Singapore slashed down Philippine inflation forecast – PHL market seen resuming climb

Philippines—The country's largest mutual fund group, Bank of the Philippine Islands-managed ALFM Mutual Funds, sees the local stock market hurdling the fresh turmoil in the eurozone and resuming its climb to new heights this year.

In the last two weeks, Philippine stocks have retreated due to the negative sentiment prevailing in the European region, which had spilled over to local markets. Last week, the main Philippine Stock Exchange index suffered its steepest weekly drop this year. It fell by 5.4 percent to 4,879.42 on Friday (May 18, 2012), on escalating risks that the eurozone will break up.

"But we remain constructive of the domestic market given our healthy macroeconomic fundamentals. We think cyclical stocks such as banks and property, which are expected to benefit from the low interest rate environment and improving incomes, will continue to lead the Philippine stock index to higher levels," ALFM director Maria Theresa Marcial-Javier said in a report to stockholders.

"Downside risks are plenty, with the external factors having a hand in shaping the domestic economy. Nevertheless, our confidence in the economy has not wavered," said ALFM chairman Romeo Bernardo.

"We still expect above-trend GDP [gross domestic product] growth, supported by benign inflation. We anticipate the government's fiscal and external position to continue improving. We anchor hopes on the sustained strength of remittance flows, high business process outsourcing sector growth, improved confidence in the government and on the economy, the government's commitment to fiscal prudence, and the priority given to infrastructure development," Bernardo said.

Javier, who heads BPI's asset management and trust group, said in an interview after the ALFM stockholders meeting that the stock market's support level at 4,750 should hold and levels close to this barrier would be an opportunity to increase position.

BPI asset management is sticking to its view that the PSEi would hit 5,500 to 5,800 levels this year.

"As of the end of April 2012, the Philippines is the third-best performing equity market in the region, with a return of 19 percent, driven by strong liquidity flows attracted by the country's favorable growth prospects and generally strong first quarter 2012 corporate earnings. Net foreign buying amounted to $909 million, already more than half of the 2011 level of $1.33 billion," Javier reported to stockholders.

In her report, Javier said 2011 turned out to be a year of opportunities as well as challenges for the economy, the financial markets and investment management industry.

"We expect 2012 to be as exciting and thought-provoking. Nevertheless, we look to the future with optimism, with our expectations strongly anchored on the resilience of our domestic economy, yet remaining mindful of the difficulties that still lie ahead as we confront the challenges in the global financial markets," she said.

Malacañang says welcomes DBS cutting of inflation forecast

Malacañang on Sunday  (May 20, 2012) welcomed the reported cutting by Singapore-based DBS Bank Ltd. of its inflation forecast for the Philippines for 2012 and 2013, saying it may result in lower prices of goods and services.

Presidential spokesman Edwin Lacierda said this is "good news" for the Philippines, even as he noted world oil prices are starting to soften.

"That's good news for us.... Then considering world oil prices are softening, mababa ang ating inflation (our inflation is low), which is good for us," he said on government-run dzRB radio.

He also noted that while world oil prices had risen in past months, prices of basic goods in the Philippines did not soar drastically due to the efforts of Philippine economic managers.

Earlier reports said DBS lowered its inflation forecast for the Philippines due to lower-than-expected consumer prices in the first four months of the year as well as softening oil prices.

The report said DBS slashed its inflation forecast to 3.5 percent instead of four percent this year and 4.3 percent instead of 4.8 percent in 2013.

National Statistics Office data showed inflation rose to three percent in April from 2.6 percent in March.

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Advance Technology investments sought & World Class Quality Products in the Philippines

Philippines needs to invest heavily on developing technology, following the models of such countries as India, Korea, Japan and the United States, among others, a prominent engineer and entrepreneur said.

Philippine Development Corp. (PhilDev) Chairman Diosdado Banatao, in a recent interview, pointed out that India, instead of being hobbled by its large population, used its human capital to build a strong capability in software development.

Cebu, he said, ought to push for more training so it could build a "technology-based ecosystem" that can create new applications or solutions to solve problems.

This way, he said, the country can slowly transform from a buyer into a major player in the global market.

"We are limited in our own markets. But, we have the ability to be part of the global market because we have way more people than Japan and Korea," said Banatao, the managing partner of Tallwood Ventures.

He pointed out that what made countries like Korea, Japan, US, Germany and France succeed is that they have built a strong capability and produced technologies that were embedded into their products.

"Imagine that 90 percent of the value goes back to the product creator, and if this is ploughed back to its local economy through investments on research and development to create more products, this alone will have a huge impact on the lives of the people as well as the economy in general," Banatao explained.

High risk, high reward

Eric Manlunas, co-founder and managing partner of Siemer Ventures, advised companies to invest on early-stage firms given the high liquidity in the market today.

"We need to promote angel investing here, for our start-ups to take off," he said.

Banatao added investors should start looking at technology development as an investment, aside from pouring all their money into real estate and shopping among others, to build a community of venture capitalists (VCs).

However, he admitted that some investors in the Philippines fear the fact that success rate among VC-supported ventures is low.

"This involves huge risks, but high returns. But VCs should be there to lead and mentor start-ups," said Banatao.

Aside from the lack of financial capital to build a community of VCs, the other challenges include a shortage of experienced technology entrepreneurs and managers, of scientists and engineers, and insufficient access to a global network of experts.

PhilDev trustee Winston Damarillo said everyone needs to participate—industry players, academe and government—to address all these concerns, considering that the Philippines is among the Next 11 emerging markets.

"We need everyone's involvement so we can turn the brilliant ideas of our people into money-earning products and services, which could further economic growth," said Damarillo, also the founder Developers Connect (DevCon) Philippines and software companies Morphlabs and Exist.

The next 11 markets are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, the Philippines, Turkey and Vietnam.

Making Local Products Globally Competitive

SMALL and Medium Enterprises (SMEs) play a major role in socio-economic development, through their creation of jobs and business opportunities, use of indigenous resources, dollar earnings, and linkages with other industries. With the growing demand for local products abroad, SMEs have begun to adopt a more aggressive campaign to promote their products and search for new markets.

This accounts for the popularity of trade fairs and expositions being held in Metro Manila and the provinces. Entrepreneurs see them as venues to introduce products and services, and the public patronize them for innovative and affordable items.

SMEs comprise 99.6 percent of the country's 80,000 business enterprises, mostly in export, and employ 63 percent of the labor force. While most jobs can be found in Metro Manila, SMEs also provide employment in economic zones and science parks nationwide. The government supports SMEs as the backbone of the Philippine economy. Small enterprise is business with capital and total assets of above R3 to R15 million, while medium enterprise has a capital and total assets of over R15 million to R100 million.

Republic Act 6977 the "Magna Carta for Micro, Small and Medium Enterprises (MSMEs) of 1991," was a landmark legislation for MSMEs. Two other laws –RA 9178, the Barangay Micro Business Enterprises Act of 2002, and RA 9501, the Magna Carta for Micro, Small, and Medium Enterprises of 2008 – provided incentives to barangay-based micro businesses and expanded the SME sector to include microenterprises.

As more community-based enterprises continue to innovate and tap more markets here and abroad, the government and private sector assist them in product development, introduction of new technologies and marketing strategies to improve operations, increase productivity and reduce production costs. 

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Philippines ready for Chinese cyber warfare, Malacañang says

Time line image from securityaffairs.co

Malacañang on Sunday said it is ready to deal with potential cyber-attacks, amid reports that China is investing in cyber-warfare as part of its steady military buildup.

"Our technical people are very competent; we have been coordinating with the Department of Science and Technology. As to whether (the) Chinese have been involved or investing in that, we are in no position to comment," presidential spokesman Edwin Lacierda said on dzRB radio.

"Suffice it to say that as soon as we detect on our servers (an incident) that would point to a (denial of service attack), our IT people are on top of it and they are competent in dealing with it," he added.

He was referring to recent cyber-attacks on government websites, including that on the Official Gazette (www.gov.ph ), where there were signs the attacks originated from China.

Other recent attacks had targeted the sites of the Department of Budget and Management (www.dbm.gov.ph ) and the Philippine Atmospheric Geophysical and Astronomical Services Administration (www.pagasa.dost.gov.ph ).

The attacks occurred amid a month-long standoff between the Philippines and China at Panatag (Scarborough) Shoal.

The dispute started when Philippine military forces spotted Chinese fishermen gathering marine species from the area but were blocked by Chinese vessels when they tried to make arrests.

Some of the attacks from China had involved the defacement of the sites with a Chinese flag and the Chinese national anthem playing in the background, along with a message that Huangyan Island – the name China uses to refer to the shoal – is China's.

Reports during the weekend quoted the Pentagon as saying China is pursuing a steady military buildup and investing in cyber-warfare.

"We have recently been the subject of several cyber-attacks... (but) so far we have been able to defend our website," Lacierda said.

No info on added Chinese warships

Meanwhile, Lacierda said the Palace has no information on reports that China has sent five warships close to the maritime domains of the Philippines after the arrival of the nuclear-powered US submarine USS North Carolina.

"We have no information na magpapadala ng Chinese warships sa waters natin, I have no information on that. I checked it with the AFP, wala sila ganoong information," he said.

In the meantime, he said it is in the interest of both the Philippines and China to continue pursuing a peaceful solution to the standoff.

"It's in the interest of both countries to pursue a peaceful resolution to this," he said.

He added that on the part of the Philippines, it has been "prudent" in both actions and words in making gestures of goodwill on the matter.

"As emphasized by (President Benigno Aquino III), we have maintained our position of de-escalating the tension in the Bajo de Masinloc standoff," he said. 

Read more in GMA NEWS

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