IU USA recommend- Investing in Indonesia and the Philippines for Growth

What we now see is the emergence of a new economic world order. And I think that most in the industry have come to grips with it. Last week MarketWatch came out with its first special report in a new series dubbed the "New Tigers."

As they state, the developed world can't be counted on as the "end all, be all" turbine of growth it was once considered. I think we've all heard about its sovereign debt issues. Filling the void are rising, new dynamic economies that have set themselves up to drive global economic growth for decades to come – the new tigers.

The first edition looks at the two up-and-coming jewels of Southeast Asia. Here is the case for Indonesia and the Philippines.

They've Come A Long Way

Remember the Asian financial crisis that started back in July of 1997? It created hysteria that there might be a global economic meltdown because of financial contagion stemming from the region.

At that time, the IMF bailed out Indonesia and the Philippines. Now in 2012, both countries have pledged $1 billion each to the International Monetary Fund.

In economic terms, Southeast Asia's stock is rising. Indonesia and the Philippines are seen as leading the way. As we stated before, the traditional economic heavyweights are burdened with excess debt, and now we see the historic regional heavy-hitters – China and India – losing some of their luster.

What's all the hype about? Here are some intriguing things both countries share:

• Each country has a rapidly growing economy with rising incomes.
• Each country possesses a large and young labor force ( English Speaking people in the Philippines counts a plus factor).
• Both Indonesia and the Philippines have a growing middle class.
• Both countries have stable elected governments that have passed legislation that has inspired investor confidence.
• Both countries have solid banking industries.
• And each has a strong position in foreign-exchange reserves that could protect against runs on their currencies.

Andrew Swan, head of Asian fundamental equities at BlackRock, stated, "You have a real contrast, which is why these markets have been doing well… We've had three to five years of great growth. But because there is so much room for growth, this can go on for so many more years."

More Reasons to be Bullish…

• Both Indonesia and the Philippines were given credit rating upgrades last year. (Indonesia is now considered investment grade by both Moody's and Fitch.)
• Each country's stock market is among the world's best performing over the last four years.
• The IMF believes that real GDP in the Philippines will grow by 4.2% in 2012 and by 4.7% next year.
• The forecast for Indonesia is even more impressive. The IMF expects their GDP to grow by 6.1% this year and 6.6% in 2013.
• Each country's fiscal house seems to be in order. Both have a very different balance sheet than a lot of those developed countries in the West. Indonesia's gross government debt was about 25% of GDP last year. The Philippines debt was about 41% of GDP in 2011. This gives both countries more room to boost their economies if that situation ever arises. In comparison, Japan's debt-to-GDP is above 200%.

This only presents the case for economic soundness. This isn't your daddy's or grandfather's emerging markets. Suffice it to say, this also isn't the Western world we've been accustomed to.

The special report goes into a lot of information. And I believe this is the heart and soul of what we need to look at. Part II of this piece looks at the strong banking industry in each country and the opportunities out there for global investors. These are plays that everyone will need to consider for years to come.

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France, Philippines, Australia will begin drilling 5 wells for oil and Gas Exploration by 2013

The Department of Energy expects local and foreign petroleum exploration companies to drill at least five wells in 2013, signifying investors' enduring confidence in the current administration.

According to Energy Undersecretary Jose M. Layug Jr., drilling activities are expected to be conducted by French firm Total E&P Philippines BV for Service Contract (SC) 56 in Sulu Sea, Blade Petroleum for SC 6 or Cadlao block, Australian firm Otto Energy Ltd. for SC 50 or the Calauit field, Nido Petroleum Ltd. for SC 63, and BHP Billiton for SC 55.

Layug noted that the continuing interest in oil and gas exploration could be attributed to the country's rich potential and to the current high oil price environment, which would make it more economical to conduct such drilling activities.

The energy official previously commented that the Philippines is a "sleeping giant" in terms of petroleum exploration. The Philippines has only 27 existing service contracts of which only two are producing. Therefore, he said, "we need to encourage more investors to come here."

Total is expected to drill a well after the acquisition of 500 square kilometers of additional 3D data in SC 56, where oil reserves are estimated to exceed 750 million barrels, enough for the country to live on for seven years.

A well may also be drilled to tap the potential resource at the Calauit oil field (SC 50), which is said to hold up to 15 million barrels.

Also, recoverable resources at the Cadlao oil field (SC 6) are estimated at 7.8 million barrels. Blade Petroleum earlier said that production there could reach some three million barrels of oil in the first year alone.

The Philippine government is aggressively pushing for the exploration and development of indigenous fuel resources to enable the country to meet its daily demand and reduce the importation of petroleum products.

Inquirer 

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U.S. A -Philippines Start New War Game Exercise Facing Scarborough Shoal

USS Bonhomme Richard (LHD-6) is a Wasp-class amphibious assault ship, and the third United States Navy ship of that name. It was named in honor of John Paul Jones' famous frigate, which he had named the French language equivalent of "Good Man Richard," in honor of Benjamin Franklin, the U.S. Ambassador to France at the time. The name Bonhomme Richard is derived from the pen name of Benjamin Franklin, the author of Poor Richard's Almanac. Bonhomme Richard is currently homeported in Sasebo, Japan. The contract to build her was awarded to Ingalls Shipbuilding on 11 December 1992, and her keel was laid down on 18 April 1995. She was launched on 14 March 1997, delivered to the Navy on 12 May 1998, and commissioned on 15 August 1998. On April 23, 2012, the Bonhomme Richard switched homeports when she took the place of the USS Essex (LHD-2) as the command ship for Expeditionary Strike Group Seven

SUBIC BAY, Philippines – Philippine and United States officials on Monday opened a joint training exercise designed to help the two militaries work together to enhance regional security.

The training, called Amphibious Landing Exercises, involve 2,600 United States Marines and 1,200 Philippine Marines and will be held in locations around the northern island of Luzon. The two militaries will train together on disaster relief, humanitarian assistance and maritime security.

"Today, we stand side by side as we face common threats," said Marine Brig. Gen. Craig Q. Timberlake at the opening ceremony.

The exercises are being held during a time of increased tensions in the South China Sea with the Philippines and China involved in a territorial dispute over islands lying near rich energy deposits.

Officials said Monday that the joint exercises have been going on for nearly 30 years and were not related to the territorial dispute between the Philippines and China. They are designed for training and mutual education.

"Amphibious Landing Exercises is an opportunity for an exchange of professional expertise," said Brig. Gen. Remigio C. Valdez, the deputy commander of the Philippines armed forces. "Technological advancement is at the heart of its goal."

There was plenty of technology on display during the opening ceremony of the exercises Monday, held in Subic Bay, a former United States naval base in the Philippines that is now a commercial port.

On the deck of the American amphibious assault ship Bonhomme Richard, where the opening ceremony were held, ground-attack Harrier jets were lined up near CH-46 Sea Knight helicopters. At the pier next to the ship was the Olympia, a nuclear-powered fast attack submarine.

The Philippines fleet, whose largest vessel is a former United States Coast Guard cutter, will have no ships participating in the exercises. Despite that, American officials said the two militaries would learn from each other during the 10 days of joint training.

"It's not about the hardware," said Col. John E. Merna, the commanding officer of the 31st Marine Expeditionary Unit. "We have a lot to learn from the Philippines. They are tremendous jungle fighters."

The training will involve live fire exercises, a simulated helicopter raid, a demonstration of American aircraft capabilities, disaster preparedness drills and public service activities, such as building classrooms and toilets in impoverished areas.

Philippine sees SUBIC naval port as vital to US

The Philippines said Monday a former US naval base facing the South China Sea could play a key role as a hub for American ships as Washington moves to boost its presence in the Asia Pacific.

Formerly the US military's largest facility overseas, the ex-Subic Bay naval base north of Manila has been transformed into a freeport and tourism zone since it was shut down in 1992.

But a senior Philippine official pointed out that, with the United States planning to shift the bulk of its fleet to the Pacific by 2020 as it focuses on Asia, it would need natural deep water bays to dock its ships and submarines.

"Based on US official pronouncements, there is a strategic rebalancing (of its forces) and that means more assets, more aircraft in the Western Pacific," said Edilberto Adan, a former general who heads the government's Visiting Forces Agreement (VFA) commission.

"There are very few ports that can accommodate naval assets and naval carriers, and one of them is Subic.

"As the US begins to implement (the shift), Subic will play an important role because it is one of the important facilities that can service their presence in the Pacific."

Adan was talking to reporters at Subic Bay aboard the USS Bonhomme Richard, an amphibious Marine Expeditionary Unit assault ship taking part in a 10-day joint exercises with Filipino forces.

Subic, along with the nearby Clark Airbase, were key facilities for the United States, the former colonial ruler of the Philippines, during World War II.

They then provided logistical support during the Vietnam War in the 1970s, and remained of strategic importance during the Cold War.

Clark closed down in 1991 after nearby Mount Pinatubo volcano erupted, covering the base in ash and rendering the facility unusable.

Subic, which is on the northern town of Olangapo facing the South China Sea, survived the explosion.

But, amid strong nationalist sentiment and street protests calling for the US troops to leave the Philippines, the Senate voted in 1992 to end a lease agreement that allowed the bases to operate.

In November of 1992 the last US ship sailed out of Subic.

The Philippines, however, ratified a visiting forces agreement with the United States in 1999, allowing the resumption of large-scale training exercises between the allies.

New York Times, Inquirer 

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