Rising Philippines, Prosperous Britain – Aquino will meet Queen Elizabeth for Investments?

Queen Elizabeth wants to meet President Benigno Aquino in his June Kingdom Visit

President Aquino's official visit to the United Kingdom is expected to yield some "big-ticket" investments to the Philippines in energy and infrastructure, a Department of Foreign Affairs official said on Wednesday.

Foreign Assistant Secretary Elizabeth Buensuceso also said in a Palace media briefing that the President's trip from June 4 to 6 comes at a time when Europe is looking at Asia, particularly the Philippines, as a "safe haven" for investments.

"Expect big-ticket investments from the United Kingdom," Buensuceso said when asked about the potential investments to be generated by the trip, which will be the President's first official visit to Britain and Europe since he assumed office in 2010.

"Several business meetings have also been lined up for the President with top British investors, who have an interest in doing business in the Philippines and participate in the Aquino administration's Public-Private Partnership Program. As you know, the UK was one of the first countries to show support for the PPP," Buensuceso said.

She said the President is scheduled to meet with executives of various "big name companies" like Shell.

When asked, Buensuceso said the President's meeting with Shell would not involve possible investments in the West Philippine Sea (South China Sea) on energy exploration.

She said several Cabinet members and Filipino businessmen were joining the President's trip "to look into enhancing reciprocal investment, trade and tourism opportunities between the Philippines and the United Kingdom."

Buensuceso said some of the Filipino businessmen with the President are from the banking sector.

The trip—whose theme is "Rising Philippines, Prosperous Britain: Forcing a new era of mutual prosperity and partnership" seeks to "expand opportunities for closer economic cooperation" between the two countries.

It also seeks to "build up cooperation toward global peace, conflict-resolution and combating international crime; deepen people-to-people linkages from the grassroots to the highest levels of the government; and celebrate shared values of democracy, free speech, good governance, transparency and countercorruption."

Asked about the timing of the President's trip, Buensuceso said it will be a "historic moment" since "European countries and, in this instance, under the leadership of the United Kingdom are now looking for alternative places; safe havens."

There is a crisis going on in Europe, and now it is looking at Asia, Buensuceso said, noting that while in the past, Europe's reference to Asia was often limited to China, India and Singapore, "this time, the focus is on the Philippines."

"So we are gaining recognition and with this visit, I think…the Philippines will be in the radar of European investors," she said.

Buensuceso said British investors are apprised of developments in the Philippine economy, and that the UK and the Philippines are members of the Open Government Partnership Program.

"The UK is now vice chairman of the steering committee. So these things are a confluence of factors that make the UK, in this specific instance, look back, look again at the Philippines as a possible partner," she said.

Buensuceso said the assumption of the British coalition government led by Prime Minister David Cameron in May 2010 "reinvigorated the bilateral relationship between the Philippines and the United Kingdom, especially as the latter sought to re-engage emerging powers, including the Philippines."

"This unprecedented focus on deepening Philippine-British bilateral ties, especially in economic and political/security matters, has even led the British government to describe the Philippines as an 'emerging power in East Asia,'" she said.

Asked why the UK was chosen among other countries as the host of the President's first trip to Europe, Buensuceso said, "The biggest attraction here really is the potential of the UK as a very important political and economic partner of the Philippines." Buensuceso said the President will meet with Cameron at 10 Downing Street to discuss bilateral political and economic cooperation, the Britain's participation in the International Contact Group (ICG), regional and international issues, and anti-corruption and good governance practices in their respective countries.

Asked about the planned discussion on political and security matters between the two leaders, Buensuceso said the President will brief Cameron on the peace process in the Philippines, and will thank Britain for its important contribution as a member of the ICG.

"We are also going to announce the entry into force of the Mutual Legal Assistance treaty between the Philippines and the UK, which has just been concurred by the Senate after ratification by the President. So this is a very good development," she said.

Mr. Aquino will attend a luncheon feted by Queen Elizabeth, where she will be represented the Lord of Mayor of London Alderman David Wooton, a recent Manila visitor, and where several business agreements are expected to be signed, Buensuceso said.

He will also meet with the Duke of York Prince Andrew, as the official representative of the queen, who will be celebrating her Diamond Jubilee on that day.

The President will meet with representatives of the 250,000-strong Filipino community in Britain, which will also feature the "It's More Fun in the Philippines" tourism campaign of the government.

Buensuceso said the President's message to the Filipino community in Britain is that "we care for them; they are important in our economic and political development and that the Filipino government, the Philippine government is giving high priority to improve their welfare and to help them in times of need."

Asked whether the President would ride one of the public buses bearing the Philippine tourism campaign poster in London, Buensuceso said, "We will see if that is logistically possible."

She said during the President's visit, the Daily Telegraph will run a special feature focusing on his programs and on the President himself. The BBC will also have an interview with the Chief Executive.

From London Mr. Aquino will head for the United States for an official visit to Washington, where he will meet with US President Barack Obama, and Los Angeles from June 6 - 8 2012.

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End of Arab Oil Supremacy is the alternative Energy?

By ZOILO P. DEJARESCO III

The Middle East, since the "petrodollars" phenomenon in the 1970's, somehow dominated the world, in the economic and energy sense.

If world oil demand falters, they reduce production; if it surges, they hike prices in tandem.

The oil-producing nations had enough petrodollar reserves to lend and invest in many overseas nations, advanced their political agenda and some even used their money to export terrorism to the nations they hated.

Hopefully, that dire situation will change.

The Arab nations are lucky that there is a new surging demand for oil like populous countries like China and India enabling them to keep the average Brent crude oil price in 2011 at a high US$111/barrel.

This surge was balanced by the reduced demand resulting from the pockets of recession in Europe and the mild one in the USA. Added to that were the technological advances that made vehicles, gadgets and plants more oil-usage efficient and the rise of substitutes for oil in transport and electric power usage.

Many countries like the USA, Australia, China, Brazil and Canada have been driven to look for alternative sources of fuel over the years. The end of Arab oil supremacy could be at hand .

Fortune disclosed that America is now the "Saudi Arabia of natural gas" – in fact, it has new domestic natural gas supply worth 100 years usage based on today's consumption. The natural gas production in that country had risen by 28% since 2005.

Exxon which bought XTO Energy (master in the new oil mining technology called "fracking") – and helped by high oil prices- shot to No. 1 in Fortune 500, eclipsing heretofore leader Wal-Mart with Exxon sales in the USA at US$486 billion and profits at US$ 41-Billion, the second largest in its corporate history.

In a few years time, oil experts predict that the USA will be able to sell natural gas to North Asia, Europe and South America (even with shipping costs) at 40% less price than the conventional crude oil. China and Australia are forecast to produce the same natural gas as well.

Western-friendly Canada now boasts of the second largest crude oil reserve in the world. The combined oil reserves of China, South America and Europe are still 250 years.

The world is moving away from "energy dependency" on crude oil and so its research has gone into – more efficient vehicles (buses, trains, cars, jeepneys, motorcycles) run by electric batteries and even by hydrogen and water. Many countries are now using CNG (Compressed Natural Gas) sources for public and private transportation by converting engines with ready tools, substituting engines with compatible ones and building new CNG0-based means of transportation.

Cheaper and cleaner than conventional gas- CNG is the wave of the future in many countries.

Exxon forecasts that by 2040 with hundreds of millions of people joining the middle class ( from the poor side) the world over- the demand for electricity will shoot by 80% from the present level. But the world is moving away from having its electric power moved by crude oil-based products alone.

In fact by 2025- the USA electricity will be powered by the following (in order of volume): crude oil, natural gas and coal- with natural gas showing the biggest increase in percentage share.

In the same USA, shale gas production which was only 11% in 2008 is now a bigger 33% of total production with the HIS Global Digest predicting that shale gas shall be 60% of total energy source production by 2035.

Newsweek reported in its "Truth about Oil" – there are about a staggering 1.459 trillion barrels or new discovered recoverable oil reserves in various forms and mining methods that should alter both the economy and the politics of the coming decades.

For instance, Light Crude Oil in Texas and North Dakota –produced by the hydraulic "fracking" method- is teeming with 300 billion barrels of reserves. The prevailing climate change has also impacted a positive benefit- the melting of the Artic Ocean lately opened new potential drilling and shipping opportunities of 90 billion barrels of oil just there.

Brazil , headed by the huge state-owned oil giant Petronas is leading the mining of Presalt Deep Water oil variety off the shores of Brazil with a potential of 50-100 billion barrels of oil reserves of this type. The Oil Shale (from solid ketrogen) is huge off the states of Wyoma, Utah, Colorado and Michigan with a mind-boggling estimate of 800 billion barrels.

Meanwhile, oil from the Oil Sands (sandstone saturated called bitumen) is a big thing in Canada with 169 billion barrels in recoverable reserves.

Many electricity-intensive countries are likewise moving away from dependency on crude oil as power source. Its natural rival would be the use of natural gas since coal and nuclear are allegedly on their death throes.

Environmentally-hostile coal plants are no longer manufactured commercially while Germany has banned all its nuclear reactors as it followed Japan which grounded 53 of its 54 nuclear plants –for reasons the Great Tsunami Tragedy in Japan exposed so vividly.

Even in the Philippines, the medium-term energy plans presented by Energy Secretary Rene Almendras include the growing use of geothermal, hydrothermal and solar and wind to a lesser degree while coal , it seems, is no longer the favored power source.

More than that –the recent Scarborough Shoal grew more significant by the research findings done by Brig General Edwin G. Nemenzo , deputy Commander of the 3rd Force Division Philippine Air Force based in Zamboanga City-as told to the Philippine News Agency-that the country (particularly near the Spratlys Islands) sits on a gargantuan oil reserves worth US$ 26-Trillion dollars.

That is enough to pay off the entire Philippine external debt and provide basic services to over 90million Filipinos many in dire poverty.

Such PAF findings were earlier confirmed by the China Ministry of Geology that the area has reserves of 17 billion barrels of oil- larger than the remaining 13 billion barrel reserves of Kuwait- a major oil producing country.

All these new discoveries of oil reserves and energy source substitutes should bring a smile to the rest of the world who always looks forward to the day that the dependency on Arab crude oil will become a thing of the past.

***

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. The contents of this article have not been reviewed nor approved by FINEX. Read more in Manila Bulletin

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Moodys upgrade rating of the Philippines 1 notch up -economy resilient

MOODY'S INVESTORS SERVICE has raised the Philippines' credit rating outlook to positive from stable as the government continues to reduce the fiscal deficit and public debt.

The move sets the stage for a possible upgrade of the Philippines' Ba2 credit rating -- two notches below investment grade -- in the next 12 to 18 months, Moody's Assistant Vice-President Christian de Guzman yesterday said in an e-mail.

The debt watcher is slated to visit the country in June as part of its "regularly scheduled surveillance activities," he added.

Finance Secretary Cesar V. Purisima, in a statement, said: "This is one more step in our march towards investment grade, towards reducing the gap between the market rating and the credit rating, and more importantly towards a more sustainable growth path".

The Aquino administration aims to secure its first-ever investment grade credit rating by 2016 in order to lower its borrowing costs and attract more foreign investors.

According to Moody's, among the key drivers behind the positive outlook were the government's "faster-than-expected" fiscal consolidation and active debt management.

"The government of the Philippines has continued to demonstrate prudence in its fiscal management, as characterized by low budget deficits relative to its rating peers and a steadily declining level of debt relative to GDP (gross domestic product)," it said in a report released yesterday.

The government trimmed its deficit to ₱2.885 billion as of April, just 1% of its P279.1-billion cap for this year. It was also kept at P197.754 billion in 2011, two-thirds of the ₱300-billion ceiling.

Moreover, national government debt fell to only 50.9% of the GDP last year, surpassing the target of 51.7% and the 52.4% posted in 2010.

"Such outcomes are the result of expenditure restraint and improved revenue performance," Moody's noted.

Revenue collections, in particular, have grown faster than the GDP in the past five quarters, solely due to tax administration measures, it added.

"We expect revenue growth to improve further upon the passage of legislation aimed at restructuring excise taxes on alcohol and tobacco products."

Moreover, the Philippines has successfully improved its public debt by lowering borrowing costs, lengthening maturities and reducing foreign currency exposure, Moody's said.

The government successfully concluded a $1.5-billion offer of 25-year global bonds in January, securing interest rates of only 5% -- the lowest ever achieved by an Asian sovereign for bonds with a tenor greater than ten years.

It also repurchased $1.3 billion in high-coupon, foreign-currency bonds last October, cutting borrowing costs by settling the debt papers before their maturity.

Other than an improvement in national finances, Moody's also cited the Bangko Sentral ng Pilipinas (BSP) for its "solid track record of inflation management."

"The sovereign's vulnerability to global financial market shocks has been reduced by the build-up of foreign exchange reserves, resulting in turn from robust current account surpluses and healthy capital inflows in recent years," it added.

The outlook on the BSP's Ba2 credit rating was likewise raised to positive from stable yesterday.

While concerns still remain over the Philippines' large debt stock, it is mitigated by institutional features such as automatic appropriations in the budget for debt servicing, Moody's said.

"In addition, an increasingly large bond sinking fund provides an adequate buffer that guards against near-term liquidity pressures," the credit rater explained.

And as the global economic environment remains uncertain, the Philippine economy is stabilized by remittance inflows which support the balance of payments and spur domestic household consumption, Moody's said.

Overseas Filipino workers remitted a total of $4.842 billion in the first quarter, posting a 5.4% growth year on year against the central bank's 5% projection.

In order to secure a credit rating upgrade, Moody's urged the government to continue the reduction of public debt and pursue reforms to increase revenues. It must also accelerate public spending in areas of the economy that would spur growth.

"These developments should also be accompanied by the continued health of the country's balance of payments and stability of the financial system," it said.

The Philippines, meanwhile, must be wary of macroeconomic instability which could trigger inflation. "A shift away from the focus on good governance" would also be detrimental.

For their part, economic managers hailed the impact of the Aquino administration's campaign of good governance.

"The message we have been trying to send ... is that fiscal performance can improve with good governance," central bank Governor Amando M. Tetangco, Jr. said.

"This positive rating action is therefore welcome and is a sign that Moody's is seeing the fruits of good governance on all fronts: fiscal, monetary and external."

Mr. Purisima added: "The Aquino administration will continue to focus on good governance as the basis for good economics, on fiscal sustainability, on macroeconomic stability and on opening up the country to business and tourism."

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