to play host to the numerous visitors he had invited to the former sleeping dragon, the message he wishes to impart goes in this roundabout way:

“You know, this booming place used to have entrepreneurs lined up along the sidewalks with their wares. Then they developed the capability, expanded their businesses and forthwith contributed to the immense growth of the place. This transformation can happen to the Philippines, too.” And then he would point at the frenetic pace of infrastructure buildup and dwell on a wish that the Philippines can play catch-up. The only thing that is needed is a patriotic zeal never seen before.

Mr. Chan goes about his own little way contributing to various ways of promoting the country. Unknown to many, he contributed in a big way to the private-public-sector fund pooled together to ensure the success of the Philippine Pavilion. But he is secretive about the extent of his contribution; it is enough that he played a part.

In a way, he spreads the tourism potential of the country subliminally. The Oishi packages show the Philippines’ major tourist draws like Bohol, Boracay, the Hundred Islands, the Banaue Terrraces and other notable places. Not only that. The Oishi advertisements, both in print and on TV, feature the major tourism attractions in the country and, in some instances, the singing pupils of the Loboc choir of Tagbilaran, Bohol, form part of the ad material that is shown in China.

Oishi’s patriotic mindset also shows in the ongoing development of the Loboc River as a major tourism draw in Bohol. The food-and-snack conglomerate is funding the lighting project of the entire river attraction to ensure that nighttime boat rides become part of the tourism package. The program has been fairly successful, thanks in part to the enthusiasm of the local government unit to promote the place. As a result, the conglomerate is pushing the envelope further and it has printed brochures about the tourism site that includes the famed tarsier.

Patriotic zeal can be infectious and it can infect other people in no time. This can be said of the Loboc experiment that Oishi undertook as part of its commitment to the country’s progress and which has been embraced and endorsed by the people in the area. The result is a deluge of visitors. Tourists waiting for their turn for a boat ride on the Loboc River form long orderly lines from a building where they are dispatched to various boats that are also lined up to await their passengers. Even the souvenir shops are “lined up” so that tourists don’t have to wangle with ambulant vendors selling their wares.

Along the river ride, there are shows that greet the boat riders who gamely disembark and dance or sing with the performers. There is a floating port at the midway point of the ride from where food is distributed to all the boats that have been dispatched. Here, there is order amid the disorder of tourists trying to take photos of the tourism attractions along the way. One cannot help but believe that somehow, Oishi was able to stamp its own brand of tourism onto the place.

For it is characteristic of Mr. Chan to see to it that the best practices in China’s booming cities are transplanted on Philippine soil. The Loboc experiment seemed to be a prelude to the big things that Mr. Chan has in mind, although in the meantime, he would rather that his accomplishment goes unnoticed beyond that of having the Philippine flag fluttering in the wind, proud of its place, and hopeful of an economic renaissance the country sorely needs.


Manufacturing output posted 23.4% growth in June

Written by Cai U. Ordinario
Business Mirror

THE country’s manufacturing output continues to increase and even posted a year-on-year growth of 23.4 percent in June, according to the latest Monthly Integrated Survey of Selected Industries released by the National Statistics Office (NSO) on Wednesday.

The NSO said the Volume of Production Index (VoPI) registered the double-digit growth in June due to double-digit increases in the production output of 14 of the 16 major sectors.

The sector that had the highest increase was furniture and fixtures, which registered a growth of 97 percent. The other sectors with significant increases were electrical machinery, machinery except electrical, transport equipment, miscellaneous manufactures, petroleum products and beverages. 

The NSO said the list also included paper and paper products, non-metallic mineral products, leather products, textiles, fabricated metal products, basic metals and rubber and plastic products.

However, on a monthly basis, the NSO said the VoPI had a slower growth of 0.8 percent in June 2010. The minimal month-on-month growth was driven by three major sectors, tobacco products, petroleum products and wood and wood products.

The NSO said the average capacity utilization in June 2010 for total manufacturing sector stood at 83.1 percent.

This was due to 11 major sectors that had capacity-utilization rates of 80 percent and more.

These sectors were basic metals, food manufacturing, machinery except electrical, electrical machinery, petroleum products, nonmetallic mineral products, miscellaneous manufactures, paper and paper products, chemical products, rubber and plastic products and leather products.

“The proportion of establishments that operated at full capacity [90 percent to 100 percent] was 15.2 percent in June 2010. About 63.6 percent of the establishments operated at 70 percent to 89 percent capacity while 21.2 percent of the establishments operated below 70 percent capacity,” the NSO said.

In terms of the Value of Production Index (VaPI) for the manufacturing sector, the index registered a slower average annual growth of 16.3 percent in June 2010. The growth was also driven by 14 major sectors.

The growth in the VaPI was driven by the significant growth in transport equipment, furniture and fixtures, petroleum products, miscellaneous manufactures, electrical machinery, machinery except electrical, leather products and beverages.

The list of sectors also included paper and paper products, basic metal, fabricated metal products, non-metallic mineral products, rubber and plastic products and textiles.

“On a month-on-month change, VaPI posted a 0.1-percent increase from 5.2-percent increment in May 2010. This was attributed to the major sectors footwear and wearing apparel, miscellaneous manufactures and fabricated metal products,” the NSO said.

Data from the NSO also showed that the Volume of Net Sales Index (VoNSI) posted a growth of 24.1 percent in June 2010. This was due to improved performances of 16 major sectors in sales output, led by machinery except electrical and electrical machinery with growth rates recorded at 52.1 percent and 47.6 percent, respectively.

On a month-on-month basis, VoNSI improved by 4.8 percent in June 2010. This was due to 12 major sectors that accounted for the growth with two-digit increases. These sectors were publishing and printing, beverages, basic metals, furniture and fixtures, fabricated metal products and miscellaneous manufactures.

The NSO also said that Value of Net Sales Index (VaNSI) continued to grow at a rate of 16.9 percent in June 2010. This was due to 14 major sectors that had double-digit growth in sales value.

These sectors were petroleum products, leather products, transport equipment, miscellaneous manufactures, basic metals, machinery except electrical, beverages, fabricated metal products, electrical machinery, paper and paper products and textiles.

Likewise, VaNSI on a monthly basis, grew by 5.7 percent in June 2010. The expansion was due to the growth in sales exhibited by 13 major sectors, with double-digit increases observed in publishing and printing, beverages, basic metals, fabricated metal products and miscellaneous manufactures.

Trust translates to prosperity

Written by John Mangun
Outside the Box
Business Mirror

Where have all the “gloom-and-doomers” gone?

For more than one year, all these “experts” with negative attitudes about the Philippines were featured prominently on the opinion pages of the local newspapers. Now, they have suddenly disappeared. Has the situation and condition changed so dramatically that these experts are now forced to turn their attention to other topics? Yes and no.

The global economic and financial meltdown has had virtually no impact on the country. And what little impact it had was more than offset by local growth and prosperity. This was obvious last year when corporate earnings continued to grow.

Yet even during the first half of 2010 there was a caution in the business community that was equally obvious. The first-quarter 2010 economic-growth numbers were very good, but a nagging suspicion about the sustainability of that growth was strong. Now well into the third quarter, everything has changed.

The longer-term problems facing the Philippines—food security, mediocre educational standards and weak employment growth—are still with us. However, there has been a radical departure from the general sentiment of only 12 months ago.

In about two months, the Americans are going to elect one-third of their Senate and all of their Congress. While Obama has been president for less than two years, the economic policies of the US are actually put in place by the legislature that has been controlled by the Democrat Party for the last four years. This is different than in the Philippines, because here, the Executive branch, led by the President, is the group that determines the economic focus of the government.

The US public’s approval rating for Congress and its economic policies, in particular, are at historic lows. These polls about approval ratings for policy are somewhat distorted. By that, I mean that when people answer these polls, they are actually speaking less about “approval” and more about “trust,” and more specifically about confidence.

The longer-term problems for the US economy in regards to its unmanageable debt burden are not going to go away if the US electorate changes the party in power. It is all but impossible to see a situation where the US is going to be able to pay its debt obligations without a massive decrease in government spending, reducing the overall standard of living, or with a huge devaluation of the dollar pushing inflation to historically unseen levels. But a change in who is running the legislature may give time for the disastrous result of the Democrat economic programs to be smoothed out and slightly lessened.

Business does not have any confidence in the Obama/Democrat administration. The private sector is holding in reserve more than $2 trillion that could be used for business expansion and job creation. For months, through the catastrophe of this US administration, the private sector has stopped spending. An economy cannot grow unless the private sector spends its profits and excess cash. The government can never replace the private sector as an engine for economic growth.

We may well see by the middle of 2011, this hidden cash begin to come to the surface and a change in the direction of the US economy.

What does this all have to do with the Philippines?

From the Philippine Star: “Business confidence for the fourth quarter has hit an all-time high on the back of higher-than-anticipated economic growth, stronger peso, robust overseas remittances, benign inflation, strong export earnings and smooth transition of political power.”

All of the factors are accurate and do come into the play in making business feel more confident for the future. But as I mentioned above, confidence is really all about trust, and specifically trust in government.

While not interested in debating the success or failure of the past administration, it is no secret that there was a confidence problem brought about by a lack of trust in the government.

Trust and, therefore, confidence in the general environment that a business has to operate in translates into genuine plans and action. The Employment Outlook Index for the fourth quarter 2010 is at plus 24 percent. This is the highest the index has ever reached since the Bangko Sentral ng Pilipinas started this quarterly survey in 2001.

When you read daily about company after company planning on spending a billion pesos here and a billion pesos there for new projects and expansion, you can clearly see the results of this newfound trust in government.

The stock market went up 50 percent in 2009. But the stock market is a cash market. It takes an investor 10 minutes to commit funds, and those funds can easily be withdrawn in another 10 minutes.

However, when a property company funds a P10-billion project, spending a few hundred million just for a feasibility study, that project cannot be turned off on short notice without a substantial financial loss.

No one at this point can speak of the competency and capability of the Aquino administration. It is too soon and little in the way of economic policy has come forth. Yet there is no doubt that trust and confidence in the government has increased. The private sector has the wisdom, experience and the capital to drive the growth of the economy. What it needs is a non-hostile environment to do its job. And the confidence that the government will back sound, ethical business practices in word and in action for both the private and public sector.

E-mail comments to . PSE stock-market information and technical analysis tools provided by Inc.

Tuesday, 24 August 2010

Hong Kong gov’t issues travel ban: Avoid RP

Thanks to the Philippine media, for making this happen.

Monday, 23 August 2010

PSEi will hit 5000 in the next 24 month

PSEi 5000
Written by Phillip S. Hagedorn
Bull Session
Business Mirror

THE PSEi will hit 5000 in the next 24 months. That is my view. I’ve answered the “What?” and the “When?” in my first sentence. Now I need to answer the “Why?” The reason the Philippine stock-market index will hit 5000 in the next 24 months is you.

Thomas L. Friedman in his book The Lexus and the Olive Tree said the first bull must be a local. I completely agree. How can we convince foreigners to invest here if we don’t put our own money where our mouth is? Beginning in 2009, Filipino investors have taken over as the largest investors in the stock market. This is unusual, because for the past 20 years foreign funds dominated the daily volume of the exchange. Something very interesting is happening. Filipinos are discovering the stock market, and this time it’s not too late. This time local investors will beat the foreign money to the punch and not be the ones left holding the bag. This time, Filipinos will benefit from a run-up in the stock market like they have never benefited before.

The basic question for Filipino investors is, “Are you happy with your investment returns today?” A typical Filipino investor will have a vast majority of investments in fixed-income instruments, like government securities. These investments are safe because they are guaranteed by the government. Historically, investing in Philippine government securities gave you returns in the high single digits like 9 percent per annum. Hopefully, those days are gone forever. The only reason government securities were giving you that rate was because the government’s fiscal position was in a heap of trouble. Things are very different today. Today the benchmark 91-Day Treasury bill gives you 3.9 percent per annum, and that is before taxes. Fixed-income returns today do not compensate for even inflation. As our economy improves and inflation creeps higher, what will you do? Some of you will be happy to keep your money safe in the government’s hands (yikes…did I really say that?). I suspect many of you will look to the stock market for the first time in your lives. Be not afraid, be not afraid.

In the interest of full disclosure, I manage Philippine equity portfolios. I basically make my living from my association with the stock market. I will not pretend to have all the answers but here are some tips to get you started in stocks. In my view, you have three choices. You can befriend a stockbroker, buy stocks online or buy an equity fund. Here is my take on each.

I love stockbrokers. My grandfather was a broker, my father was a broker and I was a broker. These folks are hard- working, aggressive, quick-thinking and risk-takers. Contrary to the myth created by “Wall Street” and Gordon Gekko, most stockbrokers are honest folks. The bottom line for them is to make money for their clients. If they don’t, they will have no clients. Most of them earn their living from a share of the commissions they earn for their brokerage houses. In the Philippines, typically a stockbroker needs to generate transactions of over P7 million in a month to take home a pay check of P20,000. What this basically means is that if you have less than a couple of million pesos to invest, you will be hard-pressed to find a good stockbroker willing to share their valuable time with you. A good stockbroker should provide you with “buy” and “sell” ideas and not just be an order taker. A good broker should provide you with fundamental or technical research on the stocks they recommend. A good stockbroker should provide you with timely execution and settlement of your account. And, finally, a good stockbroker should take you out for a cocktail or two once in a while.

Around the world, individual investors’ preferred mode of investing in the stock market is to buy mutual funds. In the Philippines there are over 20 equity funds which individuals can access. These funds have very low minimum requirements (between P5,000 and P100,000) and are managed by professional fund managers. The performances of these funds are posted daily in the newspapers for all to see. The past performance of these funds speaks for themselves; in most cases, the results are nothing less than excellent. The cost of owning a fund should not exceed about 3 percent of the value of your investment per annum. The Philippine fund-management industry has grown by leaps and bounds in the last decade. I believe we are reaching a tipping point where owning a fund will be as familiar as owning a mobile phone. The beauty here is that you are not limited to buying just one fund. You can have a portfolio of funds and effectively pick the best minds in the industry to make these difficult investment decisions for you. You should pick funds that are transparent with you about their objectives, what stocks they own, and what their costs of operations are. You should also select a fund manager who gives you some access to the decision-makers of the fund at briefings or seminars. Opening a mutual-fund account is very similar to opening a bank account in that the personal information required is almost identical. Remember that the past performance of a fund is not an indication of how it will perform in the future. This is why it is vital that you understand the style and investment approach of your fund manager. If you have never invested in the stock market before, buying a mutual fund, in my opinion, is the best way to start your stock-market investing career.

My father was a stockbroker his whole life. After he passed away I was rummaging through his things and to my utter surprise and amazement, I found a hardbound book with the title All I Know About the Stock Market, written by Fred C. Hagedorn III. I was amazed because he never told anyone in the family that he had written a book. I was also excited, as I thought I found the little black book with all the stock-market secrets on how to make millions. I sat on the floor and started thumbing through the pages. Nothing, nada, zilch, zero. Every page was blank. Cruel joke or harsh reality? There is no secret formula to beating the market. You will never beat it. If you respect it and take a long-term view, it will work for you. If you only want to join the party when things are hot, then you are bound to get burned.

Phillip Hagedorn is the investment director for Equity Portfolio Management for ATR KimEng Asset Management and chairman of its Investment Committee. For comments, you may e-mail him at .

Guam needs 10,000 construction workers

Manila Bulletin

About 10,000 workers would be needed in Guam as the construction contract of the $700-million Naval hospital will be awarded before the end of September 2010.

“The construction of the hospital will begin by the first quarter of 2011,” said Labor and Employment Secretary Rosalinda Baldoz in a statement.

Baldoz said construction for the military facilities will be until 2020 and every year, a project worth about a billion US dollars would be awarded requiring around 7,000 to 10,000 construction workers.

She said a Filipino contractor in Guam informed the Philippine Overseas Labor Office (POLO) in the area that 50% of the required manpower can be sourced out from the Philippines because of its workers’ experience and track record of performance.

The Saipan-based labor attaché said that considering Guam cannot accommodate all training for the relocation.

The US military looks at the island of Tinian in the Commonwealth of the Northern Marianas Islands (CNMI) to provide opportunities for training groups of 200 marines or larger due to greater land availability.

The proposed military training on Tinian includes firing ranges for known distance rifle, automated pistol combat, platoon battle course, field training, and airspace use.

Should this project push through, there would also be employment opportunities for Filipino workers in CNMI, the report added.

Foreign buyers sustain local stocks rally

Manila Bulletin

The prices of Philippine Stock Exchange (PSE) shares rallied as the stock market continues to chalk up gains as the local economy’s resilience gain stronger interest from foreign investors.

The PSE said its shares rallied by P11 or 3.9 percent to end at P295 per share last Friday, buoyed by its recent positive earnings. This was the fourth straight day that the shares have posted gains of a total of P37 or 14.3 percent.

In a disclosure to the Securities and Exchange Commission, the PSE said its net income soared 91 percent to P148.3 million in the first six months due to higher listing and trading-related revenues and lower operating expenses.

“We are pleased with our share performance which has mirrored the rally in the index. We believe that our share performance reflects investor optimism on our growth story,” PSE president Val Antonio B. Suarez said.

The PSE index also closed at 3,593.60, up 33.21 points or 0.93 percent with value turnover at P4.93 billion. This was the index’s highest finish since January 3, 2008 when it closed at 3,501.38. Year to date, the index has increased by 540.92 points or 17.7 percent.

Suarez reiterated the country’s economic resilience as mirrored by the positive stock market performance.

He noted that the favorable economic backdrop and the positive outlook of investors on emerging economies such as the Philippines present bright prospects for the stock market.

He noted that as the crisis bottomed out, the stock market rebounded strongly. The volume of trades in the market jumped by 32.5 percent as the daily turnover for the first half of the year stood at P4.2 billion from P3.2 billion in the same period last year.

Sustained buying interest from foreign investors was also evident as the net foreign buying doubled to P15.8 billion in the first half from P8.3 billion in the same period last year.