Saturday, 19 September 2009

Video: President Arroyo at the Economist's "Emerging Markets Summit"

London, United Kingdom
September 18, 2009

The nations of Asia are doing well and their prospect for growth is strong despite the overall global economic crisis. This is what President Gloria Macapagal Arroyo stressed as she keynoted the Emerging Markets Summit held at Park Plaza Riverbank Hotel in London. According to her, the region is addressing the challenges of the economic crisis cooperatively and with confidence that it will recover faster.

As one of the leaders in Asia, the President believes that the best opportunities for the medium-term are found in the region because of the stability of its financial system and its commitment to policy reforms.

President Arroyo also said, the Philippines has demonstrated the strength and resiliency of emerging market economies at the time of economic downturn. This is one of the reasons why the country was tagged as one of the top ten key emerging markets by the UK Trade and Investment and the Economist Intelligence Unit. Thus, she encouraged the emerging market investors to invest in the country.

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Interview by Bloomberg with President Gloria Arroyo

London, UK
September 18, 2009

As she was interviewed by Laura Cochrane, a reporter of Bloomberg, President Gloria Macapagal Arroyo stressed that there are a lot of things to do before her term ends next year. The nation must continue moving forward, the economy growing and the Filipino people keep employed, she added.

President Arroyo also said that the government continues focusing on education, economy ang environment in order to ensure the country's stability. Other measures such as tax reforms and programs on information technology and infrastructure are also vital to have a healthy economy.

Friday, 18 September 2009

Philippines eyes eight geothermal sites

Amy R. Remo
Philippine Daily Inquirer

THE DEPARTMENT OF ENERGY plans to offer to investors about eight prospective sites for geothermal exploration, development and direct utilization for power generation and other applications under the fourth Philippine Energy Contracting Round 2009.

Energy Assistant Secretary Mario Marasigan said the government had been studying the geothermal sources in the eight areas, of which two prospective sites have been validated.

Marasigan said the two prospects, which could generate a combined 50 megawatts of power, were in the extension of the Makiling-Banahaw (Mak-Ban) geothermal field and in Camarines.

The DOE is now preparing for the said contracting round. It is expected to publish the rules and invitations within the next six weeks, he said.

The Philippines is the world’s second largest producer of geothermal energy, next to the United States, with 1,978 MW capacity. This accounts for about 17 percent of the country’s generation mix, which means that one in every six light bulbs is powered by geothermal energy.

In terms of geothermal reserves, the Philippines has been reported to have sufficient resources to produce over 1,000 MW of energy.

According to the DOE, the government targets to draw an additional 1,070 MW from geothermal energy sources by 2020, up from the 1,932 MW capacity in 2002. As of this year, the country draws 2,027 MW from geothermal resources.

And with the PECR in place, the government is hoping to encourage the private sector to participate more in its energy independence program that aims to reduce dependence on imported fuels.

Philippines gets high marks as an emerging market


A NEW REPORT has projected investor sentiment to improve in 2010 and 2011, and has tagged the Philippines as among the top 10 key emerging markets beyond Brazil, Russia, India and China.

An annual report by UK Trade & Investment and the Economist Intelligence Unit — titled "Survive and Prosper: Emerging markets in the global recession" — sees the country in a light different from other recent competitiveness reports.

Unlike other listings that placed the Philippines near the bottom, this report put the country at 9th, a 14-notch imporovement from last year’s 23rd place.

It was not immediately known how many economies made up the ranking.

Results were based on a July-August global survey of over 540 firms from across 19 business sectors.

The report was presented at the Emerging Markets Summit in London yesterday which President Gloria M. Arroyo attended as keynote speaker.

It said "77% of companies expecting the prospects for the global economy to improve in 2010-2011."

Vietnam topped the report’s rankings, followed by the United Arab Emirates, Mexico, South Africa, Malaysia, Indonesia, Singapore, and Turkey. Saudi Arabia was tenth.


PGMA to join heads of emerging economies in high-level London forum

LONDON (PND) -- President Gloria Macapagal-Arroyo will be in familiar company when she attends the Emerging Markets Summit which opens here Thursday under the auspices of "The Economist", the renowned business news magazine. The President, who is due to arrive in this city of double decker buses Thursday afternoon from Turkey, will join five other heads of emerging economies who have confirmed their participation.

They are Mohamed Ghannouchi, Prime Minister of the Republic of Tunisia; Paul Kagame, President of the Republic of Rwanda; Korn Chatikavanij, Finance Minister of Thailand; Ali Babacan, Deputy Prime Minister of the Republic of Turkey; and Sri Anand Sharma, Minister for Commerce and Industry of India.

Over 300 business leaders and investors from all over the world are expected to attend the high-level conference, which will focus on the theme, "Globalization Redefined by Emerging Markets." President Arroyo is scheduled to deliver her keynote address late Friday at the close of the forum. She will take the opportunity to share the Philippines' view on Asia's leadership in the global economic recovery and to promote the country as a highly attractive investment destination.

Her speech is expected to highlight the resiliency and continued growth of the Philippine economy which reported a positive 1.5 percent growth in the second quarter, three times the 0.5 percent median of expected growth during the current global economic downturn.

While here, the President is due to witness the signing of two landmark agreements which will intensify legal cooperation between the Philipppines and the United Kingdom. Foreign Affairs Secretary Alberto Romulo and British First Secretary of State Lord Mandelson will sign the RP-UK Mutual Legal Assistance Treaty and the RP-UK Extradition Treaty. With over 200,000 Filipino migrant workers in the United Kingdom, President Arroyo will take the opportunity to meet members of the Filipino community and encourage them to further contribute to the continued economic resilience of the country.


MANILA, Philippines—The Philippines ranked 9th among key emerging markets for global investors in 2009, jumping 14 spots from 23rd place the previous year, according to new research published by UK Trade & Investment.

"The global recession was a wake-up call for companies to diversify their export base and seek out new opportunities in the emerging world. We are encouraging UK business to look to the Philippines and find new business in this exciting new market," British Ambassador to the Philippines Stephen Lillie said in a statement released to media outfits.

According to an embassy brief, the United Kingdom is the top net foreign direct investor in the Philippines, investing $298.17 million last year. There are currently around 200 British companies active in the Philippines, ranging from big multinationals to small and medium enterprises (SMEs).

According to the same brief, President Gloria Macapagal-Arroyo in March this year delivered a keynote message during the Emerging Markets Summit which might have helped put the Philippines in the radar of British businessmen.

Over 300 business leaders and investors from all over the world participated in the forum, giving her the opportunity to share the Philippines' view on Asia's leadership in the global economic recovery and to promote the Philippines as an investment destination.

In that forum, Arroyo highlighted the resiliency and continued growth of the Philippine economy, which posted a 1.5 percent economic growth in the second quarter of 2009.

Thursday, 17 September 2009

Arroyo 'not in presidential race'

The governing coalition in the Philippines has named its candidate for next year's presidential election - defence secretary Gilberto Teodoro.

The announcement ends any speculation that the current president, Gloria Arroyo, might attempt to run again.


Invest in the Philippines!

End-August ’09 RP BOP surplus reaches US$ 2.8B

MANILA (PNA) – Philippine balance of payment (BOP) position further increased in end-August this year after it reached US$ 2.78 billion.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that the eight-month surplus this year is higher than year-ago’s US$ 2.02 billion surplus.

For August this year alone, inflows reached US$ 53 million surplus, lower than the previous month’s US$ 506 million surplus.

It, however, is a reversal of the US$ 54 million deficit posted by the country in August 2008.

BSP Governor Amando Tetangco Jr. said continued strong remittance inflows continue to power the country’s BOP position.

“(The surplus was) due to higher remittances, other services receipts and foreign exchange capital inflows,” he said.

The central bank forecasts this year’s BOP position to reach US$ 700 million, higher compared to the US$ 89 million the country registered in 2008, which in turn, is still positive considering the global economic slowdown.

Earlier, monetary officials said the country’s BOP position will receive some lift from the government’s plan to issue Samurai bond, which is being issued in Japan by a foreign government or corporation.

The Philippine government, through Finance Secretary Margarito Teves, has signed a memorandum of understanding (MOU) with the Japan Bank of International Cooperation (JBIC) for a 95 percent guarantee fee for up to US$ 1 billion issuance within two years.

Earlier, finance officials are not sure whether to issue the debt instrument this year to either help plug this year’s P250-billion budget deficit or pre-fund next year’s foreign borrowings.

This as the Department of Finance (DOF) waits for the decision of JBIC on its request to lower the guarantee fee for the debt paper.

However, recent reports said the government is now mulling to issue Samurai bond in the fourth quarter this year to pre-fund the country’s 2010 borrowings.

National Treasurer Roberto Tan was quoted as saying that the plan is being considered after they “have firmed up the terms of the guarantee.”

Relatively, the government’s issuance of US$ 750 million Republic of the Philippines (ROP) bond last July boosted the country’s BOP position that month.

Monetary officials said the BOP forecast is now under review and revisions will be announced in October.

Tetangco earlier said the end-year BOP surplus could reach around US$ 1 billion.(PNA)

More Philippine cities targeted by anti-corruption program

Michael Paolo T. Jamias

ASIA FOUNDATION plans to at least double the number of Philippine cities covered by its anti-corruption program in the next three years, its country representative said yesterday.
Steven Rood, country representative of the Asia Foundation, addressed participants yesterday, the first day of the Cities Conference on Transparency, Accountability and Competitiveness at the Mandarin Oriental Hotel in Makati City.

"The Transparent Accountable Governance (TAG) project is already in over a total of more than 20 cities in the Philippines," said Steven Rood, country representative of the Asia Foundation, at the sidelines of the two-day Cities Conference on Transparency, Accountability and Competitiveness at the Mandarin Oriental Hotel in Makati City.

"We’re looking forward in the next electoral cycle, when we have a new administration next July, to go into cities interested in becoming more competitive — somewhere between 20 or 30 more cities," he added.

The Asia Foundation’s TAG project provides technical assistance that aim to lessen red tape, among others.

Consequent improvements in the business environment, in turn, are expected to stem the erosion of Philippine business competitiveness, as seen in the results of two global surveys released this month, said Interior and Local Government Undersecretary Austere A. Panadero in the same conference.

The Philippines dropped three notches to 144th out of 183 economies in the 2010 "Doing Business Report" of the International Finance Corp. (IFC), dragged by a deterioration in ease of starting a business and in paying taxes.

Similarly, the country fell to 87th out of 133 countries in the "Global Competitiveness Report" of the World Economic Forum, suffering from relatively weak market efficiency, technological readiness and innovation.

"These findings serve as a wake-up call to local government units to improve their competitiveness. [We] have to rally the cities to become champions for change," Mr. Panadero said, citing governance as a "key ingredient" for encouraging entrepreneurs and attracting foreign investors.

For his part, Jose Ma. Concepcion III, chairman of RFM Foods Corp., said city leaders should become "entrepreneurs in thinking" in order to make their jurisdictions more hospitable to a wide range of businesses, from small start-ups to multinational expansions.

Messrs. Panadero and Concepcion noted that efforts to address systemic corruption, such as the TAG project, are vital to making Philippine cities more competitive.

Mr. Rood said that, under the TAG project, cities interested in joining need only to have endorsements from both the city council and the local business chamber.

The backing of both sectors is essential, he added, due to their ability to rally support for government measures.

Asia Foundation coordinates with the United States Agency for International Development and the British Embassy in Manila for funding support for the TAG project.

The gold/dollar tsunami

Outside the Box
John Mangun
Business Mirror

Undoubtedly you have seen some of the personal videos of the tsunami that hit Thailand and Indonesia in 2004.

A normal day on the beach with the waves gently slapping the shoreline, moving back and forth as the ocean always does. For some strange reason though, the next wave does not come up to shore and the water is seemingly being pulled back into the ocean. Then, without warning, the next wave rushing toward the shore keeps growing larger and higher until the people realize that this is not normal by any standard and begin to run for their lives.

For the last few months, events have been coming together, not unlike what transpires in the hours leading up to the last few minutes prior to the unleashing of one of the most destructive forces of nature, the tsunami. The tsunami is created by a massive release of energy, unseen and unnoticed hundreds of miles away.

It has been almost two years since the debt bubble first hit the housing market in the US and Europe. This collapse in market value triggered the further collapse of giant financial institutions that had built their own wealth on that debt bubble. The domino effect cascaded through the “money companies” upon which traditional businesses in the manufacturing and service sector relied for their financing lifeblood. And because of the interdependence of all nations’ economies, the effects rippled again and again around the globe.

As consumer spending in the West came to a grinding halt, literally thousands of factories on the other side of the world in China closed, displacing hundreds of thousands of workers. A man very familiar with San Miguel’s operations in China says business in the southern part of the country has come to a near-standstill with all the workers having gone back to the interior provinces without jobs.

And when the Chinese factories closed, the ships needed to carry those goods to the West also went out of business. A year ago, the cost of shipping a 40-foot container of merchandise from China to the UK was £850, plus fuel charges. In 2009 it is £180. An oil tanker capable of carrying 80,000 tons of cargo would charter for $50,000 a day in 2008. Now it is about $5,500.

The visible sign of this tsunami has been growing steadily all year. The US dollar index is a measure of the value of a dollar against a basket of currencies. In July 2008, at the height of oil prices, the index was 72. When oil fell as demand could not justify the price, the dollar rose to 89. Theoretically, the price of the dollar and the price of oil should move inversely, high dollar, low oil.

In March 2009 oil traded at $70 and the dollar index traded at 87. Oil is still the same price, but the dollar has fallen to 76. Oil should have increased in price, but demand, due to the global economic recession, has kept oil prices flat.

The dollar index at 76 is not even a recent low. In 2008 the low was 71. But the trend of the dollar is so poor and the fundamentals that will devalue the dollar are so strong, that dollar-holding nations and individuals are slowly but unquestionably looking for a wealth storage alternative. Gold quietly closed last week at the highest price in history.

Many people have lost fortunes underestimating the resiliency and power of the US economy. But as I have said before, this is not the same US economy of even a decade ago. Its debt bubble has exploded, perhaps never to reinflate. Its government financial structure is worst than most Third World countries. Its manufacturing capabilities that made it the only true superpower for a century have vanished. There is almost nothing left that can bring that economy quickly back to its former state.

The last “rich man” on the planet, China, is moving its wealth to the traditional storehouse of wealth, gold.

From Money Week: “Hong Kong announced it was pulling all its physical gold holdings from depositories in the UK and moving them home to newly built vaults near the city’s airport. It’s estimated that they own some $63 million worth of gold. That isn’t much. What is noteworthy is that Hong Kong is taking delivery of its metal”.

It has been more than 40 years since governments and individuals were concerned about physically holding gold. And today, the largest producer of gold in the world, as well as the largest foreign holder of physical dollars, wants its gold within arms reach.

The price of gold is virtually unstoppable as it moves to $1,110 and then to $1,250 as the dollar index moves first to 72 and then to 67.

As this happens over the next months and quarters, hard asset prices will continue to increase, including that of commodities, metals and stocks, perhaps especially stocks. And the true “risk aversion,” the new motto of financial journalists, will be against cash.

Major currency interest rates will remain near zero and dollar-denominated inflation will push the prices of almost anything you can store, keep in a vault, or use as a raw material, even in the future, more and more valuable.

On a personal note, if you would like to subscribe to our weekly stock- market update and gain access to our web site, please send me an e-mail.

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Philippine Central Bank forecasts on track -- JP Morgan and Citigroup

‘Tetangco was right after all on OFW flows’
Jun Vallecera
Business Mirror

SOME of the most influential financial analysts previously disbelieved the Bangko Sentral ng Pilipinas (BSP) when it insisted on keeping a positive view on the remittance flows generated by millions of overseas Filipino workers (OFWs).

On Tuesday two of their more prominent members recast their dim views and said BSP Governor Amando Tetangco Jr. was correct all along in keeping faith with the work ethic and tenacity of purpose of OFWs.

Citigroup analysts in Asia, which once said the flows would contract this year in the manner projected by the International Monetary Fund, is now even more bullish than Tetangco.

In its latest assessment on OFW flows, Citigroup held these should expand by 4 percent this year to around $17 billion, or faster than the most optimistic BSP forecast of 2 percent up to only 3 percent.

“We have revised our OFW forecast to a total $17 billion for a modest gain of 4 percent. We assume a low of $1.38 billion in September and a high of $1.48 billion in December,” the Citigroup analysts said.

As for analysts at JPMorgan, the similar recast their outlook on OFW flows this year.

“We began the year expecting remittance inflows to contract by 6 percent from 2008 compared with most other market forecasts of around 10 percent contraction.

“We have revised it up to 3 percent and we are now raising that forecast higher to 6 percent,” its analysts said.

They noted the remittance flows have been resilient all year and the latest BSP remittance report showing a 9.3-percent growth in July marked “just one more upside surprise.”

Citigroup and JPMorgan analysts acknowledged that July is historically an “off-season” month when remittances are not particularly strong.

OFW remittance volumes rise significantly just before the school year begins in June and again in December, as Filipinos celebrate one of the longest Christmas season on the planet.

And yet the BSP reported on Tuesday of a 9.3-percent rise in OFW flows of $1.5 billion, surpassing expectations of only around $1.2 billion.

Citigroup said the remittance flows have “defied seasonal influence,” suggesting that OFW deployment continues to rise particularly in countries specifically targeted by government as non-traditional OFW destination like Qatar.

Deployment in those places was in services-oriented jobs in the medical, entertainment and even sales fields that proved less vulnerable to the global downturn, it added.

SM Investments sets $500-M bond issuance, biggest since 1997

Miguel R. Camus
Business Mirror

THE listed holding company of retail tycoon Henry Sy Sr. announced on Wednesday the completion of its $500 million bond issuance, said to be the largest of its kind in over a decade.

In a disclosure to the stock exchange, SM Investments Corp. (SMIC) said the five-year bonds will carry a fixed rate of 6 percent per annum.

“This is the largest US dollar bond since 1997, with the lowest coupon rate to be issued by a Philippine corporate,” said SMIC in a statement.

The firm added that the issue marks the first successful Philippine firm that has capitalized on the reopening of the region’s debt capital markets. Barclays Capital and Citi were the joint lead managers and bookrunners for the issue.

“Strong offshore and onshore bids resulted in an oversubscribed issue, supporting the message that the market is open for Asian borrowers with strong credit and a compelling story,” added the conglomerate.

SMIC said the funds generated from the overseas sale will be used to fund general corporate purposes and refinancing maturing obligations. This includes the refinancing of its $300 million convertible bonds issued in 2007, said SMIC vice president Cora Guidote.

The company added that the strong uptake by investors in the issuance may be a sign that global economic conditions have begun to turn around, a year after the crisis officially started with the collapse of US investment bank Lehman Brothers Holdings Inc.

“There is reason for us to be more optimistic on near-term prospects now that the global economy appears to be stabilizing and recovering from the recent financial shake up,” said SMIC president Harley Sy in a statement.

In June, SMIC successfully raised P10 billion from its retail bond issue, marking the company’s initial foray into the domestic market. The bond offering was also rated triple “A” by rating agency Philippine Ratings Services Corp.

SMIC, one of the country’s largest and most profitable conglomerates, is engaged in five main businesses namely shopping mall development and management, retail merchandising, financial services, real-estate development, and the recently added hotels and entertainment division.

The group also expects to exceed its profit targets for the full year, earlier estimated at 12-percent growth over the P14-billion net income reported in 2008.

In the first six months of the year, SMIC said its net income grew 14 percent to P7.4 billion.

This came on the back of higher revenues which rose 12.4 percent to P74 billion resulting in an improvement in net margin from 9.8 percent the previous year to 10 percent in 2009.

“We’re positive that we can sustain this kind of profit growth for the rest of the year,” said Jose Sio, SMIC executive vice president, in an earlier interview, explaining that the company normally sees an acceleration in spending during the second half of the year.

SMIC’s main businesses also benefit from overseas remittances, which account for a third of the firm’s revenues.

In addition, cash flow margins as measured by earnings before interest, taxes, depreciation and amortization also improved to 21.5 percent from 19.2 percent in the January-to-June period last year.

Wednesday, 16 September 2009

Philippine OF Remittances Surge 9.3% in July; First Seven Months Level Nears US$10.0 Billion

Bangko Sentral
Media Releases

Remittances from overseas Filipinos (OFs) coursed through banks surged to US$1.5 billion in July 2009, posting the highest year-on-year growth during the year at 9.3 percent. This favorable development brought cumulative remittances for the first seven months of the year to almost US$10.0 billion, higher by 3.8 percent from the year-ago level. Remittances from sea-based and land-based workers both recorded gains of 5.6 percent and 3.4 percent, respectively.

Sustained demand for Filipino manpower worldwide combined with greater access by overseas Filipinos and their beneficiaries to expanded remittance transfer facilities helped sustain remittance flows. "Given sustained remittance flows at the onset of the second half of the year and continuing signs of improving global economic conditions, remittances are anticipated to remain stable for the remainder of 2009 and will continue to be a major growth driver of the economy," BSP Governor Amando M. Tetangco, Jr. said. A report of the Philippine Overseas Employment Administration showing a deceleration in the rise in the number of displaced OFWs as a result of the global financial crisis reflected these signs of adjustment and subsequent stabilization in the global economy.

The expected steady stream of remittances will draw continuing support from the strong deployment of Filipino workers overseas following the employment agreements forged between the Philippines and host countries such as Qatar, Saudi Arabia, Canada, Australia, Japan, South Korea and Taiwan. Apart from these recruitment prospects, the Philippine government has started crafting guidelines on the deployment of overseas Filipino workers to provide the manpower requirements for the massive military base expansion in Guam starting next year.

Meanwhile, the increase in the number of remittance centers abroad and the establishment of more tie-ups with foreign financial institutions have resulted in greater capture of remittances. The aggressive marketing efforts of banks and non-bank remittance centers to provide enhanced financial services to cater to the various needs of overseas Filipinos are anticipated to further facilitate the flow of remittances.

For the period January-July 2009, the major sources of remittances were the U.S., Canada, Saudi Arabia, U.K., Japan, Singapore, United Arab Emirates, Italy, and Germany.

Tuesday, 15 September 2009

The Philippines may be more competitive than you think

John Mangun
Outside the Box
Business Mirror

By now I am sure that you have read that the Philippines dropped 16 places to 87 in the ranking of countries by the World Economic Forum’s (WEF) “Global Competitiveness Report.”

Don’t feel too bad though. The Philippines is still ranked No.2 in the number of times a Filipina has won the Miss International Beauty Pageant. And the importance of the WEF ranking is about the same as a beauty pageant. It means almost nothing.

Bear in mind that only 39 people, nearly the lowest count in the world, responded to the survey from the Philippines. By comparison, 54 respondents talked about Zimbabwe and 79 replied from the Kyrgyz Republic. So 39 Filipinos answered the survey questions and based on their answers, the Philippines is number 87.

But if you do get excited by these kinds of surveys and need to feel good about the Philippines, here are some of the individual rankings. Under the health category, the Philippines ranked No. 1 because of the low prevalence of HIV/AIDS. The USA ranked 85. In the “Quality of Management Schools,” here again the Philippines fared well at No. 39; Japan scored at 79.

So you can sleep well at night knowing that you probably won’t die of AIDS while getting a good-quality MBA here in the Philippines.

Rest assured that no business is going to come or not come to the Philippines based on this WEF survey. But deeply buried inside the report and not discussed by any local coverage I have read is something fearful and dangerous.

One of the 12 “pillars” of competitiveness is “Macroeconomic Stability.” The ranking here is not based on some silly perception from the survey participants. This is based on hard data; government gross budget balance as a percentage of GDP, national savings rate, inflation, interest-rate spread, and government debt. Note also that the numbers in this report are for 2008, and much has changed since then and not for the better.

The Philippines ranked 76 while the USA stood at 93, India 96, and Japan at 97.

Here is where it gets very scary. Everyone of those components listed under macro-stability has turned much, much worse in 2009 particularly in the USA.

The world cannot afford to have countries like the United States and Japan in the same economic category as Albania (95) and Bangladesh (84). Moreover, the world cannot wait for the USA to make constructive moves out of its problems, particularly when Obama is showing a complete lack of qualifications for the job with each additional economic-policy decision he makes.

Last Friday, Obama started what may turn out to be a full-blown trade war with China. China has reacted “violently” to the imposition of a US 35-percent duty on Chinese truck and auto tires. This may be the most stupid policy decision in a long list of stupid Obama policies.

On September 30, the US government closes its books on the 2009 fiscal year. By November, the USA must raise tens of billions of dollars through the sale of government debt, the biggest buyers being China and Japan. China is in no mood to finance Obama’s budget and a trade war will make the Chinese even less responsive to loaning the US money.

Japan just elected a new leader and Prime Minster Yukio Hatoyama is not the best choice from the American perspective. He has long-standing ties with the most conservative elements of Japan’s war-making past. Further, his grandfather, Ichirō Hatoyama, himself a former prime minister, was named in an assassination/coup plot to overthrow the Japanese government in 1952 and establish a pro-military, right-wing government. The current Hatoyama recently said, “The financial crisis has suggested to many that the era of US unilateralism may come to an end. It has also raised doubts about the permanence of the dollar as the key global currency.”

However, he also went on to say, “But at present no one country is ready to replace the United States as the dominant country. Nor is there a currency ready to replace the dollar as the world’s key currency.” That is unless China and Japan join together, which they could easily do as they control about 50 percent of all US government debt.

The closing sentence in yesterday’s BusinessMirror editorial summed up the current situation well; “First is to chuck the ‘business as usual’ attitude that has caused the economy to list for the longest time.”

But the future is not just about reducing red tape, perceptions of corruption or simply improving the business environment. We are entering a new world.

One important thing missed by those who commented on the WEF report was that the Philippines is equal to and mostly better in every one of the 12 pillars when compared to economies in our current stage of development, called by the WEF as a ‘factor-driven” economy. A factor-driven economy is one that must rely on its internal endowments: labor-force quality, natural resources, and labor productivity.

The qualities of “innovation-driven” economies like the USA and Japan did not save them from the current disaster. The economic world is not the same as it was a generation ago or even two decades past. And the truth is, no “expert” really has a clue what new practices and policies will be necessary for the decades to come. We may be better positioned than anyone thinks.

On a personal note, if you would like to subscribe to the weekly Stock Market Update and gain access to our website, please send me an email.

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Monday, 14 September 2009

PGMA prioritizes completion of infrastructure projects nationwide

With barely nine months left on her term, President Gloria Macapagal-Arroyo is making sure her legacy infrastructure projects are completed before she bows out of office next year.

President Arroyo's infrastructure development program aims to link up the country's urban and rural economies and spur growth nationwide.

She underscored the critical importance of these infrastructure projects to the economic development of the Super Regions.

Of her 149 priority infrastructure projects, 39 have been completed including six road and bridge projects, 21 ports; three airports, six power and electrification projects, one irrigation project, one sanitary landfill, and the Revenue Watch Dashboard of the Bureau of Internal Revenue (BIR).

There are on-going 67 civil works, 26 of which are set to be completed this year. The remaining 43 projects are still undergoing project design/procurement.

For this year alone, the infrastructure budget of the Department of Public Works and Highway (DPWH) for the construction of more than 4,000 kilometers (km) of national road and 788 lineal meters (lm) of bridges throughout the country, has amounted to P25.58 billion.

As more priority projects are completed, the economic gains from infrastructure development continue to bring more good news and hope to more communities in the country's regions and super regions.

The government has embarked on massive investments in infrastructure from 2001 to 2009. According to the DPWH, 29,370 km of national road network and 314,453 lm of national bridges have been completed during the Arroyo administration.

Major road projects that are currently being implemented in the super region such as the Halsema Highway and the Bontoc-Tabuc-Tuguegarao Road of Cordillera will bring North Luzon Agribusiness Quadrangle (NLAQ)'s food baskets closer to urban markets.

Critical projects have already been completed in Luzon including the Southern Tagalog Arterial Road (STAR)2, the Subic-Clark-Tarlac Expressway (SCTex), and the EDSA Rehabilitation Project.

The government has likewise completed the construction of P2.2 billion Bohol Circumferential Road in Central Philippines and now links the Port of Tubigon to Tagbilaran City, down to the Port of Jagna in the south of Bohol, and all the way up to the Port of Ubay in the north-east part of the island.

Currently, there are seven road projects that have ongoing civil works in Central Philippines including the P8.16 billion El Nido-Bataraza-Rio Tuba Road with an overall accomplishment of 46.45 percent which will be completed next year; the P1.24 billion Esperanza-Aroroy Road to be completed by yearend; the P2.37 billion Cebu North Coastal Road (Cansaga Bay Bridge) due for completion next year; the P2.74 billion Panay Island Road Package; the P3.22 billion Laoang-Lapinig-Arteche-San Policarpio Road to be completed on 2013; the P1.24 billion San Isidro-lope de Vega Road; and the P7.13 billion Maharlika Highway to be completed next year.

In Mindanao, the notable developments include the P2.1 billion 882-meter Diosdado Macapagal Bridge, also known as the Butuan Bridge in Butuan City that provides an alternate, all weather, and transport-efficient link across the Agusan River.

Out of the 28 priority infrastructure projects in Mindanao, three road projects such as the Hawilian-Salug-Sinakungan Barangay Road, Dapitan-Dakak Road, and Surigao-Davao Coastal Road are still ongoing with above 50 percent accomplishment.

While many of these projects are scheduled to be completed by 2010, some multi-year facilities will be finished only after 2010.

These infrastructure projects are integral part of the President's long-term goal of achieving a seamless, efficient and cheaper means of transporting people and goods through the Strong Republic Nautical Highway (SRNH) and the soon-to-be completed "Aeronautical Highway."

Part of the agenda of the Arroyo administration is to invest in both physical and human infrastructure to attract more investments and to create more jobs.

The Arroyo administration is pouring billions of pesos to various infrastructure projects in the country to enhance business and tourism climate in the country and uplift the lives of Filipinos. (PND)

Sunday, 13 September 2009

New airline sets up home base at Subic Airport

Manila Bulletin

Pacific Pearl Airways (PPA), a private airline offering domestic and foreign chartered flights, has set up its home base at the Subic Bay International Airport (SBIA) with plans to invest $10 million for its startup operations in December this year.

Subic Bay Metropolitan Authority (SBMA) administrator Armand Arreza, who signed the memorandum of agreement with Jimenez last week, considered this latest investment here as proof of Subic Bay’s economic resiliency.

“What we have witnessed now proves that there’s still life after FedEx,” said Arreza, referring to the US courier giant which used this free port as its Asia-Pacific hub. Last February, FedEx transferred to China, where domestic cargo volume alone exceeds that of Asia.

PPA president Kristoffer Jimenez said the airline will start with two advanced Boeing 737-200 jet planes capable of seating 114 passengers for international flights, and turboprop aircraft for initial domestic flights from here to Boracay, Bohol, Cebu, and Davao.

“Local flight destinations will expand as PPA establishes its presence in the local airline industry,” Jimenez said. He added that PPA will be offering competitive rates without sacrificing quality service costs – an advantage that he said was made possible by tax incentives and other perks offered by this free port.

Jimenez also said that PPA will eliminate stop-over hassles with its direct flights, enabling passengers to gain more savings and more quality holidays as it significantly cuts travel lag time.

Arreza said that being an international airport, the SBIA can host just about any kind of air transport requirements, singling out Subic’s cargo-sorting capability as its edge over other airports in the country today.

“We urge cargo airliners to start making their inquiries here at the SBIA this early, and see for themselves its complete cargo-sorting facility, and the Freeport advantages that made FedEx’s operation here successful,” said Arreza.

Arreza also said he expects more flights to and from Subic in the near future, as the SBMA aggressively promotes business and tourism establishments here.

“A lot of tourists come to Subic – foreigners and locals alike. It is also a booming place in terms of businesses,” said Jimenez, who also called on interested applicants for pilots, cabin crew, and maintenance personnel to inquire at PPA’s office at the SBIA.

Pearl Pacific Airways was organized in September 2006 and is registered with the Securities and Exchange Commission, with necessary permits from the Philippine Civil Aeronautics Board (CAB) and the Air Transportation Office (ATO).