World Bank keeps Philippine growth forecasts

WORLD BANK ECON UPDATE: World Bank lead economist Birgit Hansl answers queries from the press after giving an economic update on the Philippines. Also in photo is economist Kevin Chua. MIKE AMOROSO. Photo: PhilStar

MANILA, Philippines - The World Bank has retained its three-year economic growth forecasts for the Philippines, but stressed these projections can be exceeded if the government can ramp up its infrastructure spending as planned and provide clarity on its economic policies.

Drawing from its earlier forecast in April, the multilateral lending institution said it still expects the Philippine economy to grow 6.4 percent this year and 6.2 percent in the next two years.

In its October update on the domestic economy titled “Outperforming the Region and Managing the Transition,” the World Bank said the country has weathered the challenging global economy and grown at a rapid pace over the past five years, “supported by strong macroeconomic fundamentals and a highly competitive workforce.”

Domestic consumption is seen to prop up the economy driven by increased purchases from an expanding middle class, remittances from overseas Filipino workers, and increased employment.

“The economic outlook is optimistic with risks tilted to the upside,” said the report, noting “substantial” improvements in macroeconomic stability by way of low and stable inflation rates, prudent fiscal management, and comfortable level of foreign reserves.

The proposed budget for 2017 would increase infrastructure spending to 5.4 percent of gross domestic product (GDP) in order to address infrastructure bottlenecks and “enhance connectivity between the country’s wealthier and poorer areas.”

“This can boost a large segment of the economy including industrial activities, real estate, construction and tourism,” said the report.

The world bank said while the new administration’s 10-point socioeconomic agenda has been generally well-received as it signals continuity of the existing macroeconomic framework, the government still needs to dispel lingering uncertainty on the part of investors by providing clarity on it development priorities.

“The preliminary agenda is intended to bolster the government’s current, fiscal, monetary and trade policy stances, while prioritizing tax administration reforms. Despite these reassurances, however, a degree of uncertainty remains regarding the ultimate direction of macroeconomic policy. The short-term challenges is how to successfully manage the economic transition and providing the right signals to investors and businesses,” said the report.

In a briefing yesterday, World Bank lead economist Birgit Hansl said the completion of the 2017-2022 medium term development plan for the country is expected to provide investors with direction.

“Many reforms are being unveiled, specifically on tax policy and administration, the tracking of government spending, security of land tenure, ease of doing business, and restrictions on foreign participation,” she said.  “But as policy details are still being discussed, some businesses might remain cautious. The completion of the new Philippine Development Plan this year will provide more clarity on the government’s development priorities and further improve the country’s growth prospects.”

The government is also pursuing a comprehensive tax reform effort that promises to make the tax system more equitable and efficient.

Hansl said that while the country’s macroeconomic fundamentals remain strong, the government should also pay attention to microeconomic reforms such as improving the ease of doing business in the Philippines to sustain growth.

“So here it will be really important to see what will be the priority of the new administration. Will it be trade facilitation, will it be changing how businesses operate. These involves also labor market issues,” she said.

She declined to comment on prevailing labor issues but said the bank is encouraged by the ongoing dialogue on issues such as contractualization and minimum wage setting.

In a statement, World Bank country director Mara Warwick said macroeconomic stability puts the Philippines in a position to accelerate inclusive growth that benefits all Filipinos.

“Poverty will decline faster if the returns from economic expansion are invested in building human capital by strengthening health, education, and social protection,” she said. - PhilSTAR

Continue reading

DNA shows first inhabitants of Vanuatu came from Philippines and Taiwan

Children play on Champagne beach, Espiritu Santo, Vanuatu. A new study has found that the country’s first people came from Asia rather than neighboring Pacific countries. Photograph: Nikki Marshall for the Guardian

Those who settled on the archipelago 3,000 years ago – and Tonga shortly after – travelled from farther away than previously believed, scientists say

The first inhabitants of Vanuatu hailed from Taiwan and the Philippines rather than the South Pacific island nation’s much closer neighbors, scientists have discovered.

A study by scientists at the Australian National University of ancient DNA taken from three skeletons excavated from Vanuatu’s oldest known cemetery revealed that the first people arrived about 3,000 years ago.

Rather than moving from neighboring countries including Australia, Papua New Guinea or the Solomon Islands – where people have lived for between 40,000 and 50,000 years – Vanuatu’s original inhabitants came from much further north in Taiwan and the northern Philippines, the scientists found.

“The people of Vanuatu today are descended from Asia first of all,” said research professor Matthew Spriggs, of the ANU’s school of archaeology and anthropology. “They travelled past places where people were already living, but when they got to Vanuatu there was nobody there.

“Only some time later did they intermarry with Papuan peoples to produce the genetic mix we see today in Vanuatu, and indeed across the Pacific.”

Details of the scientists’ findings were published on Tuesday in the scientific journal Nature.

Dr Stuart Bedford, of ANU’s college of Asia and the Pacific, said debates about the origins of Pacific islanders had raged for centuries, particularly about the Lapita people who first colonised islands stretching from Vanuatu to nearby Tonga.

“It demonstrates the enormous potential for these sorts of studies but these data have already provided an extremely important piece of the puzzle,” he said.

Ancient DNA of a sample from a Tongan cemetery confirmed that the same group of people became the first inhabitants of Tonga only slightly later.

“This is the first genome-wide data on prehistoric humans from the hot tropics, and was made possible by improved methods for preparing skeletal remains,” said Dr Ron Pinhasi at University College Dublin, a senior author of the study.

A team led by researchers at Harvard Medical School, University College Dublin, and the Max Planck institute for the Science of Human History led the DNA analysis.

“The unexpected results about Oceanian history highlight the power of ancient DNA to overthrow established models of the human past.”

Vanuatu was part of the Tongan empire from the 14th century, and ruled by the English and French after missionaries settled there during the 19th century.

“A particularly striking finding is the different ancestry observed on the X-chromosome, which is inherited mainly from females,” said lead author Dr Pontus Skoglund of Harvard Medical School and Stockholm University.

“This reveals that the vast majority of the ancestry from these open-water pioneers that survives today is derived from females, showing how DNA information can provide insights into cultural processes in ancient societies.” – The Guardian : Australian Associated Press contributed to this report

Continue reading

APEVC Singapore Investors Supports Philippines' Duterte War on Drug: Improved law and order will be positive

Asia Private Equity-Venture Capital Summit: Singapore, Sept 30, 2016. Photo: ASIA LAW PORTAL

Mark Mobius still likes Philippine investments despite extrajudicial murders

·         Mark Mobius : on War on Drugs and Killing of Drug addicts and pushers "at the end of the day, I think the impact of the improved law and order will be positive."

·         "I think the drop in the peso may have been connected to the slowdown in remittances because with the economic situation in the Middle East and in Europe, the U.S., remittances have not been as high as they were," Mobius said.

Despite growing concerns over the extrajudicial murders in the Philippines, the country will likely emerge as an improved investment destination, Mark Mobius said on Friday.

"Of course, it's a tragedy that anybody gets killed, but in the context of what's happened in the Philippines in the past and the commitment to law and order, I'm not too worried about it," the storied emerging markets investment cheerleader said on the sidelines of the Asia Private Equity and Venture Capital Summit in Singapore.

Mobius, who joined Franklin Templeton in 1987 to lead the Templeton Emerging Markets Fund, is currently the executive chairman at Templeton Emerging Markets Group.

The new Philippine President Rodrigo Duterte's "law-and-order" agenda has been blamed for a surge in extra-judicial killings. More than 3,800 people have been killed in Duterte's crackdown on drugs since the June 30 inauguration, Reuters reported last week.

The parliament has also been told of murders allegedly ordered by the Philippine president during his tenure as mayor of Davao city. Duterte has denied the allegations, but has also made comments indicating he condoned both those murders and ones since he took the country's top office.

In remarks that Mobius was likely unaware of, Duterte on Friday likened himself to Nazi leader Adolf Hitler in a complimentary manner and said he would "be happy to slaughter" three million drug users and peddlers in his country, Reuters reported. Mobius didn't immediately respond to an emailed request for comment on whether the remarks change his views.

But Mobius was unconcerned about the investment climate in the country.

"The concern about the illicit killings is a minor issue. The big issue is how they implement true law and order and the degree to which Duterte is able to do that," Mobius said in his remarks at the conference.

Mobius did cite some concerns about how Duterte's "brash" remarks may affect foreign perceptions of the country.

The firebrand Duterte, who's style has often been compared with U.S. Republican presidential candidate Donald Trump, has sparked concerns in markets due to his erratic outbursts, which have included threatening China with a "bloody" confrontation over disputes in the South China Sea.

Earlier this month, Barack Obama cancelled a meeting with Duterte after Duterte used a derogatory term to describe the U.S. president.

"Of course [Duterte's behaviour] affects foreign relations. It affects foreign investors because they get concerned and you have the corporate governance concerns and so forth," Mobius said. "But at the end of the day, I think the impact of the improved law and order will be positive."

Mobius also didn't believe the Philippine currency's swoon since Obama cancelled his meeting with Duterte was entirely due to concerns about the president's temperament.

The U.S. dollar was fetching as much as ‎₱48.48 Philippine pesos on Friday around midday Asia time, , the highest for the pair since the depths of the global financial crisis in 2009, compared with around ₱46.40 pesos before the cancelled meeting.

"I think the drop in the peso may have been connected to the slowdown in remittances because with the economic situation in the Middle East and in Europe, the U.S., remittances have not been as high as they were," Mobius said.

Scene of the Crime Operatives (SOCO) work at the scene where two suspects were shot dead following an encounter and shootout with police at a checkpoint along a highway in Manila on August 28, 2016. Photo: Noel Celis | AFP | Getty Images

Earlier this month, Philippine media reported that in July, overseas Filipinos sent 5.4 percent less cash home than in the year-earlier month, but there's still been a 3 percent on-year rise for the first seven months of the year.

But apart from the immediate political situation, Mobius also pointed to a broader, longer-term transformation in the Philippines, led by its overseas workers

"The diaspora around the world, living in the Middle East, living all over the place…is not only sending back money, they're sending back know-how and technology," he said.

Many of those workers were returning to the country and taking up business leadership roles, he said. - CNBC

Continue reading