Saturday, 22 March 2008


President Gloria Macapagal-Arroyo presents a check worth P4,365,000.00 to Benguet Gov. Nestor Fongwan during awarding ceremonies highlighting the social justice and services to the poor caravan of her administration Saturday (March 22) at the Puguis Elementary School in Barangay Puguis, La Trinidad, Benguet. The check represents the initial release for the improvement and rehabilitation of three farm-to-market roads in Benguet province. Also in photo are Social Welfare and Development Secretary Esperanza Cabral (second from left) and Rep. Samuel Dangwa of the Lone District of Benguet. (Benjamin Basug-OPS/NIB Photo)

Nograles follows up funding requirements for 50 new laws

Ben R. Rosario
The Manila Bulletin

Noting improvements in the country’s economy, Speaker Prospero Nograles asked yesterday the Committee on Appropriations in the House of Representatives to guarantee funding for nearly 50 vital laws that have remained unimplemented by the government due to past fiscal constraints.

In a report submitted to the Office of the Speaker, the Congressional Planning and Budget Department (CPBD) reported that out of the 87 laws requiring budgetary support that have been passed by Congress since 1991, a total of 33 measures have not been implemented due to lack of funds.

The implementation of 13 other new laws has been limited due to partial funding, the report added.

"Today, economy is good and some, if not most of these laws, can be funded. Congress, through its appropriations committee must provide funds or these unfunded measures would become dead letter laws on paper without being implemented," said Nograles.

The House leader noted that laws that provide appropriations remain "laws of the land," but implementation was put on hold due to limited fund sources.

In its report, the CPBD disclosed that many economic-related laws passed during the past 16 years have not been implemented due to stiff budgetary requirements.

According to the Lower House legislative think tank, the government has to shell out a total of R43.7 billion to carry out these legislative mandates.

Laws on social services that would entail P31.5 billion have likewise not been enforced since their passage.

Among these are laws mandating payment of pensions and other benefits to Filipino veterans and the enrolment of indigent persons to the National Health Insurance Program.

Unpaid pensions for old age and death have reached P27.5 billion while Philhealth benefits amounted to P4 billion.

The housing program has not been fully implemented due to funding deficit amounting to R13.47 million.

The defense sector deficiency has totaled P25 billion as a result of the creation of the AFP Modernization Trust Fund which by law should be appropriated at a maximum P50 billion annually for five years.

On the general public services sector, fund lack has been pegged at R880 million for laws creating additional judicial courts in various parts of the country.

The CPBD revealed that economic-related laws that were either partially enforced or not implemented at all involved the agriculture-agrarian sub-sector, energy and infrastructure.

Inadequate budget for the implementation of the Agriculture-Fishery Modernization Act (AFMA) has had a strong impact on the country’s global competitiveness, food security and poverty-alleviation programs.

Under AFMA, a P20 billion budget was required for the first year of its implementation and P17 billion for the next five years since it was signed in 2000.

The CPBD noted that the required P20 billion did not materialize while annual allocation fell short of the required P17 billion.

Another victim of the failure of government to raise money was the recently-approved Biofuels Law which has a funding balance of P71.4 billion.

President Arroyo visits strawberry, vegetable farmers in La Trinidad, Benguet, today

The Manila Bulletin

BAGUIO CITY, Benguet – Still in a working Holy Week mode, President Arroyo will visit strawberry farmers in Betag in nearby La Trinidad today, Black Saturday.

The President is scheduled to motor to Betag for a first-hand look into the plight of upland farmers whose produce have been affected by blight due to the unexpected fluctuations of the temperature in the area.

Local officials, farmers, and researchers from the Benguet State University, formerly the Mountain State Agricultural College, will present to the President the results of their studies on the processing of vegetables into veggie meat, veggie sausage, and dehydrated veggie noodles which can be commercialized as processed food.

Processing vegetables, instead of selling them to middlemen at bargain prices in the event of either natural calamities or a supply glut, will help farmers earn higher income from their produce.

The President will also send off delivery trucks laden with processed vegetables from the country’s vegetable bowl to Metro Manila markets.

Before proceeding to Betag, Mrs. Arroyo will distribute various forms of government assistance in nearby Barangay Puguis, including rice and checks for farm-to-market road projects.

She will also distribute certificates to operate several "Botika ng Barangay" outlets, about 3,000 Philhealth cards, certificates to operate "Tindahan Natin" outlets in La Trinidad, self-employment assistance, scholarships, vegetable seeds, forms of financial support for the vegetable industry, and English reading materials for teachers.

Accompanying her are Rep. Samuel Dangwa of the lone district of Benguet, and Gov. Nestor Fongwa.

The Chief Executive and members of the First Family are spending the Holy Week break in Baguio City and other places in Northern Luzon, which has been customary.

Earlier, members of the Cabinet joined President Arroyo in another retreat at the Presidential Mansion House in Baguio to reflect on good governance and delivery of government services to the people.

NG registers P16.1-billion primary surplus in January

Lee C. Chipongian
The Manila Bulletin

The National Government continues to post primary surplus of P16.1 billion, 523.3 percent higher than the P2.6 billion recorded the same period in 2007.

Primary surplus is the budget surplus net of interest payments on government debts.

Department of Finance’s unit Bureau of the Treasury (BTr) computed the first month surplus based on total revenues of P87 billion and expenditures net of interest payments of P70.9 billion. For January the agency said interest payments totalled P30 billion, seven percent lower compared to P32.3 billion (January 2007).

In a report to the DoF, the BTr said the final NG primary surplus for the full year 2007 is P255.4 billion, P15.1 billion more than what was programmed for the year of P240.3 billion. The current surplus is also 4.1 percent higher than 2006’s P245.3 billion.

The 2007 primary surplus was calculated based on the revenues collected of P1.136 trillion and expenditures net of interest payments of P881.2 billion. The revenues were actually higher than program or by P17.8 billion while total government spending for the whole year was about P2.7 billion more than program of P878.5 billion.

In the meantime the total interest payments were P267.8 billion last year, P35.5 billion lower than program of P303.3 billion. The DoF also revised the 2007 deficit to P12.4 billion from the P9.4 billion announced in February.

For the month of January the NG reported a lower budget deficit of P13.9 billion from P29.7 billion during the same period in 2006. For this month total disbursements amounted to P100.9 billion, 1.4 percent lower than 2006’s.

The DoF calculates primary surplus based on actual interest expense and if lower, the primary surplus becomes higher. Most credit rating agencies look on a country’s primary surplus to gage its ability to reduce national debt.

NEDA bares P57.9-B infra projects for West Visayas

The Manila Bulletin

ILOILO CITY -- Some P57.9 billion worth of infrastructure projects are either ongoing or in the pipeline in Western Visayas, said National Economic Development Authority 6 (NEDA 6) Regional Director Arturo Valero.

At the recent Philippine Economic Briefing held here in, Valero identified the ongoing infrastructure projects in the region. These are the P4.3-billion Iloilo Flood Control Project, P1.9-billion Bago River Irrigation Project, the P500-million Arterial Roadlines Development Project: Iloilo-East Coast – Capiz Road;

The Southern Philippines Irrigation Sector Project: Magballo-Balocotoc –Canlamay Integrated Irrigation Sub-Project, P200 million; Kabankalan City Domestic Airport, P800 million; Metro Iloilo Radial Road, P700 million; Widening of Iloilo City-Sta. Barbara Road, P600 million, and the International Commercial Port Complex (ICPC) Wharf Extension Project, P300 million.

The infrastructure projects still on the pipeline are the Panay River Flood Control Project, P4.5 billion; Revival of Panay Railway, P31 billion; Visayas Bridges, P0.1 billion FS); Caticlan – Capiz Road, P1.4 billion; Northern Panay Backbone Project, P1.9 billion; Southern Panay Backbone Project, P1.9 billion; Panay-Negros Interconnection Updating Project P3.3 billion, Timbaban Hydro Electric Power, P2.5 billion, and Villasiga Hydro Electric Power, P2 billion.

Valero said these projects are expected to further boost the region’s economy which performed well in 2007, citing several indicators.

He said the region’s investment also grew, and exports in the ports of Iloilo and Pulupandan increased; the employment rate was high, and inflation was low.(PIA)

Thursday, 20 March 2008

Northrail-Southrail Linkage Project Update

They are working even on Maundy Thursday to make it for the 100th anniversary of Paco Station. Click here for more updates, courtesy of Jaime F Tiongson's blog ( And here's a sample shot from Jaime Tiongson's blog.

Linking NBN to Spratlys deal threatens RP-China relations

US hand seen in squabbles
By Veronica Uy

MANILA, Philippines -- The country’s relations with China are “in serious jeopardy” because of the "unsubstantiated" linking of bilateral agreements with the emerging economic giant to the alleged corruption in the $329-million national broadband network (NBN) deal with China's ZTE Corp.

This was revealed by a senior official of the Department of Foreign Affairs (DFA), who asked not to be named as she is not authorized to speak on the matter, who also blamed the United States, a major economic rival of China, for “fueling” the controversy over China-related agreements and issues.

The senior Filipino diplomat insisted that the NBN controversy is not in anyway linked with the Joint Marine Seismic Undertaking (JMSU) or even the dispute over the Spratlys, as both have been the subject of continuing diplomatic reviews over the past 10 years.

"We are putting our diplomatic relations with China in serious jeopardy because the ZTE investigation is being linked to the JMSU. The Chinese government is now raising protest on the way we handle the matter," she said.

"The US has been wanting to be involved in the oil exploration in the South China Sea but the Philippines has already agreed to undertake this with China," the diplomat explained.


The JMSU was signed by the national oil companies of Philippines, China, and Vietnam in September 2005 as part of the confidence-building measures of claimant countries to the Spratly islands, she said.

The diplomat recalled that the interagency teams held several meetings at the DFA to discuss the JMSU "because we were going to break new ground in regional diplomacy but we had to make sure it was aboveboard."

Cebu clears Filinvest bid for SRP development

By Wilfredo Rodolfo III
The Business Mirror

CEBU CITY—The Cebu City government has accepted the proposal of Filinvest Land Inc. to develop 50 hectares at the South Road Properties (SRP), pending clearance from the Commission on Audit (COA).

Filinvest is proposing to buy 14 hectares of SRP’s Pond F, the seafront strip of the 240-hectare reclaimed area facing the Mactan Channel, at P15,000 per square meter.

At this rate, Pond F alone will already generate P2.1 billion for the city government. The company will then enter into a joint venture with the city for the remaining 36 hectares of inland properties.

“Pond F will be turned into a strip of restaurants and commercial establishments,” Joel Mari Yu of the Cebu Investments and Promotions Center (CIPC), the marketing arm of SRP, said.

The remaining 36 hectares will be devoted to high-rise residential complexes, retirement homes and leisure spots, Yu added.

After the COA clearance, the Filinvest proposal will be made public and will go through a Swiss challenge, in case another developer can undertake the same project at the best financial terms for the city, Yu said.

The final proposal will then be submitted for formal approval by the city government.

Two other “wholesale” proposals are under negotiations between developers and the city government.

Yu refused to disclose the names of the big-ticket developers negotiating with the city.

He said the two projects are composed of a giant shopping and retail center and an information-technology complex, both expected to generate thousands of employment in Cebu.

Nagiel Bañacia, information officer of the Cebu City government, told the BusinessMirror that the city is working on the paperwork of the Filinvest proposal for submission to the COA.

Completed in 2001, the SRP was built through a loan obtained by the Cebu City government from the Japan Bank of International Cooperation.

The national government supported the project by building the Cebu South Coastal Road, which connects SRP straight to downtown Cebu City and the port area in the north and Talisay City in the south.

BSP can ‘pause’ after Fed cut

The Business Mirror

The country’s policymakers have time “to pause” as the Federal Reserve’s interest-rate cut will slow the withdrawal of overseas funds from emerging markets, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said Wednesday.

“This will moderate flight back to US debt,” Guinigundo said in a mobile- phone message. The slower outflow will allow the Philippines to “reflect on strategic direction of monetary policy.”

On Tuesday the Fed cut its benchmark rate by three-quarters of a percentage point to 2.25 percent. That widens the yield gap with the Philippines, making the nation’s assets more attractive.

“The central bank would be holding off from easing,” said Yvette Marquez, a fund manager at Manila’s BPI Asset Management. “The Fed signaled that further cuts may not happen, at least not right away, because of inflation.”

BSP Governor Amando Tetangco Jr. said monetary policy is “balanced,” ensuring enough liquidity to buoy growth without igniting inflation.

“The Fed move reflects their continued concern over further weakening of domestic economic activity in the US and an increased concern for the inflation outlook,” Tetangco said in a text message yesterday.

“Although this should have no significant, immediate impact on our own policy-rate settings, we are mindful of the impact of a prolonged US slowdown on our economy and the direction of capital flows between developed and emerging markets.

“At the same time, we continue to monitor developments on oil and commodity-price movements, the current key risks to our inflation outlook.”

The BSP last week eased borrowing costs by scrapping some deposits and lowering rates on the remaining accounts. It kept the benchmark rate at 5 percent after four straight reductions.

“We are mindful of creeping imported inflation, which monetary policy isn’t meant to specifically address,” Tetangco said ahead of the Fed decision. “We need to ensure sufficient liquidity is available to the market.”

Overseas investors were net sellers of Philippine stocks in the eight days to March 18. Aversion to assets in the region is escalating along with credit losses triggered by the US home-loan crisis. Money-supply growth in the Philippines fell to 7.2 percent in January, slowing from a 26.3-percent peak last April.

The country’s government bonds rose yesterday, ending two days of losses, on speculation a wider interest-rate differential over the US will help boost the appeal of local assets.

“Investors are buying the shorter-term bonds,” pushing yields lower, said Yvette Marquez, a senior trader in the fixed-income group at BPI Asset Management. “The differential is making some bonds attractive.”

The yield on the 5.75-percent note due February 2012 fell 11 basis points to 6.439 percent, according to the 11:15 a.m. fixing at Philippine Dealing & Exchange Corp., the lowest since February 26. The price gained 0.36, or P36 per P10,000 face amount, to 97.6449. A basis point is 0.01 percentage point.

Meanwhile, the peso fell as overseas investors sold more stocks than they bought for each of past eight trading days, according to data compiled by Bloomberg.

The currency declined 0.4 percent to 41.69 a dollar as of the close of trading, according to the Bankers Association of the Philippines.

The currency may fall to as low as 42 per dollar before rebounding by the end of April or early May, said Marcelo Ayes, a senior vice president for treasury at Rizal Commercial Banking Corp. (Bloomberg)

Philippines to increase rice imports as it races to beat rising prices

Rocel Felix

MANILA (Thomson Financial) - One of the world's largest rice importers, the Philippines, is gearing up to increase imports of the staple foodstuff as the government races to beat escalating Asian rice prices and secure thinning domestic stocks.

The Philippine government on Tuesday bought 335,500 metric tonnes of rice for 237.5 million dollars to offset an expected shortfall in domestic production.

In April, about 500,000 tonnes will be shipped into the country. That's on top of the more than 800,000 tonnes purchased since January and means that in in just four months, the country will have exceeded the original import target of 1.2 million metric tonnes. That target has been raised to 2.1 million tonnes.

The National Food Authority (NFA) which is tasked with importing rice, said supply will come mainly from Vietnam, Thailand and Pakistan at prices ranging from 618 to 745 dollars a tonne.

'We are trying to maintain food security and social stability. We will have to continue importing at market prices to beef up stocks of the NFA and keep prices from going up,' Agriculture Secretary Arthur Yap told Thomson Financial.

Rice is considered a socially- and politically-sensitive commodity, and securing supply at whatever cost is paramount.

In recent years, rice price movements across Southeast Asia have been increasingly influenced by the import requirements of the Philippines. Record domestic production there has failed to cope with increasing demand amid a steadily growing population that is expected to reach 90.4 million this year according to the National Statistics Office.

'It has always been a catch-up game, rice output has been increasing, even at record harvests, but it's not yet enough,' said Yap.

NFA administrator Jessup Navarro said that the average national daily rice consumption has gone up this year to 33,000 tonnes from 26,000 tonnes in 2003.

Reining in inflation

Securing domestic supply and making it available at affordable levels is a critical factor in reining in inflation. In February, higher food and oil prices pushed Philippine annual inflation to a 16-month high of 5.4 percent, pushing it above the government's full-year target of 3-5 percent.

Rice has a significant share in the consumer and food basket and a significant spike in prices will trigger higher inflation.

The NFA which regularly injects rice stocks at subsidized prices, wants to maintain its presence in the market to preempt any rice price spirals, especially in remote areas during the lean months from July to September when stocks are low.

The agency has been successful so far in keeping retail prices stable, but with import costs rising, it has had to suffer bigger operating losses.

The government has had difficulty acquiring buffer stocks as global supply tightens.

In an unprecedented move, the Philippine government last week asked Vietnam, one of its major rice suppliers, to guarantee rice shipments of about 1.5 million tonnes in a government-to-government deal. Vietnam though could only commit 1 million tonnes, 700,000 tonnes of which are part of previous contracts.

Thailand, the world's biggest rice exporter and a steady supplier, is a reluctant exporter with the strong baht and high domestic prices acting as major deterrents.

'There is no strong incentive right now for exporters. Local rice prices are so high and it's very volatile,' said Pacherin Hdad, a rice exporter from Thailand.

'Rice prices here change so often, prices quoted in the morning may be entirely different in the afternoon. There is a lot of demand from importers but exporters are not too keen to ship out rice even if there are no export restrictions. We have to match domestic prices and right now, its just too high out there, and with the baht also up, our margins are so squeezed,' said Hdad in a telephone interview.

The Thai goverment adopted a ban on rice exports in the 1970s to control domestic inflation.

Prices elsewhere are also rising and are expected to continue to soar as global supply is tightening amid growing demand from the Middle East and Africa.

The United States Department of Agriculture (USDA) said global rice supply for 2008 will hit 70 million tonnes, the lowest level since 1983-1984 with yields trending lower.

The USDA said one factor affecting global exports in 2007 and early 2008 is the ban on exports in various countries like Vietnam and India as they struggle to balance exports and domestic supply.

The International Rice Research Institute said the cost of rice doubled from 200 dollars per tonne 5 years ago to almost 400 million dollars at the start of 2008. Along with rising global demand and soaring crude oil prices that have increased freight costs, world market prices are now averaging nearly 600 dollars a tonne.

'In the last quarter of last year, the government was importing rice at a range of 360 to 400 dollars per tonne, but now the cost has gone up to 650 dollars,' said Yap.

'The uptrend will continue in the next year or two. Which is why we want to be prudent in managing our buffer stocks. It's not just a question of price anymore, but a question of supply. You may have the money, but there are no rice supplies to buy.'

'Projections that a tonne of imported rice will hit 1,000 dollars within the year are not too far-off,' said Hdad.

(1 US dollar = 41.52 pesos)

Wednesday, 19 March 2008

Employment rate estimate--92.6% in January 2008

National Statistics Office
Click here for full report.

Philippines January 2008 1/ January 2007
Total 15 years old and over (in '000) 57,389 56,145
Labor Force Participation Rate (%) 63.4 64.8
Employment Rate (%) 92.6 92.2
Unemployment Rate (%) 7.4 7.8
Underemployment Rate (%) 18.9 21.5
Notes: 1/ Estimates for January 2008 are preliminary and may change.
2/ Population 15 years and over is from the 2000 Census-based population projections.

The number of employed persons in January 2008 was registered at 33.7 million. This placed the employment rate at 92.6 percent. Last year's rate was 92.2 percent.

Across regions, the Autonomous Region in Muslim Mindanao (ARMM) had the highest employment rate (97.6%), followed by Cagayan Valley (96.5%) and Cordillera Administrative Region (96.0%). The National Capital Region recorded the lowest employment rate at 87.5 percent.

The number of persons in the labor force in January 2008 was estimated at 36.4 million out of the estimated 57.4 million population 15 years and over. These numbers translate into a labor force participation rate of 63.4 percent, compared to last year's figure of 64.8 percent.

Of the estimated 33.7 million employed persons, around one-half (50.2%) were in the services sector, more than one-third (35.0%) in the agriculture sector and the rest (14.8%) were in the industry sector. These proportions were almost the same as in January 2007 estimates at 50.5 percent for services sector, 34.7 percent for agriculture sector and 14.8 percent for industry sector.

Among the various occupation groups, laborers and unskilled workers comprised the largest proportion (31.6%) of the total employed population. This was also the largest occupation group in January 2007 (32.3%). Farmers, forestry workers and fishermen registered the next largest group of workers with 18.2 percent in January 2008 and 17.6 percent in January 2007.

Employed persons fall into any of these categories: wage and salary workers, own account workers and unpaid family workers. Wage and salary workers are those who work for private establishments, government or government corporations and those who work with pay in own-family operated farm or business. More than half (51.7%) of the total employed persons in January 2008 were wage and salary workers mostly working for private establishments (38.2%). Those working for the government or government corporations accounted for 7.9 percent. More than one-third of the total employed persons were own-account workers accounting for 36.1 percent with self-employed workers registering the highest share (32.3% of total employed). Unpaid family workers were estimated at 12.2 percent.

Employed persons are classified as either full-time workers or part-time workers. Full-time workers are those who work for 40 hours or more while part-time workers work for less than 40 hours. Six in every 10 employed persons in January 2008 were full-time workers, with those working for 40 to 48 hours having the highest proportion (40.8% of total employed). Part-time workers comprised 35.3 percent of the total employed.

Employed persons who want or desire additional hours of work are considered underemployed. Most of the underemployed were found in the agriculture sector at 49.3 percent. Underemployed persons in the services sector accounted for 35.8 percent while those in the industry sector, 14.9 percent. About 61.2 percent of the underemployed were reported as visibly underemployed, or had been working for less than 40 hours a week.

The unemployment rate in January 2008 was estimated at 7.4 percent. Among the regions, the NCR had the highest unemployment rate. It registered a 2-digit unemployment rate of 12.5 percent. Males had higher unemployment rate of 7.8 percent compared to females at 6.7 percent. For every ten unemployed, five (49.6%) were in the age group 15-24 years, while three were in the age group 25-34. Around 39.0 percent of the unemployed had attained college level and 33.5 percent were high school graduates.


Second phase of expressway to open on April 21


CLARK FREEPORT ZONE, PAMPANGA — The second package of the Subic-Clark-Tarlac Expressway (SCTEx) is expected to be inaugurated on April 21, Deputy Presidential Spokesman and Presidential Assistant for Central Luzon Lorelei C. Fajardo said.

FDI inflows projected to reach $ 4.2 B this year


The Bangko Sentral ng Pilipinas (BSP) forecasts foreign direct investments (FDIs) to reach $ 4.2 billion this year, from $ 2.7 billion in 2007.

BSP Deputy Governor Diwa C. Guinigundo said they expect big-ticket projects from the mining, manufacturing and utility sectors this year, which would increase FDIs.

For example the mining industry is projected to bring in $ 1.48 billion for 2008. These are mostly funding for feasibility projects. Another $ 150-$ 300 million are investments for various mining firms in the exploration stage while 10 mining firms are in the construction phase of their gold, nickel and copper operations.

Last year the BSP recorded $ 2.92 billion of FDIs.

In the meantime, foreign portfolio investments or so-called hot money, is expected to reach $ 3.2 billion this year, lower than actual net inflows of $ 3.5 billion in 2007.

FDIs in 2007 went into manufacturing (electronics, health and chemical products, food, automotive sensor & safety products, decorative crafts and molded plastic products, cleaning products), services (international courier, information technology development, multimedia service provider), construction, mining, real estate, financial intermediation, and agricultural industries.

BSP data show that the reinvested earnings account during the year also rose to $ 567 million from $ 485 million in 2006, as foreign direct investors continued to "plough back a portion of their earnings into local enterprises/corporations," said BSP.

As for the other capital account—which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines— this registered a lower net inflow of $ 341 million compared to the net inflow of $ 1.1 billion same period in 2006.

The FDIs came from Japan, the US, the UK, Germany, South Korea, Malaysia, and Hong Kong.

FDIs are major sources of cash flows to boost the country’s gross international reserves. Besides foreign investments and exports, overseas Filipino workers’ remittances complete the dollar reserve components.

In 2004 non-resident FDIs’ only reached $ 500 million. The investment climate at the time was mired with political uncertainties since it was an election year.

In 2005 FDIs recorded a growth of 57.6 percent to $ 1.85 billion. The Supreme Court decision on the mining act, which was constitutional after all, encouraged positive sentiments as many expected that this will help the mining industry attract new investments from the US, China and Australia. However the projected $ 3 billion investments in the mining sector have yet to materialize.

Tuesday, 18 March 2008

PGMA inaugurates Subic-Clark-Tarlac Expressway

CLARK FREEPORT ZONE, Pampanga – As a vital component of her super regions strategy aimed at developing the country's provinces into new centers of tourism, business and industry, President Gloria Macapagal-Arroyo inaugurated today the newly-constructed Subic-Clark-Tarlac Expressway (SCTEX) designed to serve as an economic backbone for growth areas north of Manila.

The President took an inaugural drive-through a portion of the SCTEX signalling the soft opening of the 94-kilometer highway that will provide better and faster access to the Subic Bay Freeport in Zambales and the Clark Freeport Zone in Pampanga.

This soft opening, according to the President, covers the Subic-Clark portion of the SCTEX, which is some 50 kilometers long.

Built at a cost of P27 billion, of which P23.06 billion was funded through a loan grant from the Japan Bank of International Cooperation (JBIC) and the rest shouldered by the Bases Conversion Development Authority (BCDA), the SCTEX, which is a major component of the Luzon Urban Beltway, serves as a critical link to vital business corridors in Central Luzon such as the Subic seaport in Zambales and the Diosdado Macapagal International Airport (DMIA) in Pampanga.

Other economic zones within Subic, Clark and Tarlac areas are also expected to benefit greatly with the opening of the SCTEX.

With its completion, SCTEX will now open up more job opportunities for residents in these areas as more industries and facilities are expected to put up businesses such as transportation, communications, banking and food services as well as labor-intensive and service-oriented industries.

To the business locators, the SCTEX enhances growth in commerce and industry in the region, spurs more opportunities for the import-export industries and attracts more players in medical tourism and call center services.

More importantly, the SCTEX ensures faster delivery of goods and services by cutting travel time to and from the centers of business because of excellent road condition. The previous one-and-a-half hours travel time from Clark to Subic now only takes 40 minutes, while the usual one hour needed to travel from Clark to Tarlac has been reduced to just 25 minutes.

In time for the Lenten break, the SCTEX will have a "Libreng Biyahe sa SCTEX Program" with the theme "Handog ni Pangulong Gloria, Libreng Biyahe sa SCTEX" for light vehicles from 1 p.m. to 5:30 p.m. after today’s soft opening and from 5:30 a.m. to 5:30 p.m. from March 19 to 24.

The President enjoined all Filipinos to take advantage of the free toll at the SCTEX which, she said, will greatly ease travel expenses for family travelling up north.

"Biyahe na!," the President exclaimed after opening the toll-free expressway.

Monday, 17 March 2008

RP balance of payments recovers to $1.257B surplus in Feb


MANILA, Philippines- The country's balance of payments recovered to $1.257 billion in February, from a sharp drop in the previous month, as foreign exchange inflows also regained their momentum.

According to Bangko Sentral ng Pilipinas data, the BOP surplus in February alone amounted to $1.041 billion in February alone, significantly higher than the $554-million surplus recorded in the same month last year.

The cumulative surplus for the first two months of the year was slightly lower than last year's $1.285 billion level, however, due mostly to the decline in the government's foreign borrowing this year compared to the same period last year.

The BSP said foreign exchange inflows from remittances, exports and foreign portfolio investments strengthened during the period. Remittances from overseas workers alone reached $1.3 billion in January with the February inflow expected to reach the same level because of the increase in the deployment of workers abroad.

IMF on the Philippine Economy--impressive, substantial

Click here for full report.


Economic performance has improved markedly over the past few years. Founded on impressive fiscal consolidation, investor confidence has revived, and sovereign spreads have tightened. A substantial improvement in banking supervision has gone in hand with a marked improvement in banks' balance sheets.

GDP growth accelerated to 7.3 percent (annual average) in 2007 in a low inflation environment. Private consumption firmed as remittances remained strong, part of which financed home purchases. Fiscal impetus from government spending, including on infrastructure, provided an added push to growth. Private investment remained low by regional standards, but there are tentative signs of a revival. Headline inflation was only 2.8 percent (annual average) in 2007, primarily from higher food and oil prices.

These developments and favorable global conditions led to a surge in foreign exchange inflows and the external value of the peso. The current account surplus reached 5.7 percent of GDP in the first half of 2007 on high levels of transfers from overseas workers. Heightened investor interest in Philippine securities helped to turn the financial account into a small surplus. Intervention helped smooth fluctuations in the foreign exchange market and scale up buffers for increased capital flows. Despite a large buildup of reserves, the currency appreciated 19 percent against the U.S. dollar during 2007.

The momentum in stepped-up collection from the 2006 VAT reform slowed. The government deficit (excluding privatization receipts) widened to about 1½ percent of GDP as expected improvements in tax administration did not materialize. Yet there was a welcomed pickup in public investment. While the deficit is likely to be mitigated by privatization receipts, the debt-to-revenue ratio remained high relative to other countries. Privatization has attracted large interest from investors. Around 40 percent of power generating capacity has been sold to date.

Inflation remained low because of an appreciating peso and prudent monetary policy. The Bangko Sentral ng Pilipinas (BSP) successfully sterilized the jump in liquidity from foreign exchange intervention, including through broader access to the Special Deposit Account facility. At the same time, the benign inflation outlook permitted the BSP to cut interest rates in the second half of 2007 and in the process moderate inflows and support growth. Outflows were also encouraged through prepayment of external debt and foreign exchange liberalization.

The health of the financial sector has improved substantially. Non-performing assets of banks were reduced without government support; risk management facilities were upgraded as Basel II was phased in. Corporations also found alternative sources of funding, as equity and bond placements helped to supplement bank lending in 2007.

Executive Board Assessment

Executive Directors commended the authorities for the economy's impressive performance—strong growth, low inflation, sustained fiscal consolidation, and improved investor confidence. Directors also welcomed the improvement in the health of the banking system and the strengthening of bank supervision. Against this background, they encouraged the authorities to address the remaining challenges and vulnerabilities, including infrastructure bottlenecks, social needs, and further strengthening of the financial sector, which would help the Philippines weather the ongoing global financial turmoil.

Directors praised the authorities for their strong efforts in fiscal adjustment. They welcomed the 2005 and 2006 tax reforms, and commended the authorities' efforts to control spending. Better performance of non-financial public enterprises has slashed the public sector deficit and further improved the Philippines' debt dynamics. Directors viewed the government's plan to attain a balanced budget in 2008 within a firm medium-term framework as an important demonstration of fiscal prudence.

Directors encouraged the authorities to strengthen the tax effort and place priority spending on a sustainable footing. In addition to administrative reforms, they considered that legislation is needed to restore the tax base by rationalizing fiscal incentives and adjusting excise taxes. Directors noted that Public-Private Partnerships can be useful but require close monitoring, particularly of projects that extend guarantees to private investors. They also congratulated the authorities for a sustained effort at privatizing power sector assets, which has generated more income than expected and helped to support the government's plan to ensure that growth is not impeded by power shortages.

Directors commended the authorities for managing foreign exchange inflows well, while maintaining price stability. They highlighted, in particular, the successful smoothing of peso fluctuations while taking a strategic opportunity to build reserves. Directors noted that wider access to the Special Deposit Account, together with operations through the Reverse Repurchase facility and greater use of swaps, have successfully sterilized the reserves buildup and reduced liquidity growth. Well-anchored inflation expectations and an appreciating peso have helped counter the effects of sharply higher commodity prices in 2007. Directors were reassured by the authorities' commitment to remain vigilant, given the recent increase in inflation provoked by higher global food and oil prices.

Noting that the underlying current account balance is only slightly higher than its long-run average, Directors considered the exchange rate to be broadly in equilibrium. They recommended continuation of the current policy of limiting intervention to smooth erratic movements of the currency in the context of the flexible exchange rate regime. They also welcomed the recent two-step liberalization of the foreign exchange regulatory regime, which should help moderate net capital inflows. The government's decision to tilt its borrowing mix more heavily toward domestic sources should further reduce vulnerabilities and potentially ease pressure on the peso.

Directors welcomed the improvement in the health of the financial system. They also encouraged the authorities to further strengthen the financial sector, particularly in light of slow domestic credit growth and the possible effects of a serious turn in the credit cycle. While welcoming the progress in disposing of non-performing assets and in implementing international accounting standards and Basel II, Directors pointed to the need to reduce the remaining large stock of non-performing assets. They also noted that banks hold a significant amount of government debt that is sensitive to changes in sovereign spreads. Directors acknowledged that bank monitoring had improved, but encouraged the authorities to work for the passage of the BSP Charter Amendment, which is essential to lift the threat of legal action against supervisors, facilitate the operation of monetary policy, and improve economic surveillance of the non-bank sector. Directors also called for the adoption of legislation such as the Corporate Recovery Act and the Credit Information Systems Act, to help improve bank profitability and lending.

The new Subic-Clark-Tarlac Expressway

Hon. Ignacio Bunye

Good news for motorists who will be spending Holy Week in the North: The President will inaugurate on Tuesday morning the 93.77-kilometer Subic-Clark-Tarlac Expressway (SCTEX), which is expected to cut travel time by up to 80 percent. Motorists will also enjoy traversing the new Expressway for free the entire Holy Week.

The SCTEX, which starts at the Tipo junction in Subic and ends in Tarlac, was conceptualized by President Arroyo as early as 2001 “to enhance seaport-airport synergy”.

Bidded out in 2003, the contract to build the expressway was approved in April 2005, and construction started by April 21, 2005.

Funded by a “concessional loan” from the Japan Bank for International Cooperation (JIBC), the soon-to-be completed highway will be officially opened by the third or fourth week of April.

This will give the BCDA time to publish the toll rate in major dailies for three consecutive weeks, a requirement of the Toll Regulatory Board (TRB) which will also set the toll rate.

Traversing Clark to Subic will now take only 35 minutes, benefiting not only tourists but regular commuters as well.

After Holy Week, however, the SCTEX will be closed to enable the contractor to make corrections and rectification works and to complete an overpass in Concepcion, Tarlac, which is being built to give an alternate route for the carabaos and tricycles of farmers in the area.

After the Clark-Subic road, , President Arroyo to connect the NLEX southwards with the South Luzon Expressway (SLEX) via Commonwealth Avenue and Mindanao Avenue in Quezon City, and extend the NLEX northwards to Rosario, La Union via the towns of La Paz and Gerona in Tarlac.

Big-ticket investments expected in electronics, shipping, automotive

Bernadette S Sto Domingo
BusinessWorld (excerpts)

THE GOVERNMENT expects big-ticket investments in the electronics, shipping and automotive parts industries to enter state-owned economic zones by the first semester.

Philippine Economic Zone Authority (PEZA) Director-General Lilia B. de Lima said three to four foreign investors are likely to come before the end of the month, even as she declined to name the firms.

"We expect investments from heavy and some light industries. We are also looking at bringing in electronics firms as well as suppliers of autoparts. We’re also relying on expansions of existing companies," Ms. De Lima said in an interview last week.

New investors this year are likely to come from Taiwan, South Korea, Singapore, Japan, the United States, as well as from Germany and other parts of Europe.

Incentives needed

Ms. De Lima said Korean firm Hanjin Heavy Industries and Construction Corp.’s planned expansion in Cagayan de Oro will help PEZA attract related industries that will supply Hanjin’s needs.

This is besides Hanjin’s $1.684-billion shipyard in Zambales.

Ms. De Lima said these investors continue to rely on fiscal incentives from the government, adding certain sectors such as manufacturing should continue to benefit from tax perks.

"We should continue the ones that we have now because our competitors are giving the same incentives and more," Ms. De Lima stressed.

"China, for instance, offers free landthat’s something we cannot do," she noted.

Apart from manufacturing, other areas that should continue to get fiscal incentives include medical tourism and other tourism-related activities, shipping, logistics, automotive car parts, and information and communication technology and business process outsourcing.

Philippines gets little share of FDIs

RP last choice for FDIs in SE Asia – study
By Iris C. Gonzales
The Philippine Star

The Philippines attracted the lowest level of foreign direct investments among Southeast Asian countries last year, according to a Department of Finance study quoting data from the United Nations Conference on Trade and Development (UNCTAD).

The study noted that the Philippines attracted only $2.5 billion in FDIs while Singapore attracted $36.9 billion followed by Vietnam with $11.3 billion.

Thailand also beat the Philippines, attracting $10 billion in FDIs while Malaysia attracted $9.4 billion in FDIs.

Indonesia recorded $5.9 billion in FDIs last year. At this level, the study said that FDIs in the Philippines grew by only 4.3 percent from the 2006 level.

The country’s growth rate stood below the growth rate of its peers in the region such as Singapore (52.6 percent); Vietnam (36.4 percent), Malaysia (54.4 percent) and Indonesia (6.3 percent).

Only Thailand posted lower growth compared to the Philippines, with only 2.3 percent.

The Bangko Sentral ng Pilipinas, said net foreign direct investments are expected to reach $3.4 billion this year.

The BSP said direct investors are expected to take advantage of the country’s economic growth momentum as well as the growth in the region this year.

FDIs benefit the countries through capital formation and are usually favored over portfolio investments which tend to be volatile.

Infrastructure projects being fast-tracked

GMA orders fast-tracking of 148 infrastructure projects
Paolo Romero
The Philippine Star

President Arroyo has ordered the fast-tracking of the completion of 148 priority infrastructure projects, including 27 public works in Mindanao, through a stronger public-private sector partnership, a top Malacañang official said.

Presidential Management Staff chief Secretary Cerge Remonde issued the statement during the 3rd National Government Infrastructure Forum (NGIF) in Davao City on Saturday attended by business leaders, local government units, donor communities and investors, development stakeholders and civil society.

He said there is an urgent need to “unite on good infrastructure” which entails a multi-sectoral effort involving both public and private sector to build good infrastructure projects to spur growth and development in Mindanao.

“President Arroyo is fast-tracking the successful implementation of 148 priority infrastructure projects, including the 27 projects in Mindanao,” he said, adding “a stronger public-private partnership is a key.”

The government has allocated some P200 billion in additional funding for infrastructure projects in the 2008 General Appropriations Act, Budget Secretary Rolando Andaya Jr. said.

Presidential Adviser on the Peace Process Secretary Jesus Dureza, who is also development champion for Mindanao, made a presentation on the updates of priority infrastructure projects in the region.

Of the 27 projects in Mindanao, three projects have been completed including the Diosdado Macapagal Bridge in Butuan, the 210-MW clean coal plant in Phividec, and the 950-KV photovoltaic powerplant in Cagayan de Oro.

Dureza expressed optimism that Mindanao’s agribusiness industry will eventually exhibit a more bullish performance in the coming years.

He noted infrastructure projects are crucial in the physical integration of Mindanao which will optimize its potential as an Agri-Fishery Export Zone in the South.

Seven more projects in Mindanao will be completed this year, according to Remonde.

These projects are the Dinagat Island road and the airports in Zamboanga City, Butuan, Pagadian, Dipolog City, Ozamis City, Cotobato City and Laguindingan.

The government will also complete 271 small irrigation projects, which will provide water to 11,191 hectares of farmland and 33 farm-to-market (FMR) roads worth P252.59 million in Mindanao, Remonde said.

Remonde said Mrs. Arroyo has created the Pro-Performance System (PPS) to ensure the effective, efficient and transparent implementation of infrastructure projects.

The PPS Steering Committee is composed of Remonde, Ambassador Donald Dee, business representative; Ambassador Marita Magpili-Jimenez, representative for international development organizations; Dr. Vincent Fabella, NGO representative; Richard Nalupta, youth representative; Fr. Anton Pascual, religious representative; Ruperto Nicdao Jr., media representative; and Mayor Ramon Guico, Union of Local Authorities of the Philippines representative.

The PPS was cited by the United States Agency for International Development (USAID) mission director Jon Lindborg as key to the many problems affecting important infrastructure projects.

Lindborg is among the business leaders and donor community members who are bullish and enthusiastic about the recent unprecedented developments and improvements in the country’s infrastructure projects, Remonde said.

He cited the administration’s Roll-on, Roll-off (Ro-Ro) network of roads and boat terminals as very beneficial for Filipinos.

USAID and other private corporations commended the government for what they called impressive developments in Mindanao and the country, Remonde said.

Remonde added that the outpouring of support and confidence for the government’s infrastructure development efforts and the country’s economic performance as a whole is very inspiring.

“The high positive note struck by our development partners and sectors augur well for the infrastructure program,” he said. “The spirit of partnership, unity and commitment on display makes a convincing argument that today is indeed the best time to invest in the Philippines.” –

Faster check-in lines readied to declog NAIA terminal

Vito Barcelo
Manila Standard

AUTHORITIES are looking for ways to hasten passenger processing time from two hours to 45 minutes by reducing the number of checks a passenger has to go through at the Ninoy Aquino International Airport.

Their first step is to discontinue the passport and ticket checks conducted by security guards at the entrance to the departure area.

This and more measures were discussed in a meeting among the Bureau of Immigration, Bureau of Customs, Aviation Security Group-Philippine National Police, Airline Operators Council, Philippine Overseas Employment Agency, and airline operators.

Officials were quick to point out that while they had agreed to reduce the number of times a passenger is frisked to two from five, they would be installing more x-ray machines.

“We hope that when all agreements are in place, we will be able to process passengers within the 45-minute standard,” Manila International Airport Authority general manager Alfonso Cusi said.

“We have discussed the mechanics of works in ensuring a more efficient and effective processing of passengers without affecting the airport’s security,” he said.

“Additional immigration counters at the departure and arrival areas will be put up. Modern passport-reading machines are now being used to detect spurious documents.”

Cusi said the processing of outbound passengers took more than two hours, requiring them to be at the airport at least three hours before their flight.

Passenger backlogs usually start at the airline counters because most airlines use only two or three counters.

“We have already suggested to the airline firms to add at least three counters by putting up improvised counters to accommodate passengers. They were likewise asked to validate plane tickets and not the passports, since inspecting and validating passports are the tasks of Immigration,” Cusi said.

“Compared with its counterparts, [the Ninoy Aquino airport] may be inferior in certain aspects—such as the level of modernity of its facilities and infrastructure—but with people and processes as our focus areas, I am confident it will carve a niche in the industry that will effectively set it apart from its competitors overseas,” Cusi said.

“We will not give up on our efforts. We are doing this because we want to show to the world that Filipinos are excellent people, that Filipinos are competitive.”

Making good use of BSP’s cooperation

The Manila Times

AFTER about a year of prodding by financial market players, the Bangko Sentral ng Pilipinas (BSP) finally succumbed to calls to limit access to a facility meant to temper inflation.

Its policy-making Monetary Board decided last Thursday to close some of the windows of its special deposit account (SDA), which has been competing for funds with the national government, preventing it from securing short-term borrowings during its fortnightly auctions of Treasury bills.

What appeared to have been the straw that broke the camel’s back was the Bureau of Treasury’s recourse to negotiated sales of T-bills after it had failed to sell these in the open market due to the attempts of banks to bid up their rates.

Conceding to the high bids would have led T-bill rates, the benchmark for banks’ lending rates, to shoot up, removing a key pillar of the country’s recent economic success. The low interest-rate regime has allowed businesses to expand and households to leverage their incomes and spend more, boosting investment and consumer spending, respectively.

Low rates also enabled the government to trim its debt servicing costs, helping it reduce its budget deficit to a record low and way below the ceiling ahead of this year’s objective of bridging the fiscal gap.

The government move to do away with auctions and negotiate T-bill rates however would have short-circuited the debt market, which is premised on transparent price discovery. The BSP no less warned that negotiated rates would throw off course capital market reform. Its decision to refine the SDA therefore is a case of walking the talk.

This move also reverts to its regular policy tools the burden of taming inflation. Alongside refining its SDA, the BSP also parted ways with its US counterpart, the Federal Reserve (Fed), suspending further monetary easing by keeping its overnight rates steady. Had it cut anew in lock-step with the Fed, the BSP would have encouraged an uptake in inflation.

The consequence of this action however is a wider differential between Philippine and US rates, especially if the Fed eases its funds rate later this month as is widely expected. From then onwards, we should expect a further strengthening of the peso vis-à-vis the dollar, which would also temper inflation in light of record prices of imported oil and other commodities.

The downside of course would be felt by, among others, the export sector, where jobs may be at risk due to slipping sales abroad. Data for January already showed this, as electronics shipments, the bulk of the Philippines’ sales abroad, decelerated. That data also lent credence to our susceptibility to a US slowdown as shipments to our largest market abroad likewise fell. State-run Philippine Institute of Development Studies (PIDS) just last week warned the country may have already contracted the Dutch disease, which infected the Netherlands in the 1960s when the discovery of huge gas reserves attracted big foreign investments, sending the kroner to record highs. This eroded the share of Dutch manufactured exports abroad, causing job losses.

PIDS said this might be happening in the Philippines, citing the weak manufacturing amid a strengthening peso. If we’ve been smitten, then expect unemployment to rise. This puts policy markers in a bind.

With monetary authorities preoccupied with reining in inflationary pressures, the task of ensuring the Philippine economy survives a US recession lay squarely on the fiscal side of policy. The question is whether the government has the wherewithal to rise up to this challenge.

Pump priming requires ample resources, which may not be forthcoming, as the government’s two main revenue agencies have insisted they are unlikely to meet higher collection targets this year. Last year’s record-low deficit was largely due to huge proceeds from government’s privatization, which is also unlikely to be replicated this year.

That leaves borrowing to plug the gap, which brings us back to where we started. Incurring more debt to accommodate the planned spending hike implies that the government would have to forego its balanced budget goal this year.

It’s a tough call given that this government has worked hard for the much-coveted upgrade in its credit rating hopefully by yearend. This Holy Grail would further improve the government’s chances of securing much cheaper borrowings from abroad.

But after the BSP’s recent policy move, the government should push this effort to its logical conclusion: jack up state spending to support economic growth. Otherwise, the central bank’s cooperation would all be for naught.

Sunday, 16 March 2008

Pacquiao: national hero

Statement of the President

Manny Pacquiao has again brought immense glory to the Flag and Filipino people with his hard fought victory today. Once more, he has inspired us with his big fighting heart, his determination and grit. He is truly one of our nation's heroes who can unite us even in times of divisiveness. An icon of the masses, Manny Pacquiao mirrors the champ within every Filipino, here and abroad.

I join the Filipino people in savoring this moment of sweet victory and national unity prompted by the courage, discipline and fighting heart of our boxing hero, Manny Pacquiao.

Like him, we, too, shall overcome the battles ahead, with courage and a steadfast faith in ourselves, our country, and the Lord Almighty.