Monday, October 29, 2012

PHL credit rating goes up a notch

All the major credit-rating agencies now rate the country’s credit standing the same way after Moody’s Investor Service on Monday announced a one-notch upgrade for the Philippines to “Ba1” from “Ba2” with a stable outlook.
Rivals Fitch Ratings and Standard & Poor’s previously raised the country’s credit stature a notch lower than the triple B (“BBB”) category, the minimum debt rating for countries whose global IOUs are considered investment grade.
The upgrade was in recognition of the country’s improved economic performance and continued fiscal revenue buoyancy in the face of deteriorating global demand, its enhanced prospects for growth over the medium term and its stable financial system that helps limit contingent risks while providing the government with a stable financing source.
Moody’s also upgraded the country’s long-term foreign currency (FC) bond ceiling to “Baa2” from “Baa3” and upgraded the long-term FC deposit ceiling to “Ba1” from “Ba2”.
The short-term FC bond ceiling of P-3 and the short-term FC deposit ceiling of “Not Prime” are unchanged. The outlook for these ceilings is stable.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. welcomed Moody’s rating action, saying
it had the effect of aligning all three major sovereign ratings at a single point just a notch below the long-sought investment grade category.
In explaining the upgrade, Moody’s said the Philippines demonstrated considerable economic strength and fiscal resilience despite headwinds from softening external demand.
In contrast to similarly rated countries, the country is poised to record a combination of faster growth, lower inflation, exchange-rate appreciation and an increase in foreign-exchange reserves, while maintaining trend debt consolidation, the agency said in a statement.
“In addition, cyclical features support improved prospects for growth in the medium term. Despite the lack of progress in its Public-Private Partnership Program, the government’s spending on infrastructure has picked up, but its fiscal impact has been mitigated by the continued gains from enhanced revenue administration. Also, remittance inflows continue to increase despite the global economic slowdown, which further underscores their role in sustaining private consumption and maintaining a healthy current-account surplus.
“Over the longer term, the landmark peace agreement signed between the government and the Moro Islamic Liberation Front [MILF] may have wider beneficial effects on investment and economic growth in Mindanao—the country’s second-largest group of islands—which has untapped agricultural and mining potential.
The local banking system was cited as an additional source of credit strength for the economy.
Also cited was macroeconomic stability best displayed by the success in the BSP’s inflation targeting regime.
The country’s healthy external payments position is exemplified by more than $80 billion worth of foreign-currency reserves and the surplus state of the balance of payments for several years now.
“Taken together, these strengths have contributed to the appreciation of the peso and lower interest rate costs for the government. These have, in turn, helped accelerate the process of debt consolidation, thus addressing the relatively high stock of debt, a constraint on the Philippine rating,” Moody’s said in a statement.
It noted that the long-term FC deposit ceilings have been maintained at the same level as the government bond ratings.
The likelihood of a bank default on an FC deposit or other FC short-term liabilities is mitigated by the presence of ample liquidity in the Philippines’s foreign-currency deposit units (FCDUs), Moody’s said.
Tetangco said the BSP will continue to craft monetary, external and bank policies “ensuring that the gains reaped thus far will lead to the sustained improvement in the country’s real gross domestic product [GDP], financial sector responsiveness and external debt manageability in a non-inflationary environment.”
“With the government’s concerted efforts and with the support of the private sector, the Philippines should achieve an investment grade credit rating sooner rather than later,” he added.
Malacañang also welcomed the Moody’s upgrade.
It said also on Monday that the country’s latest credit rating reflected “sustained international confidence in the Philippines under the Aquino administration, especially striking given a weakened global economy.”
“Indeed, this upgrade acknowledges our resilience and commends our robust responses to an increasingly challenging milieu,” according to Palace Spokesman Edwin Lacierda.
Lacierda, in a statement, said Moody’s also recognized the country’s strong macroeconomic fundamentals and “government efforts to enhance its fiscal space, as it continues to strive for inclusive growth.”
He added that this pursuit of inclusive growth includes the recently signed Bangsamoro Framework Agreement, “which may harness the long-untapped potential of Mindanao, as well as secure equitable progress for its people.” The agreement provides, among other concessions, for a political territory for the country’s Muslim minority, majority of whom are found in Mindanao.
Lacierda said Standard & Poor’s and Fitch Ratings had previously rated the Philippines one notch away from investment grade status, making the Moody’s rating a “milestone” since “it has been a decade since all three credit-ratings agencies rated the Philippines one notch below investment grade status.”
“Good governance is good economics,” he added.
The Moody’s credit-rating upgrade is the ninth positive ratings action since President Aquino assumed power in 2010.
(Mia M. Gonzalez)

Sovereign-wealth fund to speed up government programs

The rationale for a Philippine wealth fund can be found in the host of Asian and other countries that have established their own sovereign-wealth funds (SWFs) just to induce economic growth. A rise in the level of economic activity, after all, induces a ripple of benefits that range from increased income to higher government revenues, exemplified by higher tax collections.
Vietnam conceptualized its own SWF on June 20, 2005, after its own reserve level rose. It started its own fund in August of the     following year and called it the Vietnam State Capital Investment Corp. (SCIC).
SCIC’s primary objectives are to facilitate reforms of state-owned enterprises and improve efficiency of the state capital utilization.  It was mandated to represent state capital interest in various types of business areas, including financial services, energy, manufacturing, telecoms, construction, transportation, consumer products, health care and information technology.
It has since contributed capital to various ventures and agreed in the equitization, or the reverse of privatization, of other enterprises.
This Vietnam model can serve as the Philippines’s own as the Aquino administration puts up a buffer fund that would contribute to the pursuit of public-private partnership projects.
There is, however, a legal hurdle that the Aquino administration would have to contend with as the present Bangko Sentral ng Pilipinas (BSP) charter frowns on constituting such a wealth fund as what other sovereign nations have done.
This, though, is easy to deal with, as Mr. Aquino appears to have a firm grip on both chambers of Congress, which can then allow the BSP, through legislation, to amend its charter. The members of Congress, we are sure, would not do anything to defer the advancement of the country’s economy and what better way to show this than by approving posthaste the first hint of the BSP that it wants to change its charter to enable it to put up a sovereign-wealth fund.
The putting up of such a fund as soon as possible would be very timely. The recent signing of a framework agreement for the cause of lasting peace in Mindanao would need economic activities that could only be realized with the government having its own sovereign-wealth fund. By way of explanation, if the government has its own SWF, it need no longer suffer the consequences of agreeing to a disastrously high investment return as in the case of the MRT 3 project. That private endeavor, not too many may know, resulted in the punching of a huge hole in the government’s deficit levels as the ridership was not enough to pay for the costs of maintaining the line and assuring the 15-percent return.
The SWF acts as a buffer fund of sorts to insulate Filipinos from the consequences of lower allocations for government services, as the money intended for such, like the construction of schoolbuildings and new roads, is diverted to the MRT proponents.
Outside of Vietnam, the other Asian countries that have their own SWFs are Malaysia with its Khazana Nasional, New Zealand with its Super Annuation Fund, Singapore (Temasek Holdings), Indonesia (Government Investment Unit), China with its three SWFs, namely, the China National Security Fund, China Investment Corp. and China’s Africa Development Fund; Brunei with its Investment Agency and Australia with its Future Fund.
According to the influential Sovereign Wealth Fund Institute,  which charts the course of SWFs all over the world, there has been a shift from the “traditional reserve management to sovereign-wealth management.”
The institute said, “Many central banks possess reserves massively in excess of needs for liquidity or foreign-exchange management.”
Studies done by the BusinessMirror show that the BSP can apportion $20 billion as a start-up fund and still leave more elbow room for the monetary authority to flex its muscles in making sure that inflation does not rear its ugly head, its very reason for being.
After all, the start-up fund amounts to just a little over a year of remittances from the army of talented Filipinos.
The BusinessMirror extrapolations show that the remittances had an average growth of 14.2 percent in the last six years owing to a diversity of skills and destinations. In 2010 the record high of $18.8 billion in remittances accounted for 10 percent of the country’s gross domestic product. 
With a Philippine wealth fund, the overseas Filipino workers would be indirect participants in a government push to achieve double-digit growth. That alone would give the OFWs the added pat on the shoulder that they richly deserve.
Indeed, many bankers I talked to agree that the anti-corruption agenda of Mr. Aquino and the growth that the country is experiencing relative to the downturn in other economies, as well as the push for infrastructure projects, would have an added dimension when the Philippine wealth fund is established.

Time ripe for sovereign wealth fund

First of two parts
In less than a decade, the Bangko Sentral ng Pilipinas (BSP) saw its gross international reserves (GIR) surge from $15.02 billion as of end-2002 to $80.1 billion as of end-September 2012—with the country’s unsung heroes, the overseas Filipino  workers, steadily increasing their remittances.
This fivefold rise in the GIR, with three months to spare, has resulted in a very comfortable margin of safety for the BSP’s reserve-management push, since the end-September GIR already account for more than a year of imports.
Usually, a country’s reserve level should be able to finance three months of imports. For prudent levels, a central bank’s reserves of six months are seen as enough buffer for any financial hiccup that could hit the country.
Continued streaming of and expected yearly rise in the remittances from the OFWs have been fueled not just by an increase in the number of workers but also by a dramatic shift in the kind of talents employed.
This marked change in the jobs of the country’s  OFWs from household services to technical ones in information technology, hotel management, engineering  and oil drilling that account for more than half of our overseas workers has given rise to suggestions that the country put up its own sovereign-wealth fund (SWF) from the GIR.
One senior banker told the BusinessMirror that time is ripe for the Philippines to have its own country fund with the seed money coming from the BSP. The banker said the country could initially have $20 billion as start-up fund.
A $20-billion sovereign-wealth fund would mean that the country could still have a $60-billion reserve level, which is more than enough to finance 10 months of imports—well above the prudent level of six months of imports.
It could be used for some of the so-called PPP (public-private partnership) projects that the government has identified to jumpstart the economy. More than 15 PPP projects are on the pipeline and ready for bidding from foreign investors from China to Australia and Thailand to the United Kingdom.
With ready government funding from the SWF, foreign investors are immediately assured that the projects could be pursued with no need for those government guarantees that usually mean higher costs to be borne by Filipino taxpayers, such as the Metro Rail Transit system, which meant a 15-percent guaranteed return for  investors resulting in a subsidy so huge that the government had to bear the burden of added costs.
With its own sovereign-wealth fund, the government need no longer have to worry about guaranteeing unconscionably high-investment returns for investors. It would also mean the added advantage of making the government earn a bit more as a partner in PPP projects.
The buzz for an SWF for the country started with the continued surge in remittances that now average $1.5 billion a month.
The BSP data showed that it took seven years for the reserve level to double from $15.06 billion as of end-2000 to $33.75 billion in end 2007.
But it took just half that time for the reserve level to double again to $67.78 billion as of end-April this year.
The reserves topped $40 billion in July 2009, and raced to $53.75 billion in September 2010. Two months hence, the BSP reserves would hit $60.56 billion.
The need for the Philippines to have its own SWF is premised on the use of the excess reserves to fund economic activities that would result in substantial economic growth. One such activity could involve financing a new roadway that would  open up economic opportunities in Bangsa-moro, the territory that the country’s Muslim minority got under a recently signed peace agreement between the Aquino administration and the Moro Islamic Liberation Front (MILF). This roadway and other possible projects would catapult the Mindanao region in the Philippine South to economic pre-eminence fueled, no doubt, by peace dividends that would accrue as a result of the signing of the PHL-MILF agreement.

Friday, October 26, 2012

The truth behind the 4-hour workweek

In our frenetic, overscheduled world, sometimes the fastest path to success is promising the masses a way out. It certainly worked for Tim Ferriss. His 2007 book The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich became a worldwide blockbuster, and today it’s a winning formula for a bevy of globe-trotting pundits who rocket to the top of the New York Times’ “most e-mailed” list with essays on “The Joy of Quiet.”
Getting away from it all is top-of-mind for me right now, as I’m finishing up an enforced convalescence and planning a real vacation later this fall. My downtime helped me realize the acuteness of many professionals’ desperation; they’re miserable and overworked. So isn’t it about time we all started cashing in those frequent-flier miles?
Unfortunately, it’s a lot easier to blame our burnout at the office on a lack of beach time than it is to honestly evaluate our performance. To earn the right to take time off in today’s hypercompetitive global marketplace, you’ve got to meet a few preconditions:
  •  You’ve already built your expertise. There’s plenty of buzz these days about flextime and other innovative workplace arrangements. But some employees, who assume less face time means fewer hours worked, are in for a rude surprise. You can’t compete by working a 40-hour week, much less a 35-hour one. Only working on the employer’s clock doesn’t give you enough time to develop those “10,000 hours” of expertise. You’ve got to use your nights and weekends—and your vacations.
  • Your work can’t just be work. How exactly does Ferriss pull off a four-hour workweek? He doesn’t. As he declared in a 2008 blog post, “The goal was never to be idle.... The goal is to spend as much time [as] possible doing what we want.” For Ferriss, on the day in question, that meant radio interviews, writing a magazine article and reviewing web-site designs.
  • Your vacation shouldn’t be just a vacation. I’ll certainly have fun when I’m on vacation in Paris later this fall. But I’ll also accomplish some valuable work by upgrading my global outlook and contacts. I’ve scheduled meetings with business-school professors and started reading up on contemporary French politics and culture. By the end of two weeks, I’ll have done more than consume an inordinate quantity of baguettes and cheese; I’ll hopefully have a valuable new perspective to add to my skill set.
Dorie Clark is a strategy consultant who has worked with clients including Google, Yale University and the National Park Service. She is the author of the forthcoming Reinventing You: Define Your Brand, Imagine Your Future.

Comfortable living for every Juan

OWNING a house is a laborious achievement. Equally so is the construction of a new abode or redoing what’s already been acquired. Luckily, homeowners have a trusted partner in Mandaue Foam.
For 40 years, this Cebu-grown company has enabled Filipino families to fill their houses with dreamy home furnishings. From simple bedding products to home accessories and state-of-the-art furniture, customers can have everything they need to build the home of their fancy, as well as impeccable service and design consultancy.
What started as a startup business that manufactured foam four decades ago, Mandaue Foam Industries Inc. (Mandaue Foam) has metamorphosed into a big player in its field that is now one of the country’s top 1,000 corporations. True to its commitment to provide clients with quality and value-for-money products, it has now gained the stature of being the “go-to” home-store for everyone.
The tremendous success of Mandaue Foam all began when entrepreneur Rosita Uy started making foam in Cebu in 1971, with just a starting capital of P100,000. This, in turn, led to the opening of her first store on February 25, 1972.
“We manufactured polyurethane foam for [the] upholstery needs of furniture exporters and the growing population of Cebu. At that time, our focus was the wholesale of foam for distributors and exporters who would come to us. Foam distributors would send production orders, and the foam would be produced and we delivered it to their distribution partners,” recalled architect Rodrigo M. Galagar, production manager of polyurethane foam of Mandaue Foam.
Seeing the need for a complete home store, Mandaue Foam expanded outside of Cebu. A showroom in Davao came into being in 1981. Alongside its branch expansion, product lines were also diversified to include pillows, dining tables and bed frames, among others. Spring bed became a regular fixture in 1984. Signature items were also offered such as Flex Foam and Hotel Quality Gala Bed Mattress.
Refusing to rest on its laurels, the company opened two more outlets—one in Pava, Iloilo, and another in General Santos City in August 1998.  One year later, Mandaue Foam introduced sofas in November 1999. The turn of the century then saw the mushrooming of more outlets within the Visayas and Mindanao regions, particularly in Cagayan de Oro, Bacolod, Davao, Iloilo, Butuan and General Santos City.
Mandaue Foam started to import furniture items from China, Malaysia and Indonesia, and sold them locally in 2003. But this did not stop them from continuing to promote Filipino craftsmanship in their showrooms. The company put up its own wood-working factory in July 2005 to manufacture furniture made out of mahogany from Mindanao. 
Following the success of its business in the Visayas and Mindanao areas, it then set its sights on Manila and the Luzon region. A showroom was inaugurated in Cainta, Rizal, in 2007, and two more outlets were opened—one on Quezon Avenue in 2009 and another in Las Piñas in 2010.
To date, Mandaue Foam has 18 showrooms strategically located in key areas of the Philippines. All these stores carry a wide array of home and bed products, entertainment units, office tables, curtain accessories, carpets, lightings, as well as foam and packaging needs of both the fishery and export sectors.
Keeping in mind the customers with a unique taste for the design of their homes, Mandaue Foam has now transformed into a complete “one-stop shop” that offers easy solutions by allowing patrons to customize their home furniture. 
“We want to be part of our customers’ dream home, so we give them the freedom of modifying our pieces to match their style,” Mandaue Foam managing director Ryan Uy said. “We’re able to tailor our all sofas, mattresses and wooden furniture to their specific liking. Simply choose a design, fabric material and tell us the specifications. We’ll take care of the rest.”
To provide professional design consultation services to customers, who may want to have their furniture custom-made, in-house interior designers are always available to provide assistance.
“[When designing] we concentrate more on the functions. For example, condos and apartments are existing everywhere, so we would like to be in their homes. We check on the practical side. First, we consider the price, the space and then the design,” explained Melvin Nemenio, interior designer and head of PRD Department (Wood Furniture) of Mandaue Foam. 
From manufacturing and wholesaling, Mandaue Foam has quickly evolved and ventured into retailing. This, eventually, has allowed the foam manufacturer to cater to the needs of homes, hotels, hospitals, furniture exporters and even corporate offices, thus, successfully capturing 20 percent of the foam and furniture market at present.
Now celebrating 40 fruitful years of helping Filipino families beautify their homes, Mandaue Foam continues to think forward and innovate, guided by the entrepreneurial spirit of its founder and competent skills of its people, to provide every Juan comfortable living he deserves.

In Photo: This modern living room set up in Mandaue Foam’s showroom features an L-shaped sofa accentuated with floral-printed throw pillows perfectly matched with the paintings on the wall. On the side, the flamboyant, tall Christmas tree ornamented with red and gold balls and ribbons lends a Christmassy appeal.

Neo-Asian living at Rhapsody Residences

AMONG architectural styles, Neo-Asian or Modern Asian projects serenity and sophistication through its distinctive elements. Simple but elegant lines, light earth colors and minimalism are easy to the eyes, producing a soothing effect. Triangle arches and roof tiles are temple or pagoda features that inspire spirituality and meditation. Koi ponds conjure harmony with nature and gentleness for relaxation. Materials such as glass and metals add class and modernity. It’s no wonder a sense of calmness pervades in a Neo-Asian environment. One such place is Rhapsody Residences.
Rhapsody Residences is DMCI Homes’ Neo-Asian-themed mid-rise residential community located along the East Service Road in Sucat, Muntinlupa City. The design is distinguishable through its Oriental gateway along the East Service Road as well as its tea house and koi pond within.
Overall, elegant design, meticulous master-planning, scenic landscape and modern amenities make Rhapsody Residences perfect for families seeking a relaxing and healthy home and lifestyle in the city. Eight five-story condominiums, one 10-story building and 10,701 sq m of open spaces in a 3.8-hectare property make the community very spacious for utmost comfort. Single-loaded corridors inside the buildings with two-bedroom units of 58.5 to 82.5 sq m add to the generous living spaces.
Life at the Rhapsody Residences is in harmony with nature. Lush greens, rows of trees and thick foliage, pocket parks, gardens and playgrounds fill open spaces all around the housing structures. Within each building is a garden space or a central atrium that allows natural light and fresh air to freely flow. Each of the 1,127 units in all nine buildings named after musical instruments also has a balcony for breeze and sunlight to come in.
The healthy environment is complemented by resort-type recreational facilities that promote wellness for the entire family. There is a swimming pool for adults and for children. There are jogging and biking paths, a meditation area, a fitness gym, a basketball court, a badminton court, and an activity lawn.
Other leisure amenities are the clubhouse, cabanas and the tea house. The Wi-Fi-enabled clubhouse features function rooms, a lounge area, bar, game room, entertainment room and roof deck.
To ensure the convenience of residents, a property management office takes charge of running the community which involves maintenance of facilities and amenities as well as common areas. On top of it, they also extend their help to reasonable concerns raised by unit owners or tenants.  A water and laundry station as well as a convenience store are also found inside the property.
While the design, open spaces, landscapes and amenities set the relaxing mood for residents, peace of mind comes with the security and privacy at Rhapsody Residences.
Homeowners and their families are completely secured 24/7 because of the guarded entrance gate, roving security personnel and an electrified perimeter fence.
Rhapsody Residences in Barangay Buli is near the South Luzon Expressway Sucat interchange, making it accessible to public transportation and to the domestic and international airports. It is also near hospitals, schools, churches, sports centers, shopping malls and the business districts of Alabang, Makati and Bonifacio Global City.
DMCI Homes’ almost 60 years of track record in building quality homes and resort-style communities assures homeowners of Rhapsody Residences the best Neo-Asian abode and lifestyle there is in Muntinlupa City.
Rhapsody Residences is a premier condo community project of DMCI Homes—a company of innovative builders and engineering experts which develops modern-day living solutions for urban families. For inquiry call us at +63917.3236123.

In Photo: Artist’s illustration of rhapsody residences play court and illustration of rhapsody residences swimming pool

Willow Park Homes combines serenity, convenience in a developing city

ENJOYING modern and serene living in the metropolis at the same time is a rarity these days as open spaces are being eaten up by the ever-expanding urbanization. But the combination of a convenient and relaxing lifestyle in a city setting cannot be denied in Cabuyao, Laguna. The industrial town recently converted into a city still retains its idyllic atmosphere amid the development.
The unique balance and blend of modernity and suburban air makes Cabuyao an ideal alternative for a city lifestyle minus the stress from overcrowding, traffic congestion, noise and pollution. Willow Park Homes, a residential project of DMCI Homes in Laguna, provides the “best of both worlds” in a home and community that meet a family’s need for serenity and convenience in a developing city.
Rising on a prime, 12-hectare property along RFM Road in Barangay Pulo, Willow Park Homes is a master-planned garden-themed community of traditional single-detached homes, bungalows and townhouses in modern, tropical architecture.
 Unit designs are characterized by clean, formal lines, steep roof structures in dark hues, white-colored walls, and the use of exotic dark hardwoods as accent pieces.
 The 130-sq-m bungalow and two-story single-detached homes as well as the 65-sq-m townhouse can be acquired through flexible payment terms.
Pocket parks and gardens are spread throughout the development. Rest and recreational amenities include a multipurpose clubhouse, swimming pool, picnic grove and play areas.
Facilities include concrete-paved roads with gutters, overhead electricity, underground waterlines and street drainage system, including deep well and elevated water tank with cistern.
For security, Willow Park Homes has a perimeter fence, entrance gate with guardhouse and 24-hour security. A property management office is in charge of maintenance and other services and assistance.
 The gated community is very accessible, being just 3.5 kilometers to the south of the city proper, major industrial zones in Laguna, key educational institutions, leading provincial hospitals, and strategic highways such as the Cabuyao national road and South Luzon Expressway (Slex). The Slex is just 2.5 kilometers away via the Pulo-Diezon Road. Calamba is 6 kilometers to its south.
Willow Park Homes is a residential community project of DMCI Homes—a company of innovative builders and engineering experts that develop modern-day living solutions for urban families. Each of its developments is built with world-standard craftsmanship borne from D.M. Consunji Inc.’s almost 60 years of experience in the construction and development industry. DMCI Homes offers its customers the highest level of expertise and its strict adherence to global standards. It’s corporate philosophy is anchored on a deep understanding that buying a home is more about investing in a better way of living. For inquiry call us at +63917.3236123.

In Photo: Iris House

Belle, Macau gaming company sign cooperation agreement

BELLE Corp., which is building a $1-billion casino and hotel complex in Entertainment City Manila, has formally taken as its operating partner the Macau-based Melco Crown Entertainment Ltd. after more than  three months of discussions. The deal will help move the Belle Grande Manila Bay project forward but it also noticeably leaves out Belle’s former partner Leisure and Resorts World Corp. (LRWC).
The signing of the so-called cooperation agreement was disclosed to the Philippine Stock Exchange on Thursday and is seen as a positive step for Belle, which has been facing delays in the opening of its site in the Entertainment City, which aims to be the Philippines’s version of the Las Vegas Strip in Nevada.
From the original opening at the end of 2012, Belle Vice Chairman Willy Ocier said in a text message on Thursday that the opening is now scheduled in the “first half of 2014.”
A foreign partner like Melco Crown will also lend the project added credibility when drawing the lucrative overseas high-roller market, viewed as the key to the survival of the massive gaming complex.
As for LRWC, it will no longer have any participation in the Belle Grande Manila project as far as the 50-50 partnership between Belle and Melco Crown is concerned, Belle Chief Financial Officer Manuel Gana clarified in a phone interview on Thursday.
“[LRWC] will not be involved,” Gana said, adding that the previous agreement signed with LRWC subsidiary AB Leisure Global Inc. on January 14, 2011 has been canceled. LRWC declined 7.28 percent to close at the session low of P8.65 per share on heavy trading.
Belle was also down 1.82 percent to P5.39 per share.
A source with knowledge of discussions noted that LRWC is still seeking for a share in the project, and is in ongoing negotiations with Belle to come into the deal as an “investor.”
“Technically [LRWC] will not be involved in the operations and all things that have been signed between Belle and Melco. It has taken the backseat for now,” the source said. “But it is possible for LRWC to come in as an investor in the project.”
There were no details given and nothing has been finalized, the source clarified. LRWC earlier raised P3 billion—of which P1.125 billion came from private placement deals—to support its one-time role as operator of Belle Grande. It remains unclear how the new partnership will affect the treatment of funds already disbursed by LRWC.
Based on the agreement, Melco Crown, which is listed in the Hong Kong Stock Exchange, and Belle will invest equally in Belle Grande. Ocier said on Thursday that total investments will amount to at least $1 billion in line with their commitment to Philippine Amusement and Gaming Corp.
The cooperation agreement places Belle as a co-licensee and the owner of the site's land and buildings, while Melco Crown will be a co-licensee and operator of all the facilities within the resort complex, the disclosure showed.
Melco Crown, whose major shareholders are Melco International Development Limited and Crown Ltd., is a developer and owner of integrated resort facilities focused on the Macau market including “City of Dreams.”

In Photo: Belle Corp., together with 100-percent-owned subsidiary Premium Leisure and Amusement  Inc., formally signed an agreement with Melco Crown Entertainment Ltd. (MCE) which governs the parties’ cooperation in the development and operation of an integrated resort complex in Belle’s property along Diosdado Macapagal Avenue, fronting the Pagcor Entertainment City complex in Parañaque City. Photo shows (from left) James Packer, chairman of Crown Ltd. Australia; Lawrence Ho, chairman of Melco International Development Ltd.; President Aquino; and Henry Sy Jr., co-vice chairman of SM Investments Corp.

Real-estate loans up 23% to P244.4 billion in Q2

REAL-ESTATE loans, a key indicator of asset prices, stood at its highest since regulations were recast more than four years ago, at P244.4 billion in the quarter ending June this year, driven 23.2 percent higher by universal and commercial lenders looking to optimize profits under a very liquid but low interest-rate environment.
This development heightened the vigilance of the Bangko Sentral ng Pilipinas (BSP), looking keenly even now for signs of asset bubbles forming to avert economic mayhem down the line.
According to BSP Gov. Amando M. Tetangco Jr., this was 5.1 percent or P11.9 billion higher than real-estate loans of P232.6 billion at end-March.
The big universal and commercial lenders accounted for some 70 percent or P8.3 billion of the P11.9 billion quarter-on-quarter hike and 79.7 percent or P36.7 billion of the P46.1 billion rise, year-on-year.
The smaller thrift banks accounted for the remaining 29.8 percent or P3.5-billion quarterly hike and 20.3 percent or P9.4-billion annual hike in real-estate loans.
The big universal and commercial banks owned more than 57 percent or P140.3 billion of total real-estate loans disbursed, larger than total loans disbursed a quarter earlier equal to 56.8 percent or P132 billion.
As a proportion of total loan portfolio, real-estate loans were flat at 5.8 percent in the first quarter and 5.1 percent in the second quarter.
Non-performing real-estate loans also eased four percent to P9.7 billion from P9.8 billion even as the real-estate loan book increased.
Non-performing real-estate loans viewed against total NPLs, however, rose to 7.7 percent at end-June from 7.4 percent at end-March no matter this was lower than year-ago real estate NPLs averaging 7.8 percent.
Thrift bank real-estate NPLs to total real-estate loans stood at 3.5 percent at end-June.
Thrift bank non-performing real-estate loans to total NPLs stood at 14.8 percent or more than double that of universal and commercial banks at only six percent.

Dubai’s property market weakness shows in giant Taj Mahal

DUBAI proclaimed its real estate comeback in the only style it knows: grandiose.
A replica of the Taj Mahal about four times bigger than the original, a skyscraper with nine swimming pools and a mile-long canal winding its way around office buildings are among the high-profile projects unveiled in the past few weeks.
The plans had been on hold since the financial crisis brought the emirate’s property boom to a halt in 2008.
The eye-catching developments may be creating a buzz. In reality, few areas of Dubai are showing signs of recovering from a slump that caused property values across the emirate to fall by as much as 65 percent.
About a quarter of Dubai’s residential properties are empty and an additional 25,000 are due to be completed next year as developers fulfill contracts awarded before the crash, Jones Lang LaSalle Inc. estimates.
“The market has improved to some extent, but there isn’t enough to justify going ahead with all the projects that are now being talked about,” said Craig Plumb, head of research for the Middle East at the Chicago-based property broker. “They should be phased over a longer period and should be built in line with demand.”
About a third of the office space in Dubai’s central business district is unoccupied and the vacancy rate is much higher in other neighborhoods, Jones Lang said. About 900,000 square meters will be added in 2013, according to the firm. That’s about 13 percent of the existing space.
Mega projects
Some of the developments announced earlier this month at Cityscape Global, Dubai’s biggest annual property conference, were reminiscent of pre-crash projects like Burj Khalifa, the world’s tallest tower, and an indoor ski slope at the Mall of the Emirates.
Meydan City Corp., the company that built Dubai’s 60,000-seat horseracing stadium and hotel complex, said at Cityscape that it will revive a plan to create a development featuring lagoons, canals and parks as well as a skyscraper with pools and “sky gardens.”
The government also approved the construction of a canal that would connect the Business Bay area to the sea.
The Taj Arabia complex, based on India’s 17th-century Taj Mahal mausoleum, will be built by Link Global Ltd. for about 1.3 billion dirhams ($350 million), the Dubai-based company said at the three-day trade fair. Chairman Arun Mehra declined to say how Link Global would finance the construction of the Taj Arabia, which will include a 300-room luxury hotel.
Abandoned plans
As those projects get a new lease of life, many more sit abandoned in the desert or in the Persian Gulf.
Taj Arabia was designed to be part of the Falconcity of Wonders, a 41 million-square-foot complex of homes, offices, hotels and stores along the Emirates Ring Road that links Dubai to the United Arab Emirates’ six other sheikdoms.
That project, featuring attractions including replicas of the Pyramids, the Great Wall of China, the Eiffel tower and the leaning tower of Pisa, was derailed by the collapse of the real-estate market.
Salem Al Moosa, chairman of the Falconcity project, said underground work including electricity, water and sewage infrastructure has been completed and the company has sold parts of the site to developers that will realize the company’s plans.
Of the three palm-shaped artificial islands planned by Nakheel PJSC, only one—the Palm Jumeirah—has been developed, with a combination of hotels and residences. The World, a chain of islands off Dubai’s coast that look like a world map, was created by Nakheel in 2008, though the archipelago has yet to be developed. No one at the company was available to comment on the project.
Dubailand project
In all, about $757 billion of projects were delayed or aborted in the UAE since the collapse of Lehman Brothers International Inc. in 2008 sparked the global financial crisis, Citigroup said in a report October 16. That’s more than the projects that were canceled in Egypt, Iraq, Kuwait, Saudi Arabia and Qatar combined, Citigroup said.
Dubailand, an entertainment complex designed to be three times the size of Manhattan, is another project that was put on hold. Dubai Properties Group didn’t respond to questions seeking comment on the project.
Dubai’s real-estate market is showing some signs of recovery after almost four years of falling prices. The number of property transactions jumped by 50 percent in the first half of 2012 compared with a year earlier, data from Dubai’s Land Department show. The purchases, valued at 12 billion dirhams, are still 74 percent less than the 46.5 billion dirhams of sales in the first half of 2008. The Land Department doesn’t break down its data into different types of real-estate.
Gyms, pools
So far, most of the growth has been along Sheikh Zayed Road, the longest in the UAE, where facilities such as gyms, pools and landscaped areas have been completed. The biggest beneficiary has been Emaar Properties PJSC, whose developments include the downtown area around its Burj Khalifa tower, the world’s tallest building, and collections of prime single-family homes known as villa communities such as Arabian Ranches.
Emirates Hills, another villa development, as well as Downtown and Dubai Marina accounted for most of this year’s property deals, data provided by Dubai’s Land Department show.
The improving demand “isn’t sustainable without steady population growth and job creation in addition to a financing pick-up,” said Saud Masud, chief executive officer of SM Advisory Group Llc., a New York-based investment firm. “The oversupply issue will probably not be resolved for perhaps another decade, but pockets of price stability may remain.”
Many buyers are looking for a haven from the political turmoil that toppled leaders in Tunisia, Egypt and Yemen, Jan Pawel Hasman, a Cairo-based analyst at EFG-Hermes Holding SAE, said by phone on October 8.
“Most of the demand is coming from Asia and India, where worries about the European crisis didn’t leave investors many alternatives,” Hasman said. “The question is: how sustainable is it?”
Prices of residential properties in the best locations, such as the downtown area and the marina, have risen about 15 percent this year. Villas, which account for about 20 percent of the homes on the market, are in higher demand than other type of residences, said Amer Khan, a fund manager at the asset-management division of Shuaa Capital PSC.
“This demand is very different from what we saw four years ago,” Khan said. “This time it’s a lot more selective.”
Emaar, which sold more than 500 serviced apartments in a tower near Burj Khalifa last month, required buyers to pay 20 percent of the value before taking legal ownership.
Debt burden
Dubai’s default risk has dropped over the past three years as debt restructuring, bond repayments and rising corporate profits boost confidence in its economic rebound. Still, the emirate is weighed down by the $113 billion of debt it racked up transforming itself into a tourism and commercial hub.
About $15 billion of the debt matures this year, the International Monetary Fund estimated in June. Abu Dhabi’s government and two of its banks as well as the UAE’s central bank provided $20 billion to Dubai in 2009 to help state-owned companies restructure debt.
Dubai’s property market had one of the world’s biggest reversals following the global credit crisis in 2008. Nakheel wrote down the value of its real estate by $21 billion from late 2008 through mid-2010 and received an $8.6-billion bailout from Dubai’s government, helping the company to avoid default after cutting jobs and halted projects.
As emerging-market economies from China to Brazil slow, the property market faces a risk from the third major brake on expansion in five years.
“While a global recovery may add liquidity and in theory support prices, there is still a significant risk in the region, which may negatively impact direct investment,” Masud said.

In Photo: Link Global Group said it will build the Taj Arabia complex that includes a 300 room hotel in a replica of the 17th century Indian palace that’s four times as big as the original. (Falcnocity of wonders via Bloomberg)

Home sales rising to 2-year high spur US growth

AMERICANS bought new homes in September at the fastest pace in two years, another sign the industry whose decline was at the heart of the recession is bouncing back.
Sales climbed 5.7 percent to a 389,000 annual pace, the most since April 2010, following a revised 368,000 rate in August, figures from the Commerce Department showed today in Washington. The median estimate of 75 economists surveyed by Bloomberg called for an increase to 385,000.
Population growth and mortgage rates pushed to record lows by Federal Reserve purchases of housing debt are generating sales for builders like Toll Brothers Inc. and spurring the three-year economic recovery. Housing starts in September jumped 15 percent to the fastest pace since July 2008, a report last week showed.
“All the things that were really holding back housing are finally starting to lift,” said Guy Berger, a US economist at RBS Securities Inc. in Stamford, Connecticut, who projected sales would climb to 390,000. “It really is tough to find any bad signs here. Inventories are very, very lean. Assuming the economy remains on track, housing should continue to improve for the rest of the year and into 2013.”
Stocks fell, erasing earlier gains, after the Fed said employment growth is slow and strains in financial markets continue to pose risks to the economy. The Standard & Poor’s 500 Index dropped 0.3 percent to 1,408.75 at the close in New York. Treasury securities declined, sending the yield on the benchmark 10-year note up to 1.79 percent from 1.76 percent late on Wednesday.
A preliminary report showed a Chinese purchasing managers’ index climbed this month, boosting confidence that the world’s second-biggest economy is stabilizing. The 49.1 reading for October was up from 47.9 the prior month and just shy of the 50 level that is the dividing line between contraction and growth, according to data from HSBC Holdings Plc. and Markit Economics.
The news on Thursday wasn’t as positive elsewhere as euro-area services and manufacturing output contracted more than economists forecast in October and German business confidence dropped to the lowest in more than two and a half years as Europe’s recession deepened.
The Bloomberg survey estimates for US new-home sales ranged from 370,000 to 410,000. The August reading was previously reported as a 373,000 annual rate.
A government tax credit helped boost sales in April 2010, the last time they were this strong.
Fed policy-makers on Thursday said the economy is still growing modestly and unemployment remains elevated as they maintained $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion.
“Growth in employment has been slow,” the Federal Open Market Committee said on Thursday at the conclusion of a two-day meeting in Washington. “Household spending has advanced a bit more quickly.”
Demand for new houses was up 27.1 percent from a year ago, today’s report showed. The median price for a new house climbed 11.7 percent in September from the same month last year to $242,400.
Purchases increased in three of four regions last month, led by a 16.8- percent gain in the South and a 16.7- percent increase in the Northeast. Sales in the Midwest dropped 37.3 percent, the biggest decrease since January 1994.
A jump in housing starts in September was the latest sign the new-home industry is showing signs of vitality. Beginning construction rose last month to an 872,000 annual rate, the fastest pace since July 2008 and exceeding all forecasts in a Bloomberg survey, Commerce Department figures showed on October 17.
Supporting future construction, the supply of homes at the current sales rate dropped to 4.5 months, the lowest since October 2005, from 4.7 months in August, Thursday’s report showed. There were 145,000 new houses on the market at the end of September.
Residential construction hasn’t contributed to economic growth over the course of an entire year since 2005, when it accounted for 0.4 percentage point of the 3.1 percent increase in gross domestic product. From 2006 through 2009, the homebuilding slump subtracted 0.8 percent point from growth on average. The declines diminished over the past two years.
(Bloomberg News)

In Photo: Demand for new houses was up 27.1 percent from a year ago, today’s Commerce Department report showed. (Bloomberg)

Government, house builders bare road map to solve shelter backlog by 2016

The government and private sector will implement a road map that will solve the country’s housing backlog estimated at 4.65 million units by the end of 2016.
The work plan, prepared through the initiative of the Subdivision and Housing Developers Association (SHDA), calls for various support programs, including the grant of incentives and faster release of housing permits and licenses.
“Before the road map process, the industry was aware that a housing backlog exists but the extent was not very clear. Now that we have prepared the road map, we were able to probe the issues affecting the value chain of our sector and factors that could help it grow,” Paul Tanchi, SHDA president, said.
SHDA worked with 10 other industries in preparing the mass housing road map.
It was turned over to the Board of Investments (BOI) of the Department of Trade and Industry (DTI) earlier this month.
It identified issues such as delays in development permits at local government unit level, rising costs of utilities, brain drain, lack of funding for the poor, informal settlers and rising costs of land.
“Among the priority strategies identified by the group include ensuring the housing production momentum, which means making the processing of housing permits and licenses faster,” Tanchi said.
The road map called for the provision of steady financing schemes to make housing units affordable, as well as a comprehensive government housing assistance for targeted segments.
“We recognize the need for stronger collaboration among industry players, key shelter agencies, and the national government to address these gaps,” Tanchi said.
Trade Undersecretary and BOI Managing Head Adrian S. Cristobal has asked the various industries to prepare their respective road maps and committed to implement these through genuine collaboration between the government and the private sector.
“We are reviving industry policy through the industry development roadmaps project so we can all agree on visions, strategies, and deliberate actions for industries to create meaningful jobs in the country,” he said
He added that same shift to industry policy is also happening not just in the Philippines but also in Europe, South Asia and South America.
Based on the mass housing industry road map, a P1 increase in investment in the housing industry generates P3.32 additional output to the economy.
Also, a P100-million investment in construction is estimated to generate P47 million in additional household income which corresponds to 228 direct jobs created.
The industry road map initiative, launched by the DTI January this year, is the government’s strategic approach to policy development to ensure that trade and investment policies are consulted with stakeholders and international negotiating positions support the growth of key Philippine industries.
It is also meant to link the manufacturing sector with the rest of the economic sectors of the economy.

Cebu, 2 other ASEAN cities World Bank’s picks as world’s green-growth drivers

SINGAPORE—The World Bank (WB) has chosen three fast-growing cities in East Asia and the Pacific (EAP) as defining the region’s energy future and greenhouse-gas (GHG) footprint.
“Rapid urbanization and growing standards of living offer a major opportunity to EAP cities to become the global engines of green growth by choosing modern energy-efficient solutions to their infrastructure needs,” the WB’s International Bank for Reconstruction and Development said in its report released here on Tuesday.
The report, titled “Energizing Green Cities in Southeast Asia,” noted that the Philippines’s Cebu City, Vietnam’s Da Nang and Indonesia’s Surabaya “show a clear correlation between investments in energy-efficient solutions in all major infrastructure sectors and economic growth.”
Presented by Washington, D.C.-based Dejan R. Ostojic at the first Asia Future Energy Forum held here, it said that “by improving energy efficiency and slowing GHG emissions, [these] cities not only help the global environment, but also support local economic development through productivity gains, reduced pollution and more efficient use of resources.”
“The obvious question is why we didn’t do this [study] in Manila or in Jakarta or in Ho Chi Minh. [But] those cities are unique, they are megacities [and] very little can be replicated. The ‘next-wave’ cities, on the other hand, have tremendous potential for replicability, for learning,” Ostojic told the BusinessMirror in an interview.
He said that the Sustainable Urban Energy and Emissions Planning framework that Cebu, Da Nang and Surabaya have adopted could be easily followed by other cities in the world.
Ostojic added that a tool guide accompanies the report to help urban planners “go through the process” of replicating the experiences of Cebu and the two other cities.
The World Bank report noted that electricity consumption per capita for the three cities is low in comparison with other Asian cities in the Trace (Tool for Rapid Assessment of City Energy) benchmarking tool.
Surabaya is the biggest consumer among the three at more than 2,000 kilowatts per hour per capita. 
The three cities, however, exhibit high energy consumption per unit of gross domestic product (GDP).
This means that as the cities grow, each will experience “sharp increases in energy demand.”
By simply changing street lighting in Cebu, Ostojic said, could lead to more savings for the southern Philippine city.
With a population of 2.4 million, Cebu City is a net importer of energy—electricity, oil products and natural gas—according to the report.
City-wide usage of energy increased steadily year-on-year, with electricity demand growing 4.3 percent from 2008 to 2009 and 4.5 percent from 2009 to 2010.
The report said that by changing the street lights with LED lamps, Cebu would save an additional P540 million ($12.4 million) over a 10-year lifespan from an initial investment of P312 million, which can be recovered after 4.95 years.
Switching to LED lamps, it added, would also lead to an annual reduction in GHG emissions of 4,034 tons of carbon dioxide, citing results of a simple cost-benefit analysis.
Other areas studied by the team of Ostojic, energy-sector leader of the WB for East Asia and the Pacific region, included transportation, city-government buildings, solid waste, water and wastewater, power and city-government priorities.
He told the BusinessMirror that it took the team less than six months to finish their research on Cebu. The research  was funded by the Australian Agency for International Development (AusAID).
Ostojic said the WB is looking at investments in the transportation sector of Cebu, which the report noted is the city’s biggest energy user, especially of gasoline and diesel.
Diesel is said to contribute 17 percent of GHG emissions of the city and gasoline, 22 percent.
But according to Ostojic, these emission levels can be reversed if the local government leaders pursue recommendations given in the report.
“The challenge is helping strengthen capacity and developing strong institutions in these cities [Cebu, Da Nang and Surabaya],” he said.

BSP cuts rate by another 25 basis pts.

The likelihood for inflation to stay well within target of 5 percent this year no matter the “continued considerable global headwinds” over the next 18 to 24 months helped convince the Bangko Sentral ng Pilipinas (BSP) to cut its policy rates on Thursday by another 25 basis points.
This has the effect of reducing the rate at which the BSP borrows from or lends to banks to 3.5 percent and 5.5 percent, respectively.
As a result, BSP Governor Amando M. Tetangco Jr. said it should now cost less for households and businesses to obtain loans from the banks to fund productive undertakings down the line.
“The domestic underpinnings of Philippine economic growth remain firm. However, additional policy support could help ward off the risks associated with weaker external demand by encouraging investment and consumption,” Tetangco said.
According to Tetangco, the 25-basis-point rate cut was based on the assessment that price pressures remain benign.
Forecast inflation this year was seen averaging only 3.3 percent, or well within the 3-percent to 5-percent target range, and only 3.9 percent for next year.
Risks to the inflation outlook continue to be broadly balanced, as well.
“Potential upside risks to inflation remain, including pending power-rate adjustments and higher global prices for some grains. Nonetheless, subdued global demand could moderate upward pressures on international commodity prices, thus tempering the overall outlook for inflation,” he said.
Tetangco’s deputy, Diwa C. Guinigundo, said the rate cut was also seen to provide additional support to local growth, seen as high as 6 percent this year in terms of the gross domestic product.
“This can help drive the economy and provide additional boost to domestic demand,” Guinigundo said.
Analysts previously said the rate cuts should help moderate the flow of foreign capital that has boosted the value of the local currency the peso by around 6 percent from year to date.
Sterilizing all that liquidity entering the system has proven expensive for the BSP, which now pays for funds parked at its special deposit account (SDA) window  at a reduced rate, as well.
SDAs of some P1.8 trillion as of last count helped ensure there was just enough money in circulation for the purchase of services and goods by keeping such funds safely within the vaults of the BSP.
The interest rate on term reverse repos, repurchase and SDAs were also reduced by the same measure, Tetangco said.

Monday, October 22, 2012

The result of remittances rising

THE recent strong inflow of dollar remittances contributed to a couple of interesting economic outcomes—the rise of the peso against the dollar and a surplus in the balance of payments.
In August, money sent home by Filipino overseas workers increased by 7.6 percent, the fastest growth recorded this year.
The Bangko Sentral ng Pilipinas said remittances sent through banks in August reached $1.8 billion, with the January to August total at $13.7 billion, higher by 5 percent for the same period last year.
It is estimated that over 9.4 million Filipinos abroad send money to loved ones in the Philippines. Moreover, the Philippine Overseas Employment Administration said last week that there are more than 1 million Filipinos who are waiting to be deployed overseas. Once their contracts come through, they will contribute to the inflow of remittances.
The top sources of remittances are Filipinos in the United States (43.1 percent), Canada (9.5 percent), Saudi Arabia (7.7 percent), the United Kingdom (4.9 percent), Japan (4.9 percent), the United Arab Emirates (4.2 percent), and Singapore (4 percent).
Remittances are the “largest source of foreign exchange after exports,” accounting for 10 percent of gross domestic product (GDP), enabling consumer spending, and, coupled with enhanced public spending, are among the main drivers of the country’s current economic growth.
The continued growth of remittances, said British bank HSBC, “would provide ample support for the economy.”
However, some foreign analysts warn against over-reliance on remittances. Credit Suisse group AG economist Santitharn Sathirathai said they have “become a defensive support for the economy, a stabilizer,” and Standard & Poor’s Rating Services credit analyst Agost Bernard said that while the strength of remittances was a “positive factor for the Philippines’s external position and rating,” large inflows of such are a “sign of failure” that implies lack of employment opportunities in the country.
This is a concern that the government of President Benigno Aquino III is addressing by strongly marketing private-public partnerships (PPP), direct foreign investments such as business-process outsourcing and manufacturing, tourism, and other job- and business-creating initiatives.
Meanwhile, the rise in remittances led to a rise in the peso on Tuesday—the highest rate in four years.
That day, the peso gained 0.3 percent and closed at P41.33 to the dollar, its strongest performance since April 1, 2008. This was bolstered by the news of the new peace accord in Mindanao, which has encouraged businessmen to look forward to a renewed and revitalized economic climate in the region.
In a joint statement, the Makati Business Club and the Management Association of the Philippines welcomed “with great hope” the new framework agreement, “a clear road map,” they said, that could lead to “what can truly be a lasting peace in Mindanao.”
This was echoed by the European Chamber of Commerce and Industry. Michael Raeuber, ECCP president, said, “Anything that brings peace is positive,” and that more European companies would now be likely to consider Mindanao for business expansion purposes.
The strong inflow of dollar remittances was also among the factors cited for the $751-million surplus in the Philippines’s balance of payments in September, according to the BSP on Friday.
The total for January to September is $5.8 billion, more than double the forecast for the entire year. The BSP called this a “healthy level.”
There are foreign analysts that remain optimistic about the Philippine economy, among them the Union Bank of Switzerland, which said recently that growth is likely to be “relatively healthy” with a high GDP even with the challenges posed by the worldwide financial crisis.
Edward Teather, UBS senior economist, cited the lively local stock market and the BSP’s current and soon-to-be-implemented measures “to calm property lending.”
The International Monetary Fund said on Monday that the Philippines could grow over 5 percent annually over the medium term through higher state revenues and public spending on infrastructure.
Among the planned infrastructure projects of the government are the two PPP projects—the Daang Hari-South Luzon Expressway link road project worth $46.6 million, and the PPP for School Infrastructure project of P16 billion.
Moody’s Analytics on October 13 revised their outlook for the Philippines this year from 4.7 percent to 5.2 percent on strong domestic demand, and 5 percent in 2013.
To sum up, dollar remittances are a big boost to the economy and a main driver of the robust growth our economy is experiencing now. However, the Aquino administration knows that the country should not put its eggs in one basket.
Along with proper use of government funds to spur the economy through infrastructure projects and other nation-building initiatives, good governance and implementation of reforms, and hope for lasting peace, the country is on the right path to realizing its dream of an economic sunrise and better lives for Filipinos.

Atty. Rojas is general manager of the PCSO. E-mail:

What China’s economic slowdown means

China caught the attention of the global economy beginning in the eighties when it opened up its market to the world and launched an aggressive campaign to attract investments and boost exports.
The Chinese government, according to a working paper published by the International Monetary Fund (IMF), titled “Why Is China Growing So Fast?” written by Zuliu Hu and Mohsin S. Khan of the IMF’s Research Department, implemented a major reform program in 1978, after years of state control of the national economy, and opened up business to private enterprises, including foreign investors.
As a result, China’s economic growth sped up from an annual average of 6 percent in terms of gross domestic product (GDP) prior to 1978 to more than 9 percent, and even higher than 13 percent during some peak years.
That period is gone. China, now the world’s second-largest economy, was also adversely affected by the crisis in the euro zone and the sluggish American economy. News reports cited information from Hongkong & Shanghai Banking Corp. that said China’s manufacturing activity contracted for the 11th straight month in September, which would make it difficult for the country to achieve its GDP growth target of 7.5 percent for 2012.ENJOY GOOD LIFE + INVESTMENT, CLICK HERE
This year’s target of China is already significantly lower than the 9.3-percent growth in 2011 and 10.4 percent in 2010. Its GDP, according to China’s National Bureau of Statistics, grew by 7.4 percent in the third quarter of 2012, missing the official growth target.
What does this mean as far as the Philippine economy is concerned? As part of the global economy, a slowdown in China will also have a ripple effect on our economy. We are already feeling its impact, together with the spillover from other major markets, specifically in terms of exports.
The latest report from the National Statistics Office shows that Philippine merchandise exports dropped by 9 percent to $3.798 billion in August 2012, from $4.173 billion in the same month last year. Electronics exports, which accounted for 46.5 percent of total exports for the month, plunged 14.5 percent to $1.76 billion, from $2.07 billion. And for the first eight months of 2012, merchandise exports reached $35.28 billion, up 5.4 percent from $33.48 billion year-on-year.
Exports to China, the Philippines’s fourth-largest export market, plummeted by 42 percent to $376.55 million in August 2012, from $649.46 million a year ago. On a cumulative basis, exports to China improved by 3.67 percent to $4.29 billion, equivalent to 12.19 percent of total merchandise exports, from $4.14 billion in January-August 2011.
Based on the performance of exports in the first eight months, it will be difficult for the Philippines to achieve its 10-percent export growth target for the whole year. With the continuing global slowdown, and particularly with the dimming prospects for China, I see two options for the Philippines.
First, we have to be more aggressive and creative in diversifying our exports. Electronics exports, driven by the fast-changing technologies, will likely remain on top of our merchandise export list, but we have to identify other products that the global markets need, and identify the specific markets to sell those products. Food and other agricultural products quickly come to mind, especially because of the current international demand for our coconut water as a health drink. Coconut sugar is also showing strong potential, if we can offer big volumes.
The second option is to go back to manufacturing. In the past, the fast growth of China and its reputation as a cheap manufacturing hub (because of low wages) encouraged a defeatist attitude that it would be useless to promote manufacturing industries here because we could not compete with China.
China, to reiterate my message in previous columns, is losing its competitive edge because salaries have been rising, and investors are looking for other places to put up factories.
We cannot expect everybody to leave China. It is still the world’s biggest domestic market. But, despite China, we have a large pool of skilled and hardworking people who can make manufacturing industries viable and competitive.
In the end, manufacturing is still our more permanent source of sustainable growth, and this is the kind of growth that will give employment to more of our people.
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Aquino: Q2 growth higher than 5.9%

President Aquino said on Monday that economic growth in the second quarter of this year was higher than originally announced, or more than 5.9 percent, prompting an upward revision in terms of growth for that period.
Mr. Aquino made the announcement before the Filipino community at the Auckland City Convention Center in Auckland, New Zealand, on the first day of his state visit to that country, while apprising his audience of the progress his administration has achieved, in contrast to supposed problems that his predecessor Gloria Macapagal-Arroyo had left him.
“I was surprised that in two years’ time, our economy in the first quarter posted 6.3-percent GDP [gross domestic product] growth. In the second quarter, it was 5.9 [percent] but I understand that would be revised upward,” he said.
The President did not mention the revised growth figure for the second quarter, saying that his economic managers have yet to tell him “how up is upward.”
The Philippine economy was earlier reported to have grown by 6.4 percent in the first quarter, but this was revised to 6.3 percent later on.
GDP growth in the first half of the year, without the anticipated revision in the second quarter, already averaged 6.1 percent or more than the 5-percent to 6-percent GDP target for 2012.
Mr. Aquino said while the global economy was “in a bad situation,” confidence in the Philippine economy was “very, very high,” as reflected in the performance of the stock market, which had posted 27 record levels under his watch.
“So many of the problems previously thought of [as] being impossible in terms of solution seem to just really need a little time to be able to…effect changes,” he added.
To show the changes in the country since he took over, the President cited the rice-supply situation, and infrastructure development before and during his administration.
He said the Arroyo administration left him with a P177-billion debt because of excessive rice importation and a badly planned P30-billion bridge program.
From excessive rice importation, Mr. Aquino added, the country was on track in attaining rice self-sufficiency and may even become a rice exporter by next year, and had reduced the cost of infrastructure projects, such as the Araneta Avenue-Quezon Avenue underpass from P690 million to P430 million and completed 100 days ahead of schedule.
He said disaster mitigation and preparedness improved under his watch and that by next year, the Department of Education (DepEd) would be able to fully address the 66,800-classroom shortage that the Arroyo administration left behind.
The President, apparently referring to officials of the previous administration, added that those who had wronged the country should be held accountable.
“We can hold accountable those people who have wronged our people. They have to pay so that we can ensure that no one would emulate them,” he said.
Mr. Aquino shared a text joke that took a jab at the former President, which he said had made him laugh a lot when he received it.
“The joke [goes that] our corrupt countrymen in the Philippines have expensive cars but if they want to escape, they use a wheelchair,” he said.
Ahead of the 2013 elections, the President appealed to Filipino voters to choose candidates who have platforms, and who can show that they can deliver on their promises.
“Let us choose someone who does not only sing and dance well, who has not only appeared in a telenovela, but someone with a platform…and had shown in his track record that he can deliver on his promises,” he said.
Mr. Aquino added that the candidate might be someone who was not very popular or even shy and did not promote his achievements as much as other candidates, but had depth and, for this reason, should be supported over others who seemed to be “very good at presenting themselves.”