Philippines unveil 72 billion-peso ($1.7 billion) Stimulus Package

Asian policy makers are bolstering efforts to protect their economies from weakening global growth, as Indonesia unexpectedly cut interest rates and the Philippines unveiled a stimulus plan.

Bank Indonesia lowered its reference rate by a quarter of a percentage point to 6.5 percent yesterday, defying the predictions of all 15 economists surveyed by Bloomberg News. Philippine President Benigno Aquino announced a 72 billion-peso ($1.7 billion) spending package today as his government cut growth estimates, while Singapore's central bank is forecast by economists to say this week that it will slow or end its currency appreciation.

"We want to be ahead of the curve in anticipating the impact of the global economy," Perry Warjiyo, Bank Indonesia's director of economic research, said in a Bloomberg Television interview today. "It will impact through the region, and we will see there is a decelerating trend of inflation and a downward revision to economic growth. Sooner or later, central banks need to rebalance the preference of their monetary policy response."

Emerging-market nations have turned from fighting inflation to supporting growth as a struggling U.S. recovery and deepening European crisis threaten the global economy. Brazil, Turkey, Russia and Pakistan have cut borrowing costs in 2011, while Asian countries from the Philippines to South Korea have refrained from further rate increases in recent weeks.

Taking Insurance

"It's primarily because of the weaker global economic backdrop that they are taking out some insurance against the global economic headwinds," said Leif Eskesen, a Singapore- based economist at HSBC Holdings Plc.

The MSCI Asia Pacific Index of stocks has slumped 15.4 percent this year as investors pare bets on emerging markets. Some Asian currencies have tumbled against the dollar in the same period, led by a slide of about 9 percent in the Indian rupee, according to data compiled by Bloomberg.

Indonesia's rupiah has weakened 3.5 percent in the past month. Bank Indonesia said yesterday it has sufficient foreign- exchange reserves to support the currency.

"We are confident we can stabilize the market," Warjiyo said in the interview today.

Asian nations from Malaysia to the Philippines are shifting their focus to shielding growth even as elevated inflation prompts policy makers in countries such as Vietnam and India to persist with monetary tightening.

India's industrial output rose 4.1 percent in August from a year earlier, less than the median 4.7 percent estimate in a Bloomberg News survey, a report showed today.

Philippine Spending will boost

Aquino said today the additional spending he authorized for the stimulus package includes 5.5 billion pesos for infrastructure. The Philippine government cut its growth forecasts for the Southeast Asian nation for 2011 and 2012.

"If the fiscal stimulus does its job, this should give the necessary push to keep our economic growth in a solid upward trajectory," central bank Governor Amando Tetangco said today. The Philippines has sufficient liquidity, a stable exchange rate and a "manageable" inflation outlook along with "fiscal space" to help support economic growth, he said in an e-mail reply to questions.

Bangko Sentral ng Pilipinas will consider global developments, including Indonesia's rate cut and the slump in Philippine exports in next week's policy meeting, Tetangco said.

"In most jurisdictions, inflation seems to have become less of a pressing concern," he said. "The weakness in advanced economies is seen to weigh more on emerging economies than previously anticipated."

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DB Singapore seen - Philippines economy will double by 2020

The Philippine economy may grow 80 percent larger within nine years as anti-corruption efforts build momentum and translate into greater foreign direct investment inflows, according to DBS Group.

In a research titled "Asia 2020," the Singapore-based financial service group said that over the coming decade, economic growth will be respectable and trending toward 6 percent.

Such growth will depend much "on policy and whether the large labor pool and resource endowment—which include gold, nickel and copper—can be effectively tapped upon," the paper said.

"We hold a cautiously optimistic view of the economy and expect reform to proceed at a moderate rate," DBS added. "By 2020, GDP will (in today's dollars) likely be 80 percent larger, and income levels 45 percent higher than at present."

The group said that the Aquino administration has so far done a credible job in introducing reforms focused on fiscal discipline and public-private partnership (PPP) on infrastructure investments as well as population management and anti-corruption reforms.

Amid criticism that the government is not spending enough, Malacañang has limited deficit-spending to ₱34.5 Billion in the eight months to August, or about a seventh of the ₱228.1 Billion recorded in the same period of 2010.

Also, Malacañang expects to auction off the first of big-ticket PPP projects before yearend.

"A new structure for project approvals and implementation is being established, which should complement the launch of PPP projects," DBS said. "Measures to counter corruption should raise investor confidence."

DBS noted that the savings rate has grown to 18 percent from 11 percent in 2004 adding that investment is beginning to follow the same path and that GDP should follow.

"In short, the reform momentum is building, and this should translate into greater FDI inflows and complement the rising domestic savings rate already apparent in the data.

Further, DBS said the country's young population could prove to be an advantage although the still-high birth rate remains a challenge, with an additional 19 million people seen within the next nine years.

"To some extent, resources have been spent in accommodating a rise in population at the expense of other investment, and this may have impeded GDP growth," DBS said.

PUPTF – Petroleum Task Force Mining Exploration

As the Aquino administration is poised to bet heavily in developing the country's oil and gas resources, an inter-agency task force has been created by Malacanang to oversee government approvals on upstream petroleum investments.

Under Executive Order No. 60 signed by President Aquino last September 30, 2011 it has been stipulated that the inter-agency Philippine Upstream Petroleum Task Force (PUPTF) will primarily watch over the implementation processes for the $1.0 billion fresh batch of investment for the Malampaya gas field project.

The EO creating the new task force basically amended Executive Order No. 254 which was the underpinning policy for oil and gas developments since 1995.

"It is in the interest of the Philippine government that projects such as the Malampaya Phases 2 and 3 are executed with no harm to people and the environment, with minimum disruption to the power supply of Luzon, and completed on time and within budget," the EO has emphasized.

The task force has to be chaired by Energy Secretary Rene D. Almendras and the membership will be completed by 17 more representatives from various government agencies. They shall include Executive Secretary Paquito Ochoa, Department of Transportation Secretary Manuel Roxas; Finance Secretary Cesar Purisima and Justice Secretary Leila De Lima, among others.

Aside from the Malampaya venture, the task force will also keep an eye on the new 15 petroleum blocks due to be auctioned by the Department of Energy (DoE) toward the end of this year.

Fundamentally, the role of PUPTF will be to "review, simplify and streamline the applicable rules, regulations and procedures" in upstream project implementations. These shall rope in "the efficient deployment of personnel, vessels, machinery, equipment, spare parts and materials to be used in petroleum operations."

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Hainan China Mounted Nuclear Weapon Facing Philippines

When China’s largest offshore petroleum producer launched a $1 billion oil rig this summer from Shanghai, Lt. Gen. Juancho Sabban, the commander of Philippine military forces commented that China of 1,500 miles away in the South China Sea, began preparing for trouble.

The drilling platform, said China, would soon be heading in the 38 general’s direction - southward into waters rich in oil and natural gas, and also in volatile fuel for potential conflict.

China pointing the Map down south adjacent to the City of Puerto Princesa Palawan, Province of the Philippines. China is willing to face war and conflict just to drill the oil and gas with or without approval from the Philippines government as they claim the area as undisputable and it core interest.

Regardless of the UNCLOS provision of 200 Nautical Miles Exclusive Economic Zone for the Philippines and other neighboring country within the proximity of the West Philippines Sea (South China Sea), china believed their map is right and will surpassed / overpower the United Nations International laws of Sea as they have their own laws and concept.

Red Alert- Philippines for the unexpected attack of China

Few information leaked that china is preparing to sink the new Philippines Navy Warship Flagship BRP Gregorio del Pilar, a newly acquired and refurbished from the USA high endurance Hamilton Class Cutter Frigate.

Chinese nuclear submarine armed with nuclear missiles has been mounted in Hainan island south of China and high powered weapon are now facing Manila for ready to attack anytime.

Leaked information mentioned that China will target to paralyze the Philippines by attacking the BRP Gregorio del Pilar prior of their planned launching of the $1 billion Dollar oil rig in the area near Pruerto Princesa this year or early next year in 2012.

The Philippines is not yet aware of this china’s plan. The United Nations is now the only chance to intervene or to mediate prior the leaked information to happen.

The cooling of the West Philippines Sea (South China Sea) issue is the preparation of China for their ready to launch $1 billion Dollar oil rig and a simultaneous attack to destroy the BRP Gregorio del Pilar.

“We started war-gaming what we could do,” said Sabban, a barrel-chested, American-trained marine who, as chief of the Philippines’ Western Command, is responsible for keeping out intruders from a wide swath of sea that Manila views as its own 200 Nautical Miles Area from the shore but that is also claimed by Beijing.

China oil hungry giant to attack Spratlys

Arguments over who owns what in the South China Sea have rumbled on for decades, ever since the doomed Chinese government of Chiang Kai-shek in 1947 issued a crude map with 11 dashes marking as Chinese almost the entire 1.3 million-square-mile waterway. The Communist Party toppled Chiang but kept his map and his expansive claims, though it trimmed a couple of dashes.

Today, China’s insatiable thirst for energy has injected a highly combustible new element into long-running quarrels over cartography, arcane issues of international law and ancient shards of pottery that Beijing says testify to its “indisputable sovereignty” over the West Philippines Sea (South China Sea).

China, which imports more than half its oil, will nearly double its demand for the stuff over the next quarter-century, according to the International Energy Agency in Paris. Its demand for natural gas — which is believed to be particularly abundant beneath an archipelago of contested islands and reefs, known as the Spratlys, just west of here — is projected to more than quadruple.

With consumption soaring and the price of imports rising, China is desperate for new sources to boost its proven energy reserves, which for oil now account for just 1.1 percent of the world total — a paltry share for a country that last year consumed 10.4 percent of total world oil production and 20.1 percent of all the energy consumed on the planet, according to the BP Statistical Review of World Energy.

As a result, Beijing views disputed waters as not merely an arena for nationalist flag-waving but as indispensable to its future economic well-being.

“The potential for what lies beneath the sea is clearly a big motivator” in a recent shift by China to a more pugnacious posture in the West Philippines Sea (South China Sea), said William J. Fallon, a retired four-star admiral who headed the U.S. Pacific Command from 2005 until 2007. China is wary of pushing its claims to the point of serious armed conflict, which would torpedo the economic growth on which the party has staked its survival. But, Fallon said, such a thick fog of secrecy surrounds China’s thinking that “we have little insight into what really makes them tick.”

A big factor in this uncertainty is a meshing of Chinese commercial, strategic and military calculations. Like other giant energy companies in China, the China National Offshore Oil Corp., or CNOOC, the owner of the new Chinese rig, pursues profit but is ultimately answerable to the party, whose secretive Organization Department appoints its boss.

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The Philippines Offers the Best Value Investing

Philippines Mining Boom

The Philippines will attract $18 billion in mining investments over the next five years as global commodity prices soar.

Mining output had already spiked 31 percent year on year in the six months to June to P63.92 billion ($1.48 billion), according to Environment and Natural Resources Secretary Ramon Paje.

A new mining law allowed foreign investments in 2005, and high metals prices were drawing even more investor interest.

“In terms of investments, the aggregate amount of $3.835 billion has been invested in the sector over the last six years. Total investments are projected to reach $18 billion by 2016,” he told a mining conference in September 2011.

The Philippines has an untouched mineral wealth estimated by Heffernan Capital Management at over $1 trillion, valuable metals like copper, gold and chromate deposits are among the biggest in the world.

Mining has had a checkered history in The Philippines, environmental issues, foreign investment restrictions, and accidents have slowed the industry for decades.

Ramon Paje said with just 30 major mines in operation, the Philippines was still not producing enough to take advantage of climbing gold, nickel, copper, iron and chromite prices.

Seven major projects should boost both mining investment and output over the next few years.

Xstrata PLC, LON:XTA $5.9 billion Tampakan project in the southern Philippines, one of the largest undeveloped copper-gold deposits in the Western Pacific, should start producing in 2016.

Tampakan project is estimated to yield an average of 375,000 tonnes per annum of copper and 360,000 ounces per annum of gold in concentrate over a 17 year life of mine.

Japan’s Sumitomo Metals, Australia’s Oceana Gold, and Britain’s FCF Minerals also plan to go ahead with separate nickel, copper-gold, and gold-molybdenum projects, according to Paje.

The three projects have a combined investment value of more than $1.8 billion.

Chamber of Mines of the Philippines president Philip Romualdez also told the conference President Benigno Aquino’s recent state visit to China drew $2 billion in mining commitments.

Economy starts bubbling

The Asian Development Bank (ADB) has slightly lowered its 2011 growth forecast for the Philippine economy amidst subdued government spending and exports, but increased public and private investment should see a pickup in economic activity next year.

In its latest Asian Development Outlook 2011 (ADO), ADB trimmed its gross domestic product (GDP) forecast for the year to 4.7%, from 5.0% seen in April.

Growth for 2012 is projected to pick up to 5.1%, with brighter prospects seen for investments, which since 2010 have been a major contributor to GDP growth.

“Job creation remains lackluster, with the youth unemployment rate more than double the overall jobless rate,” said ADB Chief Economist Changyong Rhee.

“Further increases in investment along with policy and governance reforms are needed to boost jobs.”

Government spending fell back in the first half of 2011 after high election and typhoon-linked outlays in 2010 with government agencies taking a more cautious stance amidst an anti-corruption drive.

However, private investment grew strongly, while private domestic consumption also increased, supported by a firmer labor market and remittances from overseas workers.

Merchandise export growth, in contrast, was weaker than expected. Electronics, which make up about half the economy’s exports, are still affected by insipid global demand and supply chain disruptions linked to the earthquake in Japan.

Inflation averaged 4.8% over the first eight months, driven by higher food and oil prices. In response, the central bank raised policy interest rates and banks’ reserve requirements twice. Net portfolio investments in the first seven months remained high, helping to push stock prices to record highs in August, but foreign direct investment remains subdued with delays in bids for planned infrastructure projects.

For 2012, increased investment supported by upgrades in sovereign credit ratings and resilient consumer spending will help GDP growth to pick up. Inflation forecasts are retained at 4.9% for 2011 and 4.3% in 2012, assuming that global oil and food prices moderate as expected.

“The Philippine Development Plan 2011-2016 focuses on improvements in the business environment to raise investment and employment with higher outlays on infrastructure supported by public-private partnerships,” said Neeraj Jain, Country Director for ADB’s Philippines Country Office.

‘Some of the public-private partnership infrastructure projects that have been planned must get under way to achieve the growth we forecast for 2012.”

Undervalued Real Estate in the Philippines

Foreign investors looking to invest in real estate-related businesses have ranked Manila as their last choice among various key cities in the Asia-Pacific.

According to the Emerging Trends in Real Estate Asia Pacific 2011 survey conducted by the Urban Land Institute (ULI), global real estate investors gave Manila a score of 4.56 points out of a possible 9, placing the city a few points below “fair” and somewhere within the realms of “abysmal.”

Topping the survey was Singapore with a score of 5.96 points, followed by Shanghai with 5.87, Mumbai with 5.79, and Hong Kong with 5.70.

In an interview with the Inquirer, ULI global trustee and South Asia chairman Simon Treacy said the Philippines, in general, was suffering from a negative image, prompting investors in publicly listed real estate firms to bypass the country when deciding on where to allocate their funds.

“Manila is at the bottom of the pack because the Philippines hasn’t gone to the next level. The country’s image hasn’t really improved. Even with the new administration, there’s still a negative perception of the country,” Treacy said.

“The Philippines rarely ranks when it comes to investment allocations. Since the Philippines doesn’t get a lot of airplay, its real estate prospects become undervalued. Marketing is very important, on a national level, because not a lot of real estate investors look to the Philippines when deciding where to put their capital,.”

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Forum Energy PLC & Philex seeks partners for Oil and Gas Service Contract 72 PHL

Oil and Gas Exploration – Philippines: Forum Energy Plc is scouting for a partner for Service Contract (SC) 72 off Palawan to be able to continue the Oil and Gas exploration activities in the area. a top company official said.

“The company is also assessing potential partnerships in SC 72 to accelerate the development of the project, although there are no proposals currently in place,” Forum chairman Robert Nicholson said in a report.

But he stressed they are optimistic that SC 72 would continue to be one of the company’s major achievements.

“The completion of our first sub-phase work program over SC 72 will be a milestone for the company, since the last data acquisition which was concluded over   five years ago. We expect that this data will give us significant additional information that will enable the company to better assess the various development scenarios and potential partnership options for the SC 72 block at   a critical time in the development of this important asset,” he said.

Forum (through its 100-percent interest in Forum Philippine Holdings Ltd and Forum (GSEC101) Ltd). holds a 70 percent equity in the SC 72 licence. Philex Mining Corp. (through its interests in FEC Resources Inc and Philex Petroleum Corp.) controls 64.45 percent of the share capital of Forum.

SC 72, covers an area of 8,800 square kilometers and contains the Sampaguita gas discovery and a number of additional leads.

In 2008, a joint venture was formed with Monte Oro Resources and Energy Inc. (MORE) which qualified it for the Filipino Participation Incentive Allowance (FPIA). Through a 30-percent farm-out to MORE, the joint venture receives 7.5 percent of gross revenues shared with the government.

In February 2010, the exploration license was converted into a service contract.

Forum Energy had been stressing that SC 72 is not situated in the disputed Spratlys Group of Islands. It said the contract is located in the Reed Bank basin which is at least 150 kilometers east of the disputed Spratlys Island and is closer to the island of Palawan.

Reed Bank has been subject of numerous exploration campaigns in the past under the Philippine contractual regime. The first petroleum contract in the area was awarded by the then Ministry of Energy in 1975.

Forum (through its 100-percent interest in Forum Philippine Holdings Ltd. and Forum (GSEC101 Ltd.) holds a 70 percent equity in the SC 72 licence. Philex Mining Corp. (through its interests in FEC Resources Inc. and Philex Petroleum Corp.) controls 64.45 percent fo the share capital of Forum.

Philex mining provided a financing facility worth $10 million that enabled Forum to progress the development of Service Contract 72.

 

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