Foreign exchange reserves target raised to $75b

by Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=2011/september/7/business3.isx&d=2011/september/7

The Bangko Sentral now expects the country’s foreign exchange reserves to hit $75 billion by yearend, up from its earlier estimate of just $70 billion, on increased inflows of dollars into the country.

Bangko Sentral Governor Amando Tetangco Jr. said the gross international reserves, which refer to the country’s stock of foreign exchange as well as gold, may hit $74 billion to $75 billion by December 2011, after exceeding the previous target of $70 billion in July.

Tetangco said the GIR noted that as of end-July amounted to $71.88 billion, which was also revised upward from the previous figure of $70.9 billion, on account of higher gold prices and appreciation of other currencies against the peso.

“We expect better balance of payments surplus than earlier expected,” Tetangco told reporters Tuesday. “The BoP surplus in the first semester was substantially more than half of the target,” he added.

Latest data showed that the BoP surplus reached $6.286 billion in the first seven months of 2011, or 80.4 percent higher than $3.284 billion recorded a year ago. It is also nearing the full-year BoP surplus target of $6.7 billion.

Foreign exchange reserves rose as a result of the Bangko Sentral’s intervention in the currency market to temper the rapid rise of the peso against the US dollar.

Bangko Sentral Deputy Governor Diwa Guinigundo earlier said “barring any unforeseen event, we expect the BoP to continue to be resilient and the gross international reserves to continue to expand.”

“The reserve buildup is a consequence of favorable BoP development,” said Guinigundo.

Bangko Sentral set a foreign exchange assumption of 42 to 45 per dollar this year, which indicates it would be in the market if the foreign exchange exceeded the targeted range.

Govt dragging economy down

NEDA may revise target after poor Q2 showing
 Joyce Pangco Pañares
Manila Standard
http://www.manilastandardtoday.com/insideNews.htm?f=2011/september/7/news2.isx&d=2011/september/7

THE National Economic and Development Authority will review the country’s target of 7 percent to 8 percent growth for the full year following the sharp decline in the gross domestic product in the second quarter, a Palace official said Tuesday.

“The Neda is reviewing the fighting target because of the second quarter growth, [but] the Department of Budget and Management used a 5 percent to 6 percent growth target for our assumptions this year,” Communications Secretary Ramon Carandang said.

“That is still a doable target.”

Carandang said the government started pump-priming the economy in July to boost growth.

Private economists have traced the slow economic growth in the first half to weak public spending.

The gross domestic product, or the total value of the goods and services produced, grew only 3.4 percent in the second quarter, down from 8.9 percent a year ago and lower than the government’s forecast of 4.5 percent to 5.5 percent.

The latest growth data brought the expansion in the first half to 4 percent compared with the 8.7-percent growth a year ago.

Economist Benjamin Diokno said the government had been a drag to the economy instead of being a source of growth.

“Public construction continues to plunge: from negative 24 percent in the third quarter of 2010 to negative 37.3 in the first quarter of 2011, and now to an unprecedented negative 51.2 percent in the second quarter of 2011,” he said.

“The message for the government is clear: It has to act more decisively and move government programs and projects faster.”

PHL is world’s hub of marine biodiversity valued at $67.4 billion

DENNIS D. ESTOPACE
Business Mirror
http://www.businessmirror.com.ph/home/science/15677-phl-is-worlds-hub-of-marine-biodiversity-valued-at-674-billion
 
THE good news is that scientific findings point to the Philippines as the world’s hub of marine biodiversity valued at $67.4 billion.

The bad news: the destruction of this source of pride is likened to the scale of the devastation of the Amazon rain forest, biological science professor Kent Carpenter said.

“A crisis [of that proportion] exists in the Philippines,” Carpenter of the Norfolk, Virginia-based Old Dominion University said during the presentation of findings by several field researches that debunked East Indonesia as having the most number of diverse species.

These studies also vindicated Carpenter for having cited the Philippines in his 2004 research that showed the country having the highest concentration of marine species among the island-nations in the Coral Triangle.

“The Coral Triangle is well recognized as the global apogee of marine biodiversity, with species richness incrementally decreasing from this region eastward across the Pacific Ocean and westward across the Indian Ocean,” read an abstract of a paper in the Journal of Marine Biology.

This center, according to the paper co-authored by Jonnell Sanciangco of the University of the Philippines Marine Science Institute, “encompasses much of Indonesia, Malaysia, the Philippines, Brunei, Timor Leste, Papua New Guinea and the Solomon Islands, and is also variously referred to as the East Indies Triangle, the Indonesian and Philippine region, the Indo-Malay-Philippine archipelago, among other names.

Further studies, even by reef fish migration expert Gerry Allen in 2007, confirmed rather than debunked the Philippines’ place as the fulcrum of marine civilization, according to Carpenter.

He also cited a study that Sanciangco finished just last week to support such findings.

Sanciangco’s research of shore fishes showed that majority of these are in Mindanao up to Luzon, along with some 10,446 invertebrates like coconut crabs, sea stars and prawns.

The studies Carpenter cited proves their hypotheses that the Philippines is an area of refuge for these species and that most of marine life as we know it have genetic sources to these species in the country.

“Species in the Philippines are evolving as we speak.”

Carpenter said the country is also blessed with having the most concentrated tropical coastline on Earth, thus, giving it the “latitudinal diversity.”

He pointed to a species of sardine fish that was previously known coming only from Taiwan but was recently discovered as also abundant in the Philippines.

Carpenter said that these findings only prompted additional hypotheses “so I plan to be here many more years.”

He emphasized that this unique natural heritage of the Philippines, however, also “underscores the urgent need for conservation.”

“The bad news, we’ve seen a little bit of that lately: blast fishing, muro ami, cyanide fishing, pollution, aquarium trade and mining.”

He noted that there are “evidences that overfishing decreases the marine biodiversity.”

“The fewest species are typically found in markets. Hence, overconsumption is also a concern.”

Carpenter said the survival of the world’s marine biodiversity hangs in the balance.

“And Filipinos have the option to tilt that balance in favor of its wealthy marine heritage.”

Tetangco Among Top Central Bankers

Manila Bulletin
http://www.mb.com.ph/articles/333433/tetangco-among-top-central-bankers

MANILA, Philippines — Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. is one of the world’s top six central bankers in 2011, according to the annual survey on the performance of central bank heads conducted by New York-based Global Finance.

This is the third time in six years that Governor Tetangco was cited among the world’s best central bank heads. Governor Tetangco received an ‘A’ rating along with five other central bank heads from Australia, Israel, Lebanon, Malaysia and Taiwan.

The ‘Central Banker Report Card’ feature, published annually by Global Finance since 1994, grades Central Bank Governors of 36 key countries (and the ECB) on an ‘A’ to ‘F’ scale for success in areas such as inflation control, economic growth goals, currency stability and interest rate management. ‘A’ represents an excellent performance down through ‘F’ for outright failure.

Subjective criteria also apply. Global Finance Publisher Joseph Giarraputo said: “During one of the toughest years on record, the world’s central bankers were tested as never before. Every year, we assess the determination of central bankers to stand up to political interference, and their efforts at influencing their governments on such issues as spending and economic openness to foreign investment and financial services.”

Zero leadership

 JOHN MANGUN
OUTSIDE THE BOX
Business Mirror
http://www.businessmirror.com.ph/home/opinion/16129-zero-leadership

THESE words are hitting the page about 18 hours before you will see them, which means they are already obsolete in this age of instant information. Fortunately time slows down to a reasonable speed with a glass of wine sitting next to the keyboard.

The Philippine Stock Exchange (PSE) just had a wonderful trading, regardless of what you might be hearing and reading. The PHISIX blue-chip index closed above the important 4,375 area. The All-Share broad-market index was actually higher. Total volume was down to only P3.5 billion, which is actually good. We want down days to have less volume and up days to have more. The volume of the rising issues was about seven times higher than the volume of losing stocks and that’s good, too.

However, Asian stock markets took a formidable hit yesterday, down 2 percent to 3 percent and the opening in Europe looks to be the same. It is likely that the US stock markets will carry through with more equity destruction.

The US dollar is very strong right now, having broken back above 75 on the dollar index of a basket of weighted currencies. And while we heard the “experts” say that the gold-price bubble had burst a couple of weeks ago when the price hit $1,900 and fell, gold is trading at $1,890, up from the recent $1,750 low.

In my PSE Strategy Guide, released every Sunday, I wrote, “We are looking at the potential of a very strong and very broad market advance. Or we are looking at a failure of prices that is going to be revolting and very damaging.

In my humble opinion, the Philippine Stock Exchange is about to enter the final game of the championship to determine if the next few months are going be a period of winning or losing.”

I believe that before the end of this year, we are going to see changes on a global scale that no one expected.

Germany will decide this week whether to spend more German taxpayer money to bail out debt-dead Greece. The US will hear from its President Zero on how to create employment. The latest US numbers show that in August, no net jobs were created in both the public and private sectors, the first time since February 1945.

Australian Prime Minister Gillard is pushing Australia to adopt a system of carbon trading that has proven to be not only useless but also fraudulent. British Prime Minster Cameron was absolutely helpless when thieves and hooligans took to the streets a few weeks ago across the country in riots and property destruction. And Britain will host the 2012 Olympics. Good luck with that venture.

Japan has a new prime minister, the sixth in the last five years, as they continue to stumble to find a way out of a decades-long economic darkness.

The US elected a man proclaimed to be a bringer of hope and change who has delivered nothing but helplessness and damage. The US recession that ended in 2009 is back, if not officially yet, and will bring even more pain to the people.

The old wisdom is that adversity creates men and women of substance and character. We find our national heroes as the ones who rose out of the fires of turmoil, bringing something better with their actions.

But may it not be true also that weak leaders, or leaders without leadership qualities, are the cause of the adversity?

It has been such a long time since the world stage was populated with people like Winston Churchill, Golda Meir, Dwight Eisenhower, Japan’s Yoshida Shigeru, Ramon Magsaysay, Margaret Thatcher, China’s Deng Xiaoping, and Konrad Adenauer of Germany.

Each of these leaders had a profound and positive lasting effect on their respective countries. They were strong leaders and strong people. Perhaps the only true “big dog” in the world today is Vladimir Putin of Russia, an ex-KGB officer who ended his career keeping watch on the politics of Soviet university students.

American President John Quincy Adams wrote, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” And management theory guru Peter Drucker said, “Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.”

Where are the national and international leaders that are inspiring? Where are the national and international leaders whose actions speak louder than their words?

The next 12 to 18 months are going to shape the Philippines and the world in a way that has not been seen since World War II. And as the decisions at the time reached for generations, so, too, will the decisions made now reach to the future.




E-mail comments to mangun@gmail.com. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.

Bad policy means bad results

JOHN MANGUN
OUTSIDE THE BOX
Business Mirror
http://www.businessmirror.com.ph/home/opinion/15909-bad-policy-means-bad-results

THE latest economic numbers for the second quarter were disappointing [see "Q2 growth a disappointing 3.4%"] but they should not have come as any surprise. If government economic policy is designed for 1991, then it should not be a surprise that those policies are unsuccessful in 2011.

The government explained that the problem of slower growth lies with the economy being “buffeted by headwinds from the European debt crisis and the fragile recovery of trading partners.” And “external trade has been lackluster at best.”

Let’s see. The Europeans and the US have had a debt crisis since 2008. The Philippines’ Western trading partners have had no meaningful economic growth/recovery since 2009. So here we are in 2011, facing the same issues as for the last three years, and the government is surprised that gross domestic product growth did not match forecasts.

It must be said one more time: the export business was terrible, is terrible, will continue to be terrible. When is the government going to figure that out? Exports are a break-even proposition and the best we can hope for is to keep it going to keep the jobs it currently has. But forget about growth.

Therefore, alternatives must be found to make up for the lack of exports.

Consumer spending once again saved the day. The government’s public-private partnership (PPP) could have made an important impact on the economy. But PPP is R.I.P. for the time being. It will be at least nine to 12 months before any economic results will come from PPP.

Perhaps it was just coincidental that a couple of weeks ago, the government announced that the Philippines could be a net exporter of natural gas if we could just get the United Nations to designate the Benham Rise area east of Luzon as Philippine economic territory. “The country’s claim over Benham Rise is ‘very relevant’ because scientific surveys indicate minerals and natural gas in the area.”

Methane hydrate is basically frozen natural gas much like “dry ice” which is the solid “frozen” form of carbon dioxide. The Japanese have discovered numerous deposits of methane hydrate in their waters. In fact, there are dozens and dozens of huge proven deposits around the globe, some on dry land. The Japanese have been working unsuccessfully for 16 years through a government/private/university corporation to figure out how to harvest it. The latest estimate is that by 2018, they may have figured out how to get the stuff out of the ocean. It may take another 10 years to put it into commercial production.

The reason I mention all the ridiculous hype about Benham Rise is that the Philippines does have a huge area, filled with natural resources worth trillions of dollars seeking foreign investment. It is called the island of Mindanao.

The President and his business entourage are in China to tell the Chinese that the “Philippines is open for business.” Well, I hope the Chinese believe that because the facts seem to indicate that the Philippines is open but the lights are off.

The Chinese have globally invested hundreds of billions of dollars in the last few years. But if the President believes the Chinese will build their next rubber shoe or iPod factory in the Philippines, he is sadly mistaken.

The Chinese want to invest in natural resources like we have an overwhelming abundance of in Mindanao. But here in PHL, the Supreme Court can issue a writ of kalikasan, allowing any and every foreign-funded nongovernmental organization, ego-driven church bishop and do-gooder attorney looking for publicity to petition, seeking to stop mining operations in, you guessed it, Mindanao.

Never mind that these mining operations have complied with every law, national and local, gotten the free and informed consent of the owners of the land, the indigenous people, spent millions of dollars and years to comply, and still can be subject to a court petition, which, in effect, overrides and cancels the law of the land.

The 2011 reality is this. The Philippines does not have anything to offer for foreign investment, except the outsourcing business and mining.

The consumer market is not developed enough for foreign manufacturing to be set up for domestic consumption. If you want to manufacture for exports, you go to China.

The banking sector is robust and large enough without any foreign entry.

The Constitution directly and indirectly, prohibits substantial foreign investment in real estate, construction, retail, transportation, and the media. Tourism of all types, including medical, is too small. So what is left for foreign investment?

We need one foreign investment thrust with all government policy properly focused to insure beneficial results for all. Focus on mining. The Chinese will come.



E-mail comments to mangun@gmail.com. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.