Friday, 21 May 2010

Malacanang elated over results of World Competitiveness Survey

MANILA, May 20 (PNA) -- Malacanang expressed elation over results of the World Competitiveness survey conducted by a European firm showing an improvement in the country's ranking due to economic gains.

"We're striving hard to maintain economic growth... We're happy with this achievement," Presidential Spokesperson Ricardo Saludo said in a press briefing.

The Philippines ranked 39th place, or five notches higher to its previous ranking in 2009 at 43rd in the Institute for Management Development (IMD)’s 2010 list of 58 economies in terms of global competitiveness.

This is the Philippines' best performance since its inclusion over a decade ago.

Due to economic gains and government efficiency, the Philippines improved in its score by more than two points from 54.49 to 56.52 as shown in the latest edition of the IMD’s World Competitiveness Yearbook. (PNA)

Thursday, 20 May 2010

Another look at poverty reduction

The change the Philippines needs is to maintain some continuity of long-term economic policy
By John Mangun
Outside the Box
Business Mirror

The question plaguing the majority of the world’s nations is understanding why economic growth does not automatically mean a reduction in poverty. We talk in the Philippines that poverty would be reduced if only economic growth could reach a certain level. You can pick your own number here because there is no analysis that says there is a magic number for economic growth that equals a reduction in poverty.

Look at India, for example. Economic growth is expected to reach nearly 9 percent for this year. Yet, poverty-reduction in India has always been an elusive goal. In fact, the incidence of poverty in India is comparable to the Philippines and we have a record of weak growth in comparison to India over the last decade.

Studies on nations that have successfully seen poverty reduction where growth has “trickled down,” give some answers.

An interesting paper in 2002 from the International Monetary Fund compared the performance of Pakistan and Malaysia. These two countries obtained independence at around the same time and showed long-term economic growth that was similar. Malaysia saw its economy grow at slightly over 6 percent through four decades, while Pakistan had a growth of slightly under 6 percent. Yet Malaysia was able to reduce its poverty rate to 8 percent from 50 percent, while Pakistan saw its poverty rate fall only slightly.

The conclusions of this study may have some answers for the Philippines. They key word here is “may.”

One factor that seems to be significant in allowing growth to go down to the poorest of a society is political stability. While you could argue that the Philippines has not had political stability for more than 20 years, even during these last two decades that stability has not realized a significant reduction in poverty. The key element, though, is not really political stability in terms of a lack of unrest and turmoil because Thailand even now could not qualify under that definition as a country with political stability. The stability that matters is a continuity of economic policy that changes, not with a change of leadership, but changes as the needs arise to adapt to new domestic and global situations.

Here, the Philippines is very unstable as each succeeding administration virtually rewrites the game plan as soon as new leadership assumes power. Each new administration comes into office promising to hold the answers to poverty reduction and it is very possible that each of the last four Philippine governments have had the magic answer to the problem. But we will never know because each administration’s policies were changed as a new occupant came to Malacañang. Unfortunately we expect quick results and perhaps poverty reduction requires that policies be in place for a longer time than we give them to work. Poverty reduction is a process, a journey, not an event triggered by a policy change.

Another factor in poverty reduction, as shown by the Malaysian experience, is the realization that if poverty reduction is the goal, then that must be the primary objective—and other priorities that interfere with that goal must be discarded.

No one disagrees with the idea that ultimately the best way to reduce poverty is to create jobs for people who do not have jobs. During Malaysia’s march to an 8-percent poverty level, job creation became the primary objective and anything that stood in the way of job creation was put aside. It was the effective policy of the Malaysian government that job creation took precedence over worker’s rights. These included the right to strike, bargain for wages and the worker’s right to benefits of tenure. A low-paying job was thought more important than the notion that there should be a minimum wage.

The result was that more people were gainfully employed. And as economic growth continued and improved over the years, the benefits to the worker increased dramatically as the labor market became tighter and employers competed for even unskilled workers by raising wages and benefits.

In truth, strong labor laws such as in the Philippines that give tough protection to existing workers tend to limit the opportunities of those without jobs. Every business can only allocate a limited amount of capital for wages. If you could hire two workers for the same price as one, it would make sense to do that. Imagine a large company hiring twice as many low-skilled workers like janitors and messengers for the same total expense. Granted, each individual worker would not make as much but there would be twice as many in the work force and, ultimately, the economic benefits of twice as many people working would generate enough activity to force wages to increase for everyone.

Malaysia ’s government benefited, too, from having more people working as it was less dependent on borrowing as more employment meant a larger revenue base through taxes. While tax-collection efficiency was important, the increase in the overall tax base was more important.

Another critical aspect to Malaysia’s poverty reduction was domestic savings by individuals. Although foreign investment was important, equal emphasis was placed on Malaysians saving their money that could then be used for investment.

The Philippine economy, in contrast, is very consumer driven. There is nothing particularly wrong with that because this is cash rather than credit-driven buying. But an economy that lacks capital for investment must find that money someplace and it is better to raise it domestically instead of relying on foreign money or worse, foreign borrowing.

Finally, economic planning as such was given to local government authorities. If the government of a small area believed that a certain type of economic activity was feasible and growth creating, then the role of the national government was to provide the infrastructure to support that industry. Specific economic planning took place at the local, not the national level. Broad policy was formulated at the national level but eventual downstream implementation was a local function.

The new Aquino administration promises change. That may be a good idea. But maybe the change the Philippines needs is to maintain some continuity of long-term economic policy.

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Comelec lauds Villar's act of statesmanship

Manila Bulletin

The Commission on Elections (Comelec) on Tuesday lauded Nacionalista Party standard bearer Sen. Manuel “Manny” Villar for conceding to Sen. Benigno “Noynoy” Aquino III of the Liberal Party saying it was an act of real statesmanship.

“The Commission expresses its deep admiration for Senate President Manuel Villar’s act of statesmanship in conceding the elections,” Comelec Chairman Jose Melo said.

By right, he said, the senator could have insisted on seeing this contest through to the bitter end. However, he chose not to do that; instead he chose to set aside personal ambition to sped up the process of political reunification and recovery this country needs to go through after these elections,” he added.

Melo also thanked Villar for his vote of confidence in the Automated Election System (AES).

“The commission also expresses its gratitude for the vote of confidence in the AES that underlies the Senate President’s decision to concede the elections,” he said.

Based on Tuesday’s partial tally of the Comelec, Aquino got a total of 12,233,002 votes compared to Villar’s 4,329,215.

In the parallel unofficial count of the Parish Pastoral Council for Responsible Voting (PPCRV), yesterday Aquino also got the most number of votes with 12,879,564.

Wednesday, 19 May 2010

EU joins IMT on Mindanao peace process; RP elated

MANILA, May 19 (PNA) — The European Union (EU) has accepted membership in the International Monitoring Team (IMT) on the Mindanao peace process, a move welcomed by the negotiating panels of both the Government of the Republic of the Philippines (GRP) Panel (GRP) and the Moro Islamic Liberation Front (MILF).

The EU joins Japan, Brunei, Libya and the group’s head, Malaysia in the monitoring group. The latter is also the Facilitator of the overall peace negotiations.

EU’s participation will be finalized once appropriate terms of reference TOR) have been agreed with the GRP-MILF, according to EU ambassador to Manila, Alistair MacDonald, who informed both sides of the decision.

A revised TOR for the IMT agreed in December 2009 include four components, among them the Humanitarian, Rehabilitation and Development (HRD) aspect which the EU will now lead.

Norway has also been invited and had indicated its willingness to participate in the IMT depending on the TOR. Norway is not a EU member but is closely associated with the Union through its membership in the European Economic Area (EEA).

“The EU’s decision to join the IMT is indeed good news for both GRP and MILF Panels which now endeavor to preserve the gains of the peace talks as we transition from the current administration to the next,” GRP chief negotiator and Foreign Affairs Undersecretary Rafael E. Seguis said in a letter to MacDonald

MacDonald announced EU’s acceptance at the reception on Tuesday night celebrating the European Union National Day last May 9, as requested by the EU High Representative for Foreign Affairs and Security Policy Catherine Ashton.

“The EU’s presence in the monitoring team would be an unequivocal manifestation of its support and commitment to the peace and development agenda in Mindanao, for which we are thankful,” Seguis added.

MacDonald said the decision was based on its assessment that "Mindanao has a tremendous potential to be a prosperous and peaceful part of the Philippines, for the benefit of all who live there, whether Moros, Christians or Lumads.

”But this potential can only be realized if the vicious cycle of conflict and poverty can be broken, and if local governance can respond to the needs of the people and provide effective services to all."

He added he is “delighted that in addition to our longstanding development and humanitarian cooperation with the Philippines in general and in Mindanao more specifically, the EU will now be able to help more directly in the peace process, joining the efforts of other international and local partners, both in the IMT and in the International Contact Group."

From EU headquarters in Brussels, Catherine Ashton, High Representative (HR) of the EU for Foreign Affairs and Security Policy and Vice-President of the European Commission, said “the European Union attaches great importance to helping promote peace and development in Mindanao, and has long been active in providing both development and humanitarian assistance in the conflict-affected areas."

”The EU was honored to be invited by the Parties to assist further in the peace process, by taking part in the IMT, and I see this as a very important contribution which the EU can make, together with other international partners, to help promote peace, security and prosperity in Mindanao, and to help strengthen the long-term development of the Philippines," HR Ashton said.

She noted that since the end of 2008, the EU and its Member-States had provided more than Euros 14.5 million (about P820 million, at current exchange rates) in humanitarian assistance to help civilians displaced by the conflict in Mindanao.

Peace negotiations bogged down in August 28 when a GRP-MILF provision for a Bangsamoro Juridical Entity was declared unconstitutional by the Philippine Supreme Court. Violence ensued, displacing thousands of civilians in Mindanao. Talks resumed in December 2009.

While last-ditch efforts are exerted to carve a possible interim agreement before a new administration is installed in Malacanang on June 30, “there is still a great need to build confidence, a context in which international support is of great importance,” the EU in Manila said in explaining the rationale of its acceptance.

In addition, an International Contact Group (ICG) was established in September 2009 to assist the GRP and MILF panels and Malaysia as Facilitator in carrying the peace process forward. Its members are Japan, Turkey and the United Kingdom and a number of international non-governmental organizations.

EC development assistance grants to Mindanao since the 1990s have amounted to some Euros 96 million in total (about P5.4 billion, at current exchange rates) focusing on rural development and the environment, agrarian reform, and the health sector.

The EC has also provided some Euros 21 million (P1.2 billion) in grants for livelihood support and rehabilitation for civilian victims of conflict and about Euros23 million (P1.3 billion) in humanitarian assistance, particularly for internally-displaced persons (IDPs).

Separately and on a bilateral basis, a number of EU Member-States, such as Spain, have also been active in providing development and humanitarian assistance in Mindanao. (PNA)

Transition committee on track – Palace

Malacañang today said preparations for the smooth transition of power to the incoming administration are currently ongoing and are “on track.”

In a press briefing in Malacañang this afternoon, Presidential Management Staff assistant secretary Wilfrido Oca said necessary documents are already being prepared by concerned agencies to assist the government in formulating a “transition blueprint.”

“The different agencies of government have already created their agency transition cooperation team and these ATCTs will be drafting or submitting their organizational transition reports and functional transition reports to the Presidential Transition Cooperation Team,” Oca said.

“Aside from that, there will be a meeting of the different clusters involved in the submission of the OTRs and FTRs scheduled on Thursday. On Friday, there will be a planning session of PTCT pursuant to Administrative Order 285,” he added.

“From there up to the planning session, it is expected that a transition blueprint will be presented during the Cabinet meeting on Tuesday, May 25,” Oca said.

Oca added that aside from preparing the transition documents, “planning for the inauguration of the incoming president as well as the security aspect of the transition will be discussed.”

Executive Secretary Leandro Mendoza expressed the government’s willingness to extend any assistance to ensure a flawless transition.

“As what we had said in our transition document, we are ready to provide them the necessary coordination: the place, the time and the participants,” Mendoza said.

“We are on track. The timeline is on schedule,” he added. (PND)

PGMA condoles with Quezon gov’s family

LUCENA CITY (PND) -- President Gloria Macapagal Arroyo today condoled with the family of Quezon Province Governor Rafael Nantes, who died with five others in a helicopter crash in the outskirts of this city shortly after take off Monday afternoon.

The President dropped by Nantes' wake at the Quezon Convention Center here. She was welcomed by Nantes's wife Betty and some relatives

Nantes, his two aides and the pilot died on the spot.

Nantes, 53, was the treasurer of the national campaign of the Liberal Party in the May 10 elections.

Nantes ran for re-election but lost to David Suarez of the Lakas-Kampi-CMD.

Dressed in a casual black pantsuit, the President stayed for 30 minutes before proceeding to Funeraria Constantino to also visit the wake of Rowena Navales, a 14-year old girl who was one of the two civilian casualties in the helicopter crash inside the Jael Subdivision here.

The President gave cash assistance to the Navales family.

PGMA inspects ongoing P2.2-B Central Mindanao road project

SOUTH UPI, Maguindanao, May 18 (PNA) - People here welcomed on Tuesday with delight President Gloria Macapagal-Arroyo for being the first-ever head of the country to have visited this mountain town.

The President arrived here aboard a Presidential chopper around 10a.m. following an aerial inspection of the P892.4-million 37.88-km. North Upi, Maguindanao – Sultan Kudarat Road.

The undertaking forms part of the P2.2-billion Central Mindanao Road Project (CMRP).

While here, the President exchanged pleasantries with a local farmers' group and workers of the Korean-based Hanjin Company that handles the road project.

“With this road project, I expect your lives to become more progressive now,” the President told the crowd of well-wishers gathered at the town plaza here.

Alex Racines, leader of the South Upi farmers’ association, said the road concreting, despite its six percent completion, has helped hasten the delivery of their products to Cotabato City and other neighboring urban centers in the South Central Mindanao Region.

“The previous six-hour travel from our municipality to Cotabato City for agricultural products, for example, now only takes two hours to travel, making us save a lot from travel cost and damage of our goods,” Racines stressed.

The particular road project, now 90 percent finished on its widening segment prior to its concreting phase, is expected for completion by November this year.

Also being undertaken under the CMRP endeavor are the 30.16-km. Awang, Datu Odin Sinsuat – North Upi Road that is 70 percent completed and the 36.94 km. Maguindanao-Sultan Kudarat Boundary –Lebak-Kalamansig Road.

The President proceeded to Dapitan City, Zamboanga del Norte for another round of sortie after her 15-minute visit here. (PNA)

GMA Network says Q1 net income rose 71% to P855M


(Update: 4:15 p.m.)GMA Network Inc. said on Wednesday its net income in the first quarter rose by almost two-thirds driven by revenues from political advertisements in the run up to the May 10 elections.

Its net income in the first quarter grew by 71 percent to P855 million from P501 million a year earlier, the company, whose shares are traded on the Philippine Stock Exchange said in a statement Wednesday.

Political advertisements backed up by revenue increases across all business units pushed GMA’s consolidated gross revenues from January to March to breach the P3-billion mark and settle at P3.625 billion - up by 37 percent P2.651 billion in the first three months of 2009.

Revenues from political ads alone from January to May 8 – the last day of the campaign – amounted to about P1.85 billion, GMA chairman, president, and CEO Felipe Gozon said in a briefing on Wednesday.

“I am satisfied with the network's performance for the first quarter. Even without the political ads, we would still post modest gains in net income because of our operational efficiencies," Gozon said in a statement.

Its earnings before interest, taxes, depreciation, and amortization, or EBITDA, rose by 57 percent to P1.41 billion from P902 million in the same comparable period.
GMA said the network’s assets grew by over a tenth to P14.82 billion, with liabilities up by 8 percent to P3.09 billion.

Higher production costs, however, pushed the network’s operating expenses up by a fifth to P1.93 billion.

The network’s international units also posted gains, with GMA International’s subscription revenue reaching P235 million, or nearly a third up year-on-year on the back of a 19-percent rise in subscriber count to 250,000 for overseas channel GMA Pinoy TV (GPTV).

About 120,000 of GPTV subscribers also subscribe to GMA Life TV (GLTV), a second international channel airing lifestyle shows from the network’s local unit Q Channel 11. GLTV said its subscribers grew by 7 percent.

The subscriber counts for GPTV and GLTV were equivalent to 1.5 million and 800,000 viewers, respectively, the network said.1

GPTV was recently launched in Canada, as well as Alaska, Colorado, Florida, and Texas in the US. GLTV was also introduced in the states of Colorado, Central California, Texas and Florida, and in the China’s Hong Kong.

Both channels have already penetrated other parts of the US, Canada, Europe, Middle East, North Africa, Australia, New Zealand, Japan, Guam, Papua New Guinea, Singapore, and Hong Kong.

“[We have continued to expand our international operations] by signing a corporate agreement with Time Warner Cable and expanding into Comcast Systems. Although our international business has so much potential, napakasayang malaman na mas marami sa ating kababayan sa iba't ibang sulok ng mundo ay mga kapuso na natin (it is heart-warming to know that more of our compatriots are subscribe to our network)," Gozon said during the GMA’s stockholders’ meeting on Wednesday.

Network officials said several program replacements are lined up for the year.

“What we've done more proactively was to look at the key areas of opportunity. [Looking] at the programming grid, we see there are programs that falling below internal ratings benchmarks. There are a significant number of program replacements in line for us," Chief Operating Officer Gilberto Duavit, Jr. said at a briefing on Wednesday.

In the Philippines, GMA Network continued to expand its signal and facility projects, particularly in Matina (Davao City); Roxas City (Capiz); Dipolog (Zamboanga del Norte); Ozamis City (Misamis Occidental); San Jose City (Occidental Mindoro); and Kalibo (Aklan).

It also upgraded its projects in Virac (Catanduanes); Ormoc City (Leyte); Tagbilaran (Bohol); Santiago City (Isabela); and Jala-jala (Rizal).

The network said its engineering unit is exploring digital terrestrial television, a new technology that the company intends to incorporate in its operations.

“We are very much encouraged by the progress we had been making in all areas of our operations. The improvements in our financial position have allowed us to fulfill our commitment to our shareholders and provided them with better returns," Gozon said.
The company paid P2.19 billion in dividends in 2009, which was equivalent to 77 percent of GMA's total net income after tax of P2.08 billion.

“We shall continue to pursue new initiatives to achieve further growth from our international and regional operations, film ventures and syndications, and other businesses. We will always aim for the better and we have performed creditably well not only this year but also in the past year," Gozon said.

GMA said it will keep its 10-percent target growth for 2010, but that the higher-than-expected first quarter income might call for a rise in its year-end target.

“We miscalculated the first quarter earnings up to May. The actual results directly exceeded the projection so that that will [change] the total projection for the rest of the year," Gozon said.

“...Given that [earnings went] higher than expected, we have to. But as of now we are still maintaining that 10-percent target," corporate treasurer Felipe Yalong added. —VS, GMANews.TV

Allied Bank, Land Bank, report earnings

Allied Bank’s income up 150%; LBP nets P2.5b
by Roderick T. dela Cruz
Manila Standard

Land Bank of the Philippines, the fourth-largest bank in the country, reported a record net income of P2.52 billion in the first quarter of 2010, up 48 percent from a year ago, as total deposits jumped by a quarter year-on-year.

The government-owned bank said profit in the first quarter eclipsed the P1.7 billion registered a year ago and its target of P1.8 billion for the period.

Bank president and chief executive Gilda Pico, in a news briefing at the bank’s headquarters in Manila, said gross revenues surged 21 percent to P9.21 billion in the January-March period from P7.61 billion a year earlier, led by a 71-percent increase in investment revenues.

Investment revenues rose to P3.77 billion in the first quarter of 2010 from P2.21 billion in the first quarter of 2009.

Allied Banking Corp., a bank controlled by taipan Lucio Tan, meanwhile, reported a net income of P377.45 million in the first quarter of 2010, up by 150 percent from P150.90 million it declared a year ago.

The bank said the growth in net income was triggered by net interest profit, which went up P46.153 million due to a hike in deposit in banks and interbank loans receivable by P13.346 million.

Net interest income rose to P1.694 billion in the first quarter from P1.647 billion a year ago.

It said the higher profit was also helped by a favorable decline in interest expense by P233.380 million or 23.22 percent, especially deposit liabilities that fell P237.521 million or 26.4 percent.

The profit was also augmented by the P123.724 million turnaround in trading and investment securities from P66.274 million loss in 2009 to a gain of P57.450 million as foreign exchange losses went down by P8.371 million while miscellaneous income rose P110.057 million.

LandBank’s Pico said revenues from loans posted a flat growth to reach P3.89 billion in the first three months, despite a 12-percent increase in the loan portfolio to P212.37 billion.

She said the bank registered new depositors this year, including large corporate accounts that helped push its deposit and asset base to record levels.

LandBank’s total assets expanded by 22 percent to P521.5 billion as of March 2010 from P426.84 billion a year ago. Deposits jumped 25 percent to P407.83 billion from P325.94 billion.

Capital was up 29 percent to P49.9 billion from P38.7 billion, solidifying LandBank’s status as the fourth-largest bank in the country, behind Banco de Oro Unibank, Metrobank, and Bank of the Philippine Islands.

Allied Bank’s total assets grew P7.4 billion or 4.09 percent to reach P188.238 billion as of March from P180.834 billion posted in the first quarter of 2009.

Filipino consumers optimistic

Daniel Anne B. Nepomuceno and Reuters

FILIPINO CONSUMERS have become more optimistic about the economy and job prospects in the next six months than they were last year, in line with an improving sentiment of most consumers across Asia and the Pacific, according to a MasterCard survey released yesterday.

The latest MasterCard Worldwide Index of Consumer Confidence survey showed the consumer confidence index for the Philippines at 59.3 points, up from 49.7 six months ago and from 40.5 a year ago.

The index score, which measures consumer expectations on the economy, employment, stock market, regular income and quality of life in the next six months, has zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

The survey showed Filipino consumers have improved their sentiment in all five indicators: regular income (84.6 from 69.9 six months ago), stock market (50.0 from 47.3), the economy (58.0 from 46.4), employment (53.7 from 43.4) and quality of life (50.2 from 41.8).

Eight of the 14 Asia-Pacific markets polled reflected improved consumer sentiment as robust economic growth ignited a sense of optimism.

Ten of the 14 covered Asia-Pacific economies were found to have higher levels of consumer confidence than the Philippines. In descending order, they were: Vietnam, Singapore, China, Hong Kong, Australia, India, Malaysia, New Zealand, Taiwan, and Indonesia. Found less optimistic than the Philippines were South Korea, Thailand and Japan.

Singapore, Taiwan and the Philippines were the most confident their incomes would increase within the next six months and even pessimism levels in Japan, which is struggling to shake off an economic recession, were declining.

The entire survey, which in the Middle East, Africa and Asia Pacific involved more than 10,500 people, gave Asia and the Pacific an index score of 69.1 compared to 66.3 six months ago.

"The Asia-Pacific region rebounded in economic growth as early as the second half of last year, and regional recovery has continued to gain traction this year," a statement quoted Yuwa Hedrick-Wong, MasterCard Worldwide’s economic adviser for the Asia Pacific, as saying.

"While consumers in this region were amongst the first to cut back drastically on discretionary spending 18 months ago, they now seem confident and ready to significantly increase their discretionary expenditures... thereby contributing to the momentum of recovery," he noted.

The survey, which was conducted from March 15 to April 12 this year, also found that younger respondents, aged below 30, were more optimistic than their older counterparts.

Balance of payments surplus hits $982 million in April


The surplus in the country's balance of payments (BoP) more than doubled in April, the Bangko Sentral ng Pilipinas reported.

The surplus swelled to $982 million last month, more than double the $466 million notched in the same period last year.

The total BOP surplus for the first four months of the year hit $2.3 billion, up 6.69% from $2.3 billion in the same period last year.

The BOP is a record of a country's transactions with other countries. A higher surplus means more foreign currency entered the country, improving its ability to repay external obligations.

Tuesday, 18 May 2010

Benpres earns P11B in Q1


PROFITS OF Lopez-led Benpres Holdings Corp. ballooned in the first quarter to P11 billion as a result of political advertisements in its broadcast unit as well as higher demand for energy.

The P11.023-billion net income attributable to equity holders of the parent was a reversal of the P176-million net loss in the same period last year, the company said in a statement yesterday.

Consolidated revenues rose by almost half to P7.752 billion from P5.289 billion last year “as associate ABS-CBN Broadcasting Corp. reported a 47% year-on-year increase in consolidated revenues as well as a sixfold hike in core net income,” it added.

ABS-CBN, which is 57% owned by Benpres Holdings, benefited from political and advocacy advertisements leading into the national elections. “ABS-CBN’s performance is also expected to be sustained in the next 12 months as it continues to strengthen national ratings during this time that commercial ads are showing healthy growth,” said Benpres Holdings President Angel S. Ong.

First Gen Corp. recorded a 166% rise in net income, backed by revenues from geothermal producer Energy Development Corp. and lower financing costs.

Equity in net earnings of associates ballooned to P10.563 billion from P115 million year on year following First Philippine Holdings Corp.’s sale of a 6.7% stake in power distributor Manila Electric Co.

Economists urge 7-9% growth, tag Cabinet bets


AN AQUINO presidency can reduce poverty if it achieves annual economic growth of 7-9% coupled with reforms in the agriculture sector, economists yesterday said.

In a briefing on recommendations for the next president, Bernardo M. Villegas, professor at the University of Asia and the Pacific (UA&P), said he expected Senator Benigno Simeon "Noynoy" C. Aquino III to start his term with economic growth of 5-7%.

"Increasing the GDP (gross domestic product) by 7% to 9% in the next five years is what we need to eradicate poverty," he said. "We cannot fully eradicate poverty, but I am sure there will be very visible improvements. This is within the reach of the new Aquino administration."
He noted that sustaining this growth level, plus an effective campaign against corruption as promised by Mr. Aquino, would substantially reduce poverty.

The official growth target for this year and the next is 2.6-3.6% and 3.8-4.8%, respectively.
Asked to comment, National Economic and Development Authority (NEDA) director Dennis M. Arroyo said the 7-9% growth goal was "ambitious".

"It would take many years to achieve this growth in GDP. The government must first raise government revenues and address tax evasion to achieve that rate. Also, it is important that the new government address the problems hindering investors from putting up businesses in the country," he said.

"The 7-9% target requires better revenue administration, passing tax laws, and cutting leakages in expenditures."

Rolando T. Dy, executive director of the UA&P’s Center for Food and Agribusiness, said in the same briefing that poverty could also be addressed via farm sector reforms.

"Poverty is an agriculture phenomenon. There are some 20 million Filipinos who live in the rural areas and most of them are dependent on agriculture," he said.

Mr. Dy said the new government must increase jobs in rural areas by promoting investments in agribusiness.

"There is so much land, which are not yet utilized and cultivated. Mr. Aquino must do something about them to increase farm productivity," he added.

Messrs. Villegas and Dy also cited the importance of appointing competent people in the Cabinet.
"The new president must cross party lines. Talents should be drawn from the best and the brightest and must come from various sectors." Mr. Dy said.

Citing pitfalls of the administration of the late former president Corazon C. Aquino, Mr. Aquino’s mother, Mr. Villegas said: "Noynoy Aquino’s government must prevent what happened in Cory’s administration, where everything related to former president [Ferdinand E.] Marcos was thrown away."

Mr. Villegas recommended several individuals to the new Cabinet: former National Treasurer Omar T. Cruz for Finance, former Finance undersecretary Milwida M. Guevara for Education, former Finance secretary Cesar V. Purisima for Trade, Naga City Mayor Jesse Robredo for Local Government and the retention of Tourism Secretary Joseph "Ace" H. Durano.

Messrs. Cruz and Purisima served under the Arroyo administration, while Ms. Guevara served under the Ramos administration.

DBM releases P7.6 billion for mid-year bonus

Includes cash gift to government workers
Manila Bulletin

The Department of Budget and Management (DBM) said Monday that government workers should already be receiving the first half of the year-end bonus and cash gift by this time as it released P7.6 billion.

“As in the past years, the grant of these benefits is timed with the pre-opening of classes as government’s way of assisting employees in paying tuition fees and other school requirements for their children,” Budget and Management Secretary Joaquin C. Lagonera, said.

Lagonera said that Budget Circular No. 2010-1, which spells out the guidelines for the grant of year-end bonus (YEB) and cash gift, has already been issued and that funds for the purpose have been released earlier.

“The DBM has released P7.6 billion in funding requirements for the payment of the said benefits as part of the first semester cash release program to national government agencies,” Lagonera said.

With the issuance of the implementing guidelines, the budget chief assured the more than one million government workers that their agencies could already pay the first half of their YEB and cash gift for the year starting May 1.

Under the circular issued by the DBM, local government units (LGUs), government financial institutions (GFIs) and government owned and/or controlled corporations (GOCCs) are authorized to source the payment for these benefits from their respective local or corporate funds.

Qualified elective or appointive barangay officials and employees are also entitled to receive one-half of the YEB and cash gift based on honorarium rates, subject to the Personal Services (PS) limitation of local government budgets. Lagonera clarified however that the payment of the one-half of the minimum YEB of P1,000 for the Punong barangay and P600 each for the mandatory barangay officials, and their cash gifts are exempt from the enforcement of the PS limitation.

However, the PS limitation would apply to the payment of YEB and cash gift over the foregoing prescribed minimum amounts, which may be granted to other employees of higher level LGUs.

Remittances rise 7% to $4.34 billion in March

Manila Bulletin

Remittances grew seven percent year-on-year in the first three months of the year to $4.34 billion, the Bangko Sentral ng Pilipinas (BSP) reported Monday.

For the month of March, overseas Filipinos sent home $1.55 billion from $1.41 billion in February. It was also 5.44 percent higher compared to March 2009 of $1.47 billion.

BSP said remittances from land-based and sea-based workers increased by six percent and 11 percent, respectively.

In a statement, BSP Governor Amando M. Tetangco Jr. said prospects for more Filipinos finding more work abroad is “positive” in the next months, particularly in Hong Kong, Qatar, Taiwan, Kuwait, United Arab Emirates and Saudi Arabia.

Tetangco said employment opportunities “are expected to rise along with clearer signs of global economic recovery.” He quoted a report from the Philippine Overseas Employment Administration that in the first quarter this year, job orders totaled 155,334, of which 20.2 percent or 45,393 were job orders for service, professional, technical, and production-related work.

Tetangco also attributed banks expanded remittance network in the continued expansion of fund transfer volume. As of the end of March, the BSP noted that these networks increased to 4,483 from end-2009 of 4,192. These networks include tieups, remittance centers and local banks representative offices or branches abroad.

BSP earlier increased its remittances forecast to eight percent this year, from six percent. In dollar terms, remittances are expected to amount to $18.7 billion this year from $17.3 billion at the end of 2009. The previous projection was six percent or $18.35 billion.

The breakdown and breakup of Europe

John Mangun
Outside the Box
Business Mirror

The conception of the European Union (EU) happened in 1957 with the Treaties of Rome. The birth of the EU came with the formation of what is now known as the ‘Eurozone’ with 16 countries joining completely in a common currency on January 1, 2002. After a gestation period of more than 50 years, we may be witnessing the demise of both the euro and the Eurozone after less of decade of life.

More than $1 trillion is allocated to support the EU economic structure by, in effect, guaranteeing the debt of its economically weakest members, beginning with Greece. Two important conditions were a part of the series of agreements that formed the EU. The first was the member-states had to keep their financial affairs in order. Strict fiscal policy guidelines were established that both the “good” economies and the “bad” economies ignored. The second critical provision was that no member-state would be responsible for the debts of another. Because the first rule was ignored, the second rule had to be broken in trying to save the EU and the euro.

Guarantees of any sort are supposed to give credibility and inspire confidence. The economic ministers of Germany and France along with the US and the International Monetary Fund believed that their guarantee would do the job.

But like all guarantees backing a faulty product, this past week, many holders of the debt obligations of Greece and the other weak economies decided to take advantage of the EU guarantee. They sold their government debt and then immediately sold the euro that they received for these government bonds and went into the US dollar, Japanese yen, and gold.

As a result of this action, the euro went from 1.30 to the dollar to 1.23. The guarantee did not increase confidence because investors are so pessimistic about these economies defaulting on their debt or that the debt might be restructured forcing them to lose principle value.

Despite the $1 trillion being put on the table, no one wants most European government debt and no one wants the euro. There is talk that the euro will drop and trade one-to-one against the dollar. And if that happens, it will be the end of the European Union.

The inflationary effects of a devalued currency are unstoppable in this world where every developed nation is dependant on imports.

The developed world is being closed in on from all sides. It cannot keep its economic growth going without debt and more debt is impossible. It is printing money in massive quantities to give the illusion of economic growth but all that printing is inflationary. Currencies are being devalued as a desperate measure to pay off old debt as there is no real wealth left to pay these obligations.

And in Europe, the stronger economies like Germany will be brought down as they suffer because of the common euro currency.

At some point, perhaps before the end of the year if things continue as they are, countries such as Germany, France and others will be forced to abandon the euro to avoid going down with the sinking ship.

If the euro fails, then the US dollar will not be far behind.

Quoting one currency expert, “If you have the emergence of national European currencies as a result of the failure of the union, the mirror image strength of the dollar would instantaneously disappear.”

The euro and dollar are mirrors of each other. This means that selling the euro supports the value of the dollar. One goes up, the other goes down, creating a balance and equilibrium. Most dollar trading in the financial markets is through the US Dollar Index (USDX) which values the dollar against a basket of major currencies heavily weighted by the euro. Because the euro represents an economic system larger than that of the US dollar, the two currencies are said to mirror each other.

Quoting the currency expert again, “If the EU fails so does the USDX. With no mirror image to hold up the dollar artificially, the US dollar will fall faster than Greece’s credit.”

If the euro goes, so does this Dollar Index. If that happens, there is nothing to prevent a run against the dollar. Currently, if the Dollar Index goes too low, selling comes with profit taking, allowing the dollar to appreciate. If the dollar index disappears with the euro, then there is no counter force. If your favorite blue-chip stock goes way up, you sell, taking a profit and move into another blue chip that has not gone up. Or if that stock goes down, you sell out and move into another. But if there is only one stock, it could theoretically go up forever, or go down to zero.

After nearly a decade of the euro, there is no other currency to balance the dollar. Potentially, the Chinese renminbi could replace the euro in the world markets, but there is no way that the Chinese would ever allow their currency to be subject to pricing by the market and speculative forces.

If Europe goes back to individual national currencies, the weak ones will devalue to unheard of low prices causing even more economic and debt failures. The stronger ones like the deutschmark and the Swiss franc could be supported by their governments which would cause even more dollar problems.

Speculators would focus on the dollar because of the liquidity in the trading markets and the fact that it would be nearly impossible for the US to impose any kind of currency/capital controls like the Philippines did to protect the peso after Edsa 1. This is because there is almost as much US dollars held outside the US as there is within the US economic system.

This current European episode only accelerates the transfer of economic power and influence to the Chinese, Indians, and others in the developing world.

Buy the peso. Buy the PSE.

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

Monday, 17 May 2010

JG Summit quadruples profit to P4.4 billion

In first quarter
Manila Bulletin

JG Summit Holdings, the flagship of the Gokongwei group, posted a 410 percent growth in net income for the first quarter of 2010, to P4.41 billion from P863.99 million in the same period last year.

In a disclosure to the Philippine Stock Exchange, the firm said the continuous recovery of the financial markets and the strengthening of Philippine Peso vis-á-vis the US dollar contributed to the Group’s remarkable performance during the period.

However, even excluding these items, the Group’s core earnings still showed a 100.7 percent growth for the first three months from P2.42 billion to P4.86 billion during the period, while EBITDA reached P8.80 billion from P6.43 billion for the same period last year.

Consolidated revenues were up 13.5 percent from P26.18 billion to P29.73 billion due to the strong performance of most business units.

The substantial growth was driven by the continued improvement in sales and revenues of JG Summit’s businesses in foods, airline and real estate development, and telecoms business particularly in the wireless segment.

“Only our petrochemical business showed a decline in sales by 7.6 percent to P937.66 million during the period,” the firm said.

Consolidated cost of sales and services for the first three months of the year only increased 4.0 percent from P16.17 billion last year to P16.82 billion for the first three months of fiscal year 2010 despite higher revenues.

The increase was brought about by higher cost of sales and services recorded by the airline and wireless businesses, but this was offset by lower cost of sales recorded by URC as a result of lower costs of raw materials.

Aside from this, Robinsons Land Corporation also recognized lower cost of sales due to lower percentage of completion during the period.

Consolidated operating expenses increased 14.2 percent as a result of higher general and administrative expenses in our mobile phone network, increased airline operations and higher selling and distribution costs of the food business.

Sunday, 16 May 2010

All 19 DFA regional offices now issue ePassports

MANILA, Philippines—All 19 regional consular offices (RCOs) of the Department of Foreign Affairs have been issuing electronic passports (ePassports) since April 28, Foreign Affairs Secretary Alberto Romulo said.

“This way, our kababayans (countrymen) living in the provinces and overseas need not come to Manila to get a passport. They just have to go to an RCO nearest them and avail of the same fast and efficient services,” ne added.

The same day that the RCOs shifted from the machine-readable passport (MRP) to the ePassport, the Philippine consulate general in Hong Kong also rolled out the ePassports, the DFA-Office of Consular Affairs (OCA) said.

Other embassies and consulates general will soon follow suit, it said.

In the coming months, the DFA-OCA plans to accommodate more people as it will ramp up the system to accept more appointments—from 2,800 a day to around 3,300 a day, and even more in the near future. It is also aiming for a shorter queuing and turnaround time from receipt of application to the issuance of the passports. Earlier, Romulo said ePassport applications could last no more than 30 minutes from start to end.

Manila, Singapore okay more flights

Manila Standard

SINGAPORE and Philippine carriers have obtained official approval to mount more flights between the two countries, according to the Straits Times.

Following air talks that ended on Thursday, the two governments have decided to grant airlines on each side up to 14 more flights a week between Singapore and Manila.

Carriers will also have greater access to other Philippine cities including Clark, Cebu and Davao, the Times said.

Extra flights should bring better choices and lower fares for consumers, experts said.

The liberalization comes at an opportune time of growth not just within the Singapore-Philippine air travel market but across the region as well, said Singapore’s Transport Ministry in making the announcement of the expanded air deal Friday.

Last year, passenger traffic between the two countries grew 10 per cent despite the slowdown in the general aviation industry.

Singapore Airlines flies 28 times a week to Manila while Jetstar Asia operates 10 weekly flights to the capital city. Tiger Airways flies to nearby Clark, nine times a week. SIA subsidiary SilkAir also operates a total of seven flights a week to Cebu and Davao.