Thursday, 2 February 2012

ASEAN Rising: Myanmar Taps Singapore Expertise To Modernize Its Economy; Deal Signed

February 1, 2012, 2:58am
SINGAPORE (AFP) – Myanmar has signed an agreement with Singapore seeking the financial center's help as the country emerges from political and economic isolation after decades of military rule.

President Thein Sein arrived Sunday for a four-day state visit to the city-state accompanied by a top-level delegation which included business leaders and top ministers in charge of economic portfolios.

Thein Sein Monday met with Prime Minister Lee Hsien Loong and the leaders witnessed the signing by their foreign ministers of an agreement under which Singapore will provide training for reforms in the legal, banking and financial sectors.

The pact also calls on Singapore to share its best practices in trade, tourism and urban planning.

Wednesday, 1 February 2012

No Need to Panic About Global Warming


A large and growing number of distinguished scientists and engineers do not agree that drastic actions on global warming are needed.

The fact is that CO2 is not a pollutant. CO2 is a colorless and odorless gas, exhaled at high concentrations by each of us, and a key component of the biosphere's life cycle. Plants do so much better with more CO2 that greenhouse operators often increase the CO2 concentrations by factors of three or four to get better growth. This is no surprise since plants and animals evolved when CO2 concentrations were about 10 times larger than they are today. Better plant varieties, chemical fertilizers and agricultural management contributed to the great increase in agricultural yields of the past century, but part of the increase almost certainly came from additional CO2 in the atmosphere.

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Tuesday, 31 January 2012

JP Morgan sees foreign funds flocking to PH

Roderick T. dela Cruz
Manila Standard

Global funds will continue to flow into the Philippines this year, given the manageable inflation environment and low interest rate, according to a US bank.

“The Philippines would be doing well this year. I expect international investors to put more money in this market,” said Arian Mowat, the chief emerging market and Asian equity strategist of JP Morgan Chase & Co.

The Philippines is one of the few countries where JP Morgan is bullish in terms of growth prospects and the performance of its financial markets.

Mowat said the bank had an overweight position in the Philippines, which it shares with Indonesia, Thailand, Chile and Russia.

He said the record low interest rate, stable political environment and inflation rate and sustainable foreign exchange inflows from remittances and business process outsourcing were positive factors for the Philippines.

JP Morgan expects the gross domestic product of the Philippines to grow 4 percent this year and inflation to end the year at 4 percent.

Gilbert Lopez, the Philippines equity strategist of JP Morgan, predicted the Philippine Stock Exchange index would breach the 5,000-point mark and close the year at 5,100 to 5,150.

“We are looking at 10 to 12 percent earnings growth this year,” he said, while recommending banks and conglomerates as the stock picks this year.

He said the stocks of Bank of the Philippine Islands, Metrobank, Security Bank, Ayala Corp. and Metro Pacific would be among the largest gainers this year.

First Metro Investments Corp. president Roberto Juanchito Dispo shared the optimism about the performance of the local stocks this year, adding the index was poised to breach the 5,000 mark.

Bangko Sentral Governor Amando Tetangco Jr., however, noted that most of the foreign capital funds went to government securities and local stocks last year.

He said these funds contributed to the liquidity in the market and made funding available in the market.

Tetangco, however, said there is a need to be prepared for reversal of capital flows, if the global headwinds deteriorate.

“Capital inflows are good but at the same time they present some kind of challenge,” he said.

The Philippines, he said, had enough foreign exchange to handle any risk, given its gross international reserves of about $75 billion and foreign currency deposits amounting to $25 billion.

Tetangco, meanwhile, said remittances from Filipinos overseas would reach about $21 billion this year, despite the impact of the European debt problems.

Low GDP growth: Who’s fault?

Business Mirror

THE Philippines’s full year 2011 economic growth came in at a pathetic 3.7 percent. The spin masters have two lines of reasoning. First, the fourth-quarter number was higher than the third-quarter growth by a “robust” 0.1 percent. The second is that 2012 is going to be much better because the government did not spend in 2011 and will spend in 2012.

According to the press release from the NSCB (National Statistical Coordination Board), “Amidst the obstinate exogenous economic woes, the government under-spending on infrastructure in the second and third quarters and the sustained decline in fishing, the domestic economy grew in 2011 by a relatively feeble 3.7 percent compared to 7.6 percent in 2010.”

Obviously there was not a Filipino translation of this release because “Amidst the obstinate exogenous economic woes” barely makes sense even in English. Properly defined, that phrase almost sounds like a proverb from Confucius: “Surrounded by very difficult to change or overcome external factors of great distress.”

Fortunately, the rest of the statement from the NSCB does make sense.

The press and airwaves are going to be filled in the next few days with comments about how government underspending is the primary offender for the poor economic growth. If true, then all that has to happen to go back to the 7-percent plus growth of 2010 is for the government to spend more. Right? Wrong.

Government spending is an important driver of economic growth. However, it is not the most important factor and it is not a magic bullet for growth. Therefore, even if the administration finally starts the PPP Program, it is not going to add the
extra 1 percent to growth that some people expect. If you expect the government to push-start this economy, you will be sadly disappointed.

Government spending is not responsible for the poor 2011 economic numbers. Government spending will not be responsible for any major 2012 improvement.

One of the most interesting numbers contained in the NSCB’s disclosure is that consumer spending in 2011 increased by 6.1 percent, double the growth in 2010.

The “experts” always talk about election-year spending having such a great impact on the economy. That is true to a slight extent. More money is pumped into the economic system. However, it does not trickle down to the grass roots. Campaign materials and some “Vote-for-me” money, even a lot of it, is not as good for growth as a steady job.

Another measure of consumer spending is the Household Final Consumption Expenditure (HFCE). HFCE includes everything we pay, including VAT, and government fees like for a driver’s license. In 2010 HFCE increased by 1.4 percent. In 2011 it expanded by 4.1 percent.

Yesterday, BPI released their income statement for 2011. “The bank’s net loan portfolio reached P453 billion, increasing by 20 percent from the previous year, with the growth coming from all market segments: middle market by 24 percent, top-tier corporations by 21 percent, SMEs by 20 percent, and consumer by 12 percent.”

Those are really fantastic numbers. It shows, throughout the producing economic spectrum, prudent and manageable but expanded borrowing. That helps fuel economic growth.

The bottom line is that you and your businesses grew the economy in 2012 even if, as NSCB says, by a “feeble” 3.7 percent. So then, what is the problem? What is slowing economic growth? It is a lack of spending for fixed capital formation.

Fixed capital formation (FCF) is a specific term applied to expenditures for goods that are used in production. A vehicle, for example, is a fixed asset, but vehicles are included in FCF only if they are actually used in work activities.

The recent barrage of reports citing that the Philippines will be a major economy by 2050 is substantially based on the forecast that FCF spending will increase. Every country that has moved up the economic ladder begins with heavy FCF expenditure. China, Russia, Brazil, Indonesia have all moved higher on the back of FCF. But will it happen in the Philippines? It has not happened up to this point. Why not?

We have a growing consumer market, low public and private debt, and a reasonably diverse economy. What is keeping big business from opening their wallets and making continuous large FCF investments? The same reason foreign investment is lacking; uncertainty about government policy.

It is not lack of government spending that is slowing the economy. It is bad government policy that keeps the private sector from spending. The 3.7-percent growth is the government’s fault.

On a personal note, my one-day stock trading seminar is March 3 in Cebu. I will discuss trading techniques, stock selection, and practical technical analysis. E-mail me at and I will send you a brochure.

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

Economy could grow 7.18%

Business Mirror
THE National Statistical Coordination Board, in an unexpected but welcome plug for the education and health sectors, on Monday said the government should spend more for additional classrooms and additional teachers this year if it wanted to exceed the 5-percent to 6-percent growth estimate for 2012 to 7.18 percent.

Based on NSCB estimates, additional spending for education and health, meaning over and above their approved budgets for 2012, would increase the country’s gross domestic product (GDP) by 0.01 to as much as 1.18 percentage points this year.

This means that if the government’s growth forecast for this year is between 5 percent and 6 percent, the economy can grow by around 5.01 percent to as high as 7.18 percent.

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Cebu Pacific plans long-haul flights

Business Mirror
More at:
IN a bid to serve Filipinos working abroad who can’t afford to fly home more often, Cebu Pacific on Tuesday unveiled plans to launch budget long-haul flights, hopefully by the third quarter of 2013.

The budget carrier is in discussions to lease up to eight Airbus A330-300 aircraft to serve new markets which are beyond the range of its current fleet composed of Airbus A320s. Among the international destinations being eyed are Australia, the Middle East, parts of Europe and the United States.