US-Asean Business Council upbeat on Philippine Economic Prospects

In Photo: Members of the US-Asean Business Council (US-ABC) hosted a roundtable for Trade Undersecretary Nora K. Terrado on February 22 in Washington, D.C.Photo: Business Mirror

‘FOR the first time in three years, the Philippines made it to the worldwide list of top 20 investment destinations of multinational enterprises,” Trade Undersecretary for Industry Promotion Group Nora K. Terrado told participants in a roundtable organized by the US-Asean Business Council (US-ABC) on February 22 in Washington, D.C.

Terrado said with the country’s 6.8-percent GDP growth in 2016, the Philippines continues to be one of Asia’s fastest-growing economies, exhibiting resilience amid external shocks.

This message highlighted Terrado’s presentation about the country’s improving global competitiveness ranking.

Terrado discussed the current administration’s 10-point socio-economic agenda, which aims to sustain improvements in the Philippine investment climate, support rural development, and further enhance the country’s infrastructure, human capital and social-protection programs.

“The whole government is tasked to continue to improve the ease of doing business in the Philippines,” Terrado said.

As chair for Asean 2017 Summit, the Philippines is poised to highlight the region’s strengths by engaging the international business community, foreign governments and investors through the Asean Business and Investment Program (Abip).

As chairman for the Asean Committee on Business and Investment Promotion, Terrado urged the US-ABC and its members to participate in the business activities to be held in the Philippines, focusing on themes, such as regulatory coherence, micro, small and medium enterprises (MSMEs), women and youth entrepreneurship, and innovation.

Marc Mealy, vice president for policy of the US-ABC, expressed positive feedback after the dialogue with Terrado.

“With the Philippines serving as the current Asean chairman and having one of the highest GDP growth rates in Asia, the representatives from the 13 American multinational companies who participated were keen to receive the undersecretary’s update on current business trends in the Philippines and the economic priorities of the Duterte administration,” Mealy said. “The Council looks forward to conducting our 2017 senior executives business mission to the Philippines later this year.”

The US-ABC members that participated in the dialogue were Coca-Cola, Fluor, Citi and Philip Morris, among others. - BUSINESS MIRROR

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Philippines inflation falls to two-decade low

Philippines, Investment in the Philippines, Asia, Economy, Inflation, Deflation

Image source: The Financial Times

 

If you need evidence that the world faces a "third deflationary wave," look no further than the Philippines.

 

Annual inflation in the Philippines was just 0.6 per cent in August, the lowest reading in more than two decades of records. Economists had forecast a 0.7 per cent reading, following a 0.8 per cent print in July.

 

The central bank targets headline inflation target at 3 per cent, plus or minus one per cent. Actual inflation has come in below that band for four months.

 

The downward trajectory in inflation across much of Asia reflects weak demand, lower commodity prices and a decline in costs for manufactured goods. Currency devaluation has done little to thwart the deflationary threat: the Philippines' peso has depreciated more than 15 per cent since March 2013 and now trades at ₱ 46.79 per dollar, about 8 per cent weaker than its five year average.

 

Core inflation, which strips out volatile items to get a better sense of underlying trends, looks a little better on the whole but its August reading was well below forecasts. In August the reading was 1.6 per cent year-on-year, versus forecasts at 1.9 per cent. The downward trajectory is clear: in March the reading was 2.7 per cent; one year ago it was 3.4 per cent.

 

A quarterly index of consumer price inflation across Asia (ex-Japan) confirms this trend is found across the continent. The second quarter reading of 2.06 per cent was about half the rate seen in 2012 and a two-thirds below the rate in 2011. As explained in the FT earlier this week, these trends are likely to intensify as the Federal Reserve lifts interest rates, causing the US dollar to rise and yield-seeking investors to take cash out of emerging markets.

 

"In sum," wrote Dominic Rossi, global chief investment officer at Fidelity Worldwide Investment, "this third deflationary wave will mean that world GDP will continue to operate at a level below potential output. Downward pressure on prices will persist and a supply-side contraction in developing nations will be required before prices stabilize. A further fall in potential global output is now unavoidable. The adjustments to GDP forecasts are still ahead of us." - The Financial Times

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Texas Instruments invests $10 million to expand Philippines facility

Texas Instruments is a world leading manufacturer of Integrated Circuits (IC) used for mobiles phones and other electronic gadgets. Image: dallasnews.com

Texas Instruments Inc. has confirmed that it’s investing $10 million to expand its product distribution center in Clark Freeport, the Philippines.

A groundbreaking ceremony took place there last week, according to news reports from the Philippines.

It’s part of an overall $1 billion TI said in 2007 that it would invest in its Clark Freeport facilities through 2017, but it has been increased to $1.3 billion, according to a company spokeswoman.

“Our current product distribution center is overflowing; we do not have enough space do an efficient job on distributing,” Mohammad Yunus, president of TI Philippines, told the Pampanga Sun Times in the Philippines. Last quarter, TI shipped 1.5 billion semiconductor units from the Clark Freeport facility and plans to ship 1.9 billion units this quarter, he said.

“We are currently looking on the 2 billion units which could be a new record for any Texas Instrument site anywhere in the world,” Yunus said in the Sun Times.

TI built its first assembly and test site in the Philippines in Baguio City in 1979. In 2009, it opened a second facility in the Clark Freeport Zone,  doubling the company’s capacity in the Philippines. - The Dallas Morning News

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World-renowned economist Jeffrey Sachs: Philippines has much to teach world

LAUNCHING. Jeffrey Sachs, who serves as the director of both SDSN and the Earth Institute, launches SDSN's local chapter alongside NEDA Director General Arsenio Balisacan. Photos by Chris Schnabel / Rappler

Jeffrey Sachs: Philippines has much to teach world

The country should be a world leader in sustainable development, says the renowned US economist

MANILA, Philippines – World-renowned economist and bestselling author Dr Jeffrey Sachs wants the Philippines to be one of the world's leaders for sustainable development.

"The country has much to offer, so much to teach the world, and so much to benefit from,” said Sachs, who is in the country to formally launch the Sustainable Development Solutions Network Philippines (SDSN Philippines), alongside National and Economic Development Authority (NEDA) chief Secretary Arsenio M. Balisacan on Monday, August 3.

In his public lecture Monday titled "The Age of Sustainable Development,” which is also the title of his newest book, he gave a context of the SDSN Philippines and the challenge it faces.

The local chapter will have the responsibility of pulling the country’s leading thinkers to work side by side with NEDA, universities, political and business leaders, and communities to find paths to sustainable development in this country, he explained.

It also comes at a time of optimism in the country and that will be helpful, he added.

Sustainable Development Goals

SDSN Philippines is the local chapter of the United Nations SDSN Network established by UN Secretary Ban Ki-Moon in 2012.

Directed by Sachs, the SDSN’s aim is to help find concrete solutions to some of the world’s most pressing environmental, social, and economic problems to achieve sustainable development.

To achieve this, the SDSN network has set another series of goals called the Sustainable Development Goals (SDGs). These new goals will formally succeed the Millennium Development Goals (MDGs) in September of this year.

LECTURING. Jeffrey Sachs details the Social Development Goals and the challenges that the global community faces in achieving them to an audience of Philippine stakeholders.

Like MDGs, SDGs are a set of goals covering social, economic, and environmental issues spread by the UN for states and international bodies to use in planning and implementing development policy.

Their exact wording was finalized by the UN general assembly Monday.

This time the goal is to end all poverty, not just cut it in half, by 2030, Sachs said.

Unlike MDGs, Sachs explained, SDGs are universal and will need to be adopted by rich and poor countries alike.

They call on all countries to stop the dominant pattern of focusing only on the economic bottom line but to take development in a holistic manner.

Change direction

“It can’t be business as usual. It’s no longer enough to just achieve economic development. We need a change of direction,” Sachs said.

The focus is on pursuing economic development that is also socially inclusive and environmental friendly, he added.

The SDGs also put forward a shared vision of how international leaders want to see the world to be in 2030.

Education is also a huge agenda, one that will be spread over 15 years with a global knowledge base as its core, Sachs said.

Universities, research laboratories, and think tanks are the core of the SDSN, although it partners with business, government, and civil society, he said.

The idea is to think of how the world is going to do this because the scale of the challenge requires new ways of thinking, technology, and training, Sachs explained.

Universities' role

This, he shared, is why universities should play a leadership role in the project.

Educational institutions are incubators of innovation and have the ability to create solutions of a global scale – which is what's needed to solve big problems such as poverty and climate change, according to Sachs.

Sachs cited as examples the economic emergence of South Korea, which focused on a knowledge-based economy, and the creation of the Silicon Valley ecosystem in the US – both of which scaled using innovation.

Transforming the local economy into a knowledge-based one is a key step for the Philippines and other developing nations toward sustainable development, Sachs said.

FEEDBACK. Sachs, alongside Balisacan and former NEDA Director General professor Solita Monsod listen to reactions from stakeholder groups on Sustainable Development Goals.

Lessons from MDGs

With the SDGs, the Philippines needs to learn lessons from implementation of the previous MDGs, Balisacan said.

The Philippines has seen mixed results with the MDGs, with the country fulfilling targets related to universal primary education; lowering infant mortality; reducing malaria incidence; and enhancing clean water access for households, among others.

The country is not on track to meet goals for maternal mortality, AIDS/HIV prevention, reproductive health access, and completion rates for elementary schools.

"Putting timelines in place as we move to 2030, and being more conscious about assigning responsibility especially in government and the academe are some of the things we need to improve on," he explained.

Political will must also be mustered to push through institutional changes needed.

Above all, more financing for sustainable development should be planned and organized, especially in innovation through more funding for universities and research & development centers, Balisacan added.

The tasks are enormous and so are the challenges, he explained.

“The good thing is now that the economy is in good shape, we no longer have an excuse to not invest in sustainable development," Balisacan said. – Rappler.com

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Philippines confirmed buying SKR/ Japan made diesel powered Submarine- For the first time

Philippines is interested in acquiring Diesel submarines based on technology from the Japan Maritime Self-Defense Force's Soryu-class vessel. image:asia.nikkei.com

Philippines to buy submarines and advanced missile systems for the first time

This will ensure strength in the South China Sea

Manila: For the first time, the Philippines will buy electric and diesel-run submarines, including advanced missile systems, as listed in its $22.11 billion (998 billion pesos or Dh83.166 billion) modernization plan that was approved in July, to ensure its strength against China, Taiwan, Vietnam, Brunei, and Malaysia which have overlapping claims in the South China Sea, sources said.

“The Philippine Navy will buy several submarines and missile systems in the next five years from private manufacturing firms either from South Korea or Japan,” a military source who requested anonymity told Gulf News.

“The ambitious purchase was scheduled after the Philippine economy grew, received good ratings from rating agencies, and allowed borrowing for expensive war materials, but the Philippines could not yet match China’s 26 submarines,” said the same source.

In 2013, the Philippine Navy bought two 1.400 tons Incheon-class frigates (also called Future Frigate experimental or FFX), manufactured by South Korea’s Hyundai Heavy Industries and STX Offshore and Shipbuilding for $400 million (18 billion pesos or Dh1.5 billion); two strategic sealift vessels or floating command centers which can transport three helicopters per vessel, soldiers, and supplies at sea, from Indonesia’s PT PAL (Persero) for $85.7 million (3.86 billion pesos or Dh321.6 million). The new frigates and sealift vessels will arrive in the Philippines at the end of 2015 or early 2016, President Benigno Aquino announced recently.

It is widely reported that the Philippine Navy is manned by three US-made refurbished frigates: BRP Tagbanua; BRP Gregorio del Pilar and BRP Ramon Alcaraz, but Japan’s defense ministry said the Philippine Navy has 80 warships; China, 892; Malaysia, 208; and Vietnam, 94.

The Philippine Coast Guard also bought 10 40-metre-long multi-purpose response vessels (MRRV) from Japan in late 2013 for $184 million (8.09 billion pesos or Dh674.6 million), in a loan forged with Japan International Cooperation Agency (JICA) in 2014. They will augment the Coast Guard’s 19 rescue vessels, when they arrive in the Philippines at the end of 2015, sources said.

The Coast Guard secured a $20 million (900 million pesos or Dh75 million) loan from the United States’ Defense Threat Reduction Agency (it has a maritime security project with the US’ Weapons for Mass Destruction Proliferation Prevention Program) for three aerial surveillance radars, two surface sensors and three surveillance planes for the Philippine Coast Guard National Coast Watch Centre in northern Luzon and southwest Philippines.

Recently, the Philippine Air Force bought 12 new FA-50 fighter-trainers made by Korea Aerospace Industries. six Close Air Support Aircraft; seven of 13 AW-109 helicopters; and six of eight Bell-412 combat utility helicopters made by Korea Aerospace Industries. The two fighters will arrive in December 2015 or early 2016, and the rest in 2017.

Japan’s defense ministry said the Philippines has a total of 26 combat aircraft, compared with China’s 2,582 combat aircraft.

The Philippine government also allotted $22 million (1 billion pesos or Dh83.33 million) for the development of three new naval bases that will protect its 36,000 kilometer coastline facing the South China Sea.

In 1995, Congress approved an $8.08 billion (364 billion pesos or Dh30.3 billion) military modernization plan for 15 years. But only 10 per cent of the approved budget was secured by a loan 15 years later, in 2010, the budget department said.

China, Taiwan, and Vietnam claim the whole of the South China Sea and several parts of the oil-rich Spratly Archipelago. Brunei, Malaysia, and the Philippines claim their respective exclusive economic zones in the South China Sea and parts of the Spratly Archipelago. - Gulf News

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Philippines to attain 7 to 8% economic growth in 2015: central bank

MANILA, Philippines (Xinhua) - Governor of central bank Amando M. Tetangco, Jr. said today that the government's 7 to 8 percent economic growth target in 2015 is attainable.

This is because "domestic demand remains firm and supported by brewing production efficiency and robust labor market dynamics," Tetangco said during the Euromoney Philippines Investment Forum.

He said the central bank is confident that the country will be able to attain the goal of an upward economic growth trajectory in an environment of price and financial stability because the bank will remain proactive in policy dialogue with stakeholders, preemptive in putting in place forward-looking policies, and prudent in adopting reforms.

The Philippine economy expanded by 6.1 percent last year, short of the government's 6.5 to 7.5 percent target and also slower than the 7.2 percent growth in 2013. However, this is the second fastest growth rate seen in Asia during the period.

Tetangco added that inflation should remain within 2 to 4 percent target for this year and the next, while liquidity is also expected to remain sufficient.

Despite the favorable prospects of the economy, he said the central bank continues to monitor risks to growth such as the uneven global output, uncertainty in oil prices, and the divergence in monetary policy settings across countries.

"Given the positive alignment between inflation growth and augmented government resources as a result of fiscal consolidation, both monetary and fiscal sectors have sufficient room to make policy adjustments as warranted," Tetangco said.   - philSTAR

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Taiwan will deploy missile in Spratlys downplayed by the Philippines but Sultanate State of Sulu worried

Itu Aba Island (Taiwan: Taiping Island (Chinese: 太平島; pinyin: Tàipíng Dǎo; Vietnamese: Đảo Ba Bình; Filipino: Ligaw/Ligao), is the largest of the Spratly Islands in the South China Sea and the only island with a freshwater supply. The island is elliptical in shape being 1.4 km in length and 0.4 km in width. It is part of the Tizard Bank (Zheng He Reefs), one of seven reefs in the Spratly Islands near the centre of the West Philippines Sea (South China Sea)

Taiwan's defense minister has backed a plan to deploy advanced missiles in the island Itu Aba (Taiwan: Taiping, Filipino: Ligao-Ligao, Vietnamese: Đảo Ba Bình) in Spratlys over concerns that rival claimants to disputed islands are building up their arms, a legislator said Thursday.

Kao Hua-chu endorsed a proposal passed by the country's defense committee Wednesday (October 12, 2011) demanding coastguard units in Itu Aba (Taiping) and the Pratas islands -- claimed by China - be armed with Chaparral or Tien Chien I missiles.

"Minister Kao made it clear that he supports the proposal," he was quoted as saying in a statement released by Lin Yu-fang, the legislator from the ruling Kuomintang who pushed for the deployment.

Philippines defense department spokesman Zosimo Jesus Paredes said the country enjoyed good relations with Taiwan and believed its plan to supply missiles to coastguard units in the areas it claims was not a threat to the Philippines.

"We cannot dictate on Taiwan on what or what not to do," However, he said Manila was prepared to "defend to the hilt" islets it has already occupied in the Spraltys.

But when asked whether Manila considered a move towards aggression, he said: "Not really… we should not be over reactive."

However, the lobbying of power the Sultan of the Sultanate State of Sulu and North Borneo; Sultan Kiram is worry of this as he believed that the whole Spratlys is belong to his territory and under his sovereignty and belong to his people majority the Muslim people in Southern Philippines and Sultanate State of Sulu and North Borneo (Sabah).

Sultan Kiram revived his claim and challenged the Philippines government Saturday (October 15, 2011) to support them to take-over the North Borneo (Sabah) from Malaysia which is links to the islands of Palawan and the Spratlys Archipelago.

Sultan Kiram reminded the Philippines that the North Borneo (Sabah) is belong to the Sultanate State of Sulu and Borneo that links Palawan islands and Spratlys Archipelago which rightful owner is the Filipino people after turning-over his rights to the Philippines government in 1967.

He reminded also the majority Christian Filipinos that the North Borneo which is called now as Sabah by Malaysia was illegally captured by Britain and give it to Malaysia without his approval.

Taking-over back North Borneo (Sabah) will give more chance to the Philippines and the Sultanate State of Sulu to control the islands in the Spratlys – Kalayaan Island Group and the southern part of Palawan islands which is also claimed by Kuala Lumpur.

The deployment of advance missile by Taiwan triggered concern to the Sultan of the Sultanate state of Sulu as it is considered as belligerent action of Taiwan might triggers conflict and unwanted war  in his territory in the spratlys.

Apparently mindful of rising regional tensions, Kao said the Taiwanese coastguards may need advanced weaponry rather than the Chaparral which Taiwan first acquired in the 1980s.

"Perhaps Tien Chien I or more advanced air defense missile systems should be given priority since the Chaparral is pretty old," Kao said.

The plan came following a report in July which found that Taiwan's coastguards in the contested waters were vulnerable amid mounting tensions.

Taiwan, Vietnam, Brunei, China, Malaysia, and the Philippines claim all or part of the Spratlys, which could lie on top of large oil reserves.

The Taiwanese coastguard currently has a 130-strong garrison on Itu Iba island (Taiping), the biggest island in the Spratlys archipelago.

Lin said the proposed ground-to-air missile deployment would be legitimate, citing the ministry's recent report on the military buildups by Vietnam and other neighboring countries in the area.

Vietnam has deployed thousands of marines in the zone, backed Russia-made Su-27SK and Su-30MK2 fighter jets; Lin cited the report as saying.

"In stark contrast, the Taiwanese coastguards are only equipped with 20-mm air defense guns," he said in a statement.

The defense ministry added that in case of military conflicts, Taiwanese coastguards could hardly defend themselves against the Philippine forces equipped with naval gunboats, Lin added

The Philippines said Sunday it was prepared to defend its claims in the South China Sea, but downplayed a plan by Taiwan to deploy missiles in the area

Paredes stressed the government still believed in pursuing a peaceful solution, but stressed Taiwan's move might be misunderstood by some claimants as provocative.

He said Taiwan's move could be seen as "unsettling" by other claimants to the area, stressing that it should have officially informed them of its plan so as not to escalate tensions.

"I think moves like these should be coordinated (with other claimants) so that we will not be taken aback," he said.

On the other hand, the neighboring countries surrounding Taiwan and Hainan China is on the hand to support the Philippines of its Spratlys claim. Australia and Japan pronounced their support to the Philippines which later the New Zealand followed.

USA as the most powerful ally of the Philippines turnover its Hamilton Class cutter warship to the Philippines to boost its naval patrol in the Spartlys and recently but not yet confirmed by our team, the South Korea will offer also a navy patrol boat to the Philippines to be use in patrolling in the West Philippines Sea (South China Sea).

To follow more consolidate and contributed issues about the Spratlys join the Hikot's Spratlys Page.

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