Saturday, 7 March 2009


Joey Concepcion

Earlier this year, our Go Negosyo Bicol Caravan in the province of Gov. Lray Villafuerte set the record in terms of the attendance of people with the interest to start a business. It was a huge success.

This time, we have set another record. The Go Negosyo: Babae Yaman ka ng Bayan truly lived up as the biggest entrepreneurship event we ever completed, in partnership with the National Commission n the Role of Filipino Women Chairperson Myrna Yao and the Micro SME Development Council. The World Trade Center was packed with women, who participated because they wanted to learn and be inspired.

Luli Arroyo-Bernas, who represented her mom, came like any ordinary Filipina, with no guards and no assistant. She even walked in the registration area and asked how she would go to the stage. She is truly a great example of humility and simplicity.

Walking around the World Trade, you could really feel the excitement. It was a great feeling to see so many women. In fact, in my short welcome, I congratulated all the women taking the first step just by coming. Some of them even came as early as 5am to make sure they would get seats. I also mentioned that we have planted the seed in them. It is now up to them to work, see it grow, and bear fruit.

Everyone we invited to the forums showed up. They were in awe to see so many people and such a beautiful set in pink and green, with a humongous LED screen. We made sure this time that the event captured the emotions of women entrepreneurs who struggled to become successful. We also recognized three "Mother of all Mother Entrepreneurs”: Nanay Coring Ramos of National Bookstore, Dr. Helena Benitez of PWU, and Madam Eulalia Baylon of Immaculate Conception College Albay.

It was very important to capture their stories. Our video director Frank Mamaril and event directors Bambi Verzo and Carmel Tan did a great job with the entire event. We opened the event with a little girl, Hannah Laurel, who sang “The Prayer”. We also had our own version of a “Babae Ka” song performed by talented singers. Then, the video on women entrepreneurs set the emotion for the day. The video talked about the inspiring stories of several microentrepreneurs, especially Elibel Bautista from Zamboanga who has a crab-fattening business and Zenaida Guray who started a hog-raising business.

I personally learned a lot during this event. I asked all my children to skip school and attend this event. It is rare to have all these people in one day to share their truly inspiring stories.

Gina Alexander, who is featured in the book, came all the way from LA just to attend the event. She even wondered how we got her name and what she does in the United States. This shows that our Philippine Center for Entrepreneurship team researched for stories that are truly inspiring.

That day made it clear to me why women are natural-born entrepreneurs and why they are naturally so enterprising. They are the soul of the family. They are truly the inspiration not only for us men, but for our children. If this nation will move out of poverty, women will play a huge role in making it happen. BABAE, TALAGANG YAMAN KA NG BAYAN…

Prior to the women event, we had a successful book launch last week. PGMA attended and came on time. She surprised a lot of the women featured in the book, as we did not inform some of them that she was coming. She was also supposed to sign only five books, but she was gracious enough to sign the books of the featured women present during the launch. It was truly a women-inspiring week. Tessa Prieto-Valdez, who hosted that night, was also great. She was able to interview most of the women present on how their stories inspire others.

While the great recession is taking place, the Philippines is somehow still insulated from the magnitude of a crisis affecting almost all nations. For once, the Philippines is the shining star. MAYBE it's because we are just too small of an economy, or MAYBE it’s because we did not grow as fast as our Asian neighbors grew. MAYBE it's because we were one of the last ones to get out of the Asian crisis, making our banking institutions and corporations better prepared. MAYBE PGMA has done her job well. If one wonders how she survived all the coup attempts, God must have placed her to lead our nation to prepare us for what is coming. Or, MAYBE it is because the Philippines is the capital of manpower services – from exporting people as nurses, doctors, engineers, managers, seamen, yayas, etc. to exporting services through call centers and BPOs. MAYBE it’s beca use this business model of our country is more resilient than exporting durable goods, which China, Taiwan, South Korea, and Japan do. It is a simple business model, but many do not understand that great service is inborn and taught from the very day we are born. This service, for me, is recession-proof. More and more people and countries will need to cut cost and replace with cheaper labor.

Just MAYBE, this time, Filipinos will believe that we do have a chance to be a great nation. I believe that we will remove the "MAYBE the Filipino can" and change it to "YES, THE FILIPINO CAN!".

Let me thank all those who have helped us plant the seed from the book launch: starting with President Gloria Macapagal-Arroyo, Sec. Cerge Remonde and Sec. Arthur Yap, National Bookstore President Alfredo Ramos, of course our editor Joanne Rae Ramirez, Tessa who was very colorful as a host, her mom Marixi Prieto, PhilStar's Kevin Belmonte and wife Roseanne, Citi Phil. Head Sanjiv Vohra, PLDT's SME Nation Head Kat Abelarde, Smart's Doy Vea, Condura's Ton Concepcion, SM's Tessie Sy-Coson and Debbie Sy, French Baker's Johnlu Koa, F&H's Ronald Pineda, Nokia's Sandeep Kahnna and Nikka Abes, Small Business Corp. Chairman Vir Angelo and President Benel Lagua, Directors Dodit Leano of DTI and DepEd’s Joey Pelaez, among many others.

We also thank those who shared their time and talent to inspire and mentor all the Babaes in the crowd. Thanks to Sen. Loren Legarda, Congresswoman Cynthia Villar, Luli Arroyo Bernas, Sec. Espie Cabral and Sec. Peter Favila, Gov. Grace Padaca, Usec. Merle Cruz, Mayor Marides Fernando, and Asec. Malou Orijola. That forum was moderated by seasoned hosts Rico Hizon and Connie Sison. We had a “husband and wife” forum on women empowerment and shared responsibilities animatedly moderated by Boy Abunda and Susan Enriquez. Maricel and Anthony Pangilinan, Dina and Les Reyes, Anna and Dylan Wilk, Cathy and Mike Turvill, Val and Ping Sotto, and Michelle and Eric Reyes were the couples who participated. The self-confidence and personal imaging forum was led by Abbygaile Arenas-de Leon, Cory Quirino, and Doyee Tumpalan. Our entrep-learning forum was moderated by Tintin Bersola Babao, who is a serial entrep herself, joined by our dynamic mentor Dean Pax Lapid, Chit Jua n, and Dir. Tess Fortuna. Thanks also to our guests in the Alternative Business Opportunities Forum led by Jesus Hofilena of Insular Life, Atty. Joey Lina, Joey Sarmiento and Joanna Romero, who has an online cupcake negosyo.

Lastly, we would like to specially thank our 55 women entrepreneurs who unselfishly showed support, joined the forums and mentored our participants. Thanks to our partners PLDT, Smart, Citi Phil., Insular Life, Pagcor, SMC, RFM, Condura, Phil Star, Globe, National Bookstore, Splash Corp, R.A. Gapuz Review Center and ICCP Group. Our media partners are QTV11, GMA7, NBN, Multiply, Lifestyle Network, Working Mom, DZMM, XFM, Businessworld, Creamsilk, Absolute, Ever Bilena and Aspac Law, V-Cargo, Creative Voices and Proudly Filipina.

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Philippine president to immediately sign poll automation budget bill

Bernardette S. Sto. Domingo
BusinessWorld Online

President Gloria Macapagal-Arroyo would immediately sign into law the P11.3-billion supplemental bill to automate the 2010 elections, a Palace official said yesterday.

She also asked the Commission on Elections (Comelec) to ensure that results of next year’s polls would be known within three to four days, Presidential Assistant for Political Affairs Gabriel Claudio said.

He told reporters Mrs. Arroyo, who back full computerization, also wants the Comelec to address issues raised by lawmakers on whether a partial or hybrid system can be considered for next year’s elections.

"As far as the Palace is concerned, it is all systems go for full automation of the 2010 polls as provided by law," Mr. Claudio said.

He added Comelec has been asked to implement administrative measures to accommodate Congress’ concerns over the technology to be used to "ensure that the automation system and technology to be used is not only tamper-proof but also compliant with law."

For instance, Mr. Claudio said, there must be a way by which Comelec, without need of legislation, can provide for the generation of election returns and certificates of canvas at the local level simultaneously with the electronic transmission of election results for president, vice-president and senators.

"That way, the election results for national positions will be known in three to four days as committed by Comelec at the same time providing local candidates the official basis for ascertaining local poll results in their respective areas," Mr. Claudio said.

Philippine GIR climbs to record $ 39.2 B in Feb.

Manila Bulletin

The country’s dollar stocks reached a record high of $ 39.31 billion as of February, up by $100 million from January, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

BSP Governor Amando M. Tetangco Jr. said National Government deposits from its loan from the World Bank and Asian Development Bank boosted gross international reserves (GIR). Other sources of foreign exchange are the central bank’s gold reserves.

BSP said net international reserves (NIR) totaled $ 38.3 billion for the month, up from $ 37.7 billion in January. NIR is the difference between the BSP’s dollar reserves and total short-term liabilities.

Total GIR level is equivalent to 5.9 months of imports of goods and payments of services and income. It can cover up to 4.7 times of short-term external debt based on original maturity and 2.7 times based on residual maturity. (LCC)
For 2009, the BSP is projecting lower GIR of $ 37.5 billion from $ 40 billion last year.

To boost GIR and make sure the country’s balance of payments remain in surplus, BSP is relying on the NG to negotiate more program loans as source of foreign exchange.

BSP was considering several measures to make sure that BOP is well-stocked, including revolving loans from the Bank for International Settlements and getting new credit from the International Monetary Fund (IMF). However central bank officials said there is no need for these backup measures so long as the NG will increase program loans.

Last year, the BSP borrowed $ 500 million from BIS and another $ 200 million gold-backed and securities-backed loan. BSP can borrow up to $ 6.6 billion from the IMF as liquidity buffer or BOP support but officials said this is not an option right now.

For 2009, the NG has a higher commercial borrowing program, recently raising $ 1.5 billion from the international bonds market. The government also raised official development assistance (ODA) loans from $ 1.1 billion to $ 1.6 billion this year. Including bonds sale, NG total dollar-denominated borrowing requirement is $ 3.1 billion.

BSP Deputy Governor Diwa C. Guinigundo said last week that the government should source more funding for infrastructure requirements, for example more ODA financing as means to bring in more dollar inflows. (LCC)

Friday, 6 March 2009

Philippine National Railways instructed to run Bicol train before 2010

By Juan Escandor Jr.

NAGA CITY, Philippines -- President Gloria Macapagal-Arroyo has given orders for train service between the Bicol region and Metro Manila is restored before her term ends in 2010, an official of the Philippine National Railway (PNR) said Wednesday.

PNR general manager Ower Andal said Representative Diosdado “Dato” Arroyo of Camarines Sur’s first district, whose 10 municipalities would benefit from the reopening of the railway services, said they are also pushing to speed up rehabilitation of the railway system, including rails and cars, and the rebuilding of stations and offices.

Andal said one way of maximizing limited funds would be for the PNR management to ask local manufacturers to build new cars for the train.

He said the PNR would spend only P5 million for a locally made car, compared to around $2 million, or some P110 million, for an imported.

Andal was here to declare the start of the P24-million rehabilitation of the Central Station located in Tabuk, Naga City. The project will cost P24 million, including the construction of a new building, perimeter development and beautification.

He said they are targeting the reopening of the rail line, which stretches 377.57 kilometers from Naga City to Metro Manila, in time for the Peñafrancia Fiesta in September.

It would cost the PNR P1.875 billion to totally rehabilitate the lines and stations from Quezon province to the Bicol region, he added.

Reuters Video: Manila's street kids get finance lessons

Mar 5 - Manila's street children learn the basics of finance to help them earn their way out of poverty.

Charities in Manila have got together to show the city's street children how sound financial advice can help them plan for a better future.

Many Filipino families don't earn enough money to support their families and the children often get into trouble by stealing or taking drugs.

Hayley Platt reports.

San Miguel Corp, DMCI to meet on Philippine toll road project

Written by Honey Madrilejos-Reyes
Business Mirror

INFRASTRUCTURE may soon be added in the growing list of San Miguel Corp.’s (SMC) investment interests.

The food and beverage giant is meeting with the Consunji-led DMCI Holdings Inc. (DMCI) to explore potential participation in the Tarlac-La Union Expressway Project (TLUTE).

“We are set to meet with the Consunji group next week. As I’ve said before, any opportunity for our company, we will take a look,” said SMC vice chairman and president Ramon S. Ang at the sidelines of Liberty Telecom’s special stockholders’ meeting on Thursday.

SMC has been very aggressive in widening its investment portfolio. It is now into power through investments in the Manila Electric Co., telecommunications via Liberty Telecoms, and oil refining and retail through Petron Corp. It has, likewise, signified interest to enter the water sector via the development of the Laiban Dam.

TLUTE is a P15.2-billion project led by a consortium of local private contractors called the Private Infra Development Corp. (PIDC). DMCI owns a 34-percent economic interest in the consortium.

Also part of the consortium are First Balfour Inc., DM Wenceslao and Associates Inc., CM Pancho Construction Inc., RD Policarpio and Co. Inc., JV Angeles Construction Corp., JE Manalo and Co. Inc., New Kanlaon Construction Inc., EEI Corp. and Rockford Development Corp.

TLUTE, to be undertaken via the build-transfer-operate scheme with the Philippine government, involves the construction in two phases of the 88.5-kilometer, four-lane expressway from La Paz, Tarlac, to Rosario, La Union.

Construction started in September and is targeted for completion in 2012. Once completed, travel time from Manila to Baguio will be reduced from six to three hours with a safe speed of 80 kph.

Following the TLUTE’s completion, the land title will be transferred to the Department of Public Works and Highways (DPWH). A toll operating agreement will then be signed for a 35-year concession that can be extended for another 15 years.

Of the total project cost, 57 percent or P8.59 billion will be financed through loans and 24 percent or P3.68 billion from equity. The remaining 19 percent, amounting to about P2.91 billion, will be provided by the government in the form of subsidy.

Philippine outsourcing companies expected to employ more workers amid crisis

BusinessWorld Online

BUSINESS PROCESS outsourcing (BPO) companies expect to employ more workers this year as the slowing global economy forces them to seek alternative and cost-effective ways to provide high-value services, an online survey showed.

Ninety-five percent of 168 industry executives and human resource managers surveyed indicated a positive outlook for job growth this year, with half saying their work force requirement would increase by over 15%.

The survey, done from Feb. 5-22 by Outsource2Philippines, the Business Processing Association of the Philippines (BPA/P) and TeamAsia, also showed that value-added services outsourced to Philippine BPOs were increasing.

Moderate- to very high-value services ranging from financial analysis to knowledge management accounted for 97% of services offered by the companies polled.

More than three-fifths said their organizations provide high- to very high-value services.

Sectors that expected the highest work force increase involved complex services such as backoffice processes, information technology (IT) services and infrastructure management and Web site development. Average demand from these groups is expected to go up by 11%-15% from current staff levels.

BPO companies with 1,000-15,000 employees expect an average increase in staffing requirements of between 6% and 10%, close to the average work force increase expected across all sectors and respondents.

Meanwhile, small- and mid-sized operations expected employment to go up at the same rate.

The biggest growth was expected by companies that employ 5,000 to 10,000 workers, with a third expecting jobs to grow by 11%-15% this year.

"With at least 97% of surveyed companies providing moderate to high-value services, and 95% expecting employment growth, the question for the industry is whether current academic standards and curricula are aligned with the increasingly complex requirements of the BPO industry," BPA/P Executive Director for research Gillian Joyce G. Virata said in a statement.

In a follow-up interview, she said the recent move by US-based call center Accenture to cut jobs did not reflect the employment needs of the sector, pointing out that those laid off were IT personnel.

"Accenture continues to hire for its BPO business... Those released were from their IT department since that company both has BPO and IT operations. The latter, is harder hit by [the slow-down]," she added.

Ms. Virata said their group expected to add 110,000 more jobs this year, higher than the 75,000 it had added to its 370,000-strong work force last year.

She said there is enough talent in the Philippines to fill up demand for high-value services, but the industry must address the perception problem that working for BPOs only involves call center duty.

In an e-mail, Lauro Vives, chief analyst of XMG Global, agreed with the survey, saying "there is still considerable headroom for growth due to untapped talent availability."

Mr. Vives added that services that would remain resilient are customer care, credit and collections and back office processing, both voice and nonvoice.

"Within these growth areas, industries that are forecast to continue to grow is the insurance, health care and banking verticals," he said.

He noted that prospects for subcontracted work from the global banking industry would be mixed since some will freeze expansion plans, while others will expand aggressively.

Northern Mindanao production beats RDC’s 2008 target

Geefe P. Alba
BusinessWorld Online

CAGAYAN DE ORO CITY — Northern Mindanao’s economy contributed over a fourth of Mindanao’s economic output last year, the Regional Development Council’s (RDC) chairman reported yesterday.

"We sustained our robust performance, growing by almost 8% [last year], exceeding the target of 6.2%," said Camiguin Gov. Jurdin Jesus M. Romualdo, concurrent RDC chairman, during the council’s meeting attended by officials of National Government agencies and of local government units.

Mr. Romualdo said drivers of Northern Mindanao’s growth were investments, improved infrastructure, agrarian reform, and tourism development.

"We have observed a shift of production from agriculture to industry and services sectors," he said in his state-of-the-region address. "Share of employment by industry group also followed, wherein the majority of employed persons are now absorbed by the services sector at 45.5%, equivalent to 850,000 workers, while agriculture employed 841,000 persons as of October 2008."

"Despite the recession felt by our top export markets, particularly the US, Japan and Europe, our total exports still increased 35% last year," he added. "This amounted to $889.55 million our top exports remained to be oleochemicals, crude coconut oil, canned pineapples; while we have also recorded tremendous growth in mineral-based products, abaca pulp and fiber and fresh bananas during the period."

Leon M. Dacanay, Jr., National Economic and Development Authority director for Northern Mindanao, said the region’s gross regional domestic product last year was about 28% of the entire island’s total output.

Philippines ratifies bill boosting tourism framework

J. F. S. Valdez
BusinessWorld Online

BOTH CHAMBERS of Congress ratified last Wednesday night a bill reorganizing state tourism agencies and giving tax perks to tourism and related businesses.

Under the reconciled version of Senate Bill (SB) 2213 and House Bill (HB) 5229, entitled the "Tourism Act of 2008," agencies attached to the Department of Tourism (DoT) will be reorganized.

The Philippine Tourism Authority will be renamed the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), a state corporation that will designate, regulate and supervise tourism enterprise zones (TEZs), which will provide incentives to locators, as well as develop and manage tourism projects in the country.

TEZ locators will pay a final tax of only 5% of gross income, instead of the 30% corporate income tax, provided that income from local sales does not exceed 30% of income from all sources.

Private developers whose projects become TEZs will be able to offer to their locators duty-free importation of capital goods and income tax holidays.

The bill provides that any area with the following features may be designated a TEZ: defined as one contiguous territory; has historical and cultural significance, environmental beauty, or potential for integrated leisure facilities; offers strategic access through transportation systems; has sufficient area to expand for more new investments.


The bill provides P500 million in state funding for TIEZA’s first year of operation.

The agency will draw funds from tourism development fees, 50% of travel tax collections, project revenues, as well as subsidies and grants. Five percent of the travel tax collection share that TIEZA will get will be earmarked for the development of heritage sites and other prime tourist destinations. Another 5% will be allocated for the development of ecotourism sites in depressed provinces with strong tourism potentials.

Establishments that have applied to become TEZs include Marriott Hotel in Cebu City and the Shangri-la hotel in Boracay.

Duty Free Philippines will be reorganized to become Duty Free Philippines Corp., tasked to handle tax-free merchandising.

The Philippine Convention and Visitors Corp. will become Tourism Philippines (TP), responsible for promotional activities. The government will allocate 40% of the proceeds from the sale of some assets of the Philippine Tourism Authority to initially fund TP’s operations.

The Philippine Retirement Authority, now under the Office of the President, will be transferred to the Tourism department, along with the Intramuros Administration, the National Parks and Development Committee, and Nayong Pilipino.

Philippines' Ayala Corp. looking for opportunities

NORMAN P. AQUINO, Associate Editor
BusinessWorld Online

AYALA CORP. is on the lookout for opportunities — including expanding into new areas of business — but is doing so with caution amid a challenging economic and financial environment, the top officials of the country’s oldest conglomerate said.

The group’s ample liquidity puts it in a strong position to venture into new enterprises, they said, similar to what other big conglomerates are doing now amid plunging asset prices.

"This is a very unique time for Ayala Corp. It has the strongest balance sheet that it’s ever had. But we’re looking carefully," Ayala Corp. President and Chief Operating Officer Fernando Zobel de Ayala told journalists on Wednesday.

"We’re starting to move from making sure that everything is very strong and solid, to one [where] we’re on the lookout for interesting opportunities ... Over the next year or so, hopefully we’ll see interesting things happen."

Ayala Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala, Fernando’s older brother, said the group was "very careful" with any moves it makes, even as he pointed out that the entry of new players does change how companies compete and the way that industry shapes up.

"One has to be very attuned to it. But we’re very careful with any move we make. Sometimes, opportunities do open up, but there’s got to be a very strong rationale for that opportunity to open up and make sense for us to [grab it]," he added.

Other local conglomerates have started venturing into previously unknown investment territories to remain profitable. Cojuangco-led San Miguel Corp., since announcing a plan to diversify two years ago, now has a substantial stake in the energy sector and is in talks to buy into the oil, water and telecommunication industries.

Another big conglomerate, the Pangilinan-led Metro Pacific group, has entered the toll and hospital businesses, is negotiating to modernize the country’s oldest and busiest port, and is rumored to be wriggling its way into the power distribution business.

Ayala is no stranger to diversification, having transformed itself from a company that focused on agriculture, manufacturing, trading and mining, into a conglomerate with leading positions in real estate, banking, telecommunications, water utility, automobile dealership, information technology and business process outsourcing.

Fernando did not rule out Ayala making an "interesting move" during the so-called down cycle.

"These are the moments [when] the pricing levels are more attractive as opposed to chasing things when they’re really at their peaks. And so we are ready, but it would have something to be very important and strategic for us to pursue."

He noted that looking for opportunities would be the usual second step after the group strengthened its units.

"The first order of the day was to make sure, as we saw this crisis coming, [that we] strengthened further the balance sheets of all the [Ayala] companies," he pointed out.

"The global situation is very serious and so the primary responsibility is, first and foremost, to keep the business strong during the crisis, but to be on the lookout," he added.

But one thing for sure the Ayala group will not do is diversifying for diversification’s own sake, Jaime Augusto said. "Action for action’s sake [is] not always the answer to profitability. Sometimes it’s needed, sometimes you’re going to diversify to adjust to what you perceive will be a changing industry structure," he said.

"[But] that action for action’s sake doesn’t necessarily [lead to] excellent results."

The company earlier said it might invest in power generation, but preferred plants that use clean energy.

"We’re constantly looking at that ... The environmental issue is important throughout the group and you’ll hear it more and more as you move forward," Fernando said.

He added that while the country cannot entirely do away with coal-fired power plants, it is going to start becoming much more aware of environmental issues. "We’d definitely like to be in the sectors that do consider that."

Fernando noted that whether or not Ayala decides to diversify, it will continue to spend on projects within its existing businesses.

"When you look at the capital expenditure of our group and what we’re still willing to put out in terms of expansion, it’s enormous. So any new venture would be in addition to that," he said.

Analyst Jose Mari B. Lacson of Campos, Lanuza & Co. noted that if Ayala was indeed diversifying, it would be to explore new areas of growth and not because its existing businesses had stopped making money.

"In a sense, they are being proactive," he said in a telephone interview, noting that at the moment, the market of many Ayala subsidiaries have yet to hit saturation points.

Mr. Lacson said cash cows Ayala Land, Globe Telecom, Inc. and Manila Water all have a young market. Contrast these with San Miguel, whose main brewery business has only grown as fast as the local economy, which is not that much, he pointed out.

"For Ayala Corp., the motivation is different — it is for growth. If they don’t invest today in companies that generate returns higher than the capital, then they will fall into that state where San Miguel is now," he added.

Eagle Equities, Inc. President Joseph Y. Roxas noted that even if Ayala opted not to diversify, it can always expand its water business here and even abroad.

"Sometimes, if you get big enough in a certain industry, there is no more room to grow. In a saturated market, there’s no other way to go but across ... Sometimes, though, it’s okay to expand in your area," he pointed out.

Mr. Roxas said Ayala Corp. was a conservative group that bids not to win "but to make sure that they make money at the price they bid in."

Appreciating long-held investments in 2007 and successful fund-raising initiatives last year had allowed the group to raise its cash level to about P25 billion as of end-2008.

Ayala Corp.’s unaudited consolidated net income slid by half to P8.1 billion last year due to declining consumer demand and falling capital gains from the sale of stocks amid the slowing global economy.

Profits of listed units Ayala Land, Manila Water, Bank of the Philippine Islands (BPI) and Globe Telecom, Inc. all went up, but growth for the latter two was slower.

Ayala Land posted record earnings of P4.8 billion, a tenth higher than a year earlier, while net profits of Manila Water went up by 16% to P2.8 billion.

Meanwhile, BPI’s net income fell by more than a third to P6.4 billion due to declining securities trading earnings and nonrecurring investment income of its insurance subsidiaries.

Globe’s net earnings also went down by 15% to P11.3 billion last year due to sliding consumer demand.

Ayala Corp.’s equity earnings from companies under its AC Capital division likewise declined, weighed by nonrecurring losses from electronics unit Integrated Microelectronics, Inc., AG Holdings and business process outsourcing firms under LiveIt.

This offset the positive earnings contribution of the group’s water and automotive dealership businesses.

Vietnam to build rice warehouse in the Philippines

Manila Bulletin

HANOI, Mar. 5 (Reuters) – Vietnam’s top rice exporters have sought government approval to build a bonded warehouse for rice in the Philippines, a state-run newspaper reported on Thursday, in a move to lift exports and expand trade ties between the nations.

Vinafood 1 and Vinafood 2, which account for a combined 61 percent of Vietnam’s rice exports, plan a storage facility in the Philippines to hold 1.7 million tons, the Liberation Saigon daily said.

The government aimed to export 5 million tons of rice this year, the newspaper said, an apparent revision that set the target at the top of a range of 4.5 million to 5 million tons previously projected by the Agriculture Ministry.

If approved, the bonded warehouse, Vietnam’s first such grain facility overseas, could hold nearly all the rice imported by the Philippines, which plans to import 1.8 million tons this year after 2.3 million tons last year.

Early this year, the Philippines, the world’s largest rice importer, [signed] a deal to buy 1.5 million tons from Vietnam, the No.2 exporter after Thailand.

The two state-run exporters made the proposal to Prime Minister Nguyen Tan Dung at a meeting on Wednesday, along with measures to boost exports and stabilize domestic prices before the main harvest.

‘’Given the situation that food is a global issue, we have to bring into full play the efficiency of rice production to ensure national food security, improving the income and lives of farmers,’’ Dung was quoted as saying at the meeting.

The two exporters have asked to expand rice sales to Iraq, and build a rice trading floor, storage facilities and ports in the Mekong Delta, Vietnam’s food basket, the newspaper said.

The Vietnam Food Association, the chairman of which is also the head of Vinafood 2, has blocked new rice contracts with shipment through June, and traders said any new deal signed now would require special contacts to secure clearance for loading.

The plan to expand rice exports to Iraq emerged after Iraq’s state grain board formally issued the first tender this year to buy at least 30,000 tons of long grain rice of any origin.

Traders said the curb had disqualified Vietnamese exporters from the tender, and unless it amended the rule or the government ordered the ban lifted, it would be impossible for Vietnam to expand sales with spot shipment to the Middle Eastern country.

At the meeting on Wednesday, Premier Dung ordered Vinafood 1 and Vinafood 2 to buy all the grain from farmers at a good price to ensure growers make a profit, a government statement said.

Harvesting of the winter-spring crop, Vietnam’s largest rice crop, will peak from late March in the Mekong Delta.

Given the large export market share of Vinafood 1 and Vinafood 2, the government’s order would support prices in domestic markets at the peak of the harvest and keep export prices at a high level, traders said.

Ho Chi Minh City-based Vinafood 2 said it exported 2.2 million tonnes of rice last year, accounting for 47 percent of Vietnam’s total rice shipment.

Philippines oks poll automation budget

10 companies joining public bidding for 2010 project
Senate goes on Lenten recess after approval
Manila Bulletin

The Senate, by a 9-4-0 vote, passed at 12:30 a.m. yesterday the P11.3-billion supplemental budget of the Commission on Elections (Comelec) for the automation of the 2010 national and local elections, before going on a month-long Lenten break.

The House of Representatives had earlier approved the same measure with a vote of 193 for, 1 against, and 1 abstention.

Immediately after passing the poll automation fund, the Senate ratified several bicameral conference committee reports or pass on third and final reading several bills, including the Tourism bill.

"The poll automation is on. We did our job, it’s time for you to do your job," Senate Majority Leader Juan Miguel Zubiri told the Comelec after the voting presided by Senate President Pro Tempore Jose "Jinggoy" Estrada.

"I believe this (passage of the budget) is imperative in order to respond to the crying need of our people for credibility of elections and legitimacy of leadership," Sen. Edgardo J. Angara, chairman of the Senate Finance Committee said. The committee adopted the House of Representatives-approved bill to hasten its passage after the House dropped its earlier conditions, including a hybrid manual-computer election counting system.

Sen. Richard J. Gordon said the expenditure of P11.3 billion to computerize next year’s election is an investment to ensure the credibility of the victory of the next President.

Those who voted for the measure were Senators Angara, Gordon, Loren Legarda, Rodolfo Biazon, Manuel "Lito" Lapid, Ramon "Bong" Revilla Jr., Gregorio Honasan, Aquilino Q. Pimentel Jr., and Zubiri.

Those who voted against were Senators Maria Ana Madrigal, Benigno Aquino III, Francis Escudero, and Estrada.

Sen. Panfilo Lacson, who was at his Senate office during the voting, said he would have voted "yes" because automation is the way forward and for the country to finally uncuff itself from the age-old and controversial manual vote counting.

Results of past elections that used manual counting had been marked by violence and allegations of fraud.

Sen. Manuel "Mar" A. Roxas II, president of the Liberal Party (LP), said the Comelec should come up with stringent safeguards to ensure that the automation of the 2010 national and local elections is insulated from wide-scale cheating.

"Every Filipino’s opinion, each man’s vote important. Let us make sure that these are counted correctly. Now that the budget has been approved, we can now focus on ensuring that this will not be used as a tool for massive fraud," he said.

He said Comelec should allow political parties and other concerned entities, like independent cause groups, to actively participate in the crafting of the safeguards.

10 companies joining bidding for P11.3-B poll automation project

By E. T. Suarez

Ten companies, led by Avante International Technology, Inc., and Smartmatic Sahi (Provider), have signified their readiness to participate in the public bidding for the P11.3-billion automation of the May 10, 2010, presidential, congressional, local, and partylist elections.

Avante International and Smartmatic Asahi were the two global firms that won the contracts for the full automation of the Aug. 11, 2008, elections in the Autonomous Region in Muslim Mindanao (ARMM).

The automation of ARMM elections in Maguindanao was awarded to Smartmatic which used mchines featuring Direct Recording Electronic (DRE) technology while Avante was awarded the automation of the election in Basilan, Lanao del Sur, Sulu, and Tawi-Tawi using Optical Mark Reader (OMR) system.

For the automation of ARMM polls in five provinces using OMR system, the Commission on Elections (Comelec) spent P125 million while for Maguindanao, more than P527 million was spent.

The full automation of ARMM elections was very successful and revolutionized the country’s electoral process, Comelec Chairman Jose A.R. Melo said.

The eight other companies that expressed readiness to participate in Comelec public bidding for automation of 2010 elections are DVS Korea, Gilat Solutions, Sequioa, ES/S, Hart, DRS, Scantron, and Bharat.

Chairman Melo said the P11.3-billion supplemental budget which the House of Representatives approved last Tuesday, March 3, is for an automated election system, including the acquisition of services, supplies, and machines on a lease with option to purchase.

With the approval of the supplemental budget, Melo said Comelec can start with the bidding process.

He said this could start in the third week of March while the training of election workers and other personnel will start in December.

"What happened in the ARMM elections in which not a single complaint was filed will happen in the entire country if the 2010 polls are fully automated," Melo said.

Nograles urges full support for automation
By Ben R. Rosario

Speaker Prospero C. Nograles yesterday urged the public to fully support the country’s bid for full automation as he stressed that the swift House of Representatives approval of the P11.3-billion supplemental budget for the project should put an end to speculations that congressmen are bent on extending their terms of office and that there would be no elections in 2010.

Lanao del Sur Rep. Faysah RPM Dumarpa said Muslim leaders in the Autonomous Region in Muslim Mindanao (ARMM) are fully behind the move to fully automate the 2010 elections after the pilot-testing in the ARMM elections.

Dumarpa underscored the need for "less human intervention" in the polls to minimize if not eradicate election cheating.

Nograles said the planned poll automation system in 2010 is "by far the best antidote to electoral fraud" which, he said, has tended to undermine the integrity of Philippine elections. He said the public should fully support the proposal.

The House voted 193 in favor, with 1 against and 1 abstention, in passing HB 5715 on third reading. The Senate approved its counterpart measure before dawn yesterday.

"Poll automation is not about politics. It is not about those in power and those in the opposition. It is about making elections as truthful, clean and honest as possible so that popular democracy will serve its ends. Every Filipino has a stake in this," he said.

"This is our promised covenant with the people. Congress has delivered on its long promise since 2007 to put elections under automation."

The House leader aired hopes that approval of the Comelec automation budget will "put to rest once and for all speculations that there would be no elections next year."

Thursday, 5 March 2009

Mining firm Intex plans to put up Philippines' biggest fertilizer plant

Manila Bulletin

Norway-based Intex Resources Phils., Inc. (IRP) plans to produce ammonium fertilizer totalling to 200,000 metric tons (MT) yearly as a by-product in its nickel production.

IRP will run Philippines biggest fertilizer plant with the redesign of its nickel plant.

The company will help displace Philippines fertilizer import which from January to November 2008 reached to $ 524.02 million. Of this import, $ 182.1 million consisted of urea fertilizer. The greater bulk of $ 341 million was non-urea fertilizer which IRP’s ammonium fertilizer will help substitute.

"The project has been reconfigured to become not only the Philippines largest and most modern nickel plant with a target production of 40,000 tons per annum of nickel metal but also its largest fertilizer plant," said Lawyer Leo Cleto Gamolo, IRP president, in a statement.

On top of the ammonium sulphate that it will produce, the Mindoro plant will have another by-product, cobalt compounds. This will be in the form of sulphates, carbonates, hydroxides, and oxides.

Cobalt compounds are used for consumer applications particularly for the production of rechargeable batteries used for cellular phones. Another consumer-oriented application of cobalt compounds is for dietary supplement for livestock.

The company’s technologies will be environment-friendly.

"Even better is the fact that we will be mostly utilizing carbon-free energy in producing nickel and by products such as fertilizer and cobalt compounds. The high-pressure acid leach (HPAL) technology for our nickel processing plant will generate its own power in an environment-friendly manner. We will not be using fossil fuels nor will we be emitting carbon dioxide greenhouse gases," said Gamolo.

Rather than depending on Mindoro’s electricity grid, the nickel plant will generate more power totaling to around 50 megawatts (MW) which will further increase to 80 MW.

"The excess can be passed on Mindoro’s power grid," he said.

The Mindoro nickel plant, the biggest project in the Philippines of Intex Resources ASA of Norway, is estimated to require $ 2 billion in investment. Other partners in the project are the Aglubang Mining Corporation and Alag-ag Mining, Inc.

Philippines Ranks 2nd to Africa in Gold Production per Unit Land Area, ZNext Mining Announces


CHEYENNE, WY - ZNext Mining Industries, Inc., with OTC.PK Stock Symbols: (PINKSHEETS: ZNXT) (OTC Preferred: ZNXPP), announces today that ZNXT is getting closer to completing the compliance requirements to obtain the large scale mining permit after 12 months of reorganization. New ZNXT Management sent a new team of expert mining /mechanical engineers and metallurgists to further explore the final documentation needs of Region V Mining Licensing Agency.

ZNXT was assigned 100% Interests of the MPSA and Exploration Development on the XYZ Gold Mine that was owned by Pearl Asian Mining. This is a golden opportunity for ZNXT to capitalize on the Philippines' rich gold and other mineral reserves that have been untapped since 1991.

Worldwide, the Philippines had been an important gold producer, ranking 29th in 2002. In 1988, the country placed second to South Africa in terms of gold production per unit land area. Total production from 1946-2003 amounted to 1,172,912 kg gold valued at about PHP 225 billion (about $4,787,234.00) according to the Data from Mines and Geosciences Bureau, Mineral News Service.

Philippines Cuts Rate Less Than Expected on Inflation

By Clarissa Batino and Karl Lester M. Yap

March 5 (Bloomberg) -- The Philippine central bank cut its benchmark interest rate by a less-than-expected quarter point today, saying it’s studying the impact of previous reductions after inflation unexpectedly accelerated.

Bangko Sentral ng Pilipinas lowered the rate it pays lenders for overnight deposits to 4.75 percent, Governor Amando Tetangco said in Manila today. The decision was predicted by one of the 12 economists surveyed by Bloomberg News. The rest expected a half-point reduction.

Higher inflation risks led to the “more measured adjustment,” Tetangco said. Still, inflation in 2009 and 2010 should remain “within target,” he said.

The peso rose for a third day today after a report showed inflation quickened for the first time in six months in February, paring expectations on the magnitude of a rate cut. Asian policy makers have unveiled stimulus packages worth almost $700 billion and lowered borrowing costs as the global slump pushed Japan, Singapore and Taiwan into recession.

“A relatively stable financial system and robust growth prospects suggest that there is no urgency for aggressive rate cuts,” said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong. The central bank “can afford to move cautiously and await further exchange-rate and inflation developments before taking the axe to the policy rate again.”

The peso rose 0.1 percent to 48.64 against the dollar at 5:06 p.m. in Manila, according to Tullett Prebon Plc.

16-Year Low

Today’s cut by the Philippine central bank brings the total reduction in its key rate to 1.25 percentage points in the three meetings since mid-December. The benchmark is at the lowest since May 1992, according to Bangko Sentral.

Inflation unexpectedly accelerated to 7.3 percent in February, compared with forecasts for a slowdown in a Bloomberg News survey, a government report showed today. Still, price gains have slowed from a 16-year high of 12.4 percent in August.

Inflation risks are coming from rising prices of agricultural commodities, water and power, Deputy Governor Diwa Guinigundo said today. Government efforts meant to accelerate growth could also have “liquidity implications,” he said.

“We’re still easing,” he said after the rate decision. “We have not paused. It’s also important to give ourselves time to pause and assess the impact of previous rate reductions. Flexibility is less now compared to January.”

Indonesia, India

Neighboring Indonesia yesterday reduced its benchmark interest rate to 7.75 percent, the lowest in almost four years, and India cut its repurchase rate to a record low of 5 percent. Malaysia last week lowered its overnight policy rate for a third straight meeting to 2 percent to bolster an economy that policy makers say faces an increasing risk of contracting this year.

“It’s a sympathy cut,” said Rico Gomez, who helps manage $1 billion in assets at Rizal Commercial Banking Corp. in Manila. “There’s really no compelling need to cut the rate now but it’s joining other countries because there are still questions with regards to how economic growth will be maintained.”

The Philippines’ $144 billion economy may expand as little as 3.7 percent in 2009, the least in eight years, as exports by manufacturers such as Texas Instruments Inc. drop and demand for Filipino workers overseas dwindles, the government predicts.

President Gloria Arroyo, who expects to post the biggest budget deficit since 2004 this year as her government boosts spending to spur growth, said last week the central bank has “some more room to ease” monetary policy.

The central bank may use “other monetary policy instruments” to boost growth, Guinigundo said today.

To contact the reporter on this story: Clarissa Batino in Manila at; Karl Lester M. Yap in Manila at
Last Updated: March 5, 2009 04:36 EST

Philippines epic battle: Ayala versus San Miguel

By Tony Lopez

The Ayala Group seems to be readying to do battle with what is now the fastest-growing business group in the Philippines, San Miguel Corp. (SMC).

Having refashioned itself as a holding company, SMC has acquired majority stakes or near control of the two biggest private companies in sales in the country, Petron Corp. and Manila Electric Co. (Meralco).

Petron and Meralco are also among the best-known brands locally and among the most bankable. Together, SMC, Petron and Meralco are a formidable corporate triumvirate with combined assets of more than P560 billion (as of 2007), sales of P541 billion, and equity of P232 billion.

Ranged against these three, Ayala, at first blush, looks puny: Sales in 2007 of P78.7 billion, assets of P196 billion, and equity of P114 billion. But in profits, Ayala’s 2007 net of P19 billion is slightly bigger than the P18.34 billion combined profits of SMC, Petron and Meralco.

The SMC group is entering territories that Ayala had all along thought were its franchises—cellular phone, water, banking and property.

SMC President and Chief Strategist Ramon Ang has announced the group will priced its products and services much lower than the competition’s. In cellular phones, SMC’s QTel will charge only about 20 percent of Globe’s. Ang has also promised to reduce Meralco’s electricity rates by 20 percent and Petron’s prices by also 20 percent.

That has scared the daylights out of Jaime Augusto Zobel de Ayala (JAZA), the chairman and CEO of Ayala Corp. What is perhaps unnerving to JAZA is that San Miguel became so large, at least three times its 2007 size, in so short a time and with so little investment of capital. RSA’s shrewd dealing and maneuvering did the trick.

Ang demolished overnight the once mighty Lopez empire in energy. He quoted a high price for PNOC’s geothermal assets, prompting patriarch Oscar Lopez to quote three times the IPO price, at P58 billion to win PNOC EDC. This bled the Lopez group financially, enabling the San Miguel group to raid the corporate headquarters, Meralco and take control of it, almost for a song.

It is as if Ang had enticed Lopez to a big battle away from headquarters and the latter gamely sent his best troops and best generals to the battlefield miles away from headquarters. It was too late for Oscar to realize that Ang’s final objective was the lightly defended main camp, Meralco, which easily succumbed to San Miguel’s guerilla attack. Oscar has to get white knight, Manny Pangilinan of Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific, to defend what is left of the Lopez holdings in Meralco.

JAZA must have studied the Meralco saga. Thus, he has summoned back to headquarters his top generals—Jaime I. Ayala, 46, the CEO of Ayala Land Inc. and Gerry Ablaza, 55, the CEO of Globe Telecoms. Both Jimmy Ayala and Gerry are strategy and finance whiz kids. Harvard MBA Jim spent 19 years with the consulting company McKinsey while Gerry had a long stint with Citibank. Their skills and market savvy will blend with those of JAZA, 49, and his kid brother, Fernando Zobel de Ayala, 48, both of whom also trained at Harvard. The quad are an awesome team against the duo of US-educated Eduardo “Danding” Cojuangco Jr., 73 and Ramon Ang, 53, who is a mechanical engineer who thinks creatively out of the box, often shunning conventional wisdom to make a deal or an acquisition.

Also, of late the Ayala group has been aggressively raising cash to defend itself against predators, consolidate its businesses and become ready for any opportunities arising from the crisis. Property company Ayala Land, Inc. alone increased its borrowings 65 percent, from P10 billion in end-2007 to P16.75 billion in end-2008.

In an environment that is markedly different from the past and where conventional rules suddenly do not seem to apply (and will perhaps fail), Ang’s model of management seems to be working well.

Just study how he took control of Meralco and Petron with hardly anybody looking, and how he boosted SMC’s cash reserves by selling the company’s assets in Australia at 15 times their cash before the financial meltdown. Ang raised about $2.5 billion from the effort in opportunity profits alone because National Foods Ltd is now worth only six times EBITDA [Editor’s bite: earnings before interest, taxes, depreciation and amortization] and the Australian dollar has devalued by 34 percent.

Ang has likewise been recruiting top talents and experienced hands to manage San Miguel’s recent acquisitions. You have the young Eric Recto at Petron and the experienced Ping de Jesus at Meralco.

Who will win between San Miguel and Ayala? The answer is not clear yet. One thing is certain—both will be here for a long, long time and will have considerable impact on our lives and our lifestyles. Ayala of course is the oldest Philippine conglomerate (it was founded 1834). But San Miguel, though not young (it was founded 1890), is now the largest conglomerate.

Philippine mobile phone penetration rate topped 75% last year

By Roderick T. dela Cruz
Manila Standard

Mobile phone penetration rate in the Philippines hit 75 percent as of end-2008, as the number of subscriber identity module, or SIM cards, sold by the country’s top three operators reached 67.9 million.

Napoleon Nazareno, president of Philippine Long Distance Telephone Co., which owns the Smart and Talk ’N Text mobile brands, said that subscriber take-up this year would be slower than the previous years, as the penetration rate already topped 75 percent.

Ferdinand dela Cruz, head of Globe Telecom’s consumer wireless business group, also estimated the cellular phone penetration rate in the country at about 75 percent of the population as of the fourth quarter of 2008.

The PLDT group said it had 35.2 million subscribers as of December, including 20.9 million Smart subscribers and 14.3 million Talk ’N Text subscribers.

Globe Telecom said it had a total subscriber base of 24.7 million, including both Globe and Touch Mobile subscribers.

In a recent disclosure to the Philippine Stock Exchange, the third player in the mobile phone industry, Digital Telecommunications of the Gokongwei group, said it had more than eight million subscribers under the Sun Cellular network.

San Miguel bonds swarmed

Bloomberg, Jenniffer B. Austria
The Manila Standard

San Miguel Brewery Inc., the beer unit of food and beverage giant San Miguel Corp., may cancel plans to sell bonds in dollars after demand for its local currency notes exceeded the amount offered.

Orders for peso bonds topped the brewer’s target of P38.8 billion, according to two people with knowledge of the deal, who asked not to be identified because the sale hasn’t been completed.

Should the sale be fully subscribed in pesos, the company won’t need to borrow in dollars, San Miguel Brewery president Ramon Ang said in a text message response to queries from Bloomberg News today, without being more specific.

Debt-free San Miguel Brewery last month said its board approved borrowing as much as P38.8 billion in local currency or dollars to help the company buy land and beer brands from parent San Miguel Corp., which has said it expects to complete the asset sales by April. The brewer, whose profit last year jumped 25 percent to P10 billion, will be buying brands that control 95 percent of the Philippines’ beer market.

The purchases may save the brewer about P1 billion yearly in royalty fees it pays to the parent, Deutsche Bank AG said in a report yesterday.

San Miguel Brewery hired Citigroup Inc., Credit Suisse Group AG, Deutsche Bank, Royal Bank of Scotland Group Plc and UBS AG to help it sell about $500 million in bonds, people familiar with the situation said last month.

San Miguel Brewery is gathering 11 financial institutions to handle its proposed P38.8-billion bond offering slated this month.

San Miguel Brewery said in a filing with the Securities and Exchange Commission that it had tapped Hong Kong and Shanghai Banking Corp., Development Bank of the Philippines, Land Bank of the Philippines, BDO Capital and Investment Corp., BPI Capital, China Banking Corp., Standard Chartered Bank, Rizal Commercial Banking Corp., Philippine Commercial Capital Inc., ING Bank and First Metro Investment Corp. as joint lead underwriters for the bond offering.

Sources said the bond offering was so huge that many financial institutions were needed to underwrite the offering.

San Miguel Brewery and the 11 financial institutions will shortly sign the underwriting agreement as soon as it obtained approval from the SEC. Final price for the bond offering will also determined once the company secures SEC approval.

San Miguel Brewery is also allotting another P500 million to cover oversubscription. The bonds will be paid in three tranches and payable in three, five and 10 years.

Philippine Ratings Services Corp. earlier assigned a rating of PRSAaa for San Miguel Brewery’s bond issuance, the highest rating it gave.

Cebu furniture sector upbeat despite crunch

Willy Rodolfo III
Business Mirror

DESPITE the difficult times, Cebu’s landmark event for its proud export- furniture sector is set to open today with the number of exhibitors and buyers expected to be slightly lower, but with manufacturers exuding the same vigor that has spelled success for the industry for many decades.

With less than a hundred exhibitors, the Cebu Furniture and Furnishings Exhibition (CebuX) 2009 claims to have gathered the oldest and strongest players in the industry—manufacturers who have survived the political and economic storms for more than five decades.

“These are challenging times, yet we see this as an opportunity to solidify Cebu’s position as the design destination of Asia,” show chairman Allan Murillo said.

“While our competition holds back, we are as aggressive as ever to bring our products to the attention of the international market,” he added.

Cebu’s products are hardly hit by the successive setbacks, especially from its biggest market, the United States. Barely surviving the Asian economic crisis, the 9/11 attacks pushed demand down, then this was followed by the foreign-exchange debacles, the subprime-mortgage crisis and now the global economic recession, which pulled a once $300-million Cebu industry to face its toughest challenges yet.

Players, however, say while traditional markets like the United States feel the effects of the economic pinch, Philippine furniture exports are getting more attention elsewhere, including at home, which will be highlighted more than ever this year.

The domestic market, buoyed by the boom in the real-estate and tourism sector, is also keeping the sector alive as more stylish condominiums and luxury hotels turn to world-class Philippine furniture to spruce up their projects.

This year CebuX will bring to its show not only buyers from international furniture retail chains but interior designers, architects, resort and hotel managers, as well as property developers in the country and from abroad, representing the new market furniture manufacturers are tapping starting this year.

“These are trying times but there is still business as long as we focus on our strength in design and manufacturing,” said Eric Casas, president of Cebu Furniture Industries Foundation (CFIF), the organizer of CebuX.

The optimism is not without basis, despite the economic crunch in 2008, sales actually went up a little at the CebuX at $15.4 million, slightly higher than the $15 million in the 2007 show.

The number of buyers who joined last year’s show was also modestly higher at 1,551, compared with 1,483 from the previous year.

And one of the most promising signs is that more buyers from more countries attended the show last year, a record-high at 77 countries represented in the show.

“It is during times like this when the bolder players take the risks and push their limits of design and innovation. It is during times like this when passionate players position themselves for the certain good times ahead,” Murillo said.

With extensive programs like the design and product development program (DPDP) in place, companies joining CebuX have been trained by key players in the industry on design and materials manipulation.

Upcoming designers from academe are also given the chance to release their bold breakthrough creations through the student-internship program, also under the DPDP.

Showbiz economic forecasting

John Mangun
Business Mirror

In order to form rational and educated opinions, it is necessary to keep an open mind. That is, to listen to both sides and be willing to assume that you do not know everything there is to know about a particular topic. Give those who speak to the other side of the issue the benefit of the doubt that they, too, are intelligent. I try to keep an open mind.

Then I realized something. Maybe people who hold a different opinion from me are idiots who cannot understand the facts they see. Or, worse, maybe they are fools who ignore the facts.

I keep reading the business section and then I am confused why so many people are so negative about the Philippine economy. Then I realized what the problem is. I am the one who is perhaps the idiot or fool. I must have been missing some important economic news that others are reading; therefore, I have reached a wrong conclusion that the Philippine economy is in good condition.

Look at the recent breakup of Pops Fernandez and Jomari Yllana. Obviously, this is representative of the major problems facing the economy. Mr. Yllana says about their breakup, “It’s not really about money,” even though they were just involved in a major business deal; a concert production. We know the truth. Business is so bad in the Philippines that even a very close intimate relationship could not stand the strains of a falling economy. I wonder if that is what happened to San Miguel Corp. and Japan’s Kirin beer. Kirin is trying to sell off its 20-percent share in San Miguel, Of course, Kirin is buying 40 percent of San Miguel Beer instead for P60 billion. But both parties said this “breakup” is not about money.

More important economic news from the celebrity world is found in the harsh corporate struggle between Dr. Vicki Belo and business rivals Manny and Pie Calayan. Business must be so bad in the Philippine bigger-breast/tiny-tummy industry that Dr. Belo tried to increase her market share by going after Calayan spokesman Boy Abunda. This, no doubt, also reflects the fierce competition in the telecoms/cell-phone battle between Smart and Globe. It will be very soon, because business is so bad, when we hear Manny Pangilinan of PLDT/Smart fight for the last few million available subscribers by saying that only people with fat, ugly thumbs can use a Globe cell phone. I guess Pangilinan is worried that the 2008 profit increase of 10 percent and 2009 projected increase of 7 percent is just not good enough.

I have been making positive predictions about the Philippine economy foolishly based on news that I thought was important, like Metro Pacific Investment group’s nearly P1-billion long-term investment in three major medical centers and hospitals—Cardinal Santos, Makati Med and Davao Doctors—which will generate P15 billion in over five years. Maybe if I had been following the 36D boob sector, I, too, would be down on the economy.

And then there is the Philippine Stock Exchange (PSE). All the “experts” from London to Makati have been saying that the Philippine economy is headed for a potential disaster, maybe even zero growth. And we all know that the stock market mirrors current conditions as well as sentiments for the future. But just like me, investors in the stock market must be really dumb about the economy. No matter how bad the Western and larger Asian markets fall, the PSE just keeps hanging steady. All the analysts tell us the PSE takes its cue from Wall Street. Yet, for some strange reason, the New York stock market is already down 25 percent in 2009, while the PSE is only down 2 percent. I mean, even Thailand’s investors are smarter than we are; their market is down 13 percent for the year.

However, to be fair, I probably do spend too much time reading the business section to help form my opinion of the economy. I saw something yesterday from another expert that said the Philippines should enact the reproductive-health bill because “continued rapid population growth in the Philippines is . . . slowing down economic growth.” That was from Ambassador Alistair MacDonald, head of the Delegation of the European Commission. Well, that is surely the final word we need on the Philippine economy and the future. Europe has proven that by having an aging population through population control, it guarantees economic-boom times forever. What could be better than having a bunch of old guys with no kids making decisions to borrow hundreds of billions of dollars for expensive houses and fancy cars and to play the financial markets? Who cares about the future when you don’t have any children who have to pay the bill when it comes due? Sounds like a great economic model to me.

In the meantime, since we are being told that the Philippine economy is soon going to collapse, you might just want to buy nearly every blue- chip stock you can get your hands on to make a 20-percent to 50-percent profit over the next nine months. It never hurts to face economic catastrophe with an extra million or two in the bank. I heard that in a movie once.

PSE stock-market information and technical analysis tools provided by Inc. E-mail comments to mangun@email.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Sy-led SM Investments hikes profit to P14B amid a challenging 2008
Kristine Jane R. Liu
BusinessWorld Online

PROFITS OF Sy-led holding firm SM Investments Corp. (SMIC) went up by more than a tenth to P14 billion amid a challenging environment last year.

"SM managed to perform with-in expectations, supported largely by the strong performance of our retail and property groups," SM President Harley T. Sy told the Philippine Stock Exchange yesterday.

Excluding extraordinary items, SM’s net recurring income went up by 11% to P11.6 billion. In 2008, SM reported extraordinary gains from the sale of San Miguel shares, which more than compensated for the mark-to-market losses incurred by the group in its trading positions as a result of the global financial crisis.

SMIC said revenues increased by almost a fifth to P147.5 billion, boosted by retail and real estate sales. SMIC is mainly involved in four core businesses, namely retail merchandising, shopping malls, banking and financial services, and property.

The firm’s net debt-to-equity ratio stood 18%, while its cash balance was P47.7 billion," SMIC Executive Vice-President and Chief Finance Officer Jose T. Sio said.

"This reflects the strength of [SMIC’s] financial position, which will not only allow it to weather the current financial turmoil, but also to benefit from valuable opportunities arising from the crisis which, in turn, will help the company emerge as a stronger business when the global economy recovers," he added.

SMIC is involved in four core businesses namely, retail merchandising, shopping malls, banking and financial services, and property. The Sy-led company said its retail and mall business contributed the most to its net income, followed by its banking and real estate units.

Profits of SMIC’s retail group went up by almost a quarter to P3.4 billion last year. The retail group consists of SM Supermarkets, SaveMore stores, SM Hypermarkets, Makro and SM Department Store, which continued to post growth despite high inflation during the first half of the year.

"SM department stores, meanwhile, rallied in the second half as consumer confidence got a strong lift from the sudden decline in gasoline prices, easing inflation, and a weaker peso. Many of SM’s customers are families of Filipino workers overseas," it said.

Meanwhile, mall unit SM Prime Holdings, Inc. posted a 7% net profit growth to P6.4 billion.

Analyst Astro del Castillo of First Grade Holdings, Inc. said SMIC’s higher profit was impressive, but there was no assurance that it would be able to duplicate its performance this year. "The economy remains uncertain. If consumption in the first half continues to remain strong, then we can say that SMIC might be able to grow by more than a tenth this year," he said.

Subic bullish on hitting $7.5-B investment target by 2010Subic bullish on hitting $7.5-B investment target by 2010

BusinessWorld Online

SUBIC FREEPORT should be able to attract $7.5 billion in new investments by 2010, the Subic Bay Metropolitan Authority (SBMA) said in a statement yesterday.

The target, cumulative of investment commitments made since 1992, has been nearly accomplished, since pledges last year brought the total to $5.8 billion, SBMA said. For 2008 alone, investment pledges amounted to $249 million.

To achieve the 2010 target, SBMA Administrator and Chief Executive Officer Armand C. Arreza said improvements will have to be done in the freeport’s logistics, manufacturing, tourism and business process outsourcing sectors.

SBMA, he said, hopes to attract heavy port users by implementing automated import-export Customs procedures. For manufacturing, SBMA plans to develop industrial estates "along the Subic-Clark corridor." The agency also plans to expand the ecozone’s area towards Zambales and Bataan for more space for new locators.

Philamlife folded into AIG unit

US parent revises restructuring strategy
BusinessWorld Online

STRUGGLING American International Group, Inc. (AIG) has folded Philippine American Life and General Insurance Company (Philamlife) into a major Asian unit as part of a revised restructuring strategy meant to avert a divestment of its crown jewels at fire sale prices.

In a statement released Wednesday night, AIG said Philamlife "will be retained and made part" of Hong Kong-based American International Assurance Company, Ltd. (AIA), its most lucrative asset in the region.

AIG announced on Monday that AIA, together with Delaware-based American Life Insurance Co. (ALICO), would operate independently from AIG through a restructuring program that will allow the Federal Reserve Bank of New York access to equity ownership.

Under that new plan, AIA and ALICO will be put in trusts. The arrangement serves as partial repayment, to the tune of some $26 billion, for a credit line the Fed extended the US insurer last year.

The path charted for Philamlife effectively means the auction of the unit has been shelved.

Edward M. Liddy, chairman and chief executive officer of AIG, told CNBC that the trust arrangement would save the US insurer from selling its profitable business units at fire sale prices.

Reports have claimed that bids for Philamlife had fallen short of AIG’s asking price.

"AIA said it was appropriate at this time to include Philamlife in the new AIA structure as the rest of AIA is being separated from AIG and positioned as an independent operation," the statement read.

AIA President Mark Wilson said the revised plan would benefit Philamlife policyholders, including its employees and agents. There was no mention of possible management changes.

"The Philippines is a very important part of the AIA Asian landscape. We are confident that there will be benefits for Philamlife’s customers, employees and agents from being fully integrated into Asia’s leading insurance company," Mr. Wilson said in the statement.

Philamlife President and CEO Jose L.Cuisia, Jr. said the integration would boost the firm’s business.

"Joining the AIA group of companies, subject to regulatory approvals, will provide Philamlife with access to the resources and Asia-wide network of the region’s market leader," the statement quoted him as saying.

AIA has a network of 250,000 agents and 20,000 employees across 13 markets. It serves over 20 million customers in the region.

Philamlife, the country’s largest insurer, has consolidated assets of P170 billion and a net worth of P49.5 billion.

Bidding rules for Philippine poll automation ready

Emilia Narni J. David
Updated as of 3:45PM, 03/05/2009
BusinessWorld Online

The Commission on Elections (Comelec) is set to approve this Friday the bidding guidelines for the poll automation, providing a flicker of hope for an automated 2010 elections.

In a press conference Thursday, Comelec chairman Jose R. Melo said the commission would approve the terms of reference for bidders tomorrow while still awaiting for the approval of the P11.3 billion supplemental automation budget.

“We need to move forward so we will be approving the terms of reference. However, the bidding will not start until March 25, hopefully by then we already have our budget,” said Mr. Melo.

The Comelec chairman said some 10 or 11 service providers have expressed interest to join the bidding.

Philippine February Inflation at 7.3 Percent

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Headline inflation climbed to 7.3 percent year-on-year in February from 7.1 percent in January. This was within the 6.6-7.5 percent forecast of the BSP. The uptick in February inflation was due to higher food inflation and the increase in the price of LPG during the month. Month-on-month headline inflation also increased in February to 0.5 percent from 0.3 percent in January. However, core inflation, which excludes specific food and energy items to measure generalized price pressures, was lower at 6.4 percent year-on-year in February from 6.9 percent in January.

The increase in food inflation was due mainly to the recent increase in rice prices arising from the decline in supply coming from the major rice-producing regions towards the end of harvest season. Meanwhile, the increase in the price of LPG in early February markedly slowed down the decline in fuel prices year-on-year.

Governor Amando M. Tetangco, Jr. said that the February inflation outturn, which is in line with the within-target inflation outlook, allows the BSP to maintain an accommodative monetary policy stance to ensure that there is sufficient liquidity in the system to fuel the economy’s growth requirements.

Wednesday, 4 March 2009

11 foreign firms eyeing Philippine elections deal


(UPDATE) Eleven companies recently expressed interest in supplying voting and counting machines for the Commission on Elections' use in the 2010 elections, poll chairman Jose Melo said on Tuesday.

In a press briefing, Melo said the companies expressed their desire to bid for the P11.3-billion contract to supply the automated election system in the 2010 national and local polls.

The companies were: Sequoia, Avante, Hart, Scrantron and ES/S, all from the United States; Smartmatic (Venezuela), DRS (United Kingdom); Bharat (India); DVS Korea (South Korea); Gilat Solutions (Israel); and Indra System (Spain).

The companies have demonstrated precinct count optical scan (PCOS) solutions to the House of Representatives and the Comelec, said Melo, with some vendors like Smartmatic also presenting direct recording electronic machines.

“The demonstration at the Comelec is for information purposes only and is part of [the] environmental scanning of the poll body to know what technology is available. There is no obligation on the side of the Comelec that those who presented will be favored over another vendor,” Comelec spokesman James Jimenez said.

In an earlier interview, Comelec executive director Jose Tolentino also clarified the presentations are not a pre-qualification for parties interested in bidding.

He said the poll body can begin publication of the invitation to bid on April 3 if the budget is released April 1. The submission and opening of bid proposals will end May 4 after which the Comelec will issue the notice of award to the winning bidder on May 22.
Tolentino said 80,000 PCOS machines will be deployed in clustered precincts nationwide.

The Comelec Advisory Council recommended the use of PCOS machines because these can provide a paper trail and allow an easier transition from manual voting to the automated poll system, said Jimenez.

Using the PCOS, voting is done by shading ovals next to the candidate's name and feeding the marked ballot into a voting machine instead of a ballot box.

Once the polls close at 6 p.m., the machines will electronically transmit the results from each precinct to major and minor political parties, the Kapisanan ng mga Brodkaster ng Pilipinas and an accredited poll watchdog, the four entities authorized by Republic Act 9369 to receive the results.
The results are also transmitted to the Comelec's consolidation server at the poll body's Manila office.

For overseas absentee voters, Commissioner Nicodemo Ferrer said they plan to have manual voting and automated canvassing “due to limited budget.”

In past elections, he said, the poll office at Hong Kong had to count votes for three days without a break.

For Filipino seafarers, Ferrer said he would recommend to the Comelec en banc the implementation of Internet voting.

Meanwhile, the Catholic Bishops' Conference of the Philippines lauded the House of Representatives for approving the proposed P11.3 billion budget for the automation of the 2010 presidential and national elections.

“This is what we've been hoping for, that automation would finally be implemented,” CBCP president and Jaro (Iloilo) Archbishop Angel Lagdameo said.

He said the approval of the poll automation budget would boost the morale of the National Movement for Free Elections (Namfrel) and the Parish Pastoral Commission for Responsible Voting (PPCRV), both chaired by former ambassador to the Vatican, Henrietta De Villa.

Lagdameo said the two election watchdog groups have been preparing to adjust their own operations under an automated election system.

“This is what Namfrel and PPCRV have been hoping for. For sure, there will be modifications in their procedures. Mrs De Villa has been going around for that,” the prelate said.

The proposed budget also has to be approved by the Senate.

Philippine Ombudsman defends record

By Michael Punongbayan
Philippine Star

MANILA, Philippines - The Office of the Ombudsman yesterday defended its record as well as Ombudsman Merceditas Gutierrez, outlining what it has done in various controversial cases in an effort to shed light on issues currently hounding the office.

The move came after former Senate president Jovito Salonga and 30 other prominent personalities collectively filed an impeachment complaint against Gutierrez at the House of Representatives Monday.

The complainants accused Gutierrez of gross incompetence, betrayal of public trust and culpable violation of the Constitution.

Assistant Ombudsman Dina Joy Teñala, taking up the cudgels for the embattled agency, said in a letter to The STAR that Ombudsman Gutierrez “has never committed anything wrong, legally, morally or ethically in government which would warrant her resignation or impeachment.”

On the World Bank (WB) report of alleged bid-rigging in relation to road projects being funded by the international financial institution, Teñala said the Office of the Ombudsman received the Referral Report on Nov. 16, 2007 and stressed that the document was marked “Strictly Confidential,” which means it cannot be used for initiating any administrative, criminal, or civil proceedings.

In spite of this, and the apparent absence of witnesses’ names, the Office of the Ombudsman proceeded with its investigation, the statement said.

“The conduct of fact-finding investigation is strictly confidential and cannot be discussed publicly because it may generate controversies that might result in unintended negative publicity, prejudgment or worse, dissipation of evidence and/or witnesses,” Teñala said.

She explained that the confidentiality principle is based not only on existing laws but also on recent jurisprudence, citing the case of Chavez vs. National Housing Authority (G.R. No. 164527, 15 August 2007), where the Supreme Court held that “information on investigations of crimes by law enforcement agencies before the prosecution of the accused is considered confidential.”

The statement also clarified that the Office of the Ombudsman received the WB Integrity for Vice Presidency (INT) Philippine National Road Improvement and Management Program Evidence on Feb. 10, 2009, which was again marked “Strictly Confidential,” meaning the documents were not allowed to be used for initiating any administrative, criminal or civil proceedings.

The complainants in Gutierrez’s impeachment case said that public trust in the anti-graft agency has “collapsed” since President Arroyo named her to the post in December 2005.

“(The Office of the Ombudsman) has become synonymous to inaction, mishandling or downright dismissal of clear cases of graft and corruption, some leading to the President herself or her closest associates,” read the complaint.

In endorsing the impeachment complaint, Akbayan Rep. Risa Hontiveros-Baraquel said Gutierrez had failed to fulfill her constitutional duty.

“She has tarnished the institution with her incompetence and with her apparent bias towards the Arroyo family,” she said.

The complainants said the most notable graft and corruption cases bungled by the Ombudsman under Gutierrez are those involving former justice secretary Hernando Perez, the case of Mega Pacific and former elections chairman Benjamin Abalos, former agriculture undersecretary Jocelyn “Jocjoc” Bolante and the fertilizer scam, and contractors and public officials involved in collusive practices as exposed by the WB.

‘We’re acting on it’

But Teñala said the Office of the Ombudsman is definitely acting on the other big cases, according to law and due process.

She said that on the so-called fertilizer fund scam, which the Ombudsman inherited from her predecessor, Gutierrez immediately created Task Force Abono upon assumption of office, with 40 investigators to conduct a fact-finding investigation covering 17 regions.

“The magnitude of the complaint covers the entire archipelago, involving more or less 178 project proponents including governors, congressmen and mayors. A special panel was created to conduct preliminary investigation. The panel submitted its recommendation which is currently being reviewed by the Ombudsman,” Teñala said.

She also revealed how the Office of the Ombudsman immediately conducted a fact-finding investigation on the alleged smuggling of euros committed by high-ranking officials of the Philippine National Police (PNP) led by retired comptroller Eliseo de la Paz.

“The Field Investigation Office (FIO) of the Office of the Ombudsman has completed its fact-finding investigation and has submitted its report to the Ombudsman for her review,” she said.

Teñala also explained that the Office of the Ombudsman has complied with the directive of the Supreme Court to conduct an investigation on the possible criminal liability, if any, of public officials and other private individuals implicated in the Mega Pacific case.

She said the determination of probable cause lies with the Office of the Ombudsman, adding that a petition for review on the Resolution of the Office of the Ombudsman is now pending before the High Tribunal.

She also stressed that four cases were filed against former justice secretary Perez before the Sandiganbayan.

But the complainants said Gutierrez had filed “late and defective” information in the criminal cases against Perez, who was her boss at the Department of Justice when she was undersecretary.

“The weak information clearly shows Gutierrez’s ‘deliberate intent to cause the dismissal of such cases, or at the very least, gross ignorance of the law and overly manifest incompetence as Ombudsman,” the complainants said.

However, Teñala said two of these cases are now on trial, while the other two cases, which have been dismissed, are the subject of motions for reconsideration.

Philippine military, cops need 13,700 recruits

By Jaime Pilapil and Romie Evangelista
Manila Standard

THE Armed Forces and the police are in need of 13,700 new recruits this year as they augment their ranks to put an end to the communist insurgency and thwart terror plots.

Armed Forces spokesman Lt. Col. Ernesto Torres said the military is recruiting 6,700 soldiers equivalent to 13 full-force battalions.

Torres said the Army gets the bulk of recruits at 3,900; the Navy, 800; and the Air Force, 600 new pilots. Armed Forces leaders have vowed to end the communist insurgency before the end of President Arroyo’s term in 2010, a goal that requires additional men and firepower.

Torres said the military also needs 1,400 technical personnel—lawyers, doctors and nurses, among others—to beef up its non-combatant personnel.

Torres said an applicant should be between 18 and 26 years old, at least five feet and four inches tall for men and five feet two inches tall for women. An applicant must have at least two years of college education.

Asked if the sexual orientation of applicants will play a role in their recruitment, Torres said, “We have a series of physical and neuropsychological tests. It is up to the board tasked to screen the applicants.”

A soldier’s base pay amounts to P8,139 a month.

National Police Chief Jesus Verzosa said the recruitment for new policemen will be done in three batches— 3,000 for the first semester, 3,000 for the second semester and 1,000 more for the National Capital Region Police Office.

“This is part of the regular recruitment program of the PNP and aims to augment the required number of 3,000 new Police Officers One for 2009 and replace those who either retired or died, or dismissed or resigned in 2008,” Verzosa said.

Verzosa said the NCRPO gets 1,000 of the new recruits, the biggest among police offices. Police Region 5 gets 550 of the recruits, Police Regional Office 7 (Central Visayas) and Police Regional Office 12 (Central Mindanao) both get 430 new recruits.

“Applicants can proceed to the nearest police station and submit documentary requirements,” police spokesman Chief Supt. Nicanor Bartolome said.

“Out of the total 7,245 quota, 10 percent or 725 slots will be distributed to the National Support Units and 90 percent or 6,520 shall be distributed to the various police regional offices,” Police Director Edgardo Acuña of the Directorate for Personnel and Records Management said.

“The total distribution for all the Mindanao regions is 1,981 new police recruits. This is due to the constant threat of terrorism and peace and order concerns in the area,” he said.

Panic economics

Outside the Box
John Mangun
Business Mirror

The United States’ gross domestic product (GDP) contracted by 6.2 percent.

These economic numbers for the last three months of 2008 should be a wake-up call for the Philippines. But not in the way you probably think I mean.

From CNN: “Among the main drivers of the decline was a 4.3-percent drop in consumer spending, which makes up two-thirds of the nation’s overall economic activity.”

The US is a nation of spenders. It is an economy built on buying and investing. America is a consumer-oriented society. That is one of the main factors that has made that country and its economy great. For more than 100 years, the standard of living of the US has grown and grown, bringing along with it the rest of the world’s.

Virtually every human technological invention came to life and thrived because it became part of the consumer-oriented economy. The flush toilet was invented in 1595. It was only because of upper-economic-class British consumerism in the late 1800s that this “modern” device became part of nearly everyone’s life.

There are 4 billion cell-phone users in the world. Bell Labs of American AT&T invented the concept for the mobile phone in 1947. The complete modern structure was designed in 1973 by American company Motorola, with the Japanese telecom NTT setting up the first commercial citywide cellular network, launched in 1979. More people now hold cell phones than those who do not.

And Filipino consumerism played an important role in the cell-phone revolution. Text messaging or SMS began in Europe in 1993. As late as 2000, Europeans were sending an average of 35 messages a month. Filipinos were sending 50 texts a day. Nations, particularly the “poorer” ones, learned from Filipinos the cost-effectiveness and convenience of texting, furthering the cell-phone explosion in the last eight years.

Hundreds of millions use their phones every day for banking and bill paying, and who do you think started that? The first commercial payment system was launched here in 1999 by Globe and Smart.

Texting is a global business worth over $80 billion a year. Consumer spending is a powerful economic force; it can give life or it can give death to an economy.

Asians have the idea that people in the West, particularly Europeans, do not take baths as much as they should. That is absolutely not true (except some French). The oldest personal-sized bathtub discovered was actually found on the Mediterranean island of Crete. But around 1600, some European “experts” told people that bathing was dangerous because water could carry germs through the skin. Well, that killed the bathtub and soap-making industry for 200 years.

The same kind of “experts” may be doing a good job of killing the US economy. Yes, that economy has major problems. The GDP contracted by 6.2 percent. Unemployment is at 7.6 percent. These are the worst numbers in 26 years.

Not the worst since the Great Depression, but the worst since 1983. The unemployment number in January 1983 was 10.4 percent. But that is not even the worst since World War II. In 1982, unemployment hit 10.8 percent. In 1958, the first-quarter GDP growth rate was negative 10.4 percent.

But the US stock market is acting as if these numbers were the most terrible in 70 years. Stocks just had their worst month since 1933. The market has now seen its nastiest six-month drop, 42.7 percent, since 1932, when it dropped 45.4 percent starting in January.

There is an index called the Misery Index which factors the two most terrible things that can kill an economy: unemployment and inflation. The highest (19.72) was under President Jimmy Carter and the best under John Kennedy (6.82). The administration that made the most positive change in the Misery Index was Ronald Reagan (19.33 down to 9.72). Jimmy Carter took it from 12.72 to 19.72.

Jimmy Carter said: “For the first time in the history of our country, the majority of our people believe that the next five years will be worse than the past five years.” He said that in July 1979 and the Misery Index was 10.4; in January 1981, when Carter left office, the index was 19.3.

Ronald Reagan said things like: “I hope the people on Wall Street will pay attention to the people on Main Street. If they do, they will see there is a rising tide of confidence in the future of America.” Reagan said that in July 1981 when the Misery Index was 17.4. In January 1989, when Reagan left office, the index was 9.7.

The current Misery Index is 7.63. President Obama said: “We start 2009 in the midst of a crisis unlike any we have seen in our lifetime; a crisis that has only deepened over the last few weeks.”

Consumer spending is driven by consumer sentiment. We spend money with our emotions, not with our brains. Otherwise, there would only be white cars since white paint is cheaper, lasts longer and reflects the heat from sunlight. But red cars look hot and black paint is cool.

There is a concentrated endeavor by some individuals and sectors to ensure that consumer sentiment is broken, thus driving down consumer spending. It is an agenda-driven effort to serve their purposes. Obama’s Chief of Staff Rahm Emanuel: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.”

PSE stock-market information and technical-analysis tools were provided by Inc. E-mail comments to

Philippine central bank preparing for rebound

Jun Vallecera
Business Mirror

THE banks may not have realized it at once, but the Bangko Sentral ng Pilipinas (BSP) is even now preparing the industry for when the turbulent financial headwinds shall have died down and profits and loan activities push upward once again, Deputy BSP Governor Nestor Espenilla Jr. said on Tuesday.

He told bank executives attending the public forum organized by the Bank Marketing Association of the Philippines, or BMAP, at the Hotel InterContinental that as regulator, the BSP cannot but help the industry prepare for this.

“What’s a regulator to do? We keep building foundations. That’s where we come from in terms of new regulations, in terms of strengthening further the industry’s capital adequacy, in terms of advocating for improvements to our legal and supervisory framework,” he said in remarks at the open forum.

He said the banks’ burden of soured or nonperforming loans were to increase a bit as the full impact of the global economic downturn begins to bite. “I think it likely the level will stay firm or a little down due to the modest deterioration in asset quality at these times. But this is counterbalanced by bank effort at recapitalization, which is a conscious effort. But declining profitability will diminish their capacity to generate capital internally,” Espenilla said of commercial bank NPLs averaging lower to 3.78 percent of total portfolio as of November last year.

Philippine Savings Bank president Pascual Garcia III acknowledged at the forum that bank NPLs this year would likely inch up.

But in the end, the industry as a whole should continue to lend more and profits could still be expected, albeit at lower levels than previous, according to Garcia.

Espenilla also said the BSP was not too keen on the proposal of some banks to suspend the marking-to-market (M2M) rule, an accounting mechanism that compels banks to report or reflect in their book of accounts the market value of all their holdings as part of a broad effort to make bank dealings more transparent to both investor and depositor alike.

“We are wary of suspending the M2M for the simple reason that it has an important role in making banks transparent. It is important for people to continue to trust in the banks’ balance sheets, that this really says what it claims it says,” he said.