Saturday, 14 April 2007

US slowdown won’t affect RP, says IMF

By Des Ferriols
Full report at The Philippine Star 04/14/2007

The declining share of the US as an export market will cushion the Philippines from the slowdown in the US economy, the International Monetary Fund (IMF) said in its World Economic Outlook released yesterday.

The IMF said the Philippines had been weakened by the string of typhoons in the last quarter of 2006 but the country’s underlying momentum remained strong for this year.

Investments up 102%

Full story at the Manila Standard

Combined investments registered with the Board of Investments and the Philippine Economic Zone Authority hit P40.65 billion in the first quarter of 2007, up 102 percent from P20.12 billion in the same period last year.

The investment commitments cover 177 projects that are set to generate some 32,118 new jobs from 169 and 28,676, respectively, year-on-year.

Pollsters draw flak for biased surveys

By Jaime Pilapil
Original report at the Manila Standard
See also Manila Times (Flaws in surveys diminish their credibility)

A prominent polling firm yesterday lambasted two of the leading pollsters, Social Weather Stations and Pulse Asia, for issuing results to please their clients.

Professor Mansin Sarmiento, president of Vox Populi, said the methods of SWS and Pulse Asia were flawed and their surveys have resulted in the polluted appreciation of the present political scenario.

Speaking at a press forum yesterday, Sarmiento also belied claims made by Social Weather Stations and Pulse Asia that they were not receiving fees for conducting the opinion polls. Nationwide surveys would have been impossible to do because of the attendant prohibitive costs, he said.

The SWS and Pulse Asia have failed to stay impartial and neutral, Sarmiento pointed out.

Sarmiento said that a major flaw in the surveys conducted by both SWS and Pulse Asia was the small National Capital Region sampling, which resulted in the impossibility of eliciting an accurate opinion because of the disproportionate representation among Metro Manila residents.

“That’s not believable because of the small number of sampling. Our firm, for Metro Manila alone, usually has 1,900 respondents,” Sarmiento said.

SWS and Pulse Asia had only up to 300 Metro Manila respondents in their national surveys.

Sarmiento said that all national surveys conducted by the two leading polling companies, including that of the senatorial races, have rendered themselves not credible, because such surveys were conducted with only 300 respondents coming from Metro Manila.

He also admitted that he himself had been approached several times by candidates for the purpose of giving out doctored survey results to favor their individual standings, but thumbed them down in his desire to stay apolitical.

Adding to the credibility problem of SWS and Pulse Asia surveys is the allegation that polling records of the two firms are not generally and readily accessible to the public, Sarmiento said.

“In all my surveys, all records are open for public scrutiny. If one does not allow you to inspect, then it could have been commissioned,” Sarmiento said.

Friday, 13 April 2007

LRTA earns P400 M in 2006

Full story at the Manila Bulletin

The Light Rail Transit Authority (LRTA) reported yesterday that it earned P400.4 million in net income last year from total revenues of P2.23 billion, up 8.5 percent from the P2.1 billion in 2005.

This enabled LRTA to pay a minimum corporate income tax of R20.8 million to the Bureau of Internal Revenue on April 11, 2007.

"This is another banner year for the LRTA because this is the second year in a row, after 22 years of revenue operation, that the LRTA was able to increase its gross income even without any fare increase," LRTA Administrator Melquiades Robles announced.

Foreign Portfolio Investments Sustain Net Inflow in March

Central Bank of the Philippines
Media Release

March 2007 Flows

For the month of March 2007, the net inflow from Bangko Sentral-registered foreign portfolio investments amounted to US$173.21 million. The net weekly outflows in the first half of the month, which resulted from huge global equities sell-offs triggered by losses suffered by the China and US stock markets, were more than offset by the net weekly inflows in the second half. Contributing to the positive investor sentiment and limiting the losses in the stock market after the sell-offs were positive reports on various areas of the economy. Inflation slowed to 2.6 percent in February while the budget deficit declined to P18.6 billion in the first two months of the year vis-à-vis P40.4 billion last year (after a surplus of P11.1 billion was recorded in February). In January, a trade surplus was recorded, the first in 11 months. In addition, OFW remittances posted a 20 percent increase over January 2006.

Gross inflows of registered foreign portfolio investments 1 in March aggregated US$1.254 billion, of which a large portion (US$969.56 million or 77 percent) consisted of shares listed in the Philippine Stock Exchange (PSE), mainly in property, telecommunication and transportation services companies and banks. Government securities, primarily Fixed Rate Treasury Notes or FXTNs accounted for US$269.00 million (22 percent), while placements in money market instruments and peso bank deposits made up the remaining US$15.16 million (1 percent). These inflows exceeded capital repatriations/outflows of US$1.081 billion, which pertained to: a) divestments from listed shares of US$447.68 million (41 percent of total) and government securities of US$308.04 million (29 percent); and b) withdrawals of money market placements of US$4.63 million and peso deposits 2 of US$320.16 million (combined 30 percent share).

January-March 2007 Flows

For the first quarter of the year, gross foreign portfolio investments and capital repatriations/outflows totaled US$3.514 billion and US$2.676 billion, respectively, for a net inflow of US$838 million. Said net inflow was 71 percent more than the US$490 million net inflow in the same period in 2006.

Gross investment inflows, which rose by 139 percent from the year-ago level, went primarily into PSE-listed shares of US$2.803 billion (80 percent of total), US$1.734 billion of which were captured by firms in the property, telecommunication and banking sectors. Investments in peso-denominated government securities, mostly FXTNs, in the amount of US$606.13 million accounted for 17 percent, while investments in money market instruments of US$1.27 million and peso bank deposits of US$104.07 million had a combined share of 3 percent. These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the Philippines. US$2.116 billion or 60 percent of these remittances came from the United Kingdom, the United States and Singapore.
Foreign investments in PSE-listed shares and government securities were 2.5 times and 1.8 times their corresponding levels in 2006.

Meanwhile, gross capital outflows grew by 174 percent from US$977.94 million in 2006 because of divestments from listed shares of US$1.183 billion (44 percent of total) and government securities of US$774.34 million (29 percent); and withdrawals of money market placements and peso deposits totaling US$718.36 million (27 percent). Profit-taking opportunities arising from the appreciation of the peso were largely responsible for the increase in capital repatriations this year.


1 These statistics, which pertain to newly registered investments, are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.

2 Generally represent temporary placements of sales proceeds from divestments from listed shares and government securities.

OP, AFP a month top trust ratings gainers in 2007 MBC Executive Outlook Survey

Original report at Gov.Ph News

The Office of the President (OP) and the Armed Forces of the Philippines (AFP) were the "big gainers" among the 37 government agencies that received passing marks in the latest survey conducted by the influential Makati Business Club (MBC).

In the 2007 MBC Executive Outlook Survey, the business sector expressed their satisfaction on the performance of the Commander-in-Chief President Gloria Macapagal-Arroyo and AFP Chief of Staff Gen. Hermogenes Esperon with a decent 43.6 and 50.1 percent, respectively.

This directly refuted the outcome of a similar survey conducted by the more commercialized Pulse Asia Inc., in which they gave President Arroyo and Gen. Esperon a similar 41 percent distrust ratings.

According to members of the business sector, President Arroyo and Gen. Esperon along with the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) are among the agencies they believe are dead serious in providing quality services to the Filipino people.

"Respondents expressed greater satisfaction in the 2006 performance of the BIR, Customs and the AFP than in the previous year, giving them the biggest increase in net satisfaction ratings," the survey indicated.

The AFP got a 50.1 percent trust rating and ranks number 15, nine notch higher than its 2006 ranking among the 37 government-agencies that show best-performance as far as the MBC members are concerned.

Aside from the OP and AFP, among the other biggest gainers in the MBC-conducted trust survey were BIR with 55.2 percent net satisfaction rating, BOC with 50.2 percent and Supreme Court (SC), 48.7 percent.

The agencies that received failing marks were the Department of Interior and Local Government (DILG) with –40.0 percent rating, Department of Justice (DOJ) –17.2 percent, Department of Foreign Affairs (DFA) –13.1 percent, and the Department of Public Works and Highways (DPWH) –8.1 percent.

Huge hot money inflow in March boosts stock market

By Maricel E. Burgonio, Reporter
Original report in The Manila Times

Net foreign portfolio investments rose to significant levels in end-March 2007 with the bulk of the money going into the Philippine stock market, Bangko Sentral ng Pilipinas said on Thursday.

BSP Governor Amando M. Tetangco Jr., said net portfolio investment inflows grew 71 percent on year to $838 million in January to March this year from $490 million in the same period last year.

Gross investment inflows rose by 139 percent from year-ago level, with $2.803 billion, or 80 percent of the total going into listed shares at thePhilippine Stock Exchange and $1.734 billion into property, telecommunication and banking sectors.

About $2.116 billion, or 60 percent of these remittances came from the United Kingdom, the United States and Singapore.

“These investments were funded by fresh remittances of foreign exchange converted into pesos through banks operating in the Philippines,” Tetangco said.

Investments in peso-denominated government securities, mostly Fixed Rate Treasury Notes, or FXTNs, in the amount of $606.13 million accounted for 17 percent, while investments in money market instruments of $1.27 million and peso bank deposits of $104.07 million had a combined share of 3 percent.

For the month of March this year, the net inflow from foreign portfolio investments amoun-ted to $173.21 million.

Tetangco said the net weekly outflows in the first half of the month resulted from huge global equities sell-offs triggered by losses suffered by the China and US stock markets. However, these were more than offset by the net weekly inflows in the second half.

Inflation continued to slow down to 2.6 percent in February while the budget deficit declined to P18.6 billion in the first two months of the year vis-à-vis P40.4 billion last year after a surplus of P11.1 billion in February.

Gross inflows of registered foreign portfolio investments aggregated $1.254 billion, of which a large portion worth $969.56 million, or 77 percent consisted of PSE-listed shares of banks and property, telecommunication and transportation services companies.

Government securities, primarily FXTNs, accounted for 22 percent at $269.00 million while placements in money market instruments and peso bank deposits made up the remaining 1 percent at $15.16 million.

These inflows exceeded capital repatriations/outflows of $1.081 billion, which pertained to divestments from listed shares of $447.68 million and government securities of $308.04 million as well as withdrawals of money market placements of $4.63 million and peso deposits of $320.16 million.

Thursday, 12 April 2007

FDIs and strong peso boosting RP economy -- Bunye

Original article at Gov.Ph News

"Foreign Direct Investments (FDIs) and the strong peso are boosting us."

Thus enthused Press Secretary and Presidential Spokesperson Ignacio R. Bunye over the report of the Bangko Sentral ng Pilipinas (BSP) that FDIs "recorded net inflows of US$357 million, or a year-on-year growth of almost 51 percent" in January 2007 alone.

"FDIs are markers of global confidence while the strong peso is the handiwork of Filipino excellence and patriotism exemplified by our overseas contract workers (OFWs)," Bunye said.

The BSP or central bank explained that the growth in FDI last January "was boosted mainly by the net inflows from the reinvested earnings account which amounted to US$220 million, from only US$2 million last year."

This, as "foreign banks opted to retain their earnings in their local branches given the continued positive economic prospects," the BSP said.

On Tuesday, the peso breached the P48 per US dollar barrier to close at a six-year high of P47.95 at the Philippine Dealing System, the BSP said.

FDI inflows are expected to "remain positive" the entire year, what with investors taking advantage of the country’s improving investment climate, according to the BSP which pointed to the United States and Japan as the "major sources" of the FDI flows at the start of the year.

Still, Secretary Bunye stressed that "we have to keep up the safeguards that are already in place to protect our exporters and drive up the tempo of domestic investments."

The BSP said net equity capital inflows rose by almost 70 percent in January to US$70 million compared to the year-ago level, with fresh capital infusion in long-term investments reaching US$129 million.

"In particular, the industries which benefited most from these inflows included manufacturing (chemical products, electronics), services (international courier), real estate, financial intermediation, and construction," the central bank added.

"Loans extended by head offices to their subsidiaries in the Philippines -- comprising bulk of the other capital account -- also registered a net inflow of US$67 million," the BSP said.

Wednesday, 11 April 2007

Arroyo urged to apply open skies policy at Macapagal airport

Full story at Sun.Star

CLARK FREEPORT ZONE -- A local advocacy group urged the Arroyo administration to pursue the immediate implementation of an "open skies" policy at the Diosdado Macapagal International Airport (DMIA) "to realize its full potential as an engine of national development."

DPWH officials replaced over streetlamps scandal

By Elias O. Baquero
With Karlon N. Rama
Full story at Sun.Star

CEBU CITY -- The six-month preventive suspension order on nine Department of Public Works and Highways (DPWH) 7 officials was finally served Tuesday, almost two weeks after the anti-graft office came out with the ruling.

The order was delivered to DPWH 7 last week but it was only Tuesday that the DPWH hierarchy decided on who will replace Regional Director Robert Lala, a source said.

Peso soars to 6-year high, enters $ 47/$ 1 territory

Full story at Manila Bulletin

The peso soared to its new six-year high, breaching down the R48 to the US dollar barrier to close at PHP 47.95 in yesterday’s foreign exchange trading at the Philippine Dealing System, from PHP 48.05 closing rate on Wednesday.

Now, a visa-upon-entry setup for foreign businessmen

By Max V. de Leon
Full article at the Business Mirror

THE Philippines has finally followed the footsteps of its Asean neighbors in relaxing its immigration policies for foreign businessmen with the rollout of the visa-upon-entry scheme on Tuesday.

The Board of Investments (BOI), Bureau of Immigration (BI) and the different chambers of commerce in the country forged a memorandum of agreement putting the program into force immediately.

Trade Undersecretary and BOI managing head Elmer C. Hernandez said the program allows foreign businessmen to apply for visa electronically three days before their arrival to the country.

Their application for a Temporary Visitor’s Visa (TVV) should be endorsed and coursed through the Philippine Chamber of Commerce and Industry (PCCI) or the foreign business chamber representing their countries of origin.

Requests for TVVs by corporations for their visitors should also be coursed through the chambers.

The BOI will receive the applications and recommendations and process them within 24 hours from receipt and then transmit them to the BI.

The Immigration will then have another 24 hours to fully screen the applications and then notify the organizations that made the endorsement.

If the applications are approved, the TVV will be issued to the foreign businessmen upon their arrival here.

The Immigration will have special booths for them for the arrival and departure at the Ninoy Aquino International Airport, Mactan International Airport and Davao International Airport. The TVV will be valid for 30 days from the date of arrival and may be extended for another 30 days.

Big firms, grains group back drive vs hunger

By Jonathan Mayuga
Original article at the Business Mirror

WITH social responsibility as the mantra of the time for private corporations, several big companies such as conglomerate San Miguel Corp. and the Philippine Confederation of Grains Association expressed full cooperation with the government to end hunger in the country.

Agriculture Secretary Domingo Panganiban, lead convenor of the National Antipoverty Commission, said these companies will participate in the department’s “Adopt A Barangay Project.”

Panganiban and Secretary Edgardo Pamintuan of the Luzon Urban Beltway had been tapped by the President to carry out the government’s antipoverty programs.

The grains confederation distributed 12.5 tons of iron-fortified rice last week to poor families of Smokey Mountain in Tondo, Manila.

“We expect more private [parties] to follow in this noble undertaking to help people benefit from the benefits of the improving economy,” said Panganiban.

He said a broad alliance with the private sectors is necessary at this time to effectively carry out the government’s anti-poverty mechanisms aimed at reducing poverty by 17 percent in 2010.

Other firms supporting the effort include SM Shoemart, Philippine Long Distance Telephone Co., RFM Corp., Robinsons, Jollibee, McDonald and KFC Joyfoods Corp..

The Antipoverty Commission has also embarked on livelihood projects tapping the corporate management skills of local corporations to help communities situated in very vulnerable provinces of the country.

Panganiban said their “Adopt a Barangay Project” will also be undertaken in collaboration with local government units and other national government agencies.

Some of the aspects of the support of the big corporations include the trade of products of livelihood ventures in agriculture, handicrafts, and others undertaken by poor communities.

Panganiban also proposed to establish microfinancing initiatives directly in the 10 poorest provinces to make such financing within convenient reach of the poor in those areas that have traditionally been sidelined by financial institutions.

These poor provinces include Zamboanga del Norte, Masbate, Maguindanao, Agusan del Sur, Surigao del Norte, Mountain Province, Lanao del Norte, Camarines Norte, Sarangani and Zamboanga Sibugay.

Tuesday, 10 April 2007

FDIs post strong start in 2007; Jan net inflows reach $357M

Original article at ABS-CBN News

Foreign direct investments (FDIs) in January recorded net inflows of $357 million, or a year-on-year growth of almost 51 percent, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

"The growth in FDI for the month was boosted mainly by the net inflows from the reinvested earnings account which amounted to $220 million, from only US$2 million last year, as foreign banks opted to retain their earnings in their local branches given the continued positive economic prospects," the BSP said.

Net equity capital inflows also rose by almost 70 percent in January to $70 million compared to the year-ago level, with fresh capital infusion in long-term investments reaching $129 million.

"FDI flows are expected to remain positive in 2007 with investors taking advantage of the country's improving investment climate," the BSP said.

The major sources of FDI flows in January were the U.S. and Japan.

Gov't fast-tracking completion of 21 priority projects

Original article at Gov.Ph News

The government is fast-tracking the completion of 21 priority road and bridge projects by 2010 so that the benefits of improved agribusiness, tourism, economic and job development will be felt by the people at the soonest possible time, according to Presidential Management Staff (PMS) Chief Cerge Remonde.

In his weekly press conference at the New Executive Building in Malacañang this morning, Remonde laid down the various road and bridge projects in line with President Gloria Macapagal-Arroyo’s super regions concept.

"The government is improving, rehabilitating, extending, expanding or constructing 20 priority road projects and one major bridge project costing a total of P96.688 billion nationwide by 2010," he bared. "As part of the super regions concept, these projects will promote tourism, logistics, (and) faster and cheaper transport of agricultural products to the market."

The road projects, Remonde pointed out, aim to boost economic development in each super region by strengthening the linkages between provinces and between the super regions.

The 21 road and bridge projects, according to dates of completion, are as follows:


* EDSA rehabilitation works which involve concrete re-blocking, sidewalk rehabilitation and installation of foot bridges (P138.55 million);
* The Subic-Clark-Tarlac Expressway Project (P21 billion);
* The Dinagat Island Road in Mindanao (P100 million); and,
* The Southern Tagalog Arterial Road II (STAR II) that covers the stretch from Lipa to Batangas cities (P2.511 billion).


* The Daang Hari-Southern Luzon Exchange Link (P1.387 billion);
* The Southern Luzon Expressway (SLEX) Extension Project (P8.915 billion); and,
* The Tarlac-Dingalan Road (P725.16 million)


* The Bontoc-Tabuk-Tuguegarao Road (P1.37 billion);
* The Halsema Highway (P1.78 billion);
* The C-5 Expressway which involves the North and South Luzon Exchange (P12.76 billion);
* The Cavite-Laguna (CALA) North-South Road (P2.895 billion);
* The Marikina-Infanta Road (P1.55 billion);
* The other sections of the El Nido-Bataraza-Rio-Tuba Road (P5.98 billion);
* The Dapitan City-Dakak road (P210 million);
* The Libac-Maguindanao road project (P1.952 billion); and,
* The Sibuko-Siraway-Siocon-Baligian-Gutalak road (P1.326 billion).


* The C6-Lakeshore Expressway (P13.7 billion);
* The North Luzon East Expressway (P3.013 billion);
* The Manila-Cavite Toll Expressway Project (R-1) (P6.263 billion); and,
* The remaining sections of the Surigao-Davao coastal road.

Remonde stressed that aside from boosting agribusiness and tourism and spurring economic and job development in the areas where the road projects will traverse, traffic decongestion, peace and order and safer and more efficient transport mobility will be ensured.

He pointed out that the benefits to the farmers, who have to worry about their goods being spoiled en route to the consumers, will now be a thing of the past because the road projects, once completed, will greatly decrease travel times to and from their destinations.

The PMS chief assured that the road projects are being closely monitored by the Infrastructure Monitoring Task Force (IMTF) that he also chairs, and the National Competitiveness Council to guarantee their completion.

Majority of the road projects are being undertaken and implemented by the Department of Public Works and Highways except for the C-5 Expressway, the North and South Luzon Expressway Link and the SLEX expansion project which are being handled by the Toll Regulatory Board.

The C-6 Expressway, the CALA North-South Road, the Daang Hari-SLEX Link and the North Luzon East Expressway are being implemented by the Philippine Infrastructure Corporation.

The EDSA Rehabilitation Project is being undertaken by the Metro Manila Development Authority while the Subic-Clark-Tarlac Expressway Project is being developed by the Bases Conversion and Development Authority.

Monday, 9 April 2007

Japan envoy cites RP fiscal reform

Original article at Positive News Media

MANILA, April 10 (PNA) – Japanese Ambassador Ryuichiro Yamasaki on Monday cited the "encouraging fiscal reform" undertaken by President Gloria Macapagal-Arroyo to boost the Philippine economy.

Yamasaki made the statement in a speech during the 61st anniversary of the "Araw ng Kagitingan" celebration at Mt. Samat in Pilar, Bataan some 100 kilometers north of Manila.

An economist, President Arroyo has focused her effort to institute vital reforms to the economy the past six years to make the Philippines a globally competitive nation.

He also disclosed that Japan is awaiting the visit of Mrs. Arroyo to Tokyo next month to hold talks with Japanese Prime Minister Shinzo Abe on bilateral matters between the Philippines and Japan.

"Let me state that with Japanese economy presently in the face of sustained recovery and with the Philippine economy in the face of encouraging reform, it could not be more kindly for you Madam President to visit Japan next month to continue your close dialogue with Prime Minister Abe as well as to meet the leaders of the Japanese community," Yamasaki said.

Yamasaki said that during the annual ambassadors meeting in Japan last week, the Japanese prime minister relayed to him that Japan is looking forward to the visit of the Filipino leader in Tokyo.

"This will open new opportunity for closer comprehensive partnership between our two nations towards building an Asian community," he said.

Japan is the Philippines' largest Overseas Development Assistance (ODA) partner and one of the largest investment partners.

Yamasaki also noted that Japan is committed to continue its nationbuilding efforts, saying the Philippines is a true friend.

He was confident that by working closely together in a comprehensive partnership, together with other countries such as the United States, "we can and will ultimately attain our common goals of peace and prosperity for all."

Likewise, the Japanese envoy relayed the message of Abe who lauded the President's leadership in the highly successful holding of the Association of Southeast Asian Nations (ASEAN) summit in Cebu last January.

Abe visited Manila last December to mark the 50th anniversary of normalization of diplomatic ties between Japan and the Philippines, Yamasaki said.

Yamasaki also took the occasion to reiterate Japan's "apology and great sense of remorse over the atrocities committed by the Japanese military in the Philippines during World War II."

"Let me also reiterate the Japanese government's determination not to allow the lessons of that terrible war to erode and our determination to continue to the peace and prosperity of the world without ever waiting award," he said.

"On the occasion of this solemn ceremony as I reflect to the lessons to be learned, I again had been moved by the noble spirit of reconciliation and sense of fairness on the part of the Filipino people in appreciating Japan's cause of post war history in this loving nation that shares the value of democracy," Kamasaki added. (PNA)

Seair seeks open skies policy in Clark

By Darwin G. Amojelar
Original article at The Manila Times

SOUTH EAST Asian Airlines (SEAIR) said the restrictive policy on foreign airlines at the Diosdado Macapagal International Airport (DMIA) in Clark has constrained the entry of more foreign tourists.

In a position paper sent to reporters, Avelino Zapanta, SEAIR president, said the restrictive grant of 3rd and 4th, as well as the elimination of 5th and 7th freedoms prevent the influx of foreign tourists. This translates to foregone revenues of $1,500 per foreign visitor, or equivalent to one year’s salary for a local worker.

In August, the President signed Executive Order 500-A restricting foreign carriers from operating unlimited 3rd and 4th freedoms, and eliminating 5th and 7th freedoms.

This Palace directive voided an earlier order, EO 500, which liberalized the operations of foreign airlines that fly to the DMIA.

“This eliminates prospective low cost carriers and other foreign airlines with the exception of a few [such as] Tiger Airways and Air Asia [to operate in the country],” Zapanta said of the August order.

Philippine Airlines (PAL) and Cebu Pacific support EO 500-A, which Zapanta, a former PAL executive, said is killing foreign competition despite the two airlines’ absence in Clark.

In contrast, SEAIR, he said, advocates opening up the skies in all airports other than Manila.

World Bank warns of another asset bubble

BSP expects foreign reserves at fresh record
By Darwin G. Amojelar, Reporter
Original article at The Manila Times

THE Philippines’ rising foreign-exchange reserves risk an overheating economy and an asset price bubble, according to the World Bank.

The multilateral lender issued this warning as the Bangko Sentral ng Pilipinas announced that the country’s gross reserves, which have registered fresh record highs every month, may end higher than last year.

The World Bank warned the Philippines and other Southeast Asian countries of another asset bubble, which could lead to a financial crisis similar to what happened 10 years ago.

“Since 1997, countries have built up large foreign-exchange reserves as a buffer against further crises but this could have the unwanted side effects—overheating economies and asset price bubbles,” the World Bank said in a recent report.

An asset bubble refers to the incidence of stock or property price increases that are unwarranted by the country’s economic fundamentals.

The World Bank’s warning followed a similar concern raised by the United Nations Economic and Social Commission for Asia and the Pacific (Unescap), which said a “global liquidity bonanza, inflated asset values and tremendous speculative pressures on regional currencies could destabilize regional economies, as happened in 1997.”

Unescap said international liquidity has flowed into Asian equities and other financial products, and pushed Asia-Pacific equity markets to 29 percent in 2006.

“Some countries have also seen large housing price rises over recent years, fueled by growing household debt,” it added.

In the Philippines, huge inflows of foreign exchange have fueled domestic money supply growth to more than 20 percent, thus raising the central bank’s alarm bells on the possible risk to inflation.

As of end-March, the Bangko Sentral ng Pilipinas (BSP) reported that the country’s gross reserves stood at a fresh record high of $24.7 billion owing largely to the proceeds of a government loan from the Japan Bank for International Cooperation.

It said strong remittances of overseas Filipino workers and investment inflows will further boost the country’s reserves, with the interagency Development and Budget Coordinating Committee seeing reserves ending this year at a new all-time high of $24.5 billion.

“However, the BSP may reassess this figure in view of expectations of continued strong foreign inflows into the country,” Governor Amando M. Tetangco Jr. told reporters.

Meanwhile, the World Bank said that while countries such as the Philippines have been gradually strengthening their financial and banking sectors since the crisis, it will be critical for efforts on these matters to pick up pace.

“Ten years after confronting the reforms needed to rebound from the financial crisis, East Asia must now confront a new wave of reforms, some of which will be at least as challenging as those enacted in the months after July 1997,” Milan Brah-mbhatt, World Bank’s East Asia and Pacific region lead economist, said.

The report said countries in East Asia, such as the Philippines, need to push ahead with their reform programs, especially in improving the governance and investment climate; developing more diversified capital markets including credit access for the poor; liberalizing services trade; boosting education systems to address skilled labor shortages; and emphasizing prudent macroeconomic policies.

RP adjusting inflation, other economic targets in 2008

By Lawrence Agcaoili
Full article at the Manila Standard Today

The government is set to fine-tune its economic goals for next year as the National Economic and Development Authority projects a slower gross domestic product growth of 5.8 percent.

Neda, a member of the inter-agency Development Budget Coordination Committee, sees the GDP growth slowing down to 5.8 percent next year from the projected range of 6.1 percent to 6.7 percent this year.

The committee’s executive technical board sees the GDP expanding by only 5.8 percent next year on the back of a 12 percent growth in export earnings and a 13 percent rise in imports.

The growth projection for next year assumed an inflation rate of 3 percent and an interest of 4 percent based on the benchmark 91-day Treasury bills. The board also assumed a stronger peso at 48 to $1 and lower oil price of $57 per barrel.

World Bank: Per capita income shooting up

By Roderick T. de la Cruz
Original Article at the Manila Standard Today

REAL per-capita income in the Philippines grew much faster in 2002 up to 2006 than in any period in the past three decades, the World Bank says in a study.

That allowed the country’s real per-capita income to regain its losses during the Asian financial crisis in 1997-1998, which momentarily derailed the ambitions of several countries, including the Philippines, to become newly industrializing economies, the Bank says in its latest East Asia and Pacific Update report issued every six months.

Philippine government figures show that per-capita income exceeded $1,100 in 1996 under the Ramos administration, but fell below $1,000 in 1998 up to 2000 following the Asian financial crisis. Last year, President Gloria Macapagal Arroyo said per capita income had gone up to $1,300.

The World Bank says many Asian economies have performed robustly in many respects since the crisis.

“For one thing, all returned to positive growth quite quickly after the severe recessions of late 1997 and 1998,” the Bank says.

“Korea, Malaysia and the Philippines promptly regained or exceeded their pre-crisis level of per-capita income in 1999, while this took longer, until 2003, in Indonesia and Thailand.”

Overall, the emerging economies of East Asia have come a long way since the financial crises of 1997-98, with real per-capita income for the region as a whole rising by over 75 percent compared to 1996,” the Bank says.

“Taking 2002-06 as the period of sustained post-crisis expansion, economies such as Indonesia, Malaysia and the Philippines have achieved real per-capita income growth of 3 percent to 3.5 percent, with per-capita growth in Korea and Thailand averaging 4 percent to 4.5 percent.” the Bank says.

Still, the Bank’s report says the average growth of Asian economies in 2002 up to 2006 was still about 2 percentage points lower than in the two decades before the crisis.

“The only exception is the Philippines, whose recent per-capita growth of 2.9 percent is much higher than its negligible 0.5 percent performance in 1976-96,” it says.

The Philippines’ 0.5-percent per-capita income growth in 1976-1996 was significantly lower than 8 percent in China, 6.3 percent in Thailand, 5.2 percent in Indonesia, and 5 percent in Malaysia.

Economists blame poor income growth in the Philippines during the period for making the country one of the poorest in the region, a reversal from its status in the 1960s, when it was considered the most progressive country in Asia next to Japan.

But the Bank cites the recent economic gains in the Philippines when its gross domestic product rose 5.4 percent in 2006 and gross national product went up by 6.2 percent, marking the first time since the 1970s that three consecutive years of growth of 5 percent or more was recorded.

The Bank expects the Philippine economy to grow by 5.6 percent in 2007 and by 6 percent in 2008, and could bring it higher if the Philippines could improve the investment climate.

“A strong focus on strengthening the investment climate and improving labor force skills will be important for the Philippines,” it says.

World Bank country director Joachim von Amsberg has said that if the Philippines could apply the same determination it showed to address fiscal problems in strengthening the investment climate and competition today, higher growth would be more likely and its impact on job generation and poverty reduction would be more beneficial.

The World Bank says another challenge is to combine growth with equity, as 34 million Filipinos in 2006, or about 39.9 percent of the population, were earning less than $2 a day.

“High inequality can hamper growth as poor people without access to credit may be unable to exploit investment opportunities,” the Bank says. “It can also be a source of political and social unrest that stymies investment and growth.”

Says Von Amsberg: “The reforms that the Philippine government has started will go a long way in attaining higher growth and enhancing its impact on job generation and poverty reduction.

“What is important is sustaining and credibly implementing these reforms to meet the challenges faced by middle-income countries.”

RP jobless rate slides to 7.8% in January - NSO

03/15/2007 | 11:33 AM
Original Article at GMANews

The Philippines’ jobless rate fell to 7.8 percent in January 2007 from 8.1 percent in the same period last year, helped by additional jobs in the agriculture and services sectors.

The unemployment rate for January 2007, however, was higher than the 7.6 percent recorded in the last NSO survey conducted on October 2006.

According to a National Statistics Office report released Thursday, the National Capital Region had the highest unemployment rate of 12.7 percent. It was followed by the CALABARZON, which had an unemployment rate of 10.4 percent.

The NSO study also showed that joblessness was more rampant among men than women. Men had an unemployment rate of 8.1 percent, compared to 7.4 percent for women.

In the same study, the NSO said that of the 35.35 million employed Filipinos, 50.5 percent worked in the service sector while 34.7 worked in the agriculture sector.

Jobs under the services sector include those in restaurants, tourism, and the country’s much touted call center industry.

Those working in the industrial sector comprised 14.8 percent of the total number of employed.

The NSO said, however, that despite the fall in the unemployment rate, a sizeable number of Filipinos still deemed themselves underemployed.

“In January 2007, one in every five employed Filipinos was underemployed. Most of the underemployed were found in the agriculture sector at 45.7 percent," the NSO added.

An underemployed person is one who already has a job but is still looking for more opportunities to work.

The NSO also said that despite the increasing number of jobs in the country, a significant portion of the country’s workforce is still classified as laborers and unskilled workers.

“Among the various occupation groups, laborers and unskilled workers comprised the largest proportion (32.3 percent) of the total employed population. This was also the largest occupation group in January 2006 (31.4 percent)," the NSO said.

RP savings rate now 30% of GDP

By Jun Vallecera
Original article at the Business Mirror

THE country’s savings rate, or the sum of its private and public sector savings, finally pushed past the 30-percent level relative to local output or the gross domestic product as at end-2006, government data show.

According to the Department of Finance, from only 29.1 percent in 2005, the savings rate stands at 30.3 percent of GDP as at end-2006, “roughly the average in the East Asia region.”

Finance Undersecretary Gil Beltran acknowledged the complete comparative year is still 2004 data when the region’s savings rate averaged 32.8 percent and the Philippines managed to post a savings rate of only 28.7 percent.

“But we certainly have increased our capacity to set aside a portion of our earnings as a people the past two years,” Beltran told the BusinessMirror in a recent interview.

Except for the Philippines, no comparable savings data from the region was available for the years 2005 and 2006 when the country’s savings rate pushed steadily higher.

Beltran said the bulk of the credit goes to the millions of overseas Filipino workers whose untiring labor fueled a consumption-driven economy.

“It is tempting to say the government did absolutely nothing but that is not fair. The remittances of millions of OFWs made the most of it happen, that’s true,” Beltran said.

He noted the string of budgetary shortfalls in the past was a form of dis-saving but then again, the budget deficit as percent of GDP has steadily fallen through the years also, to just 1.04 percent of GDP last year from 2.7 percent of GDP in 2005.

The steady increase in gross domestic savings means more and more Filipinos have set aside a portion of their incomes for the future, making the country prospectively less dependent on foreign funds for its own development.

This also means, Beltran added, the Filipino has learned to be less acquisitive, spending only on essentials.

In 2000, Manila’s gross domestic savings stood at only 22.7 percent, the lowest in a region where the average was 33.4 percent and Malaysia had 46.8 percent and Singapore 52 percent, for example.

Non-Asean countries like India and Taiwan had gross domestic savings rates of 24 percent and 24.2 percent, respectively, Beltran said.

For the public sector, the goal this year is rather modest or flattish, when public sector savings is estimated to hit P120 billion from last year’s preliminary total of P119.5 billion.

Last year’s estimated public sector savings represent a 99-percent positive growth from public sector savings of only P60.1 billion in 2005.

But then again, Beltran said, public sector savings in 2004 was in a state of deficit reaching P113.7 billion.

Customs bullish despite DBCC revenue projections cut

By VG Cabuag
Full Article at the Business Mirror

THE Bureau of Customs (BOC) remains confident that this year’s collections will surpass last year’s despite the decision of the interagency Development Budget Coordinating Committee (DBCC) to reduce its revenue assumptions.

In an interview, Customs Commissioner Napoleon Morales said that he “would not allow” the assumption that tariffs and duties imposed on goods will be lower this year.

However, a source from the DBCC may already have preempted Morales’s bold assertions.

According to its estimates disclosed two weeks ago, the DBCC predicted that the customs bureau—the Philippines’ largest revenue source, next to the Bureau of Internal Revenue—may only be able to collect P165.12 billion, lower than last year’s collection of P198.2 billion.

Although he has yet to meet with the DBCC regarding this matter, Morales said the bureau remains firm in its commitment to collect P228.2 billion this year.

Nevertheless, the customs chief remained wary of lower oil shipments during the first three months of the year. Since duties imposed on crude shipments covered about a third of the BOC’s revenues last year, the slowdown in fuel importations may make it more difficult for the bureau to meet its collection targets.

Revenue dip won’t hurt growth

By Rommer M. Balaba
Original Article at the Business Mirror

THE Arroyo economic team’s decision to downgrade revenue assumptions for the tax collection agencies will not threaten growth projections this year—a range of 6.1- 6.7 percent—even if it means lesser funds for productive economic activities, Socioeconomic Planning Secretary Romulo L. Neri said.

“There are other [funding] sources that we can tap especially for infrastructure projects the government intends to undertake this year. No need to worry if the gross domestic product (GDP) growth target remains achievable [with the revenue forecast cut] . . . It is, [still attainable],” Neri told BusinessMirror in a telephone interview.

The interagency Development Budget Coordination Committee (DBCC) at its last meeting slashed the 2007 revenue assumptions of the Bureau of Internal Revenue (BIR) and Bureau of Customs to factor in reduced interest rates and a stronger peso exchange rate against the US dollar. It however kept the total revenue target at P1.12 trillion and the target limit for the budget deficit at P63 billion.

The BIR target collection was trimmed to P765 billion from P784 billion; and the Customs bureau, to P228 billion from P235 billion.

“Whatever decline in the revenues [of BIR and BoC] can be cushioned by the lower interest payments we have to pay for our foreign debt. Our interest payment savings can then be used to fund the infrastructure projects,” Neri said.

“Overall the effect on the economy would be neutral,” he added.

The Philippine government has set 10 priority infrastructure projects worth P80.681 billion either for implementation this year or early next year: P1.115-billion Bicol Emergency Power Restoration Project; the P3.575- billion Angat Water Utilization Improvement Project, Phase 2; the P1.621-billion Quirino Highway Project; the P3.13-billion Palawan South Road Project: the P19.35-billion North Luzon Expressway Extension Project; the P35.474-billion LRT Line 6 Project, which proposes a southward extension of the LRT Line 1 to Cavite; the P4.52-billion Northrail-Southrail Linkage Project; the P2.67-billion Panguil Bay Bridge Project; the P6.206 billion LRT Line 1 North Extension Project, which closes the MRT-LRT loop; and the P3.013- billion North Luzon East Expressway Project.

But Neri, who is also director general of the National Economic and Development Authority, also commented that both agencies should try to improve their collection efforts. “There should be more critical information sharing between the agencies [to capture a wider tax base] together with other government entities,” he said.