Bohol small investments surpass ₱1 Billion mark; employment rate UP↑ - 2011 Q1-Q3

An amazing growth in Bohol's micro and small enterprise investments has breached the P1 billion mark ↑ in just three quarters of this year, surpassing the total for the entire 2010.

The steady, stunning uptrend is safely projected to more than double last year's investment sum by the close of December.

These indicate that Boholanos who have savings are now getting entrepreneurial and, no matter how small in seed capitals, engaging in business ventures in their communities, according to the Bohol Investment Promotions Center (BIPC).

It added that getting the locals to become entrepreneurial signifies that the government, led in the province by Gov. Edgar Chatto, is supporting and providing opportunities for micro and small enterprises to thrive.

Rolaine Uy of BIPC said investments generated from January to September this year amounted to ₱1,309,386,000.00 as against the ₱792,458,771.05 for the whole of 2010.

The 2011 three-quarter figure already surpassed last year's total investment generation by as much as ₱516,827,228.05 or over half a billion pesos.

Chatto said the "modest" accomplishment of the economic generation efforts cannot be fully evaluated without citing the able functions of the BIPC and Bohol Business One-Stop Shop (Bohol BOSS).

Many have described the BIPC and Bohol BOSS as the heart and mind of Bohol investment promotions.

This year's third quarter from July to September posted the highest investments generated at ₱550.097 million from total registered enterprises of 756, with 626 of them new and 130 renewed.

The BIPC-Bohol BOSS recorded total investments of ₱366.426 million and ₱392.863 million in the first and second quarters, respectively.

Within the first three quarters, 1,807 new enterprises were registered while 390 were renewed, bringing to a total of 2,197 registered micro and small businesses.

Their individual capitalizations range from the lowest at ₱3,000 to the highest at P20 million.

An earlier BIPC report on the Bohol BOSS accomplishment showed that the investments generated for the first half of 2011 already almost equaled the annual total for 2010 at ₱759 million and ₱792 million, respectively.

This resulted from the quarterly increases in the number of registered enterprises and the capital that the entrepreneurs put up.

Last year's total investment caused 6,350 jobs but the investment in just first six months this year already employed 4,862.

According to BIPC, micro and small enterprises are good equalizers in the sense that economic chances benefit small-scale businesses in rural areas and provide jobs in the localities.

The thriving micro and small ventures manifest the rising number of entrepreneurs who are confident in the business enabling environment (BEE) in the province.

Refusing to sit on current gains, the provincial government thru the BIPC partnered with the Bureau of Investments and Department of Interior and Local Government in the conduct of the trainer's training for the LGUs on local investment and incentives code formulation.

INVESTOR-FRIENDLY

The BIPC cited the provincial government's investor-friendly policies and the institutionalization of the Bohol BOSS.

Thru a Sangguniang Panlalawigan ordinance, capitol has further empowered the Bohol Boss under the BIPC, emphasizing the one-stop shop as an institutionalized facility for a sustained business-conducive climate in the province.

It has strengthened the BOSS partnership with the mandatory agencies for business registration and related services such as the Department of Trade and Industry, Philhealth, Pag-IBIG and Social Security System.

The BOSS measure has enjoined other national agencies that provide business-related services to extend on-call technical personnel and establish hotlines or online quick-action links for the one stop shop.

Chatto signed in July an agreement with the Securities and Exchange Commission on the set-up of an investor's desk for regular SEC frontline services at the BOSS.

The governor chairs the Bohol BOSS Governing Board, with members from the government, including national agencies, and private sector like the Bohol Chamber of Commerce and Industry.

The board is the policy-making body of the BOSS, defining strategic management directions and policy decisions to enable the BOSS to achieve its vision, mission and goals.

Regional executives of service line agencies lauded the Bohol province for being reputedly the first LGU to hire and assign personnel to act as frontline service staff of the mandatory agencies at BOSS.

The strategy has addressed the manpower limitation which had then constrained the agencies to assign own personnel to regularly provide agency services at the shop.

This capitol innovation has proved effective as latest numbers of walk-in clients have increased while the regular business client traffic is projected to get heavier in coming months.

Providing relevant, updated and useful information to the clients is one positive feature of the Bohol BOSS.

Bohol BOSS practices are consistently garnering high satisfaction ratings from clients, humbly admitted the people at BIPC which is under the governor's office and headed by Maria Fe Dominise.

Continue reading

Identifying Investment Opportunities in the Philippines and in Asian Markets

Evan Erlanson takes a look at the broader Asian market and identifies opportunities based on countries' economic orientation. Money Management

In recent years, Australians have come to accept Asian economic growth as a forgone conclusion.

According to many commentators, Asian demand for Australia’s natural resources will grow reliably and indefinitely, shielding Australia from global economic shocks.

Perhaps as a result, the concept of Asia as a superior investment opportunity has become almost mainstream.

Without a doubt, many Asian countries are experiencing high levels of growth and development that should last for the next two decades.

But at the same time, investors and their financial advisers must be aware of the complexity and variety of markets and economies and the different stages of the economic cycle, and actively manage exposure.

Diverse economies: Philippines and Asian

From a high-level view, Hong Kong and Singapore are wealthy, services-driven entrepots while Japan and Korea are advanced but highly cyclical manufacturing-based economies.

Among emerging economies, China and India are experiencing rapid investment and consumption-led growth, while Indonesia and the Philippines have bootstrapped themselves back onto consumption-led growth trajectories.

Such differences need to be factored in when building portfolios, as risk and return vary significantly.

Domestically-oriented countries: Philippines & Indonesia

In this category, we are looking at the Philippines and Indonesia. These are fundamentally strong economies with strong balance sheets – stronger than many countries currently rated AAA – but still rated junk by the major ratings agencies.

We believe there must be an upside here. Indonesia has run a current account surplus since 1998 and has foreign reserves of US$114 billion; the Philippines has run a current account surplus since 2002 and has foreign reserves of $76 billion ranking 26^th worlds’ highest gross international reserves over many countries in Europe with AAA rating from the rating agencies while the Philippines still at its highest rating of Moody’s:  Ba2, Fitch: BB+ and S&P: BB as below investment grade .

Historically, these economies have consistently delivered 5 to 7 per cent of gross domestic product growth despite the global economic slowdown. Inflation is under control and financial and political health is better than in any time over the last century.

While the stock markets of these countries are moderately overvalued due to investor concentration in the larger and most liquid names, there are still some very interesting secular opportunities in consumer, property, financials, and resources.

The mining boom in the Philippines is shining as abundant gold and nickel throughout the country, with untapped oil and gas reserves which is Valued by the US Factbook of about 1 Trillion US Dollars and the oil rich Spratlys and soon to be part of the country the Benham Rise which is said to be rich of untapped Natural Gas.

Government has been conservative in public spending on infrastructure and a change would open up huge potential in the manufacturing and resource sectors.

Export-oriented countries

This includes Japan, Korea, Taiwan and Thailand. Japan and Thailand are arguably export/domestic hybrids as they have large domestic markets for fast-moving consumer goods, autos, consumer electronics, and service, but each of these markets is beholden to the global economic cycle and, increasingly, Chinese consumer demand and fixed capital formation.

All these economies are fundamentally healthy, with Korea the most sensitive to risk-off events and currency fluctuations.

However, the combination of slowing demand in Europe and the US and ongoing credit tightening in China is dragging on the export engines that power these economies.

Average year-on-year export growth has fallen from highs of 30 to 35 per cent in 2010, to 20 per cent in the second quarter of 2011, to roughly 15 per cent in September 2011.

Taiwan’s September export orders, for example, grew by just 2.7 per cent, due mainly to declining orders from Europe and Japan and lackluster order growth in China.

We believe we are now three to four months away from the trough of the earnings downgrade cycle and are becoming very interested in cyclical sectors.

Investment-driven countries

In China, the market environment and stock prices have been driven almost entirely by fixed asset investment trends and government policy for the last three years.

As the developed world stalls again, Chinese stocks remain in thrall to domestic monetary and fiscal policy, which we expect to stay in tightening mode until well into 2012.

A hypothetical Euro-shock resulting in an effective appreciation of the Renminbi (RMB) against the Euro would likely force the government to consider another economic stimulus package. However we believe that:

It will not repeat the heavily-criticized 2008 stimulus;

It will avoid making long-term commitments on behalf of the next generation of leadership as it prepares to exit;

The latitude for increased lending or fixed asset investment is circumscribed by inflationary pressures.

These tensions suggest that the government will tolerate more market “pain” – in the form of falling real estate and stock market value – than most expect, before stepping in to save the day.

Portfolio diversity

These economies and markets are very different in terms of structure, level of maturity, and potential.

This does have its advantages; for instance, creating automatic diversity within a portfolio. Compare this to Europe where most economies are mature and highly correlated due to history, regional politics, and financial linkages.

So Asia, while volatile at times, is a lower-risk long-term investment option than either Europe or the US.

Many Asian economies are less affected by issues such as European sovereign debt defaults and a potential US recession than current market valuations suggest, buffered by growing domestic demand, continued market share gains, and favorable demographics.

Asia isn’t fully immune from the economic and fiscal plight of OECD [Organization for Economic Co-operation and Development] economies, as many Asian manufacturers are dependent on Western consumers, and near-term liquidity flows often cause a disconnect from fundamentals in Asian markets.

In the short term (three to six months), Asian equity valuations may thus be among those worst affected by a risk-off event triggered by European sovereign default, bank crises, or political fragmentation.

A significant and sudden Euro devaluation would cause resumed capital flight from emerging markets into havens such as Treasuries, US dollar, Japanese government bonds, and the Yen.

We can position for this by hedging Asian currency exposures, taking long positions in beneficiaries of a strong Yen, or by shorting commodity plays.

However, we expect any correction to be short term, offering a great opportunity to pick up Asian cyclical stocks and small to mid-cap stocks on the cheap.

So now is a particularly opportune entry point, considering the strength of the Australian dollar and low valuations in Asian markets. When risk appetite improves globally, investors will benefit not only from the underlying growth of Asian markets, but also from the normalization of valuations and Asian currency appreciation.          

Evan Erlanson is the chief investment officer of Seres Asset Management.

Continue reading

$75.174 Billion - Philippines GIR now Rank 26th World’s highest International Reserves

THE PHILIPPINES' foreign currency reserves continued to grow in October 2011, giving the Philippines more than enough of a defense against a deteriorating global economic situation as it ranks now up to the 26^th highest World Gross International Reserves..

The Bangko Sentral ng Pilipinas (BSP) reported on Friday that the country's gross international reserves (GIR) came up to $75.8 billion last month, $600 million more than in September.

The latest figure, which was above the central bank's $75 billion full-year forecast, was mainly due to the central bank's foreign exchange operations, income from its overseas investments and higher valuation of its gold holdings.

It was nearly a third higher than the $57.153 billion recorded in October last year and could nearly pay for a year's worth of imports.

"The appreciable build-up in the reserves level at end-October 2011 resulted mainly from the foreign exchange operations and income from investments abroad of the BSP as well as revaluation gains on the BSP's gold holdings," the central bank said.

Reserves from overseas investments increased slightly by 0.32% to $65.92 billion while the value of gold holdings climbed by 6.09% to $7.91 billion.

"These inflows were partially offset, however, by payments by the national government for its maturing foreign exchange obligations," the BSP added.

The GIR, which cushions the country against external shocks, show a country's capability to pay for imports and service foreign debts. It is also the main indicator of the country's liquidity.

The BSP noted that the latest level could cover 11.2 months worth of imports. It was also equivalent to 10.6 times external debt with maturity of up to 12 months, and 6.4 times such liabilities plus principal payments on longer-term loans falling due within 12 months.

Net international reserves -- which include the revaluation of reserve assets -- rose by $600 million to $75.8 billion in end-October from $75.2 billion in the previous month. These reserves are GIR minus total short-term liabilities.

As the Philippines economy continue to bubble, the countries GIR will also grow upward. The country's GIR now higher than the reserves of Canada, Norway, Sweden, Netherlands, Australia, and most countries in Europe.

Japan remains the 2^nd highest followed by Russia & Saudi Arabia. France ranks 13^th lower than South Korea's 8^th notch. United Kingdom is on the 20^th of $114,180 Billion GIR.

Continue reading