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Early Bird News Service
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Wednesday
March 21, 2007
On-board: Jheric A. Saracho
Time completed:
9:08 a.m.
Benchmark
03/20
03/13
03/12
03/09
03/01
02/28
02/20
02/19
02/15
Peso
P48.06
P48.10
P48.25
P48.59
P48.50
P48.53
P48.53
P48.59
P48.54
Yen
¥0.4154
¥0.4114
¥0.4102
¥0.4198
¥0.4101
¥0.4095
¥0.4020
¥0.4037
¥0.4012
Euro
€64.87
€63.87
€63.61
€64.22
€64.30
€63.94
€63.23
€63.25
€63.62
PSE (points)
3,039.34
3,181.96
3,124.96
3,099.82
3,190.12
3,062.45
3,375.31
3,329.03
3,379.37
(Reference: Manila Times)
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INDUSTRY AND INVESTMENTS
BANGKOK—Charoen Pokphand Foods, Thailand’s biggest chicken exporter, said on Tuesday it would spend 37
million baht ($1.06 million or P50 million) to set up a subsidiary in the Philippines in the second quarter of this
year. The wholly owned CPF Philippines would operate a shrimp hatchery business as part of a plan to expand
animal breeding businesses overseas, chief executive Adirek Sripratak said. CP Foods operates overseas
businesses in Turkey, China, India and Russia. It has set up subsidiaries in Laos and Malaysia to expand its
animal breeding business. The firm has said it expected sales to grow 5-10 percent this year as the overseas
subsidiaries would help expand sales. (malaya.com.ph)
Biofuels 88 Corp. will build a P700-million biofuel plant with a capacity of 19.8 million liters per year in Mariveles,
Bataan. Biofuels 88 is a newly-established firm created to support the government’s drive to seek out and
harness indigenous and renewable alternative fuel. The plant, which will be operational by July 2009, will
produce alternative fuel such as ethanol in order to make the country less dependent on imported oil. In addition,
the use of alternative fuel will lessen pollution caused by motor vehicles. The plant will be designed to operate
using either sugarcane juice or molasses as feedstock to produce 60,000 liters per day of fuel grade anhydrous
ethanol suitable for gasoline blending. It will produce ethanol that will supply the needed ethanol of independent
oil industry players such as Flying V, Filpride, Filoil, Eastern Petroleum, Seaoil and Total. Early this month, the
Department of Energy (DOE) said it may delay the May 6 rollout of the Biofuels Act to ensure the smooth
implementation of the law. Energy Secretary Raphael Lotilla said the scheduled May elections may be a
distraction for the implementation of the law. The Biofuels Act mandates that diesel contain at least a one percent
blend of biofuel within three months from the effectivity of the law and a two percent blend within two years. On
the other hand, at least five percent of bioethanol has to be blended into gasoline within two years after the law
comes into effect and then increased to a 10-percent ethanol blend within four years. Lotilla said that although
farmers and groups such as the Philippine Coconut Authority and the Philippine Biodiesel Association have
assured the sufficiency of supply of biofuels, the big oil firms need time to prepare the necessary infrastructure to
take in the biofuel products. However, the Independent Philippine Petroleum Companies Association said that a
delay is unnecessary and will send the wrong signal to investors. (philstar.com)
MANILA, Philippines -- Business process outsourcing “hotspots” such as the Philippines must build up their pool
of available talents and skills and improve industry regulations as the cost advantage for offshoring services from
developed countries is waning, a Chicago-based global management consulting firm said, citing survey findings.
Results of the latest annual survey of AT Kearney released last week showed that while total compensation costs
for sample positions like IT programmers or call center representatives rose by five to 10 percent in most
developed countries, average wages for similar positions in the Philippines went up by as much as 30 percent in
US dollar terms. Dubbed “2007 Global Services Location Index,” the study that is based on data culled in 2006
ranks offshore business process outsourcing locations -- covering 50 countries worldwide—in terms of financial
attractiveness, people skills and business environment. The Philippines “surprisingly dropped several places” in
the 2007 Index from eighth place in 2006, trailing India, China, Malaysia, Thailand, Brazil, Indonesia and Chile, in
that order. Still, the poll showed that the Philippines “remained one of the lowest wage locations and now offers
the lowest telecom costs of any country in the Index.” Comparative labor cost changes between developed and
developing countries were attributed partly to accelerating wages and currency appreciation in offshore hotspots
as well as downward pressure on wages in impacted sectors in developed countries. AT Kearney said that the
cost competitiveness of key emerging markets was expected to remain for another 20 years as they have
continued to improve their attractiveness in terms of access to talent, industry experience, quality certifications
and their regulatory environment. AT Kearney chairman and managing officer Paul Laudicina said in a statement
what was most striking about this year’s Index was how the relative cost advantage of the leading offshore
destinations declined almost universally, while their scores for people skills and business environment rose
significantly. These findings reinforce the message that corporations making global location decisions should
focus less on short-term cost considerations, and more on long-term projections of talent supply and operating
conditions. The findings also sent a message to policy-makers in both developed and developing countries that
the key to maintaining and enhancing long-term competitiveness lies in skills development, infrastructure
investment and the regulatory environment, not in attempts to control wages. (inquirer.net)
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INTERNATIONAL AND DOMESTIC TRADE
The World Bank said the government should implement a policy of encouraging cement imports to contain price
pressures in the industry. The World Bank said the Philippines has the highest cement prices in the region and
that government should implement policies aimed at lowering cement prices that will "contribute to lowering the
economy wide cost of investment, enhancing cost competitiveness as well as increasing investment demand."
"The impact on affordability of middle and low-income housing costs would also be favorable," the World Bank
said, adding that the cement industry has a "central role in making infrastructure and housing sector investments
affordable." To lower cement prices, the World Bank suggests importation of cement, which should be "used as
the basis for containing price pressures." "Bringing down cement prices to levels comparable with other countries
in the region could engender significant costs savings (thus) enabling the government to step up public
investment in infrastructure while adhering to its goal of balancing the budget," World Bank said. In 2002 the
government enforced temporary safeguard measures to control the entry of imported cement, however the study
said price competition from imports is not that significant anymore since the "share of imports in total demand has
declined." (mb.com.ph)
CORPORATE
Dacon Corporation of the Consunjis injected P1.16 billion in fresh capital into DMCI Holdings Inc. to finance its
expansion in the water and power sectors. DMCI finance officer Aldric Borlaza disclosed to the Philippine Stock
Exchange (PSE) yesterday that Dacon signed three subscription agreements with DMCI last March 16 to
subscribe to a total of 168 million common shares. The shares, to come from the unissued portion of DMCI’s
authorized capital, were sold at different prices: 80 million at P7.00 per share, 15 million at P7.51954 per share,
and 73 million at P6.70 per share. DMCI’s 50-50 joint venture with Metro Pacific Invesments Corporation, DMCIMPIC Water Company Inc., won the bid for an 84 percent ownership stake in Maynilad Water Services Inc. late
last year. Under terms of the auction, DMCI-MPIC had committed to pay a total consideration of $ 503.9 million
for the stake, comprised of a minimum cash bid of $ 56.7 million and a financial supplement of $ 447.2 million.
The minimum cash bid comprises $ 22.7 million worth of common shares in Maynilad plus $ 3 million in interest
and $ 31 million in financial assistance for past MWSS advances made to Maynilad. (mb.com.ph)
Listed mining and property firm Omico Corp. is doubling its capital stock to P2 billion to fund the acquisition of
additional mining claims, exploration activities and real estate development projects. Omico president and chief
executive officer Tommy Tia said the company will undertake a stock rights offering to allow it to increase its
capitalization which now stands at P1 billion. The firm, he said, is hoping to raise about P262 million from the
proposed stock rights issue which was approved by its board of directors Tuesday. Tia said shareholders can
subscribe to one share for every three shares held as of a record date yet to be set by the company. The shares
have a par value of one centavo. Omico stocks closed at 1.9 centavos yesterday from 1.8 centavos last Monday.
As a sweetener, the company will give one free warrant for every two shares subscribed in the stock right and the
grant of stock options to Omico’s deserving employees, officers and board members. Tia said the increase in
capital stock and the rights issue are still subject to the approval of the Securities and Exchange Commission and
the Philippine Stock Exchange. (philstar.com)
BANKING AND FINANCE
Bangko Sentral ng Pilipinas deputy governor Nestor Espenilla said the introduction of new benchmark interest
rates that are more realistic and transparent will encourage the development of more derivative products. The
Bankers Association of the Philippines is now issuing interest rate benchmarks calculated from secondary market
trades of government securities. The rates are based on done deals and hence reflect the real prices of the
securities, the BAP asserts. It used to be that banks used to price their loans depending on the yields of threemonth treasury bills. Bank then tried to replace them with MART rates or the interest rates followed on the
secondary trade of government securities. These, however, were not seen to be transparent enough. "We’ll see
more kinds of products like interest rate derivatives," Espenilla said. A derivative is a financial instrument that
derives its value from other instruments such an underlying security, group of securities or an index. Banks can
use derivatives to mitigate interest rate risks such as in housing loans. (malaya.com.ph)
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