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THE
DAILY NEWS
WE TELL IT LIKE IT IS
Vol. 11 No. 156 August 26, 2009
Phil. Copyright 2002
THE WALLACE BUSINESS FORUM, INC. accepts no liability for the accuracy of the data contained in this report.
WEATHER FORECAST
The Nation
•
Villar takes over top spot in presidential
bet survey
•
Erap-Chiz tandem looms in 2010
•
Prospects for peace talks dimming
•
Santos is acting NEDA chief
METRO MANILA 24°C to 33°C
Light t to Moderate Southwest Manila
Bay: Slight to Moderate
COUNTRY
Curre ncy
in Pe s o
Curre ncy in
US$1
1 Pe s o in
Curre ncy
EXCHANGE RATE
US (dollar)
48.341
1.000
0.021
Japan (yen)
0.511
0.011
1.955
The Economy and Business
UK (pound)
79.352
0.011
0.013
6.238
0.129
0.160
•
Canada (dollar)
44.885
0.929
0.022
Australia (dollar)
40.595
0.840
0.025
New Zealand (dollar)
33.176
0.686
0.030
EMU (euro)
69.108
1.430
0.014
RP economy may have grown 0.1% in 2Q
- Moody's
•
June imports recover
•
Govt debt to hit P4.723-T in 2010
•
Investments in retirement industry to
expand
•
Referendum vs oil depot ordinance filed
Corporate Briefs
•
Atlas Shippers International Inc. is
setting up a port in the Subic Freeport
•
GE Money Bank to start operating as
Banco de Oro Unibank subsidiary
•
Charoen Pok-phand (CP) Foods PCL to
invest $45-M in RP
Hong Kong (dollar)
/
PESO–DOLLAR RATE
30 trading days to August 25, 2009
46.50
Open: P 48.500
47.00
Close: P 48.510
47.50
High: P 48.500
48.00
Low: P 48.640
48.50
W.A.: P 48.559
49.00
Vol: 732.86 M
COMPOSITE INDEX
30 trading days to August 25, 2009
2900
2800
Open: 2,587.14
Close: 2,858.15
High: 2,869.12
2700
Low: 2,852.59
2600
Index: 2,858.15
2500
Vol: 2.882 B
2400
Val: P 3.374 B
Disclaimer:
The articles in this Daily News have been culled from various media sources. We cannot, therefore, vouch for the accuracy of what is reported.
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THE NATION
Villar takes over top spot in presidential bet survey
Senator Manuel B. Villar, Jr. now leads presidential aspirants in an independent poll on the respondents’
preference if the 2010 elections were held today. In the noncommissioned "Ulat ng Bayan" conducted by Pulse
Asia, Inc. on July 28-Aug. 10, the Nacionalista Party leader rose to top spot (25%) to dislodge Vice-President
Manuel "Noli" L. de Castro, who slid to third place (16%). The last survey was done in May. Former president
Joseph E. Estrada rose to second (19%) from third place, while senators Francis Joseph G. Escudero (12%) and
Manuel A. Roxas II (11%) maintained their fourth and fifth places, respectively. Mr. Villar, who is facing a
Senate ethics probe over a controversial road project that allegedly benefited his real estate firm, was the
biggest gainer with 11 percentage points. The nationwide survey was based on a sample of 1,800 adults aged
18 and above, and has a margin of error of ±2% at the 95% confidence level.
Erap-Chiz tandem looms in 2010
Former President Joseph Estrada wants Sen. Francis “Chiz” Escudero to be his running mate if he decides to run
for president in 2010, a source from the opposition said. The source, who requested anonymity, said Estrada
prefers Escudero over Sen. Loren Legarda and Makati City Mayor Jejomar Binay because of his good ratings in
surveys. “Escudero is the strongest vice presidential candidate among the opposition. President Estrada is
inclined to choose Escudero. The next survey is coming in 10 days and that will be a deciding factor,” the source
said. Sought for comment, Escudero said the former president had not discussed the matter with him. A recent
Social Weather Stations survey reportedly placed Estrada on top among the presidentiables, followed by Sen.
Manuel Villar, Escudero, Vice President Noli de Castro, and Legarda.
Prospects for peace talks dimming
The government’s peace adviser doused hopes for an early resolution of the impasse on the resumption of talks
with the Communist Party of the Philippines-National Democratic Front (CPP-NDF), claiming "hawks" have taken
over the helm of the communist group. Presidential Adviser on the Peace Process Avelino I. Razon, Jr., said the
so-called hawks and "hard-liners," referring to couple Benito and Wilma Tiamson, are opposed to the peace
process. He also accused the CPP-NDF of virtually abandoning the negotiations. "The change in the tone,
language and position of the CPP-NDF can only be attributed to the change in leadership in the movement.
From what we have gathered, it is now the Tiamson couple that is calling the shots and not Joma [CPP founder
Jose Ma. Sison]," he said. He also warned that the Tiamson couple’s leadership could signal a "regime of
violence" through the CPP-NDF’s armed wing, the New People’s Army (NPA). There was no immediate comment
from the communist leadership, who is in self-exile in the Netherlands.
Santos is acting NEDA chief
Malacañang has appointed Augusto B. Santos as acting Director-General of the National Economic and
Development Authority (NEDA), following the resignation of former chief Ralph G. Recto effective Aug. 16. The
appointment, signed Aug. 19 and relayed to NEDA on Aug. 24, will be the third time for Mr. Santos to head the
economic planning agency under President Gloria Macapagal-Arroyo. He was earlier assigned as officer-incharge from July 14, 2005 to Feb. 16, 2006; and as acting Director-General from Aug. 16, 2007 to July 28,
2008. Mr. Santos said the role of NEDA head would entail "more of the same work. The challenge [though] is to
keep on pushing, setting directions and reforms." Mr. Santos also said one of his immediate concerns would be
in "defining the priorities for fiscal spending" given his expectation of a recovery in the latter half.
ECONOMY & BUSINESS
RP economy may have grown 0.1% in 2Q - Moody's
The Philippine economy may have grown by 0.1% in the second quarter of the year, down from the 4.6%
recorded in the same period in 2008, a unit of Moody’s Investors Service said in a report. Moody’s said the drop
stems largely from the strong performance of the economy in the first quarter of the year. “Output is expected
to have risen compared with the previous quarter,” Moody’s Economy.com said in its report. Moody’s said that
nearly all members of the Association of Southeast Asian Nations (ASEAN) have emerged from recession even
though the economic performance in the second quarter is lower than the year ago expansions.
June imports recover
The country’s import performance began to show signs of recovery in June, posting the lowest annual
contraction since October last year and marking the second consecutive month of improvement. The National
Statistics Office (NSO) reported that imports fell 22.8% to $4.108 billion in June, better than the 24.3% drop
recorded in the previous month. On a month-on-month basis, June’s import performance was 13.6% higher
than May, marking the second straight month of improvement. The country recorded a trade deficit of $702
million in June, 11.7% smaller than the shortfall registered in the same period last year, the NSO said. The
National Economic and Development Authority (NEDA) said the month-on-month growth in merchandise
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imports shows that the sector is starting to recover. Imports of electronic components, which accounted for
33.8% of June’s total, amounted to $1.389 billion, down 20.3% from the same period last year but up 6.8%
from May.
Govt debt to hit P4.723-T in 2010
The Department of Finance (DOF) is expecting the government’s debt stock to climb to P4.723 trillion in 2010
or P234 billion more than the programmed P4.489 trillion for this year. The P4.723 trillion debt stock is also P34
billion more than the previous target of P4.689 trillion for 2010. As a percentage of gross domestic product
(GDP), the P4.723 trillion programmed debt stock for 2010 is 56.7% while the P4.689 trillion target for 2009 is
56.3%. Of the amount, debt owed to local lenders is expected to reach P2.771 trillion next year while the
amount of foreign debt has been programmed to hit P1.952 trillion. Finance Undersecretary Gil Beltran said the
upward revision in next year’s debt stock program is due to the wider-than-expected budget deficit in 2010 of
P233.4 billion or 2.8% of GDP.
Investments in retirement industry to expand
Investments in the retirement industry are expected to increase this year in spite of the slowdown in the global
economy, the Philippine Retirement Authority (PRA) said. PRA acting general manager Reynaldo D. Lingat said
they expect more investments in the retirement industry even if investments in other sectors are declining. He
said they are negotiating with several foreign investors for retirement villages. Lingat said an American firm will
build a continuing care facility in Clark. He said the firm is looking at an idle land beyond Subic. Since 2006,
investments in the retirement industry have reached P6.9 billion.
Referendum vs oil depot ordinance filed
A people’s initiative was filed with the Commission on Elections (Comelec) that seeks to repeal an ordinance
allowing the continued operation of the Pandacan oil depot as well as other medium and heavy industries in
Manila. Councilor Lourdes Isip-Garcia said that the group, led by the organizations Manileño Kontra Abuso and
Tanggulan ng mga Barangay Kagawad sa Tondo Foreshore (TABAK-TF), filed the petition due to the inaction of
the Manila city council on the petition against the ordinance signed by over 2,000 residents and filed on June
23. The petition seeks to repeal Ordinance 8187 which mainly allowed the continued operation of the oil depot
in Pandacan by Pilipinas Shell Petroleum Corp., Caltex Philippines (renamed Chevron Philippines, Inc.) and
Petron Corp.
CORPORATE BRIEFS
U.S. based cargo forwarder Atlas Shippers International Inc. announced it is setting up a port in the Subic
Freeport which will serve as the firm’s hub for its North Luzon operations…the port in Subic will serve as an
entry point for balikbayan boxes for Atlas, one of the top 3 door-to-door cargo forwarders in the country…Atlas
used the Subic port for the first time on Thursday, officially marking the U.S. based firm’s intent to establish the
Subic Bay Freeport as its hub for Northern Luzon operations…GE Money Bank will begin operating as a
subsidiary of Banco de Oro Unibank, Inc. (BDO) after the country’s largest bank completed its acquisition of the
savings bank…BDO said it has completed the purchase of 98.81% of GE Money Bank’s outstanding common
shares and 100% of its preferred shares…BDO earlier said the addition of GE Money into its stable would boost
its consumer banking business given the savings bank’s 30,000 customers and network of 31 branches and 38
automated teller machines…Charoen Pok-phand (CP) Foods PCL, Thailand’s biggest chicken exporter, said it
planned to invest 1.52 billion baht ($45 million) in the Philippines, mainly in the aquaculture business…overseas
expansion is part of the company’s strategy to expand its revenue…its net profit for the second quarter more
than tripled, due in part to growth overseas.
WORD FOR WORD
BusinessWorld columnist Benjamin Diokno wrote:
“But what’s in store for the Philippine economy? A world economic recovery does not necessarily mean a strong
rebound for the Philippine economy. There are many reasons why to road to recovery could be a bumpy one for
the Philippines.
First, risk associated with lower than normal level of world trade. World exports to the U.S., euro area, and
other developed countries are not about to go back to their pre-crisis levels soon. For the U.S. economy to grow
on a sustainable basis, it has to address, on a permanent basis, its twin-deficit problems.
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To fix its humongous trade deficits, the U.S. has to export more and import less. That’s bad news for countries
that export to the U.S. heavily, such as China, Japan, Germany, and South Korea and, to a limited extent, the
Philippines.
In addition, even before the crisis, the U.S. government had been accumulating a lot of red ink. For the U.S. to
be on a sustainable growth path, it too has to fix its budget deficit problem. This year, as a result of its fiscal
stimulus program, the U.S. will incur a huge deficit equivalent to 12.3% of GDP. It is reported that the U.S.
government has recently raised its 10-year budget deficit projection by some $2 trillion to about $9 trillion.
But large deficits now mean higher taxes or lower public spending for essential public services in the future. The
implication for U.S. consumers is not a cause for optimism: it means lower consumer spending as American’s
disposable incomes fall as taxes rise, and lower public spending as more public funds would go to debt
payment. Overall, this means a slower than normal economy and lower demand for imported goods.
The second risk is associated with a peso appreciation. For the U.S. to be able to export more and import less,
the U.S. dollar has to be weakened; the converse is that the peso has to appreciate in value vis-a-vis the dollar.
There is another pressure for a peso appreciation. Do you ever wonder where all the monetary expansion has
gone? The easy monetary policy must show up somewhere. And some of it must show up in transition
economies, like the Philippines. With the heavy infusion of cash into the world economy, it is expected that the
recovery of the financial markets will precede the recovery of the real economy. And only after a long lag will
the job market finally recover (but more on this below).
With the real economy still weak, it is likely that excess liquidity would find it way to emerging economies like
the Philippines. This, unfortunately, will put pressure on the peso. Unless handled properly, the outcome of a
serious peso appreciation could be devastating: what remain of Philippine exports will perish and the peso value
of overseas remittances will shrink. Think of the second-round effect of the lower peso value of remittances on
domestic consumption.
The third risk is associated with a possible contraction of the job market for Filipinos abroad. In the sequence of
events, the job market will be the last to recover, after the financial market first, and the real economy next.
But a lot of jobs have disappeared in the recent world economic recession. In the U.S. alone, some 7 million
jobs were lost. Governments in affected countries will be under a lot of pressure to provide jobs for their
constituents first. With creeping protectionism, job opportunities for Filipinos abroad may be at risk. With world
trade slowing, Filipino workers in factories abroad and those employed in cargo ships will be under a lot of
stress.
The fourth risk is the Philippines’ fast narrowing fiscal space. With its fast deteriorating fiscal situation, its ability
to spend in order to perk up the economy is iffy. Its public debt has doubled, and as a result, the national
government has to set aside an increasing share of its revenues for debt service. Higher allocation for debt
service means less budget allocation for education, health, and public infrastructure.
At some point, probably as soon as the next president is installed on July 1st, 2010, the Philippine government
has to worry about how to regain its sound fiscal footing. But raising taxes too early, or compressing spending
prematurely, may in fact undermine the recovery.
The final risk is the return of inflation. Crude oil and oil product prices have inched up past $70 per barrel. Food
and commodity prices are expected to go up too. The fear of inflation will put some halt to easy monetary policy
even as central bankers worry about exit strategies.
For the Philippines, the much-vaunted election spending as stimulus is probably overrated. The current focus of
election spending is in the nature of a media blitz. But its multiplier effect is very low. True, rich owners of
media firms (ABS-CBN and GMA-7) have benefitted, but I doubt if election spending has filtered to the Filipino
masses.
Election spending that affects the large number of Filipinos will not come into the system until the second
quarter of 2010. But a big part of the election spending will be eaten up by inflation and as expected will not be
long lasting. Election spending, as expected, is sugar high and will not boost economic activity beyond a
quarter.
Those who anticipate a smooth linear road to economy recovery are either blind or eternal optimists. In fact,
the road to recovery is tricky, risky, and bumpy. To have a fair chance of navigating this difficult road
successfully, government leaders and policymakers need a lot of clear thinking, boldness, competence,
seriousness, honesty, and political will.”
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