Saturday, 14 July 2007

Foreign Portfolio Investments Post Record High US$871 million Net Inflow in June

Media Release
Bangko Sentral ng Pilipinas
Full report at
Click here to view table.

June 2007 Flows

Bangko Sentral-registered foreign portfolio investments posted a record high net inflow of US$870.8 million in June 2007, which surpassed the previous highest monthly total of US$580.8 million in May.

On a gross basis, registered foreign portfolio investments 1 in June aggregated about US$1.9 billion, 82 percent or close to US$1.6 billion of which were in shares listed in the Philippine Stock Exchange (PSE). Holding and property firms and banks captured 73 percent of said investments in listed shares. Placements in peso-denominated government securities, primarily Fixed Rate Treasury Notes or FXTNs, accounted for US$294.3 million or 16 percent of registered investments, while placements in peso time deposits made up the remaining US$38.0 million (2 percent). These inflows more than offset capital repatriations/outflows of US$1.0 billion, which arose from: a) divestments from PSE-listed shares of US$480.2 million (47 percent of total); b) divestments from government securities of US$290.8 million (29 percent); and c) withdrawals of money market instruments and peso deposits 2 of US$249.4 million (24 percent).

These strong investment flows during the month of June came about with the sustained positive market sentiment following robust corporate profits, appreciating peso and generally sound macroeconomic fundamentals. A large follow-on offering also attracted investments into the stock market.

January-June 2007 Flows

For the first semester of the year, newly-registered foreign portfolio investments and capital repatriations/outflows totaled US$7.8 billion and US$5.2 billion, respectively, for a net inflow of over US$2.5 billion. This net inflow was 3.3 times the US$773.8 million net inflow for the first semester of 2006.

Gross investment inflows, which rose by 131 percent from the year-ago level of nearly US$3.4 billion, went primarily to PSE-listed shares of US$6.2 billion (79 percent of total), distributed mainly among telecommunication, holding, utility and property firms. This reflects continued confidence in the economy, helped by the generally peaceful electoral exercise as well as the series of large stock rights and follow-on offerings during the semester. Peso-denominated government securities, mostly FXTNs, accounted for over US$1.4 billion or 19 percent of the investment inflows, while money market instruments and peso bank deposits aggregating US$170.2 million had a combined share of only 2 percent. These investments were funded by fresh inward remittances of foreign exchange converted into pesos through banks operating in the country. About US$5.07 billion or 64 percent of these remittances were sourced from the United Kingdom, the United States and Singapore.

Foreign investments in PSE-listed shares and government securities were 2.6 times and 1.5 times their corresponding levels in 2006.

Meanwhile, gross capital outflows for the semester increased by 102 percent from US$2.6 billion in 2006. The outflows represented divestments from listed shares of US$2.5 billion (47 percent of total) and government securities (US$1.3 billion or 25 percent); and withdrawals of money market placements and peso deposits (28 percent). The rise in these outflows may be attributed to a great extent to profit-taking activities of foreign investors to gain from the continued appreciation of the peso.


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.

OFW remittances rise 21.9% to US$5.9B in May 2007

Media Release
Bangko Sentral ng Pilipinas
Click here for table.

Remittances of overseas Filipinos (OFs) coursed through banks for the period January-May 2007 rose to US$5.9 billion, 21.9 percent higher than the level posted in the same period in 2006. Remittances in May 2007 was strong at US$1.2 billion. This marks the 13th consecutive month that remittances are above the US$1 billion mark. However, remittances in May grew by 8.4 percent year-on-year, a deceleration from the double-digit growth realized in the same month last year. The slowdown in growth during the month can be attributed primarily to the base effect following the sharp increase in remittances in May 2006.

The robust growth of remittances year-to-date was due largely to technological innovations introduced by financial institutions that serve as conduits for remittance transfers. These efficient modes of remittance transfers, combined with the increasing number of remittance centers and tie-ups abroad, expanded the banks’ coverage to service the needs of OFs and their beneficiaries.

As a result of these measures and other initiatives to facilitate remittance flows through formal channels, remittances remained strong even as the number of deployed Filipino workers contracted for the first five months of 2007. Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that total deployment at 457,531 from January-May 2007 was lower by 4.4 percent relative to the year-ago level. Classified by type of worker, the total number of land-based and sea-based workers in the year to date was 355,389 and 102,142, respectively. These were lower by 1.8 percent and 12.6 percent, respectively, compared to the levels in the same period last year. On a monthly basis, however, total deployment recovered in May relative to the level in same period last year due mainly to the pick-up in the deployment of land-based workers. Over the medium-term, the deployment of Filipino workers is expected to rise as labor importing countries such as the Middle East, Brunei Darussalam, Malaysia, South Korea, Taiwan, and Singapore employ more skilled overseas workers to meet the demands of their growing economies. These countries are expected to provide employment opportunities for highly-skilled and professional workers, particularly in the construction, information technology, hotel and restaurant, tourism, shipbuilding/ship repair, medical and healthcare sectors.

During the review period, the bulk of remittances originated from the U.S., Canada, the U.K., Saudi Arabia, United Arab Emirates, Italy, Japan and Hong Kong.

National Broadband, anyone?


Questions hound national broadband network project
Part 1 of 3
By Erwin Oliva
Full article at

MANILA, Philippines -- Controversy continues to hound the multi-billion-peso National Broadband Network (NBN) project of the Department of Transportation and Communication (DoTC).

National broadband network to save RP billions, says DoTC
Part 2 of 3
By Erwin Oliva
Full article at

MANILA, Philippines -- The Department of Transportation and Communication (DoTC) wants to establish a national broadband network (NBN) to "exclusively cater to the needs of the national government agencies and local government units."

Should the national broadband network project be outsourced?
Part 3 of 3
By Erwin Oliva
Full article at

MANILA, Philippines -- The biggest question hounding the national broadband network (NBN) project of the Department of the Transportation and Communications was the decision to implement it through a government-to-government agreement with funding coming from the Eximbank of China.

Friday, 13 July 2007


Full report at the National Statistics Office

Total external trade in goods for January to April 2007 reached $32.606 billion, representing a 5.7 percent increment from $30.838 billion during the same 4-month period in 2006. Similarly, total imports grew by 3.4 percent to $16.307 billion from $15.766 billion. Exports, on the other hand, registered an increase of 8.1 percent to aggregate dollar revenue of $16.299 billion from $15.073 billion during the same 4-month period in 2006. Balance of trade in goods (BOT-G) for the Philippines registered a deficit of $8.00 million during the same 4-month period in 2007.

JANUARY to MARCH (Previously posted in May)
Full report at the National Statistics Office

Total external trade in goods for January to March 2007 reached $24.123 billion, representing a 9.6 percent increment from $22.019 billion during the same 3-month period in 2006. Similarly, total imports grew by 7.1 percent to $11.971 billion from $11.172 billion. Exports, on the other hand, registered an increase of 12.0 percent to aggregate dollar revenue of $12.152 billion from $10.847 billion during the same 3-month period in 2006. Interestingly, balance of trade in goods (BOT-G) for the Philippines registered a surplus of $181.00 million during the same 3-month period in 2007.

President Arroyo to inspect new airport project in Negros Occidental

Original report at Gov.Ph News

ILOILO CITY (PNA) -– President Gloria Macapagal-Arroyo is set to inspect Friday a major infrastructure project in Negros Occidental that will boost her plan to make this part of the country a center for tourism.

President Arroyo will tour the new Bacolod-Silay Airport that will serve as another backbone of the tourism industry in Western Visayas after the recent opening the new Iloilo Airport in Cabatuan town.

It may be recalled that the construction of the airport suffered delay after it was bombed by some members of the New People’s Army (NPA) a year ago.

The new airport's construction in about 98 percent completed. It is situated in Bgy. Bagtic, Silay City is located 20 kilometers north of Bacolod City.

The P4.37 billion facility was constructed under a loan package from the Japan Bank of International Cooperation (JBIC).

It has a 2,500-meter runway capable of handling A-320 aircrafts with a capacity of 160 passengers. Its apron can hold five aircrafts at the same time.

After the airport inspection, the President will meet with members of the Cabinet for the Central Philippines Infrastructure Support Program to be attended by the governors of the provinces identified under the tourism belt of the super regions program. The meeting will be held in the new airport.

She will also meet with a potential ethanol investor for Negros Occidental. (PNA)

Peso jumps after rate cut, seen capped by BSP

Original report at ABS-CBN News

The Philippine peso rose on Friday, buoyed by a stock market rally after the central bank slashed interest rates and offset the impact by scrapping a scheme which paid lower interest on high-volume deposits.

The peso rose as far as 45.73 per dollar, up about half of a percent from Thursday's close, but traders said suspected central bank intervention pushed it back towards 45.80.

The Indonesian rupiah, which has recently moved largely in tandem with the peso, rose as far as 9,010 per dollar, up about 0.4 percent from late Asia trade on Thursday. Most other Asian currencies made modest gains against the dollar.

"The peso is settling down between 45.75 and 45.80 after strong central bank intervention around the 45.75 level," said a trader in Manila.

"The central bank's rate cut yesterday seems to be taken in a positive light," he said. "The cut is positive for the equity market, and with the equity market strong, there is foreign interest and that causes the peso to strengthen," he said.

The Philippine shares rose about 1 percent early on Friday.

On Thursday, the stock market was already closed when the central bank surprised investors by slashing the overnight borrowing rate by 150 basis pints to 6.0 percent and the lending rate by 175 basis points to 8.0 percent.

In an accompanying move, the central bank removed a tiered scheme, under which interest rates were reduced by up to 400 basis points on banks' deposits in excess of 10 billion pesos.

Central bank governor Amando Tetangco said the impact from the policy adjustments would be neutral, but market players believed the moves still amounted to some easing.

"While easing is bullish for the government bonds we expect a limited negative impact on the peso as strong economic fundamentals will continue to attract capital inflows to support the currency," analysts at ING said in a research note.

Sean Callow, currency strategist at Westpac, said he believed the relaxation was in line with the central bank's cut of its 2007 inflation forecast to 2.6-3.1 percent from 4-5 percent.

"Markets should quickly factor in at least one rate cut in coming months," he said in a note.

"While this will of course undermine the peso from a yield spread view, foreign equity investors already attracted to the Philippines' macro story are likely to become even more enthusiastic," he said. - Reuters

Award of rail link deal eyed this December

By Maricel E. Estavillo
Original report at the BusinessWorld

The government is planning a December awarding of the contract for a much-delayed link that will connect the Light Rail Transit-1 (LRT) station in Monu-mento, Caloocan and the Metro Rail Transit (MRT) North Avenue station in Quezon City.

The 5.4-kilometer link will complete the so-called EDSA Loop and involves three new stations, one beside the MRT-3 North Avenue end and the other two at Balintawak and Muñoz Market in Quezon City.

"We have already started the process of closing the loop. Bidding for the construction will be in December with construction expected to start in January or February next year," Light Rail Transit Authority (LRTA) Administrator Melquiades Robles yesterday said during the agency’s 27th anniversary.

The LRTA has awarded the contract for the project’s feasibility study to Metrolink JV. The entire project, which has been stalled for about six years due to legal issues, will cost some P6.2 billion.

Construction should have started 18 months after the MRT-3 line was completed in 2000, according to the contract signed by the government with Metro Rail Transit Corp. (MRTC). MRTC is the consortium that built the MRT-3 line, which runs 17 kilometers from North Ave. to Taft Ave. in Pasay City.

MRTC was supposed to undertake the line extension but the Justice department in 2004 ruled that an entirely new deal was needed. The government then decided to seek new offers for the project.

Construction of the EDSA loop has also displaced an earlier proposal to build a 9.2-kilometer rail link called the EDSA North Transit or ENT, which was supposed to link all Metro Manila railways by 2010.

Part of the ENT would extend from North Avenue to Malabon and connect the MRT-3 on EDSA and the planned MRT-7 on Commonwealth Ave. through a rail depot. It was also supposed to link to the Southrail and Northrail lines and eventually run to the Clark economic zone in Pampanga. Construction was to start early next year.

Mr. Robles said closing the EDSA Loop would add 80,000-100,000 passengers to LRT’s present capacity of 40,000/hour/direction.

In addition, construction of the loop will also make it easier for the LRTA to have a direct connection with National Transmission Corp. (Transco). The light railways are powered by electricity.

"The new line will pass through the Balintawak substation of Transco. There is already an initial agreement with Transco for the direct connection ," Mr. Robles said.

The LRTA operates Line 1, which runs from Monumento to Baclaran, and Line 2, which runs from Santolan in Pasig City to Recto in Manila.

High-tech passports out by August

By Estrella Torres
Original report at the Business Mirror

The Department of Foreign Affairs (DFA) will start issuing machine-readable passports by August this year.

The new passports contain security features that aim to avoid tampering.

A DFA official said the agency started issuing the first batch of machine-readable passports to government officials and diplomats on June 18. At least 450 machine-readable official passports and 200 diplomatic passports have so far been issued.

He said the DFA will pilot-test next week the issuance of the new machine-readable passport, now colored maroon, instead of the current green handscripted passport.

The first to be issued machine-readable passports next week include the migrant workers who are currently processing travel documents at the Philippine Overseas Employment Administration (POEA) and senior citizens who are applying for passports at the DFA.

There are some 300 to 500 workers who go to the POEA daily to have travel documents processed while 50 to 100 senior citizens apply for passports at the DFA daily.

BSP cuts key interest rates

By Des Ferriols
Original article at the Philippine Star

For the first time since 2005, the Bangko Sentral ng Pilipinas (BSP) adjusted its key policy rates downward yesterday but said its settings remained neutral as the Monetary Board (MB) also lifted the tiering scheme on bank placements.

This developed as the BSP projected the inflation rate this year to average between 2.6 percent and 3.1 percent, giving the MB even more room to swing its monetary tools around.

At its meeting yesterday, the BSP decided that effective today, the tiering system on placements with the BSP would be lifted and the BSP’s key policy interest rates would be adjusted to six percent for the overnight borrowing or reverse repurchase (RRP) rate and eight percent for the overnight lending or repurchase (RP) rate.

The BSP last adjusted its headline policy rates in October 2005 when the rates were increased to 7.5 percent for overnight borrowing and 9.7 percent for overnight lending.

The tiered rates, on the other hand, were introduced in November last year, supposedly to force banks to take their funds out of the central bank and lend them to borrowers.

BSP Governor Amando M. Tetangco Jr. said the removal of the tiering scheme and the adjustment in headline policy rates would also apply to placements in the special deposit account (SDA) facility of the BSP which he said would remain open to trust entities.

The surprise move was expected to have no effect on the effective monetary policy settings since one move was counterbalanced by the other, Tetangco said.

“This policy stance — which is neutral relative to future inflation and output — is consistent with the forward-looking orientation of inflation targeting,” Tetangco said. “We considered the low actual inflation and, more importantly, the benign inflation outlook over the policy horizon.”

With the latest projections, Tetangco said the inflation rate would fall below the four to five percent target range in 2007 and stay within the four percent plus or minus one percentage point target in 2008.

“We removed the tiering scheme because it has achieved what it was supposed to,” Tetangco said. “Lending has gone up to 12.1 percent and we can see now that banks are no longer the primary source of funding anyway.”

According to Tetangco, corporations have raised as much as P85 billion in funds by tapping the equities market as well as the bond market, indicating that the capital market was developing a more significant role in raising capital.

However, Tetangco said removing the tiering scheme would have the effect of tightening the monetary policy settings. “That’s why we decided to adjust the key policy rates,” he said. “We want the measures to remain neutral as far as our inflation targeting is concerned.”

Tetangco said the MB’s assessment of the recent data indicated that the BSP’s mopping up operations that started in early May 2007 have begun to have the desired cooling effect on liquidity conditions.

“Meanwhile, there are indications that the tiering scheme that has been in effect for the past eight months has had a beneficial impact on bank lending to the productive sectors of the economy,” he said.

At the same time, Tetangco said the Monetary Board observed that the continued broadening of financial markets means that non-bank sources of financing are becoming increasingly available to the corporate sector, thereby reducing the reliance on bank lending.

“The Monetary Board believes that the neutral stance of monetary policy is appropriate given moderate demand pressures, favorable supply conditions and manageable inflation expectations,” he said.

According to Tetangco, yesterday’s two-sided action would keep the MB’s flexibility in the absence of a clearer direction on potential risks, such as liquidity, wage pressures and oil prices.

Thursday, 12 July 2007

Foreign chambers urge masterplan for aviation, sea transport, logistics

Original report at the Manila Bulletin

The Foreign Chambers of the Philippines (FCP) has called for a new masterplan to develop international and domestic aviation and sea transport for logistics in Central Luzon in order that the Philippines could cope up with the fast increasing volume of travellers,

In a statement, Roger J Dallas, FCP president, expressed particular concerns about the inefficiencies of several major airports to handle the expected growth of international and domestic air traffic. He cited the NAIA which he said suffers from two very serious constraints: (a) runway safety and capacity and (b) antiquated terminal facilities.

The foreign chambers also recommended the following:

1. Opening of the NAIA Terminal 3. It is extremely important that the terminal be opened at the earliest date and be available to all international carriers on a "level playing" field basis. The operation of the terminal should be bid out to the private sector, including international firms, to ensure professional management comparable to other international airports in Southeast Asia.

2. Operation of NAIA Terminal 2. The "new" domestic terminal (Terminal 2), financed by Japanese Official Development Assistance, has operated for a decade as the domestic and international terminal of Philippine Airlines and since 2006 as the domestic terminal of Air Philippines, a PAL affiliate. PAL pays lease payments to the government for Terminal 2, but has not paid the government aeronautical fees amounting to billions of pesos. The terminal should operate as originally intended as the new domestic terminal.

3. Expansion of DMIA Terminal (Interim). The current terminal at Clark is approaching capacity and needs to be expanded as soon as possible and completed by the end of 2008.

4. DMIA Terminal (Future) – Clark will need a large modern terminal for international and domestic traffic in around five years and the current master plan for Clark should be revised as part of the new Central Luzon Air and Sea Logistics Hub Master Plan. Then a design-build contract should be prepared for international bidding. Funding for the terminal might come from a bond issued by the Clark International Airport Corporation.

5. Construction of additional DMIA parallel Runway. Runway 02 R/20 L needs an additional parallel runway as an alternative runway as well as to allow eventual dual simultaneous operations. Runway 02 L/20 R can not be used by any aircraft because of the "crocodile cracks" which appeared on it after the Mt. Pinatubo eruption. The construction of a runway takes 2-3 years, after a planning and bidding period of 2-3 years.

6. Manila-Clark Rail connection. A high-speed rail connection between Metro Manila and Clark will be essential.

All other domestic and international carriers have continued to operate from outdated, unsafe and increasingly overcrowded facilities, while awaiting the opening of the ill-fated privately-financed Terminal 3, which the current administration expropriated in 2005 over alleged corruption in the terminal’s contracting and construction. Current estimates suggest Terminal 3 will not open until sometime in 2008, if at all. Many foreign businessmen visiting the Philippines for the first time ask why the facility remains unused.

7. Clark should be developed rapidly. The Philippine Government is fortunate to control the former US military base at Clark (renamed Diosdado Macapagal International Airport) north of Manila which has two parallel international runways (of which only 02 R/20 L accommodates flights) and vacant space for a third to be built as an option, instead of rehabilitating the old runaway 02/L20 R. This would allow simultaneous use of two runways.

However, Clark lacks adequate domestic and international terminals and its ground transportation links to Manila are subject to congestion. Clark is about the same distance from the capital as the expensive new international airports and terminals built in recent years in Korea and Malaysia at some distance from city centers, which have highly efficient ground transportation links. For example, the high-speed train connecting Kuala Lumpur to its new international airport travels 57 kilometers in 30 minutes.


We are republishing this very enlightening comment to a previous post (3 July: ZTE has copy of broadband contract, says Chinese official). The comment was posted on 10 July 2007. --Blogger ed.
By Scott Arey, CFO, ARESCOM
See related news at
This comment has also been sent to Jarius Bondoc at the Philippine Star (

Last week, the DOTC took an unprecedented public position to support its ill-conceived selection of the ZTE proposal from the Peoples Republic of China. The misinformation and inadequate statements in the full-page newspaper advertisement by DOTC must be publicly addressed for the record. The public should be aware of at least the following untruths (some of which are echoed by ZTE above):

1) DOTC's published chart stated ARESCOM's "Objective" was to establish a "satellite based network" - a statement which is totally contrary to the facts. We consistently told the government that a satellite based network will be too expensive to operate and will not work properly for some of its requirements. Only at its insistence did ARESCOM include the satellite and then just as a back up system.

2) DOTC's published chart states that the "Nature of (ARESCOM's) Proposal" is "Not Clear." If this is the case then why did Sec. Leandro Mendoza endorse ARESCOM's proposal on March 14, 2007 (see attached letter signed by DOTC Secretary Leandro Mendoza).

3) DOTC's published chart states that the "Financial Capability of the Proponent" has "No Information." Please see the attached letters dated August 1st and August 5th 2005 to the government addressing this issue. Note the stamps of different offices indicating receipt of these correspondences. In November of 2005 a delegation from the Philippine government actually visited U.S. Eximbank with ARESCOM. Shortly after that visit in January of 2006 the project was passed to NEDA. In March of 2006 after NEDA's endorsement had been received DOTC insisted on taking over the project. All prior information was turned over to DOTC. They were completely informed.

4) DOTC's published chart states that ARESCOM has no "Technical Capability." ARESCOM has been an exclusive technology provider to Microsoft. For this reason ARESCOM's integrated products are installed in telcos in more than 40 countries all over the world. ARESCOM hired as its integrator Wireless Facilities (NASDAQ: WFII) which has met with DOTC and shown the military grade networks deployed by WFI for the U.S. Department of Defense.

5) DOTC's published chart states that ARESCOM's "Coverage" is only 21 selected regional centers. The reason for this is that ARESCOM was asked to provide service to those centers over a backbone that could be expanded to serve the entire nation. ARESCOM can easily expand the scope. Given what the DOTC has listed as equipment for the $329M ZTE project ARESCOM would do the same project for $270M at the most and this price includes key elements that the DOTC has omitted that are necessary for the project to work (see attached chart).

We hope that you will provide the public with the truth, so that the Philippine people will not have to pay an extra $50M for the project. We will be happy to answer any of your questions.

Despite weather, PGMA reopens Ozamiz City airport, takes regular ferry

Original report at News.Balita.Ph
See photo at
(Photo caption: PASSING THE TIME. President Gloria Macapagal-Arroyo chats with other passengers of a roll-on roll-off (RORO) ferry she took from Cagayan de Oro City to Ozamiz City to re-open the airport there. Arroyo had to take the ferry instead of her jet due to bad weather. INQUIRER/LYN RILLON)

Noting the importance of major infrastructure projects in the realization of the Mindanao Super Region as the country’s agri-business center in Southern Philippines, President Gloria Macapagal-Arroyo pursued her visit here today, ignoring the threat of an incoming typhoon that is expected to hit the province of Misamis Occidental.

The President took almost three hours of land travel from Cagayan de Oro City and another 20 minutes by barge from Mukas Port in Lanao del Norte to reach this city via the Ozamiz Port.

Presidential Adviser on the Peace Process Jesus Dureza and Agriculture Secretary Arthur Yap joined the President in the journey threatened by strong winds spawned by oncoming typhoon "Bebeng."

Upon arrival here, the President cut the ceremonial ribbon signaling the reopening of the Ozamiz Airport to commercial flight operations after its closure in 1998 due to its poor condition.

She was welcomed by Misamis Occidental Gov. Loreto Leo Ocampos, Misamis Occidental 2nd District Rep. Herminia Ramiro, Lanao del Norte Gov. Khalid Dimaporo, Ozamiz City Mayor Reynaldo Parojinog and other municipal mayors, barangay officials and residents.

The President said the reopening of the airport would sustain the viability and facilitate the economic growth of Misamis Occidental and Lanao del Norte by attracting local and foreign tourists as well as investors.

Air Philippines will have regular flights to and from this city once every Monday, Wednesday, Friday and Sunday, arriving from Manila at 11:20 a.m. and departing for Manila at 12 noon.

After the brief reopening rites at the arrival area, the President walked in front of the airport building and witnessed the signing and the presentation of the signed memorandum of agreement (MOA) for the construction of the Panguil Bay Bridge Project.

Governor Ocampos of Misamis Occidental, Governor Dimaporo of Lanao del Norte and Tangub City Mayor Jennifer Tan signed the document in front of the President and presented it to her afterwards.

Under the MOA, the local government units (LGUs) of the provinces of Misamis Occidental, especially Tangub City, and the municipality of Tubod in Lanao del Norte agreed to form a consortium to promote the Panguil Bay Bridge Project.

The Ozamiz City Airport Development Project is one of the priority projects of the President under the Mindanao Super Region concept. It is also a secondary airport under the administrative control of Pagadian Airport – Area Center VII.

On Tuesday, the President opened the newly-completed P2.2-billion Diosdado Macapagal Bridge and the Butuan Bypass Road project in Butuan City -- two projects which she described as vital to the realization of the Mindanao Super region concept.

The twin projects are expected to enhance the urban transport needs for commerce and industries in the CARAGA region.

Under the President’s mega-region development strategy, the Mindanao Super Region is composed of Regions IX, X, XI, XII, XIII (CARAGA) and the Autonomous Region in Muslim Mindanao (ARMM). (PNA)

Tuesday, 10 July 2007

RP exports up 6.1% in May

National Statistics Office

Export earnings in May 2007 went up by 6.1 percent to $4.122 billion from $3.885 billion in May 2006. Similarly, receipts from merchandise exports during January to May increase by 7.7 percent to $20.421 billion from $18.958 billion during the same five-month period in 2006.


Accounting for 62.1 percent of the aggregate export revenue in May, Electronic Products went up by 11.8 percent to $2.560 billion from $2.290 billion in May 2006. Except for Electronic Data Processing, Consumer Electronics and Telecommunication, all electronic products recorded a year-on-year increase ranging from a low of 17.0 percent to a high of 582.1 percent. Similarly, export receipts of the Electronic Products for January to May increased by 8.0 percent to $12.989 billion from $12.025 billion during the same five-month period in 2006.

Articles of Apparel and Clothing Accessories continued to be the country's second top earner with a combined share of 4.4 percent and an aggregate receipt of $182.32 million or 23.6 percent lower than $238.61 million in May 2006.

Cathodes and Sections of Cathodes of Refined Copper ranked third with total revenue of $133.52 million, posting a double-digit increase of 25.3 from $106.59 million in May 2006.

Woodcrafts and Furniture ranked fourth with sales amounting to $91.47 million or a growth of 8.8 percent from $84.10 million in May 2006.

Petroleum Products ranked fifth with export receipts of $85.97 million or a year-on-year growth of 42.0 percent from $60.56 million in May 2006.

Rounding up the list of the top exports for the month of May 2007 were Coconut Oil with an export value of $64.51 million, down by 1.22 percent; Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships (consisted only of electrical wiring harness for motor vehicles), $56.92 million or a decline of 2.4 percent; Other Products Manufactured from Materials Imported on Consignment Basis, $53.82 million or a decrease of 8.7 percent; Metal Components with proceeds billed at $41.16 million or a growth of 65.4 percent; and Gold, with export revenue of $36.10 million or 75.9 percent growth from the same month in 2006.

Total receipts from the top ten exports reached $3.306 billion, or 80.2 percent of the total exports.

Monday, 9 July 2007

NYK Maritime Academy inaugurated

How a Japanese champions Filipino seafarers
By Presidential Spokesman Ignacio R Bunye

At the inauguration of the Nippon Yusen Kaisha-Transnational Diversified Group (NYK-TDG) Maritime Academy last Friday, President Arroyo marveled at the completion in just two years of this world-class institution that will certainly upgrade the skills and training of Filipino seafarers.

NYK, one of the world’s leading shipping companies, has always championed the Filipino seafarer, and has been given a Presidential Award of Distinction for preferring Filipino seafarers for the past several years. It is noteworthy that of the more than 1 million seafarers deployed in international ongoing vessels, approximately 250,000 are Filipinos, accounting for 28 percent of the world’s workforce in the international maritime industry.

The maritime academy could trace its roots to Fil-Japan Shipping Corporation, a 60-40 company, co-founded in the mid-70’s by Robbie Delgado and Kiyoshi Osawa, a long-time Philippine resident. I was fortunate to have known Mr. Osawa, fondly called KO (pronounced K.O.) by friends and "Lolo Kiyoshi" by his many scholars in Muntinlupa City. Because of his philantrophy, he was declared an honorary citizen of Muntinlupa City, which I once headed as mayor. Muntinlupa City and the town of Gunma, KO’s place of birth, are sister municipalities. Shortly after KO’s death some five years ago, the grateful residents of Muntinlupa City erected in his honor a marble memorial overlooking the scenic man-made Jamboree Lake in the city.

KO gave me an autographed biography, entitled "A Japanese in the Philippines," one of five books he wrote during his more than 75 years stay in the Philippines. In one chapter, he recounted how his lifelong partnership with Robbie Delgado, chair of the newly established maritime academy, started.

"What motivated me to go into the shipping business was, among other things, the fact that the Philippines, with only a minimal number of trading vessels of its own, was dependent on foreign vessels for 90 percent of its shipments. I thought of sailing ships brought from Japan around the globe under the Filipino flag with Filipino crews," KO narrated in his autobiography.

It is interesting to note that at the time Fil-Japan Shipping was formed, KO was already in his 70s while Robbie was just in his early thirties.

Originally conceived to manage the container ship operations of NYK in the Philippines, Fil-Japan Shipping eventually ventured into manning operations, becoming the country’s pioneer in maritime service exporting. During its first year, Fil-Japan Shipping provided officers and crew to 10 ocean-going ships. By its 10th year, the company was servicing 195 ships. Fil-Japan eventually adopted the name NYK-Fil-Japan Shipping.

As part of his many advocacies, KO sponsored Muntinlupa public school teachers as well as job trainees to Japan. KO remained active in business and in sports up to a ripe old age. I used to play golf with KO at the Alabang Golf and Country Club. Believe it or not, at the age of 90, he could play 18 holes of golf without using a golf cart.

As we were about the reach the 18th hole in the first of our many enjoyable games together, I asked KO if he was OK. He looked up at me and replied: "Why, do you want to play another 9 holes?"

How government plans to tackle revenue shortfall

By Presidential Spokesman Ignacio R Bunye

The Arroyo administration is taking very seriously the shortfall in revenue collection by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) and is taking immediate steps to address this. While we are not on target for the first semester of this year, we know what has to be done to get back on target and we are taking the required actions.

In 2006, this administration’s dedication and discipline to raise revenues led to 20 percent growth in revenues from the previous year. Revenues from collection efficiency and tax administration reforms alone reached P40.8 billion, about 0.7 percent of Gross Domestic Product (GDP) - higher than the conservative plan of 0.3 percent. Our past performance has demonstrated our ability to address the challenges of revenue generation and we are confident that we will succeed with certain adjustments having been made.

The economic team is vigorously implementing the respective action plans for the BIR and the BOC with the support from our development partners to improve tax collection efficiency. These action plans include: a review of all rulings granting tax exemptions and preferential treatment to certain corporate taxpayers; intensifying the development of tax evasion cases, and verifying compliance with withholding tax rules by the country's top 1,000 corporations; checking compliance with withholding tax rules by expatriates working in the Philippines and prohibiting BIR officials from issuing unnumbered rulings, which have been the source of graft in the past; and closely monitoring taxpayers with declining tax payments.

The President has made it very clear that she and her economic team remain committed to the economic reform program that produced 5.4 percent economic growth in 2006 and that has enabled the Government to generate the revenue needed to invest in modern infrastructure and much needed social services. The economy grew 6.9 percent in the first quarter from a year earlier, far exceeding market expectations and marking its fastest annual expansion in 17 years. Sustained growth in foreign direct investments, which grew 18.5 percent to reach US$710 million in the first quarter, and registered foreign portfolio investments, which grew two and a half times year-on-year in the first five months to US$1.7 billion, are evidence that our strategy to reform our country and our economy is working.

The nation's economic reform program has certainly gained significant momentum and is expected to continue fuelling growth throughout the country

One argument against open skies

Hong Kong rejects Cebu Pacific
By Lenie Lectura
Original article at the Business Mirror

HONG KONG’S civil aviation authorities did not allow Cebu Pacific to make charter flights from Clark to the former British colony, the Philippine Civil Aeronautics Board (CAB) said over the weekend.

“We were advised by HKG Civil Aeronautics division that there’s not enough space in the bilateral agreement. However, HK Airlines continues to operate to HKG from Clark because they are covered by EO500-A,” Candice Iyog, Cebu Pacific vice president for marketing and product, said in a text message.

CAB executive director Carmelo Arcilla said the airline unit of the Gokongwei group sent him a letter asking for the board’s assistance.

“Hong Kong’s so-called liberal regime just recently rejected Cebu Pacific’s application for charter flights from Clark,” said Arcilla.

Arcilla said CAB would have to get in touch with the Hong Kong authorities for more information.

Cebu Pacific is eyeing Diosdado Macapagal International Airport (DMIA) in Clark, Pampanga as its third hub after Manila and Cebu.

Lance Gokongwei, Cebu Pacific president and chief executive officer, said the airline plans to use Clark to fly daily to Hong Kong, four times a week to Singapore and Macau, three times a week to Bangkok and Taipei.

“If we get the necessary approvals from all the governments concerned, we will make Clark our third base and hub after Manila and Cebu,” Gokongwei said.

He said the plan is strategically important to Cebu Pacific. Making Clark a base for aircraft and a hub for flights to and from various regional destinations could enhance Cebu Pacific’s presence in Central Luzon and in the whole of Northern Luzon in a major way.

“We hope to get a favorable response from all other governments considering that our own government has given their carriers similar rights to Clark,” Gokongwei said.

Cebu Pacific expects to carry as many as 300,000 passengers in and out of Clark per year. It said it is confident of raising passenger volume as Clark, being the gateway to the northern corridor, continues to spur growth in the region.

The DMIA has been envisioned as the country’s main gateway. Arcilla said Friday that if foreign airlines are granted unilateral, outright and unlimited traffic rights to DMIA, and assuming that DMIA has already become the country’s main gateway, there is indeed the possibility that local airlines could be practically shut out of DMIA.

“This is because the Philippines would be left with no leverage at all to negotiate with foreign countries for traffic rights to and from DMIA in favor of local carriers,” he said.

Target-driven BIR shuffles execs

Full report at the Business Mirror

TWO days after a Palace command conference tackling the government’s increasingly problematic fiscal situation, the Bureau of Internal Revenue (BIR) shuffled 13 key officials, in what is seen as an effort to better prepare the economy’s top revenue raiser for tough targets it is being held to by an impatient President.

Live Earth at SEA's first wind farm in Ilocos

‘Saranay’: Bangui’s wind, bay teach respect for Earth
Original article at the Business Mirror

INDIVIDUALS, groups, music fans and environmentalists around the world united Saturday for Live Earth, a concert to raise awareness and funds for the global climate crisis including the Philippines. One of the biggest local events was the “Saranay” (Ilocano word meaning “nurture”) held in Bangui Bay, Ilocos Norte, site of the first wind farm in Southeast Asia. Local students from all over the Ilocos Region performed cultural song and dance numbers while hundreds of Ilocanos as well as friends joined the celebration.

The focus on the internationally acclaimed Bangui windmills—as explained earlier by local officials including Rep. Ferdinand “Bongbong” Marcos Jr. and Gov. Michael Keon—was meant to trumpet the desirability of renewable energy sources like wind and solar, both abundant in the Philippines, in providing a concrete alternative to fossil fuels that have been blamed for speeding up the pace of global warming.

A signing of a pledge to protect the environment was also undertaken on Saturday at the windmills’ site by the local government officials including Ilocos Norte Vice Gov. Wendell Chua; Bangui Mayor Salvacion Sales Cimatu; Pagudpud Mayor Marlon Sales; Shermon Cruz of Green Ilocos Norte; Haribon Foundation’s executive director Anabelle Plantilla; Edvee Cruz of Live Earth Philippines and the national business daily, the BUSINESSMIRROR, represented by its columnist Jonathan de la Cruz and writer Tet Andolong.

SBMA overshoots full-year investment target in 6 months

By Ma. Elisa P. Osorio
Original report at the Philippine Star

The Subic Bay Metropolitan Authority (SBMA) announced over the weekend that it has overshot its $1 billion full year target in only six months.

In an interview, SBMA administrator Armand Arreza said investments committed at the Subic Freeport in the first six months of this year already amounted to $1.38 billion, more than the $1 billion target for the whole of 2007.

Half year investments at the former United States military base are from 10 companies.

The biggest investor is Korean shipbuilder Hanjin which promised to infuse $684 million for its plant expansion. This was followed by the cogeneration power project of Redondo Peninsula Energy Inc. with a $431.64 million investment.

Redondo Peninsula is a joint venture between a Taiwanese firm and the Aboitiz Group.

Arreza said once the power generation plant project has become operational, the electricity cost in the Subic Bay area will go down to P4.20 per kilowatt-hour from the current P5 level.

Other notable investments are from KT Global Subic Inc., $127 million; Subic Bay International Terminal Corp., $89 million; Philip Morris Philippines Manufacturing Inc., $20 million; Shin Young’s Corp., $5.37 million; Baypointe Hospital and Medical Center Inc., $4.067; Pacific Peal Airways.Com Corp., $2.12 million; Orient Pearl Entertainment & Management Ltd., $1.42 million, and Carag & Cook C4 Solutions Inc., $1.39 million.

Last month, the multi-million access road from Subic to Olongapo opened making it easier for investors to gain access to both materials and manpower.

Arreza said the P635 million road project complements the ongoing construction of the new container port under the Subic Port Development Project and the Subic-Clark Toll Road Project, both of which are being funded by the Japan Bank for International Cooperation (JBIC).

The 16.15-kilometer road project is the gateway for the creation of more employment opportunities for the residents of Subic, Zambales and Olongapo City.

The project was jointly funded by the Department of Public Works and Highways (DPWH) and the Bases Conversion Development Authority (BCDA) in order to connect the $1 billion Hanjin plant to the proposed Zambales Industrial park and provincial port. Hanjin is one of the world’s largest shipbuilders.

Number of foreigners retiring in RP doubles

By Mayen Jaymalin
Original report at the Philippine Star

For many foreigners, the Philippines is no longer just a popular tourist attraction but a well-loved retirement destination.

The Philippine Retirement Authority (PRA) has reported a dramatic growth in the number of elderly foreign nationals coming to the country to retire and enjoy life.

Ex-Col. Fernando Francisco, acting PRA general manager, said the recorded number of “foreign retirees” doubled in the past years and is still growing.

Francisco said from a total of 1,263 in 2005, the number of foreign retirees who registered with the PRA went up to 2,398 in 2006.

“In the first four months of the year, PRA already recorded a total of 1,060 foreign retirees and we expect the number to exceed last year’s figure,” Francisco told The STAR.

As a result of the increase, Francisco said the PRA also posted a staggering $600 million income generated from the registration fees and investment deposit of the applicants.

Those who registered for membership with the PRA are foreign nationals who are 35 years old and above. The PRA lowered the minimum age to accommodate American servicemen who choose to retire here, Francisco said.

“Some of the retirees come here by themselves but there are also some who come with their spouses and children,” Francisco disclosed.

Many of those who opted to retire in the Philippines permanently with their family were Korean nationals, according to Francisco.

Based on PRA data, since 2005, Koreans accounted for 56 percent of the total retirees, followed by the Chinese, 16 percent and Japanese, 5.75 percent.

“The number one motivation of Korean nationals to retire here is for their children to study the English language,” Francisco further said.

Francisco added that foreign retirees who have registered with PRA are allowed to travel in and out of the country without the need to seek clearance from the Bureau of Immigration.

They are also allowed to engage in business upon posting investment deposit to PRA.

Even with the steady growth in the number of foreign retirees coming to the Philippines, Francisco said the PRA still joins marketing missions to encourage more elderly foreign nationals to live here.

Broadband deal ordered reviewed

By Paolo Romero
Original report at the Philippine Star

Worried over the possible political backlash from the $330-million broadband contract between the government and ZTE Corp., President Arroyo has ordered the Department of Justice to thoroughly review the deal to determine whether it should be nullified.

Justice Secretary Raul Gonzalez made the disclosure as Amsterdam Holdings Inc. (AHI), a local telecommunications firm opposing the deal, warned that it is studying its legal options to oppose what it described as an onerous contract that is also grossly disadvantageous to the Philippines.

AHI co-founder Jose de Venecia III said the deal appeared to have violated Republic Act 7718 or the Build-Operate-Transfer (BOT) law and procurement laws.

Gonzalez said Mrs. Arroyo, during a Cabinet meeting in Legaspi City last Tuesday, directed him to be “very, very careful” in reviewing the contract with ZTE, the third largest manufacturer of telecommunications equipment in China, for the National Broadband Network (NBN) that will link all government agencies and offices.

“This (NBN) project is something close to her heart so she wants this contract to be very, very carefully scrutinized. She does not want any unnecessary risk-taking or to jeopardize the project because of a bad contract,” he said.

Gonzalez said he had been tasked to come up with a recommendation before the 14th Congress opens on July 23. Senators have warned that they were planning an inquiry into the contract.

Gonzalez said the controversial contract “might open the floodgates of congressional investigations, which we don’t want.”

“But we’re not in a rush. I’ve instructed the Department of Justice’s legal department to read it many times over,” he said.

Gonzalez said based on his conversation with the President, she was concerned on whether the NBN, which would finally implement an overdue telecommunications and information network in government, would push through, regardless of its proponent.

Gonzalez is working on the so-called “reconstituted” contract after Department of Transportation and Communications (DOTC) officials earlier claimed the originals were stolen shortly after the deal was signed in Boao, Hainan last April 21 between DOTC chief Leandro Mendoza and ZTE vice president Yu Yong.

Mendoza earlier said the ZTE contract was still “conditional” pending the legal opinion of the justice department on whether the deal was an executive agreement or not.

The deal entails a $330-million loan to be made by the Philippine government from the China Eximbank to fund the NBN. AHI and US-based Arescom Inc., which submitted lower bids, decried the lack of transparency and the haste in which the contract was forged.

The US Embassy had also joined the protest over the deal with Ambassador Kristie Kenney earlier writing Socio-economic Planning Secretary Romulo Neri, urging him to avoid undue haste and to take time to carefully review other proposals.

Gonzalez disclosed that so far, he found some issues and provisions in the ZTE contract that were “infirm.” “But there were also some items that were good.”

He said he has already two drafts of his recommendations but he asked his legal team to review the contract again and revise the drafts.

“I was not satisfied with them (drafts). The onus is on me so I have to be very, very careful,” Gonzalez said.

For his part, Executive Secretary Eduardo Ermita said the Palace is still awaiting the special briefing of Transportation and Communications Secretary Leandro Mendoza before the Cabinet regarding the deal.

Superior proposal

Meanwhile, De Venecia, a son of Speaker Jose de Venecia Jr., maintained that their $240-million proposal is superior since it would not only be fully privately-funded, it also does not require a sovereign guarantee, much less a massive foreign loan.

Under a sovereign guarantee, the government is liable to shoulder the debts of the private proponent in case a project fails.

He pointed out that since the ZTE deal was described by Mendoza and other DOTC officials as a “supply contract,” it should have gone through a transparent government bidding. The NBN will be operated by the government with ZTE as supplier.

He says the signing last April also violated the election ban.

De Venecia also pointed out that the contract was also a reversal of the government’s move since 1992 to deregulate the telecommunications industry.

He said under the government policy, projects of such nature should be undertaken through a BOT scheme and proponents should be chosen through biddings. He pointed out that the BOT program of the government, information and communications technology, is one of the areas where private sector participation is encouraged.

“These violations could be the basis for legal action to stop the contract from being implemented. There appears to be a whole gamut of inappropriate actions by the DOTC,” he said.

He added that it does not matter whether its AHI or another company because the violations are there.

De Venecia said he was forced to come out in the open after he received reliable information that local handlers of ZTE would attempt a smear campaign against him, specifically spreading reports that he is trying to extort $100 million from ZTE in exchange for keeping silent. There were also reports of possible threats to his life, he said.

De Venecia further said that under the Build-Operate-Own mechanism, unsolicited bids, such as that of AHI’s, should be immediately acted upon. He said AHI has submitted its bid last December but the DOTC responded only in January.

He also hit reports that AHI does not have any track record. He pointed out that he had brought ZTE into the country for some previous projects. ZTE, he said, only has experience in Metro Manila where it was able to set up on some 200 routers in the last two years.

On the other hand, AHI’s foreign partner is Hua Wei, China’s largest telecommunications manufacturer and the second biggest in the world. He said Hua Wei was able to set up at least a thousand routers and similar equipment nationwide.

In February, DOTC officials asked for several meetings for AHI’s presentation in which De Venecia attended some, he said.

Later, AHI was asked by the DOTC to fill up the ICC-NEDA form for its endorsement, implying that it has its initial approval. He said the task of filling up the form should be done by the DOTC, not the private proponent.

He also said DOTC Assistant Secretary Lorenzo Formoso had promised AHI and the media to give copies of the reconstituted contract for transparency but up to now, no such document has been presented.

De Venecia said he and his representatives have called Formoso for a copy several times but he has been ignoring them.

AHI legal counsel Atty. Marinelle Santos in a separate statement hit the DOTC for AHI and the other American company competitor, ARESCOM, for spreading disinformation against ZTE.

“AHI cannot take credit for DOTC and ZTE’s difficulties. In any case, if the contract between DOTC and ZTE is indeed regular and above-board, then they should have nothing to fear from the scrutiny of lawmakers, the press, and the public,” she said.

Santos also said that the identity of the people behind AHI should not detract from the main issue of the merits or technical competence of their build-own-operate proposal for a national broadband network for the government as against the deal forged with ZTE Corporation.

“Further, AHI wishes to state that it does not have anything against ZTE. In fact, Broadband Philippines, the premier service provider of scarce broadband spectrum nationwide, of which Jose de Venecia III is chairman, currently uses some ZTE equipment for its broadband mobile business,” Santos said. – With Rainier Allan Ronda