Friday, 17 June 2011

CebuPac buys $3.8-B planes

"This year ... we expect to be one of the few airlines in the world that will remain solidly profitable despite the high fuel prices."

Business Mirror

CEBU Air Inc. has placed firm orders for 37 new Airbus units with a total list price of about $3.8 billion, or roughly P165.4 billion, making it the largest single aircraft order ever made by a Philippine carrier.

The low-cost carrier is going to use internal funds and tap loans from export-credit agencies to finance the payment for its orders.

“We will be using the same financing sources for our current fleet. We will try not to take in more than we can absorb, and we expect to fully fund the predelivery payments through the old means that we have, which are internal cash flow, access to export credit- agency financing and commercial lending market,” Lance Gokongwei, airline president, said at a press conference on Thursday.

The orders are composed of seven A320s and 30 A321neo aircraft, with options for a further 10 A321neos. The orders will be delivered between 2015 and 2021. These are on top of firm orders for 18 Airbus A320s to be delivered from the second half of 2011 until 2014. This increases Cebu Pacific’s total firm orders of Airbus to 55.

The airline currently utilizes 33 brand-new aircraft, 25 of which are from the Airbus A320 family and eight ATR turbo-prop aircraft. By 2021, it will more than double its fleet and triple its capacity.

Gokongwei said the new fleet will be used to mount flights to new destinations such as Australia, India and northern Japan—places which the A320s cannot reach.

The new fleet will help the company save on fuel cost by about 15 percent and reduce its unit cost per passenger, which will redound to lower fares.

“The new aircraft provides us savings in two ways. First, on the use of fuel alone, we get 15-percent savings. The second benefit is that we are ordering a larger plane, which means more capacity,” he said. Fuel covers more than 60 percent of Cebu Pacific’s operating cost.

The airline is making this investment amid the rising cost of fuel in the world market and uncertainty in the aviation sector.

“We do believe that the Philippines’ tourism agenda will add fuel to [Cebu Pacific’s] growth,” said Gokongwei. “The years 2009 and 2010 were record-breaking years for Cebu Pacific. In 2011 we intend to fully break our record further in terms of passengers carried and revenue.”

In 2010 the airline carried 10.5 million passengers. Gokongwei said Cebu Pacific intends to carry more than 12 million this year.

“The general trend in the industry is that the load factors are staying quite constant—mid- to high-80s. I would say that there is a little bit of pressure given the amount of new capacity. Overall we expect profitability this year below than last year but we expect to be one of the few airlines in the world that will remain solidly profitable despite the high fuel prices,” Gokongwei said.

According to Gokongwei, Cebu Pacific is the third-largest low-cost carrier in Asia. The largest is Air Asia of Malaysia, followed by an Indonesian carrier. “Cebu Pacific is definitely larger than Tiger Air,” he added.

Cebu Pacific will be the first airline in the country to operate the A321neo, which is a larger and longer-haul version of an A320 unit. “There is very high demand for this aircraft. We expect our regional competitors will be making the same orders,” Gokongwei said.

Japanese sexagenarian enjoying 'second childhood'

Manila Bulletin

SAN CARLOS CITY, Pangasinan, Philippines — He’s a stranger in a strange place, doing a strange thing. But somehow everything makes perfect sense to Japanese national and third grade “pupil” Etsuo Yamagata.

“I want to study English, Tagalog, and Pangasinense,” Etsuo said in stammering yet comprehensible English. He is 63 years old.

Belinda Yamagata, 57, Etsuo’s Filipino wife and long-time employee of a leading Japanese electronics company, helps prepare the student daily for his classes at Jose Macam Paningbatan Sr. Elementary School here in the town of San Juan.

As a routine, Belinda or “Belen” accompanies her husband to school every morning before going to the local market. Thursday was no different.

“Every day, we leave the house at 6:50 a.m. and walk to school together. We treat it as exercise,” she said.

After having kamote and coffee for breakfast, Etsuo emerges from their eye-catching pink house carrying a back pack, and clad in a white T-shirt, walking shorts and rubber shoes. “I also like pandesal,” he quipped.

As soon as he stepped out, three kids half the man’s height joined Etsuo in the 10-minute walk to Jose Macam. He would attract a few more pupils along the way.

Belen swore it was a familiar sight. “He’s very friendly to kids. He gives them candies and plays with them. The kids like him a lot.”

For the children here, this old, foreign student is a celebrity.

Etsuo used to be a city council member back home in Okazaki City in Japan. Here in Jose Macam, he acts and is treated like an ordinary Grade Three pupil, said school head Arlene Sabangan.

“The kids are already used to him. He does all the things that a usual Grade Three pupil does,” Sabangan said, while pointing out that the sexagenarian is being accommodated more like a sit-in rather than an enrolled student.

“He said that he would stop going to classes after learning Tagalog, English and Pangasinense,” the school head said. Etsuo seems to be taking his sweet time, though.

“Too much enjoy,” he said of his experiences in school. “But sometimes, Pangasinense I can’t understand,” Etsuo snickered.

Apparently, Etsuo had already sat through an entire year with Six-Graders at the nearby Baldog Elementary School. “Gusto niya pauli-ulit nag-aaral kasi nag-eenjoy siya (He wants to study over and over again because he enjoys it),” Belen said.

He picks up lessons quickly too, said Grade Three teacher Mary Jane Hermogeno, 28. Hermogeno teaches 54 pupils in class, including Etsuo.

Upon reaching the school grounds, Etsuo’s first order of business is to help out 53-year-old Jun Aquino in picking up stray garbage on the quadrangle. “Lagi siyang tumutulong sa akin sa umaga maski hindi ko tawagin (He always volunteers to help me in the morning).”

The foreigner, who looks more like a 40-year-old and moves around like a 14-year-old boy, then settles down to study with his classmate up until 4 p.m. Usually, he still has enough spunk in him to play football with the kids after class.

“He serves as an inspiration because at the age of 63, he’s still very eager to learn. Just imagine his age!” Sabangan said.

As a result, she said the kids who interact with Etsuo also become more eager to go to school. His enthusiasm is infectious.

Thursday, 16 June 2011

Remittances grow 6.3%

January - April 2011 OF Remittances Total US$6.2 Billion
Media Release

Remittances from overseas Filipinos (OFs) coursed through banks reached US$1.6 billion in April 2011, growing by 6.3 percent from the year-ago level. This favorable development brought the cumulative remittances during the four-month period to US$6.2 billion, higher by 6.0 percent compared to the US$5.9 billion level recorded in the same period last year, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today. The sustained growth in cash transfers from overseas Filipinos was due to increased remittances from both sea-based and land-based workers, which rose by 12.2 percent and 4.4 percent, respectively.

Remittance flows continued to draw support from the steady overseas demand for Filipino skills and expertise and the continuing efforts of banks and other financial institutions to extensively promote and improve upon the financial products and services they offer in the remittance market.

Data obtained from the Philippine Overseas Employment Administration (POEA) indicated that demand for Filipino workers abroad remained strong. For the period 1 January - 31 May 2011, the approved job orders reached 269,386, of which 32.0 percent (86,300) were already processed while 68.0 percent (183,086) are still to be filled up. These job orders were intended for the manpower requirements in Saudi Arabia, UAE, Qatar, Kuwait, Taiwan and Hong Kong, among other countries. Moreover, the POEA also reported that new rules have been issued to strengthen the Temporary Foreign Workers Program (TFWP) in Canada effective 1 April 2011 to better protect foreign workers and maintain the Canadian government's focus on alleviating temporary labor shortages.

Banks and other financial institutions have also been actively introducing innovative remittance products (e.g., adding a remittance feature to credit cards which was recently introduced in the market) and providing reliable services to enable OFs to transfer money swiftly and securely to relatives back home. These initiatives are expected to encourage the use of the formal channels to capture a bigger share of the global remittance market.

For the period January-April 2011, the major sources of remittances were the U.S., Canada, Saudi Arabia, U.K., Japan, Singapore, United Arab Emirates, and Italy.

The Tao of modern economic policy

Business Mirror

‘Were I possessed only of the least knowledge, I would, when walking on the great way, fear only paths that lead astray. The great way is easy, yet people prefer the side-paths.

“Be aware when things are out of balance.
Stay centered within the Tao.
The Court is corrupt,
The fields are overgrown with weeds,
The granaries are empty,
Yet there are those dressed in fineries,
With swords at their sides,
Filled with food and drink,
And possessed of much wealth.
All this is robbery and chaos.
Far indeed is this from the Way.”

Chapter 53 of the Tao Te Ching, attributed to Lao Tzu.

It seems amazing that these words were written some 2,500 years ago and yet describes the world as we know it today.

The author begins by saying that even if he were of minimal intelligence, common sense would keep a person or institution from doing foolish things. Even though following common sense is easier, people want to go off the path.

The global financial turmoil comes down to individuals and institutions living way beyond their means and then borrowing deep into debt to avoid changing their ways. “Be aware when things are out of balance.” The financial balance sheets of all global banks are so far tilted to the debt side, that standard accounting practices were changed to allow the banks to carry on the asset-side, debt paper that is worthless. If the banks had to declare the market value of all the loans they have outstanding at true recoverable value, the world financial system would collapse immediately.

Remember for years after the 1997 Asian crisis, the business news was filled with the percentage of local banks’ nonperforming loans (NPLs)? The total NPL percentage for Filipino banks is now less than 3 percent. In July 2000 the NPL was 15 percent.

The US banking system is so fragile that even a 5-percent NPL is considered very risky. This is because the capital adequacy ratio of Filipino banks even in the post-1997 years is so very much higher than in the US.

The more severe an economic crisis becomes, the more corrupt the court, the government, becomes. During the economic depression of the 1930s, the US government confiscated all non-jewelry gold holdings of the American people. The government forced the people to sell their gold at a low price fixed by the government. This is nothing less than stealing and extortion.

In 2008 Argentina confiscated the 10 largest private pension funds, taking their assets for the government and then allowing the government to “guarantee” the funds. Outright theft. Last month Ireland imposed a tax on pension money, in effect taking away part of the money that people had contributed for their retirement funds. The US Treasury is now “borrowing” from the US Federal employees’ pension funds, of course, without asking the pension- fund holders if they would like to loan their money to the government.

This is corruption at its worst, and it is not isolated. Hungary, Bulgaria, Poland and France have all confiscated their workers’ retirement funds without permission.

The economic fields of the West and much of the world are overgrown with weeds; unproductive. Global economic growth is not sufficient to maintain today’s standard of living for tomorrow’s population growth or even today’s current population. Government policies have created an environment of nonproductivity.

Greece is the lowest financially rated economy on earth because the government encouraged borrowing instead of production. St. Paul wrote, “If any man will not work, neither let him eat.” If any leader said that, they would be denounced as antipoor. And yet, governments’ philosophy of “If any man will not borrow, neither let him eat” has pushed millions more into poverty in the last three years.

The American people have lost $11 trillion of their wealth since the peak of housing prices in 2007. A survey just released says 47 percent of all Americans would have to sell something to raise $2,000. An old, used car or a new automobile transmission costs about $2,000. The granaries are empty. Instead of storing wealth for themselves, people decided some decades ago to put their faith in the government to fill the granaries, and now they find them empty.

Still, amid what is perhaps the greatest global financial disaster in history, there are more billionaires than ever before. In the US 4.5 percent of all households are “millionaires.” Global “wealth” has hit an all-time high.

“All this is robbery and chaos.”

The fact that the Tao Te Ching described our current situation so accurately proves that what the world faces now is a repeat experience. This is not the first time that people and governments have not followed the way of good economic behavior and common sense.

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Wednesday, 15 June 2011

The West Philippine Sea and Subic Bay

Business Mirror

Two headlines appeared Sunday morning on the web site of the Daily Inquirer.

The top message was: “Aquino: Filipinos starting to taste ‘true freedom.’”

Underneath was: “US not coming to PH aid vs China.”

I wonder if anyone realized the irony of those two statements being together in light of it being the day Filipinos celebrate Independence Day, freedom day, from Spain and, in effect, also from the United States?

As the word war between China and the Philippines grew more intense, a presidential spokesman reminded the people not to worry, as the US and the Philippines signed a Mutual Defense Treaty in 1951. That treaty obligates each country to come to the other’s defense in the event of an invasion.

The Chinese government could send People’s Liberation Army Navy nuclear submarines to the middle of Manila Bay and park People’s Liberation Army tanks around the Rizal Monument and the Obama administration would caution the Philippines to use restraint and pursue all diplomatic means to avoid conflict.

“The US does not take sides in regional territorial disputes,” said the US press attaché.”

Now that is “true freedom,” or at least freedom from what some fear as a US neo-colonial empire.

However, the hypocrisy of the US Embassy statement is astounding. Wasn’t Iraq’s invasion of Kuwait a “regional territorial dispute”? Seems to me that Iraq was saying then that Kuwait was stealing Iraqi oil. In fact, Iraq also claimed Kuwait was actually a part of Iraq, based on historical records going centuries back. Does that sound familiar to some current claims on some disputed ocean west of Manila?

That part of the ocean claimed by PHL is now called the “West Philippine Sea” by the government. And Vietnam says you should refer to the area they demand sovereignty over as the “East Sea.” Of course, China simply calls the whole area the “South Sea” or “Our South Sea.”

The US refers to the area as “Not-Our-Problem Sea.”

While the “little” players in the game, Vietnam, the Philippines, Malaysia and Brunei, demand the resources like oil and fishing rights, for China, those are merely a bonus.

The Chinese are only continuing what the Japanese created as a concept between 1895 and 1937 and formalized in the term coined by Japanese Prime Minister Fumimaro Konoe in 1940: “Greater East Asia Co-Prosperity Sphere.” It represented the desire to create a self-sufficient “bloc of Asian nations led by the Japanese and free of Western powers.” Come forward to the 21st century by substituting “the Chinese” and “American power.”

The eventual goal of the Prosperity Sphere, after conquering these nations and removing Western powers, was to create a series of puppet states from Tokyo to Singapore to include China, Hong Kong, Macau, Annam (Vietnam), the Philippines, the Malay states, Brunei/Borneo and the East Indies Kingdom (Indonesia).

While Japan was looking to secure sources of every raw material from lumber to rubber and oil, China is more interested in the ocean itself.

Name the two busiest seaports on the planet? Singapore and Shanghai. Name the second busiest maritime shipping route in the world? The South China Sea, through the Taiwan Strait to Japan and the Luzon Strait, more directly to North America.

The nation and navy that control the South China Sea control East Asia shipping. The nation with control also can shut down the Chinese economy at any time.

From a strategic economic view, China cannot allow anything less than to have absolute mastery and dominance over the 3.5 million square kilometers of ocean between Singapore and Taiwan.

Prior to the end of 1992, the Yokosuka, Japan, based US Seventh Fleet was the master of those 3.5 million kilometers. While the Seventh Fleet is now no less powerful or mobile, the difference is that no longer does it make regular runs and regular exercises between Japan and the US Naval Base in Subic Bay.

The decision made by the Philippine Senate to end the bases treaty for use of Clark and Subic was the right choice for the Philippines, it was definitely not the best choice for either country. For the US, it was one of the worst military/geopolitical decisions in global history.

A small group of politicians from a “Third World basket case” country, wittingly or unwittingly, understood the importance of Subic better than all the “experts” in Washington, D.C.

The US should have given the Philippines any and everything it wanted and more to retain Subic Bay as a US naval station.

The US cannot assist the Philippines in any dispute over the West Philippine Sea even if it wanted to do so.

While the Philippine decision in 1992 was correct, nonetheless, the Philippines now stands alone, unaided, and may suffer consequences from US arrogance, pride and shortsighted thinking 20 years ago.

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Monday, 13 June 2011

Govt to build P71-M reservoir, dam in Batanes, to help area become self-sufficient in rice

Business Mirror

THE government will build a P71-million reservoir and irrigation dam in Itbayat, Batanes, to help make the area self-sufficient in rice by 2014.

The Department of Agriculture (DA) and its attached agency the National Irrigation Administration (NIA) said the construction of the Itbayat Integrated Agriculture Development Project is set to be completed by 2013.

In a statement, Agriculture Secretary Proceso J. Alcala said the project will increase 10-fold the present rainfed area from the current 33 hectares to over 300 hectares, and enable Itbayat farmers to plant two crops of palay every year.

Originally, the project only had an allocation of P11 million, but Alcala had instructed the NIA to revise the project and expand it after surveying the area.

With relatively more flatlands, Itbayat has been Batanes’s main rice producer, with some 33 hectares planted to palay, producing a measly 20 to 40 cavans (1 to 2 tons) per hectare. With a population of 16,000, such harvest is obviously not enough for the entire province, said Alcala.

With the construction and completion of a bigger reservoir, with the dam measuring 18 to 20 meters high, the DA said the irrigated area will cover more than 300 hectares, which could be planted twice a year. The reservoir could hold about 230,000 cubic meters of water, enough to irrigate 2 two palay crops annually.

Also, the DA will provide Itbayat farmers technical assistance and quality rice seeds to enable them to double their average palay harvest to 3 to 4 tons per hectare. At 2 croppings a year, the 300-hectare area could produce a minimum of 1,800 metric tons annually.

Alcala assured the support of other attached agencies of the DA, including the Philippine Rice Research Institute, the National Food Authority and the Land Bank of the Philippines to enable Batanes to attain self-sufficiency in rice.

Alcala handed over P2 million worth of farm equipment, projects and farm inputs to the provincial and municipal governments, consisting of a four-wheel tractor, small-scale irrigation systems, sprayers, cultivators, Ph meters, greenhouses, planting materials and assorted vegetable seeds.

He also committed P1 million to bankroll a livelihood project for rural women who will engage in the production of breadfruit, guava, and cashew, among other ptoducts.