Malaysia Shocked Philippines Pledge $1 Billion Dollars to IMF to help European Crisis

In the opinion posted by the NewStraitsTimes a Malaysian online news website, it really surprised that the Philippines is now afford to pledge $1 Billion USD Dollar to the IMF to help the European crisis.

AT the recent G20 Leaders' Summit in Los Cabos, Mexico, 12 countries committed US$456 billion (RM1.4 trillion) funds to beef up the International Monetary Fund's facility to address the financial crises, notably the sovereign debt and banking debacles in Europe.

Three of the 12 contributors were ASEAN member countries at US$1 billion each, namely Malaysia, Thailand and the Philippines. Philippines pledge right then and ahead of Malaysia and Thailand.

Somewhat challenging to Malaysia as the Philippines without any doubts pledged for $1 Billion dollars and later 2 countries followed namely; Malaysia and Thailand

What? The Philippines? 

(It is like saying oh? this beggar could afford now to pledge that much $1 Billies USD Dollars? how comes?)

"It is our obligation to assist those nations who require funding from the IMF. This would also help in stabilising the crisis that is going on in Europe," a spokesman of Philippine President Benigno S. Aquino III affirmed.

These developments surprised many, as the country used to be a net borrower as far as its membership was concerned. In 2006, however, the country prepaid all its outstanding debts with the IMF, given its much-improved external liquidity position. It then achieved its new status by participating in the Financial Transaction Plan as a creditor country in 2010.

The country can afford to lend as it has some US$76 billion in gross international reserves (GIR) at present, thanks in no small measure to the Aquino administration's no-nonsense good governance thrust that attracted foreign investors back to the Philippines.

With strong gross domestic product (GDP) growth sustained through the years -- and a surprising 6.4 per cent growth for the first three months of the year -- global financial institutions have certainly noticed. Morgan Stanley recently listed the Philippines as one of the "breakout nations", and Goldman Sachs' proclaimed it among the "Next 11" countries. In a May 3 article aptly titled "The Philippines astounds the skeptics", Bloomberg Businessweek cited the great strides that resulted from governance reforms and infrastructure developments. For those who can wait it out, there is the HSBC's forecast that the Philippines will be the 16th biggest economy in 2050. But that's getting too far ahead of our story.

In my and others' views, a realistic barometer of the vigour of the economy is that there are less young Filipinos looking for jobs overseas because of available good ones at home, notably in the business process outsourcing (BPO) and related sectors. These companies, which handle customer support, technical problems and other tasks for overseas clients, now provide employment to some 638,000 people and took in US$11 billion last year, about five per cent of the country's GDP. This makes the Philippine BPO voice-related services, in particular, the biggest in the world, even ahead of India.

Our region is looking forward to the establishment of an Asean Community by 2015, with deeper integration of national economies at its core. It would do well to have more business companies within the region collaborating for mutual benefit.

There has been a substantial Malaysian business presence in the Philippines since the 90s, with the likes of Maybank, Berjaya and other companies.

In fact, there has been a surge recently in two-way investments. AlloyMTD Group, which rehabilitated the South Luzon Expressway, is constructing nine mini-hydroelectric dams in northern Luzon and a government offices complex in Laguna province. CIMB Bank bought into the Philippine Bank of Commerce, with investments reaching some RM1 billion.  After profitably operating the Resorts World Manila hotel-casino across Manila's international airport, Genting is investing in a second casino complex by the famed Manila Bay to be completed in 2016, in the new "Entertainment City", which aims to rival Macau.

Investment flows being by nature two-way, Petron Corporation recently completed its purchase of the retail services business of Esso Malaysia Bhd, with investments worth at least US$610 million.

Business opportunities in the two countries were the focus of an investment forum in Kuala Lumpur last May, which was attended by some 300 businessmen and women. Present were Philippine Vice-President Jejomar Binay, who led a delegation of 24 leading Filipino businessmen and officials from the Philippine Chamber of Commerce and Industry.

Right after meeting Binay, Prime Minister Datuk Seri Najib Razak tweeted: "Fruitful discussions that will hopefully strengthen socio-economic ties." This is a sign that Philippines-Malaysia relations have nowhere to go but up.

Sectors for productive collaboration were highlighted by both the Philippine Department of Trade and Industry and the Malaysian External Trade Development Corporation (Matrade), notably tourism infrastructure, agro-business, mass housing, energy/electricity, logistics, Islamic finance, halal food and investments opportunities in the Autonomous Region of Muslim Mindanao.

What impressed those at the forum were the two messages delivered by Malaysian investors already doing business in the Philippines.

First, the Philippine has a large consumer market of 94 million people, the largest in Southeast Asia after Indonesia, which cannot be taken for granted.

"The Philippine has all the ingredients for success. We want to invest in a country with the right population so that there is a big consumer base. The Philippines is a big customer base," said Berjaya Corporation founder Tan Sri Vincent Tan.

Second, despite its occasional noisy internal politics, business has remained profitable through the years, AlloyMTD Group CEO and Malaysia-Philippine Business Council pro-tempore chair Datuk Azmil Khalil stated. (Well, it isn't the Philippines if the politics is any less exciting). It also helps to consider the other factors that make the country a preferred investment destination with the following points as the Philippines in the NOW:

1. THE best global BPO destination;
2. A TOP global electronics assembly hub;
3. THE world's fourth largest shipbuilder;
4. THE world's next mining power;
5. ASIA'S trusted logistics support center;
6. ABUNDANT managerial talents,
7. HIGHLY skilled, reliable, English-speaking workforce
8. LIBERALIZED investment and incentives policies, and,
9. IT is home to Boracay, Palawan, and some of the best beaches and diving spots in the world, for those serious at both work and play.

The Philippines has its fiscal house in order and is now a lender nation. It is vigorously reaching out to its neighbors and strengthening relations with them. Truly, exciting times are ahead; it added.

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S&P Raises Philippines’ Credit Rating “BB+” to 9-Year High

July 5, 2012: The Philippines' debt rating was raised to the highest level since 2003 by Standard & Poor's, taking President Benigno Aquino nearer his goal of attaining investment grade.

The nation's long-term foreign currency-denominated debt was raised one level to BB+ from BB, S&P said in a statement Wednesday (July 4, 2012). That's one step below investment grade and on a par with neighboring Indonesia. The outlook on the rating is stable.

"The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability," Agost Benard, a Singapore-based analyst at Standard & Poor's, said in the statement. "The rating action also reflects the country's strengthening external position, with remittances and an expanding service export sector continuing to drive current- account surpluses."

Emerging nations from Brazil to Indonesia have won credit- rating upgrades in the past year as governments contained budget deficits. A higher assessment for the Philippines will help Aquino as he moves to boost spending to a record this year and seeks $16 billion of investment in roads, bridges and airports to shield the economy from Europe's sovereign-debt crisis.

The Philippine peso (₱) is up 4.8 percent against the dollar in 2012, the best performer in a basket of 11 major Asian currencies tracked by Bloomberg. The Philippine Stock Exchange Index climbed to a record this week. The benchmark seven-year bond yield fell to the lowest in at least two months yesterday.

'Very Positive'

S&P's recognition for the Philippines' strong external position, growth prospects and improving fiscal sector adds fundamental support to the market, Bangko Sentral ng Pilipinas Governor Amando Tetangco said yesterday after the ratings action.

Moody's Investors Service boosted its outlook on the Philippines to positive in May 2012, citing improving debt levels. Fitch Ratings raised the country's debt to one step below investment grade in June 2011.

S&P's move is "very positive because it promotes the country's macroeconomic and fiscal context," said Fitz Aclan, who helps manage ₱850 billion pesos ($20.4 billion) at Manila- based BDO Unibank Inc. "There could be some upward movement for our sovereign bonds, even our local bonds. This will also be positive for equities."

Aquino plans to narrow the budget shortfall to 2 percent of gross domestic product by 2013 from a target of 2.6 percent this year. The government has stepped up efforts to catch tax evaders and smugglers, and has drawn up bills aimed at increasing revenue to narrow the fiscal deficit.

"We expect further rating improvements will likely be driven by either our appraisal of improving political and institutional factors or by evidence of a sustainable structural revenue improvement," S&P said. "Conversely, we may lower the ratings if the government's commitment to fiscal consolidation weakens, resulting in rising debt, or if the external liquidity position deteriorates significantly."

The $200 billion economy grew 6.4 percent in the first quarter, the fastest pace since 2010. Aquino is aiming for an expansion of as much as 8 percent annually to cut poverty.

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2012 Philippines economic growth level up at 6.4 percent in Quarter 1

 It's more fun in the Philippines; it's more fun to invest in the Philippines.

In spite of shaky economy in the US and in Europe; Philippines  economic jump shows it's more fun to invest the Philippines.

The Philippine economy grew a faster-than-expected 6.4 percent in the first three months of the year, boosted by increased government spending.

The National Economic and Development Authority says the pickup from a sluggish 3.7 percent growth in 2011 also shows renewed business confidence in the Philippines.

The growth was fueled by a surge in public construction as the government splashed out on new roads and airports.

The government late last year announced a 72 billion peso ($1.66 billion) stimulus package to cushion the economy from Europe's debt crisis.

The services sector, which accounts for more than half of the economy, was supported by a rise in real estate and tourist arrivals.

The government expects full year growth of 5-6 percent.

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Philippine infrastructure planners have dreamt for years of building an elevated highway above the traffic-clogged streets of metropolitan Manila and linking the capital with the fast-growing cities and ports to the north and south.

Benigno "Noynoy" Aquino, the president, last week approved not one but two toll road projects across the city and instructed ministers to speed up the tendering process so they could be completed by the time he steps down from office in four years. He was hoping, he joked, for an easier journey to the beach.

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The proposed toll road projects, together worth 48bn pesos ($1.1bn), are adding to growing business optimism about the Philippines' medium-term prospects. Analysts say the country is on the cusp of its first investment boom since the Asian financial crisis of 1997, after more than a decade of political instability.

Many of the country's biggest conglomerates are rolling out their most ambitious spending plans in years to build shopping malls, office towers and residential projects.

The president is inviting private companies to build infrastructure projects, such as airports and light rail systems, through public-private partnerships that bind the government to help ensure investors recover costs and earn minimum returns through user charges or direct government payments.

Ramon del Rosario Jr, chairman of the Makati Business Club, a grouping of the country's biggest companies, believes foreign investors are also expressing confidence in the Aquino administration's efforts to tackle corruption.

"The main thing that has changed is this idea that we are now serious about good governance, about integrity in government, about fighting corruption," he said in a television interview, shortly after the Senate voted to remove the chief justice of the Supreme Court for failing to declare US dollar deposits in his asset disclosure statements.

Shares in listed companies betting big on infrastructure, including San Miguel and Metro Pacific – the two proponents of the highway project – have surged since late last year, making the Philippines one of the best performing equities markets in the world. Despite market volatility triggered by the risk of a Greek exit from the EUROZONE, the Philippine Stock Exchange index is up 14.8 percent this year after hitting record highs 19 times in the first five months of 2012.

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The Philippines is announcing first-quarter gross domestic product results on Thursday, and analysts predict that economic growth year-on-year may have accelerated to 4.6 per cent from 3.7 per cent in the fourth quarter, according to a Reuters poll.

Most economic forecasters say the Philippines will expand 5 per cent or more next year, giving the country a fighting chance of hitting the government's growth target of 7-8 per cent in 2016.

In the short term, however, the country's economic prospects are more subdued amid continuing sluggishness in the US and Europe, and a slowdown in China.

Exports, which are equivalent to about a third of the economy, fell 1.2 per cent from a year ago in March as deliveries to East Asia dropped sharply.

Some of the country's exports to China, such as bananas and other fruits, have been affected by the dispute between the two countries over the Scarborough Shoal reef in the South China Sea. However, Philippine trade officials do not expect the diplomatic dispute to affect deliveries of electronics parts and minerals, which Chinese companies need to produce other goods.

Mr Aquino also faces the challenge of improving regulatory capacity across government agencies and units, and resolving policy conflicts that are slowing down the approvals for large investments, say business leaders.

A case in point is plans by the Philippine unit of Xstrata' to spend up to $5.9bn in the next five years to develop one of the world's largest untapped mining deposits in the southern Philippines. The project is potentially the country's single-biggest inward foreign investment but is being stalled by a local government ban on open-pit mining.

Milagros Reyes, who heads PetroEnergy Resources, an exploration group, complains that investors often get caught between different government agencies with overlapping mandates. "We bring in foreign drill ships that are leased per day only to be told to wait for days for permits by maritime authorities" seeking to protect the domestic shipping industry, she said.

More Fun! Incredible Economic Jump of the Philippines in Q1 2012

Incredible! Amazing! While other Asian countries describe themselves with superlatives, the Philippines national ad campaign promises only "more fun."

Filipinos have reasons to smile. Asia's perennial underachiever is outperforming. This week saw more successes: Moody's upped its outlook on the country's credit rating to "positive," citing prudent fiscal management. An anti-graft drive notched a win with a guilty verdict in the impeachment trial of a former chief justice. And first-quarter gross domestic product growth of 6.4%, announced Thursday, defied most forecasts as well as the mood in the global economy.

But to build on the promise, the Philippines must deliver on three main growth drivers.

Business-process outsourcing is already booming due to strong English skills, cheap rent and low wages. A fondness for basketball and Hollywood movies is an advantage, too, when it comes to staffing call centers with workers who can make a cultural connection with U.S. customers. Starting from scratch a decade ago, the sector generated revenue of $11.25 billion last year. CLSA says that could double by 2015.

Government officials say tourism is a low-hanging fruit. They aim to triple arrivals to 10 million by 2016. A $5 billion gambling hub under construction will help. So too a surge in new planned hotel rooms and a rising tide of Chinese visitors, whose numbers were up almost 30% last year.

Arrivals hit a record high 1.2 million in the first quarter. But there are challenges. A regional economic slowdown would hurt. Manila's spat with China over potentially resource-rich areas of the South China Sea has raised diplomatic tensions that could stymie Chinese tourism too.

Poor infrastructure is a bigger issue. Security concerns at the country's airports have led to restrictions on its carriers. International aviation regulators won't let the nation's major airlines fly new routes to South Korea or the U.S.—their top two markets for visitors—until domestic airports improve.

Indeed, infrastructure spending is the third leg of the country's growth agenda. The government has pledged an extensive public-works program. The first quarter saw public construction jump 62% over last year. That pace must be sustained. Private investment activity also needs to pick up. RBS says weak private investment was a factor in disappointing first quarter construction overall, which was up just 0.3% from a year earlier.

Manila is more fun these days. But the Philippines must get serious on infrastructure to make the most of its time in the sun.

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Philippines unveil 72 billion-peso ($1.7 billion) Stimulus Package

Asian policy makers are bolstering efforts to protect their economies from weakening global growth, as Indonesia unexpectedly cut interest rates and the Philippines unveiled a stimulus plan.

Bank Indonesia lowered its reference rate by a quarter of a percentage point to 6.5 percent yesterday, defying the predictions of all 15 economists surveyed by Bloomberg News. Philippine President Benigno Aquino announced a 72 billion-peso ($1.7 billion) spending package today as his government cut growth estimates, while Singapore's central bank is forecast by economists to say this week that it will slow or end its currency appreciation.

"We want to be ahead of the curve in anticipating the impact of the global economy," Perry Warjiyo, Bank Indonesia's director of economic research, said in a Bloomberg Television interview today. "It will impact through the region, and we will see there is a decelerating trend of inflation and a downward revision to economic growth. Sooner or later, central banks need to rebalance the preference of their monetary policy response."

Emerging-market nations have turned from fighting inflation to supporting growth as a struggling U.S. recovery and deepening European crisis threaten the global economy. Brazil, Turkey, Russia and Pakistan have cut borrowing costs in 2011, while Asian countries from the Philippines to South Korea have refrained from further rate increases in recent weeks.

Taking Insurance

"It's primarily because of the weaker global economic backdrop that they are taking out some insurance against the global economic headwinds," said Leif Eskesen, a Singapore- based economist at HSBC Holdings Plc.

The MSCI Asia Pacific Index of stocks has slumped 15.4 percent this year as investors pare bets on emerging markets. Some Asian currencies have tumbled against the dollar in the same period, led by a slide of about 9 percent in the Indian rupee, according to data compiled by Bloomberg.

Indonesia's rupiah has weakened 3.5 percent in the past month. Bank Indonesia said yesterday it has sufficient foreign- exchange reserves to support the currency.

"We are confident we can stabilize the market," Warjiyo said in the interview today.

Asian nations from Malaysia to the Philippines are shifting their focus to shielding growth even as elevated inflation prompts policy makers in countries such as Vietnam and India to persist with monetary tightening.

India's industrial output rose 4.1 percent in August from a year earlier, less than the median 4.7 percent estimate in a Bloomberg News survey, a report showed today.

Philippine Spending will boost

Aquino said today the additional spending he authorized for the stimulus package includes 5.5 billion pesos for infrastructure. The Philippine government cut its growth forecasts for the Southeast Asian nation for 2011 and 2012.

"If the fiscal stimulus does its job, this should give the necessary push to keep our economic growth in a solid upward trajectory," central bank Governor Amando Tetangco said today. The Philippines has sufficient liquidity, a stable exchange rate and a "manageable" inflation outlook along with "fiscal space" to help support economic growth, he said in an e-mail reply to questions.

Bangko Sentral ng Pilipinas will consider global developments, including Indonesia's rate cut and the slump in Philippine exports in next week's policy meeting, Tetangco said.

"In most jurisdictions, inflation seems to have become less of a pressing concern," he said. "The weakness in advanced economies is seen to weigh more on emerging economies than previously anticipated."

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The next ASEAN tiger cited by Asia Inc & Business leader could be the Philippines

The Philippines has a most unique economy in the world which is highly dependent on domestic consumption that drives their economy that could be hardly hit for any possible global economic recession. Inspite of rich resources, Philippines did not rely on exports to drive a better and fast forward economy.

The Philippines now tagged with fresh opportunities in Asia, boosting and high grades gold mining, boosting of oil and gas exploration,  good political leader,  revived confidence from global investors and now named as to be Asia’s next tiger economy, potentially regaining the glory lost decades ago, according to a visiting regional business leader from Brunei.

Dato Timothy Ong, a leading Brunei businessman who founded and now chairs regional dialogue platform Asia Inc. Forum, said in a press briefing on last September 26, 2011 that he has seen signs that the Philippines could return to its goal of being the next Asian tiger despite staying at the bottom half of the 10-member Association of Southeast Asian Nations (ASEAN) in terms of economic performance for years.

Ong is also the convener of ASEAN 100 Leadership Forum, which will be hosted by the city of Makati on Sept. 28-29, 2011 at the Makati Shangri-La. This year’s ASEAN meet aims to foster insightful and intelligent discussions on the future of ASEAN and how the region can emerge as one of the world’s significant economic blocs.

According to Dato Timothy  Ong, the Philippines can join the ranks of Taiwan, Singapore, South Korea and Hong Kong, the so-called Asian “tiger” economies or newly industrializing countries. He cited five reasons why the country, though a “dark horse,” or a sick man in Asia had the makings of the next move to be the next “tiger.”

The Chair of the regional dialogue platform Asia Inc. Forum cited 5 following reasons why the Philippines could be the next ASEAN Tiger as:

1.      The new leadership under President Aquino has promised to weed out corruption in the country, which has been creating a lot of optimism. It’s widely perceived that the high level of corruption in the country has driven up the cost of doing business.

2.      Mr. Ong said that the Philippines’ would be vast pool of hardworking professionals and skilled manpower, many of whom have been deployed across the globe. “With this wealth of human resources, it’s important to ask then why the Philippines aren’t more successful economically,” he said. Many countries had been dependent on Filipino Professionals and skilled workers to drive their economy like for example banning the Filipino to work in Taiwan will paralyze the Taiwan’s economy. Banning the Filipino to work in the Middle-east might paralyze their economy. Deporting Filipinos in (North Borneo) Sabah might paralyze the Sabah’s economy which the world knew how important the human resources are.  The continues development in the other north Asian countries had been dependent on Filipino skilled workers like for example the Billion Dollar projects of Korea’s builder Hyundai Engineering in Kazakhstan and Turkmenistan which been dependent on Overseas Filipino Workers as highly skilled which the builder could not outsource such kinds from the local man power pool in the 2 ‘stan countries. Many Leading fortune 200 companies in the world are talents hungry but the Philippines have vast and awashing man power pool. Many countries take advantage of Filipinos for not just for cheap labor but also trustworthy multi-tasker and English speaker that could compete globally.

3.      The third factor would be the Philippines’ “centers of excellence,” Ong said, noting that the country has become a competitive hub for business process outsourcing. He likened the Makati central business district to a “First World” city in a Third World country.  “If the Philippines is capable of being first world in these centers of excellence, why can’t it be First World in every respect?” he said.

4.      Ong said the fourth reason would be the Philippines’ homegrown companies that were at par with the world’s best.  He cited fast-food giant Jollibee Foods Corp., international port operator International Container Terminal Services Inc. and the Ayala group of companies. “There is a sense of optimism that characterizes the country as a whole.  As the new government takes its steps in leading the country towards change, it may be able to experience higher standards of governance,” he said.

5.      Finally, Ong noted the Philippines’ “sharply improving competitiveness” as another factor supporting its aspiration to be the next tiger economy. He cited recent reports that the Philippines had jumped 10 notches to 75 from 85 in the latest ranking of the World Economic Forum. Ong said this happened only within the first 15 months of the term of the new president.

Meanwhile, Ong said ASEAN would likely partly meet its target to establish an integrated economic community by 2015.

“A One ASEAN is important for our collective future to accelerate the economic growth, social progress and economic stability in the region; to promote active collaboration and mutual assistance in economic, social, cultural, technical and administrative spheres,” Ong said.

“At the moment, Southeast Asia is like a big gated community where neighbors barely know each other. They know each other by name, they exchange pleasantries but they wouldn’t really go out of their way to have dinner at each other’s house,” he said.

Once integrated, he said, ASEAN could be a very influential bloc as it could become Asia’s third-largest economy next to China and Japan and the ninth-largest in the world.

The Philippines hinting to be a the second ASEAN tiger is so closed to achieve.

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Charoen Pok-phand Group will Invest ₱1.45 billion in the Phl

Investment: Thai agriculture firm Charoen Pok-phand (CP) Group will be investing ₱1.45 billion in the Philippines and will hire 1,800 more employees while the Siam Cement Group (SCG) said they will infuse an additional P1 billion to expand its operations in the country, the Department of Trade and Industry (DTI) announced yesterday.

CP Group and SCG are just two of the large conglomerates which committed to invest in the Philippines when President Aquino together with some of his cabinet members including Trade Secretary Gregory L. Domingo visited Thailand last month.

CP Foods PLC president and CEO Adirek Sripratak expressed their commitment to further invest and introduce technology to aid the Filipino farmers. The CP Group intends to pour in P 1.45 billion worth of investment in the agribusiness and food industry. CP will go into shrimp and fish farming, shrimp and fish hatchery operations, feed milling, poultry and hog raising. The Group will also increase its Filipino workforce from 200 to 2,000 by 2012.

The other firm that met with the Philippine contingent was PTT Public Co, Ltd. (PCL). With the aim of promoting medical tourism in the country, the President and his economic team also met with the executives of Bumrungrad Hospital, Asia's biggest private hospital group and leader in medical tourism.

Similarly, the meeting with the SCG centered on their expansion plans in the Philippines. SCG President and CEO Kan Trakulhoon mentioned that they could bring in the "dry cement manufacturing technology" which is more efficient and environmentally friendly. Kan also pointed out that SCG is currently focusing on value added products and the expansion of its operations in ASEAN countries as part of their company's strategy. The SCG is one of the biggest foreign investors in the Philippines with more than $200 million investments, according to Kan.

Kan also said that they own several companies in the Philippines engaged in manufacturing activities such as kraft paper (United Pulp and Paper Co.), concrete roof tiles (CPAC Mornier Philippines), ceramic tiles and bathroom fixtures (Mariwasa Manufacturing Inc.).

"Mariwasa in the Philippines is already running on full capacity and there are plans to expand the facilities of Mariwasa," Kan said. The company also plans to put up a P1-billion box plant to support their kraft paper manufacturing business in the Philippines.

 

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Philippine Export growth rises to 19% $4.3 Billion in April 2011

Business & Economy: Philippines - Merchandise exports rose by an annual 19.1 percent in April 2011, their fastest growth rate this year, as shipments to Japan remained strong despite the natural and nuclear disasters there,  as announced by the Govt last Thursday June 9, 2011.

The Philippines’ export bill rose to $4.3 Billion Dollars in April from $3.611 billion a year ago, after the 4.1 percent annual rise in March, data from the National Statistics Office showed.

Month on month, however, April exports were down 1.2 percent from March’s $4.353 billion.

Electronics shipments, which dominate exports, fell 2.1 percent from last year, the third successive monthly decline. Electronics made up 49.9 percent of April revenues.

Exports to Japan, the country’s top market during the month, rose 20.2 percent in April to $741.88 million. Exports to the United States, the second-biggest export destination, were down 1.3 percent from a year earlier.

Analysts said the crisis in Japan had affected trade, but the impact was limited so far, and strong growth levels are expected later this year.

“While the electronics sector suffered from the supply chain disruption following the

Japan’s earthquake... non-electronic exports have seen strong performance,” said Vincent Tsui, Standard Chartered Bank economist.

“This reflects the impact of Japan’s earthquake on headline economic growth to be much moderate, with limited impact on net exports, and trade performance set to rebound in the upcoming months as Japan’s manufacturers gradually report restoration of production facilities, this should support revival of processing trade in electronic products going forward.”

“Surprisingly, exports to Japan climbed 20.2 percent year-on-year, though slipped on the month, and we expect the slowdown in purchases from the key export destination to reflect in the rest of the quarter,” added Radhika Rao, economist at Forecast Pte, Singapore.

Exports are estimated to climb between nine percent to ten percent this year, and 12 percent next year. Imports are expected to rise 17 percent to 18 percent in 2011, and 18 percent in 2012. Exports grew 34 percent and imports 27 percent in 2010.

The Semiconductor and Electronics Industries in the Philippines is still hopeful of hitting at least the lower end of its export growth target of eight percent to 12 percent this year, but the head of the industry group has said it would be difficult to achieve.

The Philippines provides about 10 percent of the world’s semiconductor manufacturing services, including for mobile phone chips and micro processors.

Other top Philippine exports include garments and accessories, wood furniture, vehicle parts, coconut oil, and tropical fruits.

Exports account for about two-fifths of the country’s gross domestic product (GDP), based on expenditure terms.

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Net FDI Investment in the Philippines Inflows surge 142% in Q1 - BSP

The Banco Central Sa Pilipinas / Bangko Sentral ng Pilipinas (BSP) reported  June 9, 2011 that net foreign direct investment (FDI) inflows surged 142 percent in March as equity infusion more than doubled while withdrawals declined.

BSP Governor Amando Tetangco Jr. said that net FDI inflows amounted to $167 million Dollar in March or $98 million lower than the $69 million inflows booked in the same month last year.

"All FDI components yielded positive balances during the month," Tetangco stressed.

Data showed that equity placements jumped 113 percent to $64 million Dollar in March from $30 million in the same month last year while withdrawals slowed down by 47 percent to $18 million from $34 million.

The net inflow of other capital account consisting largely of intercompany borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines jumped 146.2 percent to $96 million in March from $39 million in the same period last year while reinvested earnings fell 26.5 percent to $25 million from $34 million.

In all, Tetangco said net FDI inflows retreated by 16.6 percent to $471 million in the first quarter of the year from $565 million in the same period last year due to the tensions in Middle East and North African (MENA) states, the debt crisis in Europe, and the disasters in Japan.

"Investors remained cautious on account of the uncertainties brought about by the ongoing sovereign debt problems in Europe, the political unrest in the MENA region as well as the disasters that struck Japan," the BSP chief stressed.

Equity placements retreated by 7.6 percent to $121 million from January to March compared to $131 million in the same period last year while withdrawals plunged 53.5 percent to $40 million from $86 million.

Data showed that reinvested earnings plummeted 38.3 percent to $113 million from $183 million while other capital fell 17.8 percent to $277 million from $337 million.

FDI inflows retreated by 12.7 percent to $1.71 billion last year from $1.96 billion in 2009 as equity placements plunged 42.5 percent to $1.15 billion while equity withdrawals increased by 10.8 percent to $307 million.

The drop was attributed to the decline in equity capital investments in new and existing projects as investor sentiment was generally marked by cautiousness and uncertainties surrounding the sovereign debt crisis in some parts of Europe, geopolitical tensions in Korea, asset price bubble and overheating concerns in fast growing emerging markets.

Likewise, the BSP explained that large-scale investments arising from the privatization of a local power corporation and the acquisition of shares of a local beverage manufacturing firm were recorded in 2009.

These included the investment made by China's largest electricity provider State Grid Corp. and Monte Oro Grid Resources Corp. in state-owned National Transmission Corp. (Transco) that bagged a $3.95 billion concession contract as well as the decision of Japanese brewer Kirin Holdings to acquire a stake in Manila-based San Miguel Brewery of diversified conglomerate San Miguel Corp. worth ₱ 65.8 billion.

Monetary authorities are confident that FDIs would continue to pour into the Philippines to fund projects under the Aquino administration's public private partnership (PPP) scheme.

 

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Bank loans in the Philippines up 14.2% to P 2.42 Trilion as of April 2011

Economy: The Bangko Sentral ng Pilipinas (BSP) reported yesterday that bank lending continued to post double-digit growth in April despite the economic slowdown experienced in the first quarter of the year.

BSP Governor Amando M. Tetangco Jr. said in a statement that bank loans grew 14.2 percent to P2.423 trillion as of end-April from P2.121 trillion as of end-April last year.

“The steady growth in bank lending reflects the prevailing pace of domestic economic activity,” Tetangco stressed.

This was the fourth straight month that bank lending posted a double digit growth after expanding by 11 percent in January, 12.3 percent in February, 14.1 percent in March, and 14.2 percent in April.

Economic managers through the Cabinet level Development Budget Coordination Committee (DBCC) see the country’s domestic output as measured by the gross domestic product (GDP) growing between seven percent and eight percent this year and next year.

The country’s GDP posted a surprising growth of 7.6 percent last year after slackening to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

As expected, the country’s GDP growth slowed down to 4.9 percent in the first quarter of the year from the revised 8.4 percent in the same quarter last year due to government underspending as well as the weak global trade.

Despite the economic slowdown, loans extended to productive activities grew 15.7 percent to P2.187 trillion as of end-April from P1.899 trillion in the same period last year as corporate borrowers sourced more loans from banks to bankroll their expansion programs.

In terms of growth, data showed that loans to the mining and quarrying sector posted the biggest growth of 74.2 percent followed by the electricity, gas, and water with 47.3 percent, and the manufacturing sector with 19.5 percent.

In terms of amount, the manufacturing sector got the biggest share with P406.18 billion followed by the real estate, lending and business services with P385.9 billion; the agriculture, hunting, and fisheries sector with P344.38 billion; wholesale and retail trade sector with P269.1 billion; and the electricity, gas, and water sector with P215.3 billion.

Tetangco also reported that the growth in the loans extended for household consumption was steady at 12.9 percent to P199.41 billion in end-April from P176.59 billion in the same month last year.

Data showed that credit card loans went up by 7.6 percent to P120.5 billion from P111.95 billion while auto loans jumped 27.3 percent to P62.2 billion from P48.86 billion.

The BSP chief pointed out that authorities would ensure appropriate monetary and financial conditions for continued credit expansion while promoting the BSP’s primary mandate of maintaining price stability.

“Going forward, the BSP will contiue to provide the appropriate credit conditions to support its primary mandates of maintaining monetarya and financial stability ,” Tetangco added.

A BSP survey showed companies are still planning to expand their operations and hire more workers in the Philippines this year despite the projected easing in economic growth this year.

BSP director for Department of Economic Statistics Rosabel Guerrero said one of every four respondents of the Business Expectations Survey (BES) for the second quarter 2011 indicated plans to expand their operations.

“About one for every four respondents in the industry sector ir 24.7 percent indicated expansion plans for the third quarter,” Guerrero stressed.

However, she explained that the percentage of respondents that signified their intention to expand their operations went down to 24.7 percent in the second quarter of the year from 33.9 percent in the first quarter.

In terms of Employment Outlook Index of the survey, Guerrero said the number of respondents who expected to continue hiring in the third quarter declined to 14.5 percent in the second quarter from 23 percent in the first quarter

 

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New Philippines digital plan to highlight National Information & Communications Technology ICT Month

The celebration of National ICT Month is mandated under Presidential Proclamation No. 1521 (Series of 2008), declaring every month of June as National ICT Month.

The month-long celebration features events and activities organized by government and the private sector.

For its part, the CICT, together with various industry associations, will be holding the National ICT Summit, which will feature the official launch of the Philippine Digital Strategy (PDS) 2011-2016 and the launch of a limited edition Commemorative Stamp marking National ICT Month 2011.

Another major event is the celebration of the 40th Anniversary of the establishment of the National Computer Center (NCC), a component agency of the CICT.

Several milestones have been achieved for the ICT sector, many of these bringing prestige to the country. According to “the Global Location Trends 2010 Report” of IBM Global Business Services, the Philippines is now the world leader in terms of jobs for shared services and business process and outsourcing (BPO) services.

The IT-BPO industry, through the Business Processing Association of the Philippines, has provided more than 525,000 jobs as of December 2010, about 79,000 new jobs created representing an increase of about 24 percent from the previous year.

The increase in employment for this industry can also be attributed to the success of the Next Wave Cities initiative, a program which develops cities as alternative destinations for BPO investments.

Cities such as Davao, Iloilo, Bacolod and Sta. Rosa, Laguna are now in the roster of preferred IT-BPO locations, due to the success of this program.

A significant activity this June is the launch of the Philippine Digital Strategy on the theme “Transformation 2.0: A Digitally Empowered Nation.”

The Philippine Digital Strategy 2011-2016 aims to contribute to the Aquino administration’s “Social Contract with the Filipino People”, mainly by leveraging the use of ICT for national development.

The PDS identifies four strategic thrusts, namely: 1) transparent government and efficient services delivery, 2) Internet opportunities for all, 3) investing in people: digital literacy for all, and 4) ICT industry and business innovation for national development.

The strategy presents a renewed vision for ICT and its importance in transforming Philippine society into a competitive force in the global digital economy by the year 2016.

The PDS is also aligned with the principles and thrusts of the ASEAN Information and Communications Technology Masterplan (AIM) 2015, which was adopted in January 2011. AIM 2015 was developed to serve as a guiding document to advance ASEAN regional ICT cooperation.

 

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Chinese firms urged to locate BPO functions in Philippines

The Board of Investments is urging Chinese companies to put up business process outsourcing facilities in the Philippines, so that they can take advantage of the support that highly skilled English-speaking BPO personnel can provide for their businesses.

Coming from a recent investment promotion trip to China, BoI managing head Cristino Panlilio said Chinese companies would benefit from offshoring some company functions to the Philippines, especially those that China still had to improve.

“China is starting to bone up on its service exports, so we’re giving them tips and strategic recommendations on how to make their service export industry more competitive,” he said.

Certain banking and financial functions, for example, could be done out of the Philippines for China’s overseas clients, he related.

“The Chinese market is big, and it needs strong support from English-speaking countries like the Philippines to serve its clients in the West. What they can do is move some business functions here, then just move these back to China when they’ve already built their capabilities,” Panlilio said.

“Like in banking, for example. China’s banking capabilities are still not on par with the world’s best. The Philippines can help in that area. We can also do animation and just about any service. A lot of companies in China need BPO services,” he added.

Should Chinese firms decide to bring their BPO business into the country, he said as much as a third of local BPO operations could be servicing Chinese companies.

In an earlier interview, Business Processing Association of the Philippines executive director for information and research Gillian Joyce Virata said the local BPO industry was keen on entering new markets.

Not wanting to rely almost solely on the United States for its business, she related that the BPO sector was pushing to enter new markets such as the United Kingdom and Asia-Pacific.

“Because of the growth of the Asia-Pacific region, there’s now also a big demand (for BPO services). We’re trying to capitalize on our language capabilities. The biggest demand is for Mandarin, Japanese, Thai, Bahasa, and Korean,” she said.

 

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WORLD Bank ranked the Philippines among world's top service exporters

The World Bank has ranked the Philippines among the best performers in the services exports, particularly in the business process outsourcing (BPO) sector, but urged further reforms in the travel and tourism sector if the country intends to sustain growth moving forward.

World Bank senior trade economist Sebastian Saez said in a report that the services sector depends on human capital, the quality of the telecommunications network, and the quality of institutions.

“The experience of exporting outsourced business services in the Philippines shows that by creating an enabling environment where the private sector can deploy its creativity, developing countries can reap the benefits that services exports opportunities are opening,” Saez added.

The Philippine experience shows that services are a viable option for export diversification, he said, adding that trade in goods is no longer the only vehicle to diversify exports for developing countries.

Services exports as a percentage of total exports increased from nine percent in 1999 to 21 percent in 2009 in the Philippines. Its services exports rose 3.6 percent on average per year during the period, higher than that of Asia as a group, which averaged 1.5 percent per year. Unlike many developing countries, the Philippines had been a net exporter of services since 2006.

The Philippines is currently the third largest player in BPO in the world, accounting for 15 percent of the global BPO market, after India (37%) and Canada (27%).

Business Processing Association Philippines (BPAP) chairman Fred Ayala said that the BPO sector currently employs close to 500,000 people and generated about $9 billion worth of exports in 2010.

The industry’s target in terms of annual revenue is $25 billion by 2016 and a direct workforce of 1.3 million.

“There is an urgent need to develop supervisors, middle managers, and more skilled workers to respond to increasing market demand for a broadening array of knowledge-based, complex services,” Ayala said.

The World Bank report also highlights the importance of developing the tourism sector.

Tourism accounts for about nearly seven percent of the country’s gross domestic product (GDP), and directly employs about 3.5 million people. But the report said that tourism could contribute more to help address poverty should reforms outlined in the National Tourism Development Plan (NTDP) are effectively implemented.

The study said major impediments to tourism competitiveness are largely associated with weak ground and air transport infrastructure - roads, railways, ground transport network, and airports. Weak physical infrastructure, it says, lowers accessibility to tourism destinations and discourages private sector investments in accommodation facilities.

Tourism Undersecretary Daniel Corpuz said the government has already started to put in place important reforms that will increase tourism arrivals in the country. The Philippines implemented a liberalized air policy in selected international airports outside Metro Manila to promote greater tourism flows to the country.

“More reforms are underway to transform the Philippines into a ‘must experience destination in Asia,’” Corpuz added.

 

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Standard Chartered revised up 2011 economic growth forecast for the Philippines to 5.7 percent

Economy: British-owned Standard Chartered Bank revised upwards its 2011 economic growth forecast for the Philippines to 5.7 percent from the original 5.4 percent.

In a research note, Standard Chartered economist Vincent Tsui said the investment bank raised the country’s GDP growth forecast to 5.7 percent instead of 5.4 percent this year due to the projected strong investment inflows in the second half.

“In anticipation of more broad-based and sustainable growth dynamics ahead, we raise our 2011 GDP forecast to 5.7 percent from 5.4 percent previously. We expect growth momentum to pick up in the second half,” he stressed.

Tsui said the investment bank raised its GDP growth forecast for the third quarter of the year to 6.4 percent instead of six percent but lowered its growth forecast in the fourth quarter to 6.8 percent instead of seven percent.

“We expect the strong investment pipeline to remain a key growth driver in the coming quarters. While we expect headline GDP growth to slow further in the second quarter due to the high base effect and temporary disruptions to electronics manufacturing from the Japan earthquake, the underlying  fundamentals of the economy remain solid. We believe headline GDP growth is set for a strong rebound in second half,” Tsui added.

He pointed out that the growth in the second half would be fuelled by investments instead of consumer spending.

“Near-term weakness aside, we believe the shift from consumer spending to business investment as the Philippines’ key growth driver deserves more market attention,” Tsui added.

The National Statistical Coordination Board (NSCB) reported late last month that the country’s GDP growth slowed down to 4.9 percent in the first quarter of the year from the revised 8.4 percent in the same period last year due to weaker government spending and slow global trade. The National Economic and Development Authority (NEDA) was expecting a growth of between 4.8 percent and 5.8 percent for the first quarter.

“Even so, we believe the weaker headline numbers mask underlying strength in an economy that is now driven by more sustainable and balanced growth dynamics,” the economist said.

The sharp drop in government spending in the first quarter of the year helped the Aquino administration post a budget surplus of P61 billion in the first four months of the year, a complete reversal of the P131.6 billion budget deficit booked in the first four months of last year.

“This is in line with our expectation that this year’s budget deficit will narrow to P256 billion due to fiscal prudence and stronger tax collection on the back of buoyant domestic demand,” Tsui said.

The Aquino administration hopes to trim the budget deficit to P300 billion or 3.2 percent of GDP this year from a record level of P314.5 billion or 3.7 percent of GDP last year. It has committed to trim the deficit to two percent of GDP starting 2013 until the end of the term of President Aquino on 2016.

Standard Chartered reported that inventory restocking particularly of durable equipment resulted to a sharp 37 percent rise in gross capital formation in the first quarter of the year reflecting the booming investment activity in the country.

It added that remittances from overseas Filipino workers (OFWs) remained strong despite the tensions in the Middle East and North African (MENA) states as well as the disaster in Japan while foreign direct investments (FDIs) would pick up later this year in light of the public private partnership (PPP) scheme of the Aquino government.

“The launch of 10 infrastructure projects this year as part of the government’s PPP initiative is also expected to attract $1 billion of FDI inflows and support construction-related sectors,” Tsui explained.

Tsui said the investment bank sees the country’s GDP expanding by six percent in 2012 and 2013.

The Philippines posted its strongest growth in 34 years after its GDP expanded by 7.6 percent last year exceeding the revised growth forecast of five percent to six percent set by economic managers. It was on the verge of a recession when its GDP growth slowed down to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

The Cabinet-level Development Budget Coordination Committee (DBCC) has set a GDP growth target of between seven percent and eight percent this year and next year.

Bangko Sentral Governor Amando Tetangco Jr. said the country’s GDP would grow slower than expected this year as the economic growth targets were set by the DBCC prior to the tensions in the MENA region and the disasters in Japan.

“We think the economy will continue to grow this year. The government is projecting seven percent to eight percent although that projection was arrived at prior to the events at the MENA region as well as the earthquake, the tsunami and the nuclear disaster in Japan,” Tetangco said earlier.

 

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