Thursday, 23 August 2012

BoP surplus jumped to $3.2b in July

Manila Standard

The country recorded a balance of payments surplus of $3.2 billion in July, up 151 percent from just $1.3 billion a year ago, on the back of a steady stream of remittances, foreign fund inflows and outsourcing revenues.

Data from the Bangko Sentral showed the July surplus was the highest in 20 months since it hit $3.9 billion in November 2010. The figure was also up from just $14 million registered in June.

The amount also brought the cumulative BoP surplus to $4.5 billion in the first seven months, although this was down from $6.3 billion booked in the same period last year.

Bangko Sentral Governor Amando Tetangco Jr. said the bank’s foreign exchange operations and investments abroad supported the rise in the BoP surplus. The bank earns from its investments abroad, like US Treasuries.

PHL: Good potential; little probability

Business Mirror

THE title of the editorial in yesterday’s issue of the Business-Mirror sums it all up: “PPP Inches Forward.” While the editorial was speaking to the dismally slow progress of the Public-Private Partnership Program, PPP could mean “Philippines Pathetic Progress.”

It is absolutely ridiculous to read a headline “PHL Makes Top 10 List of Fastest Growing Economies” when the article talks about the year 2050. Further, our 2050 neighbors will include Mongolia, Nigeria and Egypt.

The “experts” at Knight Frank and Citi Private Wealth feel they can make accurate predictions 38 years down the road, but I want to see their predictions for next year on Nigeria’s ongoing civil war and Egypt’s move backward into the 8th century. It is all nonsense.

In 2005 I wrote an article, “The ‘Good Old Days:’ Philippine Economic Progress Since 1988” that analyzed the Philippine economy’s progress from 1988.

Between 1989 and 2005, the gross domestic product (GDP) of the Philippines increased by 700 percent. Another interesting fact that I discovered was that the Philippines was at times better at turning its growing national wealth into human development regardless of the fact that poverty had grown and that the experts even now complain about growth not reaching all of the population. But in fact, for example from 1990 to 2001 the GDP growth averaged a meager 1-percent growth, while PHL’s Human Development Index (HDI) score went up 2.74 percent. By comparison, Thailand averaged 3-percent growth but their HDI score only increased by 3.9 percent. The Philippines actually got more economic bang for its buck of wealth growth.

United Nations Development Program statistics showed that PHL rated a score of 16 on “Converting Wealth to Human Development” while our neighbors lagged behind. Their scores were China: 9, South Korea: 3, India: 2, Indonesia: -1, and Malaysia and Thailand both -7.

The one factor that became evident in my research was that the government was the single most important factor that was keeping the Philippines down. During the period from 1988 to 2004, the GDP was increasing at a rate of 4.5 percent on average, but government borrowing was rising at the phenomenal rate of 17 percent per year. Furthermore, all that government borrowing through four administrations did not translate into propelling the PHL economy forward.

Thanks to the efforts of the last administration finally getting a handle on the government debt problem and those polices carrying forward now, PHL government debt is not an anchor around the neck of the economy.

However, the same inefficient and ineffective national government of the 1980s, 1990s, and beyond is still running (or maybe ruining) the show.

On Monday one article in this paper was titled “BSP Gold Purchases Drop By 95%.” The report says that gold purchases by the Bangko Sentral ng Pilipinas (BSP) dropped by 95 percent in the first half of 2012.

The reason for this is not a lack of production but that the gold is being smuggled out of the Philippines. Since the Bureau of Internal Revenue (BIR) started cracking down on alleged tax evaders who might also be those who transact gold selling to the BSP, the sellers have found “alternative” sources to buy their gold.

I am not defending those who would cheat on their taxes. But you might think that the government could figure out how to do their jobs well. The BSP, the BIR, and Bureau of Customs cannot seem to figure out how some P10 billion or P20 billion worth of gold suddenly disappeared out of the country. Perhaps they could start by asking a local cigarette vendor in any provincial area outside of Davao. Or a fisherman along some deserted Davao del Norte coastline. While corruption in government may be a significant problem, perhaps a greater problem is competency. If the private sector was managed and operated the way the government seems to be, Filipinos would all be living in nipa huts and riding carabaos for transportation.

Something must quickly change for the better in the government or nothing is going to change for the better for the nation.

E-mail to, web site is, and Twitter @mangunonmarkets. PSE stock market information and technical analysis tools provided by COL Financial Group Inc.