Friday, 13 August 2010

Bicol seen rising 12% on mining boom

by Roderick T. dela Cruz
Manila Standard

Legaspi City—Bicol, the country’s fastest growing region in 2009, is expected to expand by another 12 percent this year, fueled by mining and energy sectors.

“In 2009, when traditional growth areas generally slowed down and the national GDP growth was a modest 1.1 percent, Bicol’s GDP increased by an impressive 8.2 percent,” Bangko Sentral Gov. Amando Tetangco Jr. said on Wednesday at the opening of the Bangko Sentral’s new office in Legaspi City.

“Out of the 17 regions in the Philippines, Bicol region claimed the distinction of having the fastest growth rate in terms of goods and services produced,” he said.

The new office will provide central banking services in the booming Bicol region. Tetangco said the new facility was built to keep pace with the expanding economy of Bicol.

BSP Legaspi branch services 75 branches of rural, thrift and commercial banks in the cities of Legaspi, Tabaco, Ligao and Sorsogon as well as the provinces of Albay, Sorsogon, Masbate and Catanduanes.

Albay Governor Joey Salceda confirmed that the Bicol region was booming, fueled by the expansion of the mining and energy sectors.

“It is near boom in Albay,” he said.

Salceda said tax collection in the province rose 36 percent to P2.5 billion in the first half from P1.9 billion a year ago.

Electricity sales rose 27.5 percent in the first half while tourist arrivals are seen to increase dramatically by 21 percent this year, with the opening of new hotels.

Bangko Sentral Deputy Governor Diwa Guinigundo said the bank is confident about the future of Legaspi and Albay.

Data showed that bank deposits in Bicol posted an annual growth rate of 12 percent to P53 billion in 2009. Bank loans also increased 15 percent to P13.8 billion last year.

Meanwhile, Bangko Sentral said it would continue to use a combination of cotton and abaca for the newly designed paper money or banknotes, to be launched in a few months to support the abaca industry in Bicol.

SM Land offers P20 billion for BCDA property

Manila Bulletin

SM Land Inc. has offered to invest P20 billion for the development of the 33.1 hectare prime government property south of Fort Bonifacio and a secured yearly revenues totaling P25.9 billion over a 20-year period.

The state-owned Bases Conversion and Development Authority (BCDA) Thursday announced that SMLI’s unsolicited joint venture proposal would be subject to competitive challenge as required under Annex C of the NEDA Joint Venture (JV) Guidelines.


GMA7 makes P1.69 billion in 1st half, up 24%

Manila Bulletin

Broadcast giant GMA Network sustained its strong financial performance for the first semester of 2010 even after the revenue windfall from political advertisements that ended in early May.

In a press briefing, the company said its net income for the covered period grew by 24 percent to P1.69 billion from P1.36 billion in the first semester last year.


SMC reports lower H1 net profit of P6.3 billion but core income up 7%

Manila Bulletin

Diversified conglomerate San Miguel Corporation reported that its consolidated net income for the first half of the year fell 89 percent due to one time gains last year while recurring net income rose 7 percent.

Vista Land net profit up 28% to P1.32 billion

Manila Bulletin

Vista Land & Lifescapes, Inc., the country’s largest homebuilder, it reported a 28 percent jump in first half earnings to P1.32 billion from P1.03 billion in the same period of 2009 and now expects net income this year to rise 22 percent to P2.8 billion from P2.3 billion in 2009.


Thursday, 12 August 2010

Prospering from the failure of the US

Written by John Mangun
Outside the Box
Business Mirror

The Philippines is going to enjoy a favorable economic situation for the rest of the year, probably extending into the second quarter of 2011.

An important barometer of business activity and confidence is advertising. Yesterday ABS-CBN announced earnings for the first half of 2010. This is the key: Recurring advertising revenue grew by P2.45 billion, or 36 percent, to P9.17 billion. Newspaper headlines that talked about the company’s earnings being a result of election spending were misleading. A 36-percent jump in recurring advertising means that private Filipino companies are willing to advertise to increase their exposure with the promise of increasing sales because they believe in a positive future.

For some time I have been saying, “Buy the PSE, buy the peso, and buy the Philippines.” This trend is going to continue for the rest of the year, assuming that targets are not hit sooner. As far as the Philippine Stock Exchange (PSE) goes, the historic high will be reached, but beyond that it is anyone’s guess.

The Philippine economy is going to show exceptional growth for 2010. The peso will continue its run higher, corresponding to strength in the major currencies.

However, the time of “plenty” for the Philippines will come to an end before 2011 is over.

The Philippines is riding the crest of the calm in the global financial markets and economies. Although business activity in the West, particularly in the US, is still poor, things seem better because of comparisons with 2008 and 2009. There is a false sense of ease and quiet in the West because things are not that much worse than before.

However, the worst is yet to come.

The US should be enjoying a strong 2010 and should be coming out of the problems of 2008/2009. It is not. The policies of the Obama economic team and the Obama-led Congress are a dismal failure.

The US government policies throughout 2009 and 2010 are similar to a man who has fallen on hard times, borrowing all the money he can and then going to the casino. The trillions of dollars of government spending have not created jobs or business activity. But what those policies have created is a debt burden unseen in the history of the US or the world. When you think that banks have been able to borrow money at a zero interest rate from the US Federal Reserve, bank leading is at the lowest levels in history. Bank failures are running higher in 2010 than they did in 2008 or 2009 and in 2010 the financial crisis is supposed to be over.

The Federal Reserve has made clear that it has no other option than to continue to borrow, keep interest rates at zero, and spend all the borrowed money. It is becoming more obvious every month that the US government cannot ever repay its debt.

The only alternative is to print dollars to pay that debt, and the result will be a collapse of the dollar and skyrocketing inflation.

I know that I have said that often before but the indicators of that hyperinflation happening are increasing in intensity and in more sectors of the US economy.

US companies are holding some $2 trillion in cash. If the economy and the outlook for the future were improving, companies would be starting to spend that money for hiring new employees and getting their businesses ready for a strong economic recovery. Instead, worried and fearful, they are sitting on their cash.

Further, food prices in the US, the most basic of all indicators of debased money and currency-caused inflation, are rising strongly. Food prices rose by 2.4 percent in March, the highest monthly increase since 1984. Between June and July, Wal-Mart, the largest retailer in the US, increased food prices by 5.8 percent.

The US has the most diversified agricultural-food-producing system in the world and the US is a major net exporter of food. Rising food prices is not caused by any supply-demand imbalances. It is caused by a growing lack of confidence in the purchasing value of the currency.

There is a great shortage of nurses in the US and most hospitals get a significant part of the revenues from government- and insurance-subsidized health-care programs. Yet Philippine deployment of nurses is down 50 percent this year. Private expenditures continue to drop even as money is becoming worthless in terms of what that cash can buy.

As the economic situation in the US continues to deteriorate, and it will, the Philippines, with its close psychological ties to the US, will be negatively affected. We have not broken the “they sneeze, we catch a cold” mindset…yet.

The US has dug itself into a very deep, black hole of debt, not unlike many Asian countries in the runup to the 1997 Asian crisis. The US is poised to become an economic “basket case.” But unlike Asia, the US is also burdened with huge required spending for government giveaways, and there is no foreign investment standing by to help with recovery.

However, problems for the Philippines will be more imagined than real. Business activity will slow and then the realization that this is not the US will kick in and the economy will continue to flourish. In addition, investment and money will flee to nations like the Philippines, further boosting the economy.

The personal and business strategy for the next year to 18 months is this. Get onboard the speeding train of economic activity while keeping a cautious eye on the coming slowdown. Maximize your wealth creation, whether in the stock market or your business, but be prudently looking ahead. Conserve assets and build cash reserves anticipating several lean months. Those cash reserves will be doubly valuable when the US begins to accelerate downward and the Philippines finally and robustly begins to disconnect from the US.

Buy the PSE. Buy the Peso. Buy the Philippines. The best is yet to come.

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Traveling A-Z: Marinduque

Manila Bulletin

Located at the geographical center of the Philippines, Marinduque is home to the Moriones Festival, a top tourist attraction wherein locals parade in costumes and masks, representative of the Roman soldiers during Biblical times. It also boasts of scenic beaches, diving sites, mystical caves, hot springs, and serene isles, making it an ideal retreat for adventurers, spelunkers, and nature lovers.

The island of Marinduque owes its origin and name to the legend of Marina and Garduke – lovers whose romance ended tragically. It’s been said that Garduke, a prince from the nearby kingdom of Balayan (now Batangas) fell in love with Marina, the daughter of a local chieftain in the kingdom of Tayabas. Their parents were opposed to their love and so they eloped by going out into the sea where they perished and eventually their remains formed the island which bears their names.

Today, Marinduque is known for farming, fishing, and tourism, the last being seen as the next catalyst for development in the province. A treasure trove of exquisite natural beauty, this island of 370 square miles is dotted with various white sand beaches, well-preserved diving sites, enchanting caves, rejuvenating hot springs and tranquil islets that provide for a perfect getaway. Being an island of volcanic origin, hot springs, are also a common feature in Marinduque.

Local Dialect: Tagalog

Must dos:

Take part in the Moriones - The Moriones Festival is an amazing spectacle that takes part all over Marinduque during Holy Week. During the Lenten season, the province comes alive with people from all over the country visiting to witness the very popular Moriones mascots, a colorful religious celebration that links the story of Longinus with Christ’s Passion and Death.

Diving - Marinduque has a lot of places to explore underwater, generally the drop-off into the reefs and marine life of the island is a few hundred meters off shore. The Tres Reyes Islands are some of the nice spots for diving or snorkeling. The islands are surrounded by abundant marine life and warm tropical waters.

Must See:

Bathala Caves - The Bathala caves are said to be mystical and the repository of psychic powers emanating from various points of the universe. It is believed that there are seven caves composing the Bathala Cave Complex. However, only four of these caves have been explored.

Paadjao Falls - A series of gently cascading falls ending in a 10-feet deep pool of crystal-clear waters, Paadjao Falls is an ideal place for family picnics and camping.

Natangco Islet - Natangco is an eight-hectare islet with a short stretch of powdery white sand beach that gradually slopes into the sea. This islet is a haven for scuba divers, its waters teeming with corals, marine life, butterfly fishes, and the occasional siganids.

Battle of Pulang Lupa Marker - A marker stands at the site of the bloodiest battle ever fought in the island between the Marinduque Revolutionary Forces and the Americans. The “Battle of Pulang Lupa” was the first known major battle won by the Filipinos over the Americans.

Boac Cathedral - This cathedral was built sometime in 1656. The architecture is Fil-Hispanic Gothic with much of the original structure faithfully preserved - the facade and main body, the belfry, and the altar. Stained glass windows, though a later addition, adorn the walls.

How to get there:

Regular flights from Manila can take you to Marinduque in about 45 minutes. You can also take a bus to Lucena City, and then hop onto a ferry for the Buyabod Port in Sta. Cruz or Balanacan Port in Morong. Other bus lines can also take you directly to Marinduque from Pasay, or Kamias, Quezon City.

Tuesday, 10 August 2010

ABS-CBN nearly triples profit to P2.27 billion

In first 6 months
Manila Bulletin

ABS-CBN Broadcasting Corporation expects to easily hit its P3 billion profit target for the year after it reported that its net income for the first six months of 2010 nearly tripled.


SMC group, Korean firm ink deal for P177-M Clark project

Written by Miguel R. Camus
Business Mirror

THE consortium backed by San Miguel Corp. (SMC) that plans to redevelop the Diosdado Macapagal International Airport (DMIA) has partnered with an international airport management firm for the $177-million project within Clark Freeport Zone.

The BusinessMirror learned that the Philco Aero Group has tapped Korea Airports Corp. (KAC), which handles the operations and management of 14 airports in South Korea, for the Pampanga project.

As part of the agreement, Philco Aero chief executive Ricardo Penson said KAC will acquire a 5-percent stake in the Filipino-owned consortium which also includes partners Posco Engineering and Construction Co., Samil PricewaterhouseCoopers and Korea Development Bank.

Penson said the agreement was structured in such a way that a Filipino team can assume management of the airport “with international standards” after five years.

“We have concluded talks with Korea Airports Corp. who will be our O&M [operations and management] partner. We will be signing the share purchase agreement this coming week,” Penson told the BusinessMirror.

To be concluded also is the systems integration deal with South Korean telecommunications giant Korea Telecom, Penson said.

Philco Aero is still in the middle of negotiations with state-run Clark International Airport Corp. (CIAC) for the development of a second terminal within the complex. CIAC oversees the airport which now being positioned as the country’s next international gateway.

CIAC in May went into detailed negotiations with the Philco Aero Group which, it said, submitted the “superior offer” for the project, besting Malaysian consortium Bristeel Overseas Ventures Inc.

Should Philco Aero and CIAC end in favorable terms, negotiations will be followed by the signing of the terms of reference after which a “competitive challenge will held before a contract is awarded.

Penson also lamented alleged efforts by Bristeel to discredit the Philco Aero Group, citing published reports.

“The CIAC board is aware that Bristeel cannot comply because they insist on being a 100-percent Malaysian company,” he said. “Why will Filipinos allow a Malaysian to operate our next airport when Filipino companies [can] do it themselves?”

“We are not a fly-by-night corporation. We have San Miguel as a partner,” Penson emphasized. Bristeel and CIAC officials could not be reached for comment yesterday.

Diversifying conglomerate SMC, which recently acquired a majority interest in Caticlan Airport near Boracay Island, is taking a majority position in Philco Aero, Penson said.

Metro Pacific Investments Corp., an infrastructure conglomerate led by businessman Manuel V. Pangilinan, has also expressed its interest to team up with SMC for Clark.

Penson said the original investment of $126 million has been upgraded to $177 million as talks now include the upgrading of Terminal 1 and additional equipment.

The Philco Aero proposal will allow DMIA, which handled 750,000 passengers last year, to gradually increase its passenger capacity to 3 million initially, then 5 million and 7 million over a five-year period.

The Clark civil aviation complex encompasses 2,367 hectares within the 4,400-hectare Clark Freeport Zone.

Economic courage

Written by John Mangun
Outside the Box
Business Mirror

The weakest link in any organization is at the top. Every institution is only as strong and as effective as the leadership.

The leadership of the Philippines has lacked courage, or to use the vulgar Spanish term, cojones, for far too long. That is not to criticize any one person because, while courage is an individual characteristic, personal courage is just about worthless unless that quality is cascaded throughout an organization.

A courageous general cannot win battles unless that courage becomes a part of the policy and the mindset and behavior of everyone within the army. However, a courageous general has the obligation to get the troops to buy-in and become part of the general’s courageous thought and actions.

What is courage? The traditional dictionary definition goes something like this: “The quality of a confident character not to be easily afraid or intimidated. It is the ability to do things which one finds frightening.” American author Mark Twain wrote, “Courage is not the absence of fear. It is acting in spite of it.”

An important reason to revere and respect Dr. Jose Rizal was his courage. He took it directly, too, and put his grievances and ideas right in the face of the Spanish and the Church that supported the abuses of the Spanish colonizers. His courage inspired courage in dozens of other leaders and thousands of ordinary Filipinos.

Perhaps the best way for a leader to judge his or her courage is to look at the reaction of people when that courage is displayed. Those who understand and embrace the benefits of that courageous thought and action, themselves are emboldened to do the right thing. Those who are satisfied with the way things are, will find reason to rebel against the leader’s courage.

President Aquino took a bold move in banning sirens on private and non-emergency public vehicles. Of course, it is only a symbol but it is an important symbol. Less symbolic is his strong language about corruption. The cancellation of the “midnight” appointees also is symbolic but important. It would have been easier and less courageous just to have ignored the issue. He did not.

Honestly, though, it is easy to be courageous about corruption. Displaying economic courage is an entirely different matter and rarely has the Philippine government and its leaders shown economic courage.

You get a job offer from another company. Leaving the comfort zone of your present employer after many hears takes courage but you know that it is an economically wiser decision to transfer. Ever done that or known someone who has? That takes cojones.

You may have decided to quit your job after many years and struck out on your own, opening your own business. That takes a lot of courage, especially when many others are telling you how foolish you are both before and after you make the move.

President Fidel Ramos exhibited economic courage during his term. Deregulating and opening up the telecommunications sector was a bold and courageous move. Of course, the established system did not work very well. But changing to an unknown was frightening. And the small minority that benefited from the status quo fought madly to stop Ramos.

From the moment he uttered the words about public-private partnership in his State of the Nation Address, the benefactors of the current system began howling. Those who hate the private sector and love big government (because of the benefits they receive) bared their fangs and claws.

But those looking for courageous economic leadership, understanding the potential if the President’s vision could be realized, started thinking outside the comfort zone.

San Miguel Corp. vice chairman Ramon S. Ang is the first to challenge the President’s word and to test his resolve and courage. From the Daily Inquirer: Ang “is proposing the privatization of Philippine Amusement and Gaming Corp. [Pagcor] to raise as much as $10 billion.” With $10 billion in cash, Ang said the impact of Pagcor’s privatization would be “stunning” not only on the government’s cash position but also on the country’s debt stock and economic standing in the region. Mr. Ang is right.

Privatizing Pagcor would be the jewel of public-private sector partnership for the government. The government would still regulate and control, but the government would receive a huge financial windfall unavailable any place else.

Pagcor’s casino operations are a bit of a joke in the international gaming and travel community. The only reason foreign gambling enthusiasts come to the Philippines is that it is cheap. I know. I used to be one. I have traveled to almost every major casino hub—Monaco, Las Vegas, Malaysia and Aruba. Pagcor’s casinos are exactly what they are supposed to be—a government-run corporation, lifeless, not very user-friendly, and non-competitive.

True, Mr. Ang is thinking very big with his proposal. But that is what real courage can lead to. That P450-billion investment would never be equaled. But think of what it could do for this economy. Each good-paying, sustainable job costs about P150,000 to create. Privatizing Pagcor could potentially create 3,000,000 new jobs if the government spends the money productively.

It will take an immense amount of courage on the President’s part to make this proposal happen. He will be opposed at every turn. He will have to fight every single individual who benefits under the current system. But that is what being a leader is all about.

Mr. Aquino now has been given the opportunity to put action behind his words and to prove to the nation that he has the courage to implement his convictions. It will be interesting, to say the least, to see how this plays out over the next six months.

Are we entering a new era of economic leadership? The answer to that question rests with Malacañang.

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