Saturday, 13 September 2008

Palace sets up P1-b power subsidy fund for exporters

By Joyce Pangco Pañares and Roy Pelovello
The Manila Standard

PRESIDENT Arroyo has approved the creation of a P1-billion Industry Competitiveness Fund that will subsidize the cost of power to at least 4,000 export companies operating outside the special economic zones.

Trade Secretary Peter Favila said the fund would be drawn from expanded value added tax collections, and would start at about P1 billion.

“We are committed to address the appeal of local export enterprises,” Favila said, adding the government wanted to bring the exporters’ power rates closer to those paid by companies in the economic zones and thus level the playing field.

“We will implement this as soon as possible, at the very least within the month,” Favila said.

The announcement of a power rate subsidy for exporters comes on the heels of a World Bank and International Finance Corp. report that showed the Philippines was among the least competitive economies in Asia because of red tape.

The Doing Business 2009 survey said the Philippines had the most number of procedures for starting and closing a business, earning it a low 140th ranking among the 181 economies the World Bank polled.

Favila did not dispute the survey findings, but said amending the Constitution and the Local Government Code could correct those procedural obstacles and improve the Philippines’ competitiveness.

Favila, co-chairman of the National Competitiveness Council, said the President had called a meeting next week to see what else needed to be done and to set timetables for programs to improve the country’s ability to compete.

“A change in the Constitution, particularly in the economic provisions, will enhance competitiveness,” Favila said.

He said economic limitations in the Constitution were major concerns to foreign investors, and among these were the constitutional limits to foreign ownership in certain industries.

Favila said the World Bank report did not cover the reforms that the administration put into place after the survey period, including the creation of the Credit Information Bureau.

But he acknowledged that provisions in the Local Government Code were holding back competitiveness, enabling corrupt local officials to make it harder and expensive for new businesses to set up.

He cited another study, by the International Institute for Management and Development, that showed the Philippines improving its competitiveness standing to no. 40 among 55 countries, up from no. 45.

The President last week approved a three-year Philippine Export Development Plan that aims to generate $84.4 billion in exports by 2010.

Favila said a power subsidy would provide an incentive to exporters to sell more.

“The President only asked these companies to create more jobs, hire more people, since they will now be enjoying lower power rates,” he said.

In the three-year rolling national export plan, the government plans to meet export targets of $64.3 billion for 2008, $73.2 billion for 2009, and $84.4 billion for 2010.

Favila said the government expected a 6 to 8 percent growth in the export of goods and 35 to 45 percent growth in services.

“The President said these are respectable targets, but what she would like to see are hard numbers,” he said.

PGMA gives 1,000 Nueva Ecija farmers fertilizer subsidies of P1,000 each

JAEN, Nueva Ecija – Some 1,000 farmers from the 4th congressional district of this province today received P1,000 in cash each from President Gloria Macapagal-Arroyo after she approved the release of P1 million to subsidize their fertilizer needs.

“P1,000 fertilizer subsidy sa bawat isa sa 1,000 magsasaka,” the President said in her remarks at the 57th birthday anniversary celebration of Nueva Ecija 4th Congressional District Rep. Rodolfo W. Antonino held at his family residence in Barangay Langla here.

Kaya iyan ang dagdag na regalo natin sa distrito ni Rody,” she said as part of the national government’s efforts to help farmers to increase their earnings and for them to lessen the impact of rising prices of fertilizer in the market.

Kung magiging mas mura ang fertilizer nila dahil sa ating subsidy, siguro naman mas lalaki ang kita nila at sa ganon ay mas magkakaroon din ng ginhawa ang ating mga magsasaka (pati pamilya nila),” she noted.

Earlier, the President awarded scholarship certificates to two qualified beneficiaries under the PGMA Training for Work Program of the Technical Education and Skills Development Authority (TESDA).

She also distributed 12 PhilHealth cards to 12 indigent recipients. The President also handed over a check for P100,000 to Jaen Mayor Santiago Austria as the administration’s contribution to the public safety program of Jaen and for the daily income earners like balut and cigarette vendors, among others.

Earlier at 10 a.m. the President led Novo Ecijanos in paying tribute to one of their outstanding provincemates, the late Sen. Gaudencio Antonino by renaming the Cabiao Bridge after him, by virtue of Cabiao Sangguniang Bayan resolution.

“Senator Antonino was not an ordinary statesman,” the President noted, adding that the father of incumbent Rep. Antonino is regarded as a hero by Novo Ecijanos because of his great contributions to the economic development of Nueva Ecija, now one of the top rice producing provinces in the country.

The construction of the Cabiao bridge and its approaches started in 1990 but was completed only last year thru the efforts, intercession and funding assistance of P45,507,769 from the office of Congressman Antonino.

The original Cabiao Bridge was washed out by a great flood in 1990, on the day Mt. Pinatubo erupted in June of that year.

The bridge connects the agricultural barangays of San Carlos and Sta. Isabel and provides an alternate route to the municipalities of Jaen, San Antonio, Zaragoza, among others.

Billion-peso buffer fund in ’09 to support infrastructure projects

BusinessWorld Online

A billion-peso standby buffer fund has been set aside in next year’s budget to lessen foreign exchange risks of foreign-assisted infrastructure projects.

In a statement, Budget Secretary Rolando G. Andaya Jr. said the General Fund Adjustment (GFA) will ensure that projects will not be hampered "because there is no mechanism for fund augmentation when forex (foreign exchange) loss is incurred."

Mr. Andaya said the GFA will cover additional costs due to revaluation after the project’s implementation, and from increased expenses due to inflation, in which case the government goes back to the foreign donor for additional assistance.

The government usually asks donors to fast-track the fund release when the cost is cheaper due to a strong peso. On the other hand, a weaker peso against the dollar tends to slow down project implementation. In both cases, additional funding is expected from the original allotment.

Mr. Andaya said the P1-billion fund has safeguards against possible diversion.

"The use of the GFA is governed by a special provision limiting it to cost differentials caused by exchange rate movements so the fear that it will [be used for other purposes] has no basis," he added.

The Budget chief noted that all administrations from the Aquino presidency to the present had a GFA in the budget. The GFA for 2008, however, was included in the uprogrammed fund.

"We are just resurrecting the old practice of making the GFA a regular program in the budget," Mr. Andaya said.

The government has earmarked P40.8 billion worth of foreign-assisted projects for 2009, of which P28.5 billion will be financed through loans, P11.9 billion in counterpart funds, and P424 million in grants.

The government is looking at a P1.415-trillion national budget based on a more upbeat growth outlook of between 6.1% and 7.1%, an inflation rate of 6%-8%, foreign exchange rate of between P42-P45 to the dollar, benchmark Dubai crude oil price of between $115-$125 per barrel (Dubai crude is now hovering below $100 per barrel; and a deficit of only 0.5% of gross domestic product, or the sum of goods and services produced in the country in a year. —

Tuesday, 9 September 2008

Agriculture eyes P4-B from VAT collections

By Ira Karen Apanay
The Manila Times

Agriculture Secretary Arthur Yap said the next batch of collections from the expanded value-added tax (E-VAT), amounting to P4 billion will be allocated for agriculture production, specifically as financial assistance to small farmers.

“This third wave of the ‘Katas ng VAT’ program might have additional funding for financial assistance to farmers,” Yap said.

Yap said President Gloria Arroyo announced earlier the government would tap funds from the E-VAT collections from oil to bankroll the third stage of the government’s assistance package for various sectors, including agriculture.

Aside from the E-VAT collections, Yap said the Agriculture department is working for the speedy release of P4 billion in incremental revenues from royalties collected for extracting natural gas in the Malam­paya field off Palawan. The funds will be used to bankroll President Arro­yo’s food security program.

Yap said the P4-billion Malam­paya fund is one of the sources of capital that the government is tapping to ease the rural credit squeeze, thereby allowing farmers and other small agriculture borrowers to access funds to boost agricultural production and raise their incomes.

Guarantee fund from Land Bank

The Agriculture chief further said President Arroyo also ordered the Land Bank of the Philippines to set aside a P7-billion guarantee fund, to be sourced from her “Katas ng E-VAT,” to enable small farmers and fisherfolk to avail of loans to procure production inputs for the beginning this wet cropping season for rice.

The Arroyo administration launched the “Katas ng VAT” program earlier this year with an initial P4 billion allotted for power subsidies; scholarships and student loans; the conversion of public utility vehicles to run on cheaper energy sources and the replacement of incandescent bulbs to the more efficient compact fluorescent lamps in government offices.

The second batch, which also amounts to P4 billion, include subsidies for small power users; the rehabilitation of infrastructure affected by typhoons; livelihood and loan packages for the spouses and immediate relatives of transport workers; upgrading of provincial hospitals and direct cash assistance for senior citizens not covered by pension funds.

President Arroyo also tapped into her E-VAT-generated funds to subsidize rice prices to stabilize the cost of the Filipino’s food staple.

Clark primed as next air hub

Paolo Luis G. Montecillo
BusinessWorld Online

THE GOVERNMENT is proceeding to develop the commercial air transport system of Central Luzon in order to decongest Manila airports.

The Civil Aeronautics Board (CAB) said it has been seeking more flights between Diosdado Macapagal International Airport (DMIA) in the Clark Freeport, Pampanga, and key hubs around the world, as it expects more demand for air travel from Asia and the Pacific.

CAB Deputy Executive Director Porvenir P. Porciuncula said in an interview yesterday, "we have a policy to get more flights to Clark."

He said this was in accordance with President Gloria M. Arroyo’s directive to develop the area as the "premier gateway to the Philippines."

Since last April, negotiations with air panels from Macau, Hong Kong, Thailand, and Iran, have resulted in flight entitlements between these countries and the Philippines, mainly operating through the latter’s international airports in Manila and Clark.

The next set of negotiations for entitlements will be on Sept. 29-30 between the Philippines and Finland.

More entitlements to Canada, Japan, Malaysia and Spain will also be sought before the year ends.

Mr. Porciuncula said that Clark’s airport system is better than that of Manila, since its two parallel runways allow for two different aircraft to take off and land simultaneously, a feat impossible with the Manila airport system’s perpendicular runways.

He said the Clark runway’s configuration minimizes delays and makes operations more efficient.

Mr. Porciuncula said the "main consideration" in seeking more flights for Clark is the number of overseas Filipino workers (OFWs) from the Northern and Central Luzon provinces.

Alexander S. Caguiran, executive vice-president of the Clark International Airport Corp., said in a separate interview yesterday that more than half of the country’s OFWs come from Northern and Central Luzon.

To accommodate this market, he said the Clark airport authorities plan to build a P6.5-billion terminal, which will be designed to accommodate up to seven million passengers a year.

Once built, the new terminal will dwarf Clark’s existing terminal, capable of two million passengers yearly.

Developing the Clark airport system "is really needed since the Manila airports are already congested," he said. He said the passengers that the Manila terminals will not be able to accommodate need the option of having more than just one airport system.

The new international terminal will be built beside the smaller terminal, which in turn will be converted into a domestic terminal.

The new terminal is expected to begin operations by early 2010, Mr. Caguiran said.

He said the potential market of eight million passengers for the Clark terminals will come from Northern and Central Luzon, and even northern Metro Manila.

He said that the envisioned new Clark terminal will complement the congested Manila international airport system, which is composed of Ninoy Aquino International Airport terminals 1, 2 the newly opened terminal 3, as well as the Manila Domestic airport.

Manila International Airport Authority officials have said the old airport system, which excludes terminal 3, was running at a combined capacity of 22 million passengers a year.

This is above 18-million passengers annually, which was the combined capacity the three terminals had been designed originally to accommodate.

Terminal 3, which is capable of handling 13 million passengers a year, is expected to alleviate the old system’s congestion, and make way for improvements of the older terminals.

The new Manila terminal is currently running at 60% of its capacity, housing the operations of Cebu Pacific, PAL (Philippines Airlines) Express, and Air Philippines. —

Norwegian shipping firm sets up another office, relies on Filipino seamen to drive growth

Paolo Luis G. Montecillo
BusinessWorld Online

A NORWEGIAN shipping company is banking on Filipinos born and trained here to support its growth targets in the next five years.

In a press briefing yesterday, officials of Odfjell, a shipping conglomerate based in Bergen, Norway, said the company would add two ships a year to its fleet of over a hundred vessels, and would fill the 25 positions needed to run each ship with Filipino seamen.

"We have an indefinite commitment to [hire] Filipino seafarers," said Jan Arthur Hammer, president and chief operating officer of Odfjell Tankers AS.

Kjell Arne Johansen, owner’s representative of Odfjell Philippines, Inc., said two 40,000-ton vessels, designed to transport chemicals, acids, petroleum products and edible oils, would be added to its fleet. Each ship is estimated to cost $80 million to $100 million.

He said the company has around 2,000 crew members working on board and in various positions in the shore organization, and close to three-quarters of them are Filipinos.

The Oslo Stock Exchange-listed company yesterday opened a nine-storey facility in Manila, which will serve as an administrative center for all crew-related activities such as recruitment, crew processing and dispatch, and career management.

The inauguration coincided with Odfjell’s 23 years in the country, as well as the first anniversary of Odfjell Philippines’ incorporation.

Odfjell was set up in the early 1900s by the Odfjell family, whose members were seafarers.

Its main headquarters is in Bergen, Norway, a country with a long history in seafaring dating back to the time of the Vikings.

Today, Odfjell SE is a global leader in transporting bulk liquids such as chemicals, petroleum products, acids, alcohols, vegetable oils and animal fats.

Helge Olsen, senior vice-president of another Odfjell affiliate, Odfjell SE, said the company would "continue to develop Filipino operators for all levels of employment."

In 2003, the company set up Odfjell Academy at the Subic Bay Freeport in Olongapo City to improve the skills of its pool of seafarers.

The academy offers in-house training courses, focusing mainly on shipboard operations and health, safety and environmental procedures.

The company has also partnered with the J.B. Lacson Foundation Maritime University in Bacolod, Negros Occidental, for a cadetship program.

Remegio S. Zamora, project manager of Odfjell Ship Management Philippines, said the training programs prepare the students beyond Commission on Higher Education standards.

Mr. Johansen said the company spends around $100,000 a year on the program.

He said both programs will be able to fill whatever employment demand the company may experience in the next five years.

Meanwhile, Mr. Hammer said the company has been affected by high inflation, higher oil prices and other costs.

"Over the last couple of years, we have seen a rise in management costs," he said, though he declined to be more specific. —

NAIA 3 update photos


Flights now 86% on time — Cebu Pacific

Paolo Luis G. Montecillo
BusinessWorld Online
Updated as of 04:50PM

After a streak of flight delays last month, Gokongwei’s budget airline Cebu Pacific said Tuesday it has recovered with 86% on-time performance.

Operational lapses occured after it moved its operations to the newly opened Ninoy Aquino International Terminal 3, coupled with bad weather. Flight delays for the airline lasted for at most 30 hours for some flights.

In a statement today, the company said the airline’s operations have normalized with the required airport facilities, resulting in most of its flights being on time during the August 8 To September 7 period.

The company noted that North American carriers registered a 75.7% on time performance (OTP) for July 2008 with the highest OTP registering at 85.6% for Pinnacle Airlines.

A flight is considered to have departed on time if it departs within 15 minutes from the original estimated time of departure.

Candice Iyog, Cebu Pacific vice-president for marketing and distribution, said: "We have fully settled-in in NAIA-3. Our airport team has adjusted to the new facility and we continue to look for ways to further improve our on time performance and benefit from the efficiencies of operating both domestic and international flights under one roof."

Sunday, 7 September 2008

Sugar surplus seen; more exports set

The Manila Bulletin

The Philippines is projected to post a sugar production of 2.45 million metric tons (MT) this current crop year, at least a 20-year high record that’s sending a huge surplus and export of around 400,000 MT.

Rafael L. Coscolluela, administrator of the Sugar Regulatory Administration (SRA), said the country is set to export 175,000 MT of raw sugar to the US and to the world market up to Jan. 15.

This is as surplus is expected to have risen to 590,000 to 630,000 MT. However, this surplus is foreseen to decline by the end of crop year (CY) September 2008 to August 2009 through government’s intervention.

"Through the export program we’re adopting, we’re looking at an ending inventory of 400,000 tons," said Coscolluela in an interview.

The projected sugar production this crop year indicates a growth of 8.7 percent from 2.257 million MT in CY 2007-2008.

Sugar Order No. 1 is allocating 10 percent of total sugar production for CY 2008-2009 for the US sugar export quota or 245,000 MT and seven percent for the world market or 171,780 MT. Domestic sugar gets 68 percent of raw sugar production for this crop year and reserve sugar, 15 percent.

Coscolluela said government expects a losing price for sugar farmers from the export market. While production cost is at P950 per 50-kilo bag, US export price is placed at P750 per bag and the world market at a significantly lower price of P600 per bag.

"These are rough figures because we know where to sell sugar, but we’ll sell it at a loss," he said.

Local price of sugar is at a more attractive P1,100 per bag. The country’s sugar production has consistently grown over the last 10 years, except for a few calamity-hit years, with farmers’ increased use of high yielding varieties.

Despite the huge surplus this crop year, SRA projects that the country will experience some imbalance when the Philippines begins implementing the Biofuels Act. The law provided for a five percent bioethanol-gasoline mix starting 2009. While the law does not discriminate on any feedstock for bioethanol, the Philippines is more prepared to use sugarcane for bioethanol feedstock with the upcoming completion of the sugarcane-based ethanol plant of San Carlos Bioenergy in Negros Occidental.

Another company, Leyte Agri Corp. has already started producing bioethanol in Ormoc, Leyte using molasses.