Philippines News Archives

PHILIPPINES IN DEBT: Fiscal Plight Dire, But Not Crisis

2004-09-03T09:25:00.000+08:00

Thursday September 2, 8:02 AM
PHILIPPINES IN DEBT: Fiscal Plight Dire, But Not Crisis
(This item was first published at 1124 GMT Wednesday.)
(This is the first in a four-part series examining the Philippines'
fiscal plight.)
By Ditas Lopez
Of DOW JONES NEWSWIRES

MANILA (Dow Jones)--The dust may be settling after President Gloria
Macapagal Arroyo declared the Philippines in a "fiscal crisis," but her
dramatic remark has focused attention on debt problems that will bedevil the
country for years.
If the Philippines - Asia's biggest debt issuer outside Japan - isn't set to
go the way of Argentina's 2002 default, it nonetheless is a ticking fiscal
time bomb.
"The Philippines is not yet in a fiscal crisis but it may soon find itself
in that situation," said Jose Emmanuel Hilado, treasurer at BDO Private
Bank. "The government has to do something and it has to do it now."
While no one seriously doubts the Philippine government's ability to repay
its debts or to finance its fiscal deficit at the moment, the government is
struggling to try to tame the deficit and its reliance on foreign funding
puts it in a precarious position as global interest rates start to rise and
the peso grinds lower over time.
Economists and the government agree the debt burden is the biggest threat to
an economy hobbled by tepid growth, widespread poverty and bouts of
political instability. Congress drags its feet on pending tax measures;
government corruption and a culture of tax evasion mean the authorities
collect barely half what they are owed in taxes, by one estimate; and such
money-bleeding state firms as National Power Corp. keep the Philippines
sinking in red ink.
Arroyo, a U.S.-trained economist who won a six-year mandate in a May 10
election, has set as her top priority tackling the nation's budget deficit,
which the government hopes to pare from last year's 4.6% of gross domestic
product on the way to a balanced budget by 2009.
Raising the stakes Aug. 23, she stunned financial markets by saying, "We are
already in the midst of a fiscal crisis and we have to face it squarely,"
while urging national solidarity to resolve the problem.
Debt Drag

Her statement was a political attack on a reluctant Congress to rally
support for belt-tightening measures and higher taxes. A formal declaration
of fiscal crisis would have allowed Manila to freeze the release of funds to
local government units.
Arroyo's economic team swiftly rejected a fiscal state-of-emergency
declaration - indeed within hours top finance and central officials were
flatly contradicting the president, saying the Philippines wasn't in a
"fiscal crisis" as this would mean impending default.
The damage on investors' nerves, however, was done. The peso has tumbled to
a two-month low, while stock prices fell 2.7% over two days but have since
recouped their losses. The quoted yield on the five-year treasury bond rose
as much as 33 basis points to 12.554% by Friday, although it has edged back
this week.
Although the markets shuddered to be reminded of it, the Philippine debt
mess is nothing new. Analysts have warned of fiscal peril for years.
In January, Standard Chartered Bank was warning that while a crisis wasn't
imminent, Manila needed to act quickly to shore up its finances or face the
outside chance of defaulting. University of the Philippines economists - the
day before Arroyo bemoaned the "crisis" - said the country faces economic
collapse in two to three years unless the government reins in the widening
deficit and ballooning debt by adopting a package of revenue and cost-saving
measures.
The government has only ever been in the black from 1994 to 1997, thanks to
surpluses largely from the sale of state assets. The deficit swelled to 5.3%
of GDP in 2002. The government, more optimistic than some analysts, hopes to
bring this year's deficit down to 197.8 billion pesos ($1=PHP56.250), or
4.2% of GDP and to 3.6% in 2005.
And while the government has foreign reserves worth four months of imports,
making a currency crisis unlikely, the debt mountain is huge.
The Philippines had outstanding central government debt, excluding that of
state firms and financial institutions, of over PHP3.36 trillion at the end
of 2003, or 77% of GDP, roughly half domestic and half foreign. The
proportion of non-peso borrowing has increased in recent years, meaning the
government has to pay more in peso terms as the currency declines. Total
external obligations, public and private, at 71% of GDP, is among the
highest in Asia.
While those high debt levels are worrying enough, another problem is that
the Philippines "has accumulated a large amount of debt without creating
income-producing assets to help repay them," said Romeo Bernardo, an
economist and former finance undersecretary.
If this continues, he said, the country will be burdened with higher
borrowing costs, which means a growing portion of government revenues will
go toward servicing the national debt. Already, one-third of government
spending goes just to pay the interest on the burgeoning debt. With salaries
and other operating expenses taking up half of all spending, that leaves
little for revenue-churning government programs.
100-Year Bond, Anyone?

"Interest payments ranking number one as budgetary priority, we believe, is
a headline manifestation of an evolving fiscal crisis," said Congressman
Joey Salceda, head of House of Representatives' economic affairs committee.
Failure to find the revenues for needed spending would require the
government "to accumulate more debt, falling deeper into a debt trap,"
economist Bernardo said. And indeed, the government overshot its deficit
target again last month as spending continued to outstrip improving
revenues.
At the least, having that much of the budget already spoken for crimps the
government's ability to goose the economy.
Debt servicing costs are up 12% to PHP310.69 billion in the record 2005
budget of PHP907.59 billion the government submitted to Congress last week.
That may make it hard for Arroyo's government to meet its goal of boosting
growth to 5.3%-6.3% next year. Those would be among the fastest rates of
growth since the late 1980s, following this year's target 4.8%-5.9% rise.
The government has funded needed spending by tapping local and overseas
borrowers, but that borrowing threatens to snowball as the beleaguered
national power utility's debts come due. The government raised the full $1.8
billion it aimed to borrow this year from foreign commercial sources, mostly
to support budget spending. Still, it finds it has fallen short as it needs
another $1 billion later this year for Napocor, whose debts it guarantees
and for whom it is sometimes required to issue sovereign debt.
And yet, despite all these risks, investment bankers still sweet-talk Manila
policymakers.
They continue to pitch a variety of bond ideas to the government on the idea
that if the price is right, there will be a buyer. The ideas include
short-dated debt where bankers say the government can get cheap funding now
and longer-term bonds to fit the government's aim of lengthening the
maturity profile of its outstanding debt.
Credit markets have been willing to continue financing the government - but
at increasing cost. Pakistan and Indonesia, lower-rated than the
Philippines - itself two notches below investment grade - were able to
borrow at spreads below the Philippines' in April.
Still, bond buyers may not remain generous forever, and Manila's options may
be shrinking: talk surfaced last week that one idea is for a 100-year
sovereign bond.
-By Ditas Lopez, Dow Jones Newswires; 632-885-0288;
ditas.lopez@dowjones.com
(Karen Lane in Singapore contributed to this article.)
-Edited by Lim Mui Khi and William Mallard
http://sg.biz.yahoo.com/040901/15/3mu98.html

PHILIPPINES IN DEBT: Fiscal Plight Dire, But Not Crisis

2004-09-03T09:12:00.000+08:00

Thursday September 2, 8:02 AM

PHILIPPINES IN DEBT: Fiscal Plight Dire, But Not Crisis

   (This item was first published at 1124 GMT Wednesday.)    (This is the first in a four-part series examining the Philippines' fiscal plight.)    By Ditas Lopez    Of DOW JONES NEWSWIRES

MANILA (Dow Jones)--The dust may be settling after President Gloria Macapagal Arroyo declared the Philippines in a "fiscal crisis," but her dramatic remark has focused attention on debt problems that will bedevil the country for years.

If the Philippines - Asia's biggest debt issuer outside Japan - isn't set to go the way of Argentina's 2002 default, it nonetheless is a ticking fiscal time bomb.

"The Philippines is not yet in a fiscal crisis but it may soon find itself in that situation," said Jose Emmanuel Hilado, treasurer at BDO Private Bank. "The government has to do something and it has to do it now."

While no one seriously doubts the Philippine government's ability to repay its debts or to finance its fiscal deficit at the moment, the government is struggling to try to tame the deficit and its reliance on foreign funding puts it in a precarious position as global interest rates start to rise and the peso grinds lower over time.

Economists and the government agree the debt burden is the biggest threat to an economy hobbled by tepid growth, widespread poverty and bouts of political instability. Congress drags its feet on pending tax measures; government corruption and a culture of tax evasion mean the authorities collect barely half what they are owed in taxes, by one estimate; and such money-bleeding state firms as National Power Corp. keep the Philippines sinking in red ink.

Arroyo, a U.S.-trained economist who won a six-year mandate in a May 10 election, has set as her top priority tackling the nation's budget deficit, which the government hopes to pare from last year's 4.6% of gross domestic product on the way to a balanced budget by 2009.

Raising the stakes Aug. 23, she stunned financial markets by saying, "We are already in the midst of a fiscal crisis and we have to face it squarely," while urging national solidarity to resolve the problem.

                     Debt Drag

Her statement was a political attack on a reluctant Congress to rally support for belt-tightening measures and higher taxes. A formal declaration of fiscal crisis would have allowed Manila to freeze the release of funds to local government units.

Arroyo's economic team swiftly rejected a fiscal state-of-emergency declaration - indeed within hours top finance and central officials were flatly contradicting the president, saying the Philippines wasn't in a "fiscal crisis" as this would mean impending default.

The damage on investors' nerves, however, was done. The peso has tumbled to a two-month low, while stock prices fell 2.7% over two days but have since recouped their losses. The quoted yield on the five-year treasury bond rose as much as 33 basis points to 12.554% by Friday, although it has edged back this week.

Although the markets shuddered to be reminded of it, the Philippine debt mess is nothing new. Analysts have warned of fiscal peril for years.

In January, Standard Chartered Bank was warning that while a crisis wasn't imminent, Manila needed to act quickly to shore up its finances or face the outside chance of defaulting. University of the Philippines economists - the day before Arroyo bemoaned the "crisis" - said the country faces economic collapse in two to three years unless the government reins in the widening deficit and ballooning debt by adopting a package of revenue and cost-saving measures.

The government has only ever been in the black from 1994 to 1997, thanks to surpluses largely from the sale of state assets. The deficit swelled to 5.3% of GDP in 2002. The government, more optimistic than some analysts, hopes to bring this year's deficit down to 197.8 billion pesos ($1=PHP56.250), or 4.2% of GDP and to 3.6% in 2005.

And while the government has foreign reserves worth four months of imports, making a currency crisis unlikely, the debt mountain is huge.

The Philippines had outstanding central government debt, excluding that of state firms and financial institutions, of over PHP3.36 trillion at the end of 2003, or 77% of GDP, roughly half domestic and half foreign. The proportion of non-peso borrowing has increased in recent years, meaning the government has to pay more in peso terms as the currency declines. Total external obligations, public and private, at 71% of GDP, is among the highest in Asia.

While those high debt levels are worrying enough, another problem is that the Philippines "has accumulated a large amount of debt without creating income-producing assets to help repay them," said Romeo Bernardo, an economist and former finance undersecretary.

If this continues, he said, the country will be burdened with higher borrowing costs, which means a growing portion of government revenues will go toward servicing the national debt. Already, one-third of government spending goes just to pay the interest on the burgeoning debt. With salaries and other operating expenses taking up half of all spending, that leaves little for revenue-churning government programs.

             100-Year Bond, Anyone?

"Interest payments ranking number one as budgetary priority, we believe, is a headline manifestation of an evolving fiscal crisis," said Congressman Joey Salceda, head of House of Representatives' economic affairs committee.

Failure to find the revenues for needed spending would require the government "to accumulate more debt, falling deeper into a debt trap," economist Bernardo said. And indeed, the government overshot its deficit target again last month as spending continued to outstrip improving revenues.

At the least, having that much of the budget already spoken for crimps the government's ability to goose the economy.

Debt servicing costs are up 12% to PHP310.69 billion in the record 2005 budget of PHP907.59 billion the government submitted to Congress last week. That may make it hard for Arroyo's government to meet its goal of boosting growth to 5.3%-6.3% next year. Those would be among the fastest rates of growth since the late 1980s, following this year's target 4.8%-5.9% rise.

The government has funded needed spending by tapping local and overseas borrowers, but that borrowing threatens to snowball as the beleaguered national power utility's debts come due. The government raised the full $1.8 billion it aimed to borrow this year from foreign commercial sources, mostly to support budget spending. Still, it finds it has fallen short as it needs another $1 billion later this year for Napocor, whose debts it guarantees and for whom it is sometimes required to issue sovereign debt.

And yet, despite all these risks, investment bankers still sweet-talk Manila policymakers.

They continue to pitch a variety of bond ideas to the government on the idea that if the price is right, there will be a buyer. The ideas include short-dated debt where bankers say the government can get cheap funding now and longer-term bonds to fit the government's aim of lengthening the maturity profile of its outstanding debt.

Credit markets have been willing to continue financing the government - but at increasing cost. Pakistan and Indonesia, lower-rated than the Philippines - itself two notches below investment grade - were able to borrow at spreads below the Philippines' in April.

Still, bond buyers may not remain generous forever, and Manila's options may be shrinking: talk surfaced last week that one idea is for a 100-year sovereign bond.

   -By Ditas Lopez, Dow Jones Newswires; 632-885-0288; ditas.lopez@dowjones.com    (Karen Lane in Singapore contributed to this article.)    -Edited by Lim Mui Khi and William Mallard

 http://sg.biz.yahoo.com/040901/15/3mu98.html

01-06-2004: Manila's Smart still eyeing Piltel debt deal

2004-08-09T18:35:00.000+08:00

Philippine mobile phone firm Smart Communications Inc said on June 1 it had
failed to convince creditors of affiliate Pilipino Telephone Corp (Piltel)
to approve a 20.5 billion peso (RM1.39 billion) debt swap.

But the company, a wholly owned unit of Philippine Long Distance Telephone
Co, said it was confident of pushing through the swap that analysts said
would eventually lead to Smart taking over PLDT's 45.3% holding in Piltel.

Smart has proposed to pay 40 cents for every US$1 of Piltel debt and has set
aside US$20 million for the swap.

Piltel, Philippine's third-largest mobile firm, had defaulted on its debt
payments in 1999 and declared a moratorium on 41.1 billion pesos worth of
obligations. After an overhaul in 2001, it was left with unrestructured debt
of 20.5 billion pesos.

Creditors needed to agree to swap at least 75% of Piltel's debt for Smart
debt for the deal to go through. At the May 31 offer deadline, Smart had
received offers for 68.4% of Piltel's debts.

"Given the high acceptance level from Piltel's creditors, Smart would still
be able to proceed with the transaction. Smart has a period of 90 days from
the end of the offer period in which to determine if it will proceed with
and then close the transaction," Smart said in a statement.

"I think there's still a good chance for the deal to push through. There
could be some negotiations on some areas," said RCBC Securities research
head Chelsea Dipasupil.

"Given the fact that Smart is in better financial position, that is a good
indication that debts would be paid." Piltel shares were four centavos up at
1.72 pesos by 0345 GMT, after Smart said the debt swap still hanging in the
balance.

PLDT, which is a quarter owned by Hong Kong's First Pacific Co Ltd and is
the Philippines' largest phone firm, was up 10 pesos at 1,080 pesos.

"If Smart does elect to proceed with the debt exchange, it would hope to
close the transaction by the end of July 2004," Smart said.

Since the 75% threshold was not met, the proposed transaction will be
reviewed by both the board of PLDT and Smart. PLDT's next board meeting is
on June 8.

"Until then, Smart is prepared to entertain any further offers for Piltel's
debt on the same economic terms."

Analysts said the offer could be a prelude to a merger, which would help
PLDT consolidate its mobile business and give Smart access to Piltel's
improving subscriber base and revenues.

Piltel, whose heavy losses since 1997 hurt its ability to pay maturing debts
on time, returned to profitability in the first quarter with a net income of
eight million pesos as it topped three million mobile subscribers by the end
of March.

But Smart has said it does not intend to merge with Piltel or use Piltel as
a vehicle for a backdoor listing on the stock exchange.

Smart is legally required to list its shares by August. Smart and Piltel
together hold 58% of the lucrative but only partially penetrated Philippine
mobile market with a combined 14 million subscribers. PLDT's chief rival
Globe Telecom Inc has 40%. - Reuters

Betting on cockfights to go online?

2004-08-09T18:28:00.000+08:00

Francisco Alcuaz Jr. and Ian Sayson Bloomberg News
Thursday, June 3, 2004

MANILA A Philippine Internet service provider said it is proposing what may
be the first online betting for cockfights, aiming to draw some of the
thousands of dollars that change hands during contests into a central
system.

Philweb wants to cash in on the tens of thousands of cockfights held each
year in a nation where enthusiasts say cockpits may outnumber pulpits in the
predominantly Roman Catholic country.

Much of the betting now is done through hand signals before two roosters,
fitted with steel blades on their feet, are thrown at each other in a clash
usually to the death.

"With the popularity of cockfighting in the Philippines, we are extremely
optimistic about the potential of this new format," Roberto Ongpin, chairman
of the listed Philweb, told the stock exchange in Manila.

Philweb, which operates online casino gambling and sports betting in the
Philippines, estimates cockfight betting online may generate annual revenue
of 60 million pesos, or about $1 million.

Philippine Amusement and Gaming, which regulates gambling and gets a
percentage of the proceeds, said it has not committed to the idea.

Cockfighting is already a hot topic on the Internet. Sabong.net.ph, which
calls itself the most popular Philippine cockfighting Web site, lists
contests, has links to feedmakers for breeders, and contains photos of fowl
with names such as Lemonbutcher.

Bloomberg News

Philippines Meralco 1H Net Profit PHP1.4B -2-

2004-07-27T10:34:00.000+08:00

Philippines Meralco 1H Net Profit PHP1.4B -2-
MANILA (Dow Jones)--Manila Electric Co. (MERB.PH), the Philippines' largest
power distributor, said Monday net profit in the six months to June reached
1.4 billion pesos ($1=PHP56.055) on a 3.8% on-year rise in electricity
sales.

Meralco didn't provide revenue figures, comparative earnings data for the
year-ago period or data for the second quarter.

Financial statements filed by Meralco in the year-ago period and in the
first quarter this year, however, both point to a strong recovery of the
power distributor's earnings, which continue to be hounded by an ongoing
refund of overbillings since 1994.

Meralco posted a PHP66.1 million net profit in the first half of 2003 and
PHP344 million in the first quarter of this year.

"At its face value the reported net income of PHP1.4 billion is a pittance
compared to our financial obligations. This also includes the heavy burden
the ongoing refund has on oil financial position," said Elpi Cuna, Meralco
vice president for corporate communications.

Early last year, the Supreme Court ordered the refund of some PHP30 billion
in overbillings by Meralco after it secured in 1994 a rate increase that was
canceled by regulators four years later.

Cuna said Meralco still needs to refund PHP2.4 billion this year and around
PHP4.7 billion in 2005.

Meralco is also seeking to refinance its debt maturing in the next two
years. Its debt stands at PHP24.2 billion at the end of June, with PHP8.7
billion maturing in the second half of 2004.

Cuna said aside from its debt and the refund, Meralco also has to fund a
PHP5.75 billion capital expenditure program for this year.

"Our capital expenditure program is of primordial importance since this will
ensure that our company will be able to provide the level of service
expected by our customers," he said.

Meralco said power sales in the first half hit 12.03 billion kilowatt-hours
from 11.59 billion kWh in the year-ago period.

Sales rose 5% on year to 4.23 billion kWh to commercial customers; 4% on
year to 4.37 billion kWh to residential users; 2.3% on year for industrial
customers to 3.36 billion kWh, while sales for use of streetlights declined
5.8% on year to 69.1 million kWh.

Meralco said a more detailed financial report will be published by Thursday.

Philippine Shares End 1% Lower On Profit-Taking

2004-07-26T23:56:00.000+08:00

MANILA (Dow Jones)--Philippine shares finished lower Monday on profit-taking after three sessions of gains, fueled by disappointment over the first-half earnings results that have come out so far, traders said.

The 30-company Philippine Stock Exchange Index ended down 15.96 points, or 1%, at 1543.26, after posting a 1.7% gain in the past three sessions, including Friday's 0.4% rise.

Profit-taking in select stocks weighed on the market. These stocks included Petron, down 0.15 peso ($1=PHP56.041), or 5.1%, at PHP2.80, after the company erroneously reported a sharp drop in second-quarter net profit earlier in the session.

In its press statement, Petron reported that its second-quarter net profit dropped sharply to PHP77 million from PHP836 million. A few hours later, the country's largest oil refiner corrected the numbers, saying its actual second-quarter net profit amounted to PHP572 million, though it was still lower compared with year-ago figures.

Another actively traded stock was Metropolitan Bank, or Metrobank, which fell PHP1, or 3.7%, to PHP26. The country's largest bank last week posted an 11% on-year rise in net profit to PHP1.73 billion, which some analysts felt was below expectations.

"So far, the earnings that have come out have been disappointing," said AB Capital Securities economist Jose Vistan.

Vistan said the market will first have to lower its corporate earnings expectations to jive with reality, and that may entail further weakness in the market.

"Investors have to first lower their expectations. The bar has been set a bit too high," said Vistan. "From there, the market may have to correct a little bit. That's the time we'll be seeing some market discounts."

Vistan said the market will likely continue to slide until the main index forms a solid base to prepare for a strong fourth-quarter economic and corporate performance. He pegged the index support at 1530.

Traders also blamed the market's fall on the 0.9% loss suffered by the Dow Jones Industrial Average Friday, the weakness displayed by most Asian regional markets earlier Monday, the dollar's persistence in trading above the PHP56.00 level, and higher world crude prices.

President Gloria Macapagal Arroyo's state of the nation address scheduled around 0800 GMT isn't expected to cause much of a ripple in the market, traders said.

"I don't see this SONA as a catalyst. It will just highlight Arroyo's 10-point agenda, which she already announced. She will most likely also focus on the budget deficit data, which is already expected," said Vistan.

Other active stocks included Pilipino Telephone, which shed PHP0.08, or 3.5%, to PHP2.20, and Bank of the Philippine Islands, down PHP1.50, or 3.6%, at PHP40, both on profit-taking.

Total volume of shares traded thinned to 414.8 million shares valued at PHP313.7 million from 2.04 billion shares valued at PHP332.9 million.

Decliners led gainers 39 to 22, while 40 stocks were unchanged.

Monday Previous Change
PSE Index 1543.26 1559.22 dn 15.96
All Shares Index 993.19 996.35 dn 3.16
Commercial-Industrial Index 2444.73 2458.09 dn 13.36
Property Index 515.24 522.23 dn 6.99
Banks-Financial Index 454.94 465.69 dn 10.75
Mining Index 1610.30 1604.44 up 5.86
Oil Index 1.48 1.41 up 0.07

INTERVIEW: Philippines To Again Borrow For Napocor

2004-07-26T23:55:00.000+08:00

MANILA (Dow Jones)--The Philippine government is set to tap the international debt market again this year, primarily for financing for state utility National Power Corp. (NAP.YY), Finance Secretary Juanita Amatong said Monday.

Amatong told Dow Jones Newswires that Napocor still needs around $1 billion to complete its financing requirements for 2004.

"It will be used mainly for the payment of Napocor's debts," she said of the planned borrowing.

The Philippines - Asia's largest sovereign borrower after Japan - has so far raised $750 million for Napocor this year, through the reopening of a number of existing sovereign bonds.

Last week, finance and central bank officials went on a non-deal roadshow to explain the new Philippine administration and its policies. The weeklong roadshow was held in Hong Kong, London, Paris, and New York. Deutsche Bank, UBS AG and Credit Suisse First Boston coordinated the presentations.

Amatong said the government secured the approval of the local monetary authority last week for the planned debt issue. All foreign borrowing by public and private entities in the Philippines has to first be approved by the central bank's policy-making Monetary Board, of which Amatong is a member.

The government has been borrowing on behalf of Napocor over the past several years as the utility's mounting losses make it too costly for it to raise money under its own name in the global market.

The government has already raised the $1.85 billion for its own use from the international debt market that it planned to secure this year.

But with uncertainty surrounding its massive budget deficit, the government may look to fund 2005 requirements early, government and central bank sources said.

The government has penciled in a budget deficit target of 184.5 billion pesos ($1=PHP56.041) for next year, compared with a goal of PHP197.8 billion for the current year.

Analysts have said the new mandate for the administration on June 30 provides the government with a good opportunity to present itself again to international investors.

The Republic this year sold $200 million worth of zero-coupon bonds, pulled in $500 million through an 11-year global bonds issue, and raised $120 million through an external debt management program that included an exchange of old bonds for new debt. It also funded some of its 2004 financing requirement last year.

In September, the government will hold its regular international roadshow to update investors from Asia, Europe and the U.S. on the plans for the Arroyo government.

Philippines Meralco 1H Net Profit PHP1.4B -2-

2004-07-26T23:10:00.000+08:00

MANILA (Dow Jones)--Manila Electric Co. (MERB.PH), the Philippines' largest power distributor, said Monday net profit in the six months to June reached 1.4 billion pesos ($1=PHP56.055) on a 3.8% on-year rise in electricity sales.

Meralco didn't provide revenue figures, comparative earnings data for the year-ago period or data for the second quarter.

Financial statements filed by Meralco in the year-ago period and in the first quarter this year, however, both point to a strong recovery of the power distributor's earnings, which continue to be hounded by an ongoing refund of overbillings since 1994.

Meralco posted a PHP66.1 million net profit in the first half of 2003 and PHP344 million in the first quarter of this year.

"At its face value the reported net income of PHP1.4 billion is a pittance compared to our financial obligations. This also includes the heavy burden the ongoing refund has on oil financial position," said Elpi Cuna, Meralco vice president for corporate communications.

Early last year, the Supreme Court ordered the refund of some PHP30 billion in overbillings by Meralco after it secured in 1994 a rate increase that was canceled by regulators four years later.

Cuna said Meralco still needs to refund PHP2.4 billion this year and around PHP4.7 billion in 2005.

Meralco is also seeking to refinance its debt maturing in the next two years. Its debt stands at PHP24.2 billion at the end of June, with PHP8.7 billion maturing in the second half of 2004.

Cuna said aside from its debt and the refund, Meralco also has to fund a PHP5.75 billion capital expenditure program for this year.

"Our capital expenditure program is of primordial importance since this will ensure that our company will be able to provide the level of service expected by our customers," he said.

Meralco said power sales in the first half hit 12.03 billion kilowatt-hours from 11.59 billion kWh in the year-ago period.

Sales rose 5% on year to 4.23 billion kWh to commercial customers; 4% on year to 4.37 billion kWh to residential users; 2.3% on year for industrial customers to 3.36 billion kWh, while sales for use of streetlights declined 5.8% on year to 69.1 million kWh.

Meralco said a more detailed financial report will be published by Thursday.

Philippines Petron 2Q Net Pft PHP572M, Sales PHP33.60B

2004-07-25T00:04:00.000+08:00

Petron Corp. (PCOR.PH) - Manila
2Q ended June 30:
Figures are in pesos
2004 2003
Sales PHP33.60 Bln PHP26.86 Bln
Cost of goods sold 31.46 Bln 24.72 Bln
Gross profit 2.14 Bln 2.13 Bln
Operating expenses 913.0 Mln 759.0 Mln
Operating income 1.23 Bln 1.38 Bln
Other charges 469.0 Mln 263.0 Mln
Pretax income 761.0 Mln 1.12 Bln
Income tax 189.0 Mln 282.0 Mln
Net profit 572.0 Mln 836.0 Mln
Per share earnings
(basic) 0.06 0.09

Corrected July 25, 2004 23:29 ET

Petron Corp. (PCOR.PH) - Manila
2Q ended June 30:
Figures are in pesos
2004 2003
Sales PHP33.60 Bln PHP26.86 Bln
Cost of goods sold 31.46 Bln 24.72 Bln
Gross profit 2.14 Bln 2.13 Bln
Operating expenses 913.0 Mln 759.0 Mln
Operating income 1.23 Bln 1.38 Bln
Other charges 469.0 Mln 263.0 Mln
Pretax income 761.0 Mln 1.12 Bln
Income tax 189.0 Mln 282.0 Mln
Net profit 572.0 Mln 836.0 Mln
Per share earnings
(basic) 0.06 0.09

(In items timed between 0117 GMT and 0141 GMT, the net profit and sales figures for the second quarter were misstated).

MANILA (Dow Jones)--Petron Corp. (PCOR.PH), the Philippines' largest oil refiner, said Monday net profit in the second quarter fell a sharp 32% on year as gross margins were squeezed by the higher cost of imported crude and higher financial charges.

Petron, whose major shareholders are the government and Saudi Aramco, said second quarter net profit dropped to 572 million pesos ($1=PHP56.03) from PHP836 million last year. Sales for the April-June quarter, however, surged 25% to PHP33.60 billion from PHP26.86 billion a year earlier.

For the first half, net profit rose 6% to PHP1.36 billion from PHP1.28 billion in the year-earlier period. Sales in the six months to June climbed to PHP66.14 billion from PHP55.32 billion.

Petron said sales volume in the first half rose 2.3% on year to 25.8 million barrels. Domestic sales rose 14% to 23.9 million barrels, while exports dropped to 1.9 million barrels from 4.2 million as most refinery output was used to cover rising domestic consumption. Exports provide a better yield for Petron.

It said sales to state utility National Power Corp. (NAP.YY) and industrial customers were up 20% and 27% on year, respectively.

Despite higher sales in the second quarter, gross profit was unchanged at PHP2.14 billion as cost of goods sold jumped to PHP31.46 billion from PHP24.72 billion last year. In the first half, gross profit rose 17% on year to PHP4.94 billion.

Other financial charges, which includes foreign exchange losses, rose in the second quarter to PHP469 million from PHP263 million, and in the first half climbed to PHP923 million from PHP667 million. Foreign exchange losses total PHP128 million in the first half compared to PHP42 million last year.

"We are pleased to report that the company has sustained its profitability due to the strategic initiatives that we implemented last year," Petron President Khalid Al-Faddagh said in a statement that refers to the first half results.

"We are hopeful that these initiatives will continue to support a favorable trend in our finances for the rest of the year," he added.

Petron Chairman Nicasio Alcantara said the company will continue to expand its network of gas stations to maintain its current leading market share of 37.4% in May, up from 33.8% in 2003. He said the company plans to set up around 200 new gas stations nationwide - some company-owned, others franchised - over the next five years.

2004-07-13T02:02:00.000+08:00

Alleba Filipino Search Engine and Directory Philippines

Philippine Shares Up Early On Select Bargain-Hunting

2004-07-12T15:45:00.000+08:00

MANILA (Dow Jones)--Philippine stocks are inching higher early Monday on bargain-hunting in select stocks, traders said.

At 0232 GMT, the 30-company Philippine Stock Exchange Index was up 0.63 point at 1593.09, after Friday's 0.2% loss.

Philippine Long Distance Telephone Co. is among the most actively traded, up 5 pesos ($1=PHP55.684), or 0.4%, at PHP1,240 ahead of the release next month of what the market expects to be strong first-half earnings of the country's largest telecommunications group.

The all shares, banks and financial services, and property subindexes are advancing, while the commercial-industrial, oil, and mining subindicators are retreating. Gainers lead decliners 15 to 13, while 27 stocks are unchanged. Volume is at 705.7 million shares valued at PHP68.88 million.

"We would continue to see more consolidation in the coming sessions. There has been very little conviction behind the past weeks' trading," said AB Capital Securities economist Jose Vistan. "Investors are generally making few big moves as they await second-quarter earnings. Rallies in the market have been becoming increasingly selective and investors are not particularly interested in buying stocks at prevailing prices."

Vistan said with no major economic news expected, earnings news will receive a healthy dose of attention. He said corporate earnings, which will begin coming in later this month, will set the tone for the market.

The market's support is pegged at 1580 points, while resistance is at 1600.

As companies downsize, a new industry emerges to help retrenched employees

2004-07-09T09:17:00.000+08:00

By DAVE L. LLORITO
TODAY Research Head

More and more companies are resorting to outplacement consulting services as a way to deal with downsizing and retrenchments problems.

“Outplacement is a structured approach towards a next career for employees who have been displaced, conducted on behalf of the company making the [retrenchments],” said Vicente Kilayko, director for sales and marketing of the local unit of New York-based outplacement services firm Drake Beam Morin Inc. “We are here to help take care of employees until they start a new career.”

In a roundtable discussion Thursday, Kilayko said outplacement services emerged as a response to changes that has been consuming a lot of business activities all over the world. This, he said, include economic and political uncertainty, currency fluctuations, leadership changes, globalization, restructuring, mergers and acquisitions, emergence of new technologies, and poor corporate performance.

In the United States, 80 percent of Fortune 500 companies use outplacement services, he said. And this business is expanding rapidly in the Asia-Pacific Region, particularly Japan and South Korea, as companies respond to a lot economic, political, and technological change.

“The world is in constant chaos,” Kilayko said, stressing that most firms respond to these changes through restructuring to reduce cost, increase productivity, update competences, and make the organization more responsive to market opportunities. But he explained that retrenchments could actually be painful and embarrassing to both employees and the downsizing firm.

“So these companies usually take our services so they could do the downsizing right,” he said, stressing that through outplacement affected employees could have emotional and structural support to affected employees, including counseling and career reassessment. “Through outplacement consulting, affected employees could focus on the future, develop transition and career skills, and reduce their period of unemployment.”

In the Philippines, Kilayko said affected workers under outplacement take about four months to get a new career. Others though become entrepreneurs.

“In outplacement, the responsibility of finding a job rest with the individual affected by the change,” said Kilayko. “We provide the tools, process and support to make the chance of finding the highest possible job. We help them empower themselves.”

Outplacement also benefits employers through improved image, reduced litigation, reduced stress for managers, improved return on investment, and improved morale of retained employees.

Based on a recent survey, downsizing businesses that availed of outplacement consulting are 28 percent less likely to get sued by affected employees; posted increased stock prices within six months; and enjoyed higher productivity and profitability after a year.

IMF tells Philippines to improve deficit situation

2004-07-08T09:12:00.000+08:00

Agence France-Presse
THE International Monetary Fund on Thursday praised the Philippines for successfully managing election-related economic risks but said much needed to be done to improve its fiscal position.

The economy remains at a "crucial juncture" with President Gloria Macapagal-Arroyo given "a clear opportunity to press ahead with much needed reforms" after winning a fresh six-year mandate in the May 10 elections, the IMF said.

It noted while the budget deficit target for 2003 had been met and performance was on track this year, there was a need to raise revenues to bring the deficit and debt levels "to more sustainable levels," it said.

"Consideration ought to be given to raising and indexing excise taxes on alcohol, tobacco, and petroleum products, in addition to other possible steps," an IMF mission said in a statement after completing post-program monitoring.

"These measures will need to be complemented by further deepening of the successful efforts underway to strengthen tax administration," it said.

The Philippines posted a budget deficit of 77.4 billion pesos (1.37 billion dollars) in the first five months of 2004 but this was still within government ceilings, officials have said.

The deficit in May alone amounted to 12.7 billion pesos. The government had set a ceiling of 79.6 billion pesos for its deficit in the first six months of the year but has not set monthly targets.

The government is struggling to keep the full-year budget deficit under the 197.8 billion peso ceiling, or 4.2 percent of gross domestic product.

Exports jump 15.3% in May

2004-07-07T15:47:00.000+08:00

July 7, 2004 – The country’s exports rose 15.3 percent in May to US$3.3 billion from US$2.8 billion in same month a year ago. Exports to the US, the country’s top export market, soared 43.9%. In terms of commodity, electronics exports posted a 17-month high growth rate of 18.7%. Garments exports also turned around with a 2.0% pace of expansion. In the first five months, exports grew 8.6 percent to US$15.4 billion from US$14.2 billion in the same period a year ago.

Exports rise 6.9% in first four months

June 4, 2004 - The country’s exports rose 6.9% to US$12.2 billion in the first four months of the year. Exports to Japan significantly improved, jumping 28.4%, as demand for electronics recovered. Exports to other traditional markets – Netherlands, Hong Kong, Singapore, China, and Germany – likewise posted double digit growths. Electronics continued to be the country’s top dollar earner, rising 5.6% and accounting for half of the country’s exports. The country’s other leading merchandise export, garments, declined 6.9%.

Toll fee hike caught public by surprise

2004-07-06T15:53:00.000+08:00

July 6, 2004 – Motorists plying the North and South Luzon expressways (NLEX and SLEX) were caught by surprise when toll fee rates had been adjusted midnight of 4 July.

NLEX toll fees increased to P0.52 from P0.33 per kilometer for private vehicles, P0.665 to P1.04 per kilometer for public utility vehicles, and P0.998 to P1.55 per kilometer for trucks. SLEX, meanwhile, increased to P0.72 from P0.33 per kilometer for private vehicles, to P1.44 from P0.665 per kilometer for public utility vehicles, and to P2.16 from P0.998 for trucks.

The Toll Regulatory Board (TRB), however, did not approve the Philippine National Construction Corporation’s (PNCC) move to raise toll fees. The PNCC has already undergone the required process for implementing the raise when it filed before TRB last September 2003 its plan to raise toll charges and published it before 30 November 2003. According to Malacañang, the toll hikes are provisional, pending final decision of the TRB after conducting public hearings.

Air Philippines pursues China route in July

July 5, 2004 – Another Lucio Tan-owned airline, Air Philippines, started its charter flights to Guangzhou, China on 2 July and will start operations to Chengdu by the middle of the month. The airline’s operation in Guangzhou is a joint project with Hong Kong-based True Ease Travel Ltd.

In a press release, the third largest local airline said, “Air Philippines has set China as its next Asian destination in its bid to become the preferred airline in the region.”

With its new Boeing 737-200 aircraft that accommodates up to 118 passengers, Air Philippines will fly to Guangzhou two times a week.

Air Philippines also charters flights to Korea and Hong Kong and has a permit to fly to Japan, South Korea, Taiwan, and the US.

The newly opened operation to China is part of Air Philippines’ Asian expansion plan, especially after its certificate of authority to operate from the Civil Aeronautics Board – which was due to expire this month – was renewed for another five years.

Air Philippines earlier planned on partnering with Philippine Airlines – another Tan-owned company – to introduce Fiesta Air, a low-budget brand that would compete with Gokongwei-owned Cebu Pacific. It was meant to ensure the survival of Air Philippines at a time when the aviation industry was in a slump. The plan, however, never materialized.

RP flag carriers get fare hike approval

June 29, 2004 – The joint petition of Philippine Airlines (PAL) and Cebu Pacific for a US$6 increase in their overseas fare per one-way trip was approved by the Civil Aeronautics Board (CAB).

The increase is due to take effect immediately and will cover the additional cost of fuel incurred by the airlines caused by the continuing increases in oil prices. According to PAL, the increase in jet fuel prices raised its operating cost per passenger by US$20.84, while Cebu Pacific claim its cost went up by US$9 per passenger. Jet fuel price has increased to US$45.71 per barrel from US$28.25 in May 2003.

The CAB said the fuel surcharge will be in effect for as long as prices of aviation fuel remain high, but will have to be reduced or removed once prices drop.

PAL and Cebu Pacific have not yet decided on whether they will ask for a similar increase in domestic fares.

Meanwhile, 14 foreign airlines have also asked CAB for fare hikes on one-way trips: American carrier Northwest Airlines (US$20), South Korea’s Asiana Airlines (US$7), Papua New Guinea’s Air Niugini (US$10.50), British Airways (US$4), China Airlines (US$7), Hong Kong’s Cathay Pacific (US$5 - US$14, depending on the route), Taiwan’s Eva Air (US$6), Malaysian Airlines (US$6), Australia’ss Qantas Airways (US$10.70), Singapore Airlines (US$5), Vietnam Airlines (US$5), Royal Brunei and Saudi Airlines (US$5), and Qatar Airways (US$2.50).

Local carriers now seeking fare hike

June 10, 2004 – Local airlines may not hold on their air fares at current rates any longer. The Philippine Airlines and Cebu Pacific have asked the Civil Aeronautics Board (CAB) to approve their petitions for an additional US$6 (P330) fuel surcharge on one-way passenger tickets on international flights. Foreign carriers such as the Northwest Airlines, Continental Airlines, Emirates Airlines, reportedly asked airfare increases of between US$10 - US$20 for a one-way ticket. The CAB will hold a public hearing on the fare increase petitions on 15 June. If the surcharge is approved, air passenger fares would cost US$12 more.

The price of aviation fuel already rose to US$45 a barrel this year from last year’s rate of US$28 per barrel. The airline industry stands to lose some US$5 billion in 2004 because of increased fuel costs, according to the International Air Transport Association.

Shipping companies to hike fares soon

June 9, 2004 – Some local shipping companies are already contemplating on increasing their rates due to continuing oil price hikes, but will have to comply first with the requirements of the Maritime Industry Authority, including the filing of a notice, its publication in newspapers, and its posting in the pier area, terminals, inside the vessels, and in booking offices. The fare hike in shipping can only be implemented 15 days thereafter.

Supercat Fast Ferry Corporation has already filed a notice for a uniform increase of P20 in passage rates for all its ten routes in the Visayas and Mindanao. Cokalion Shipping Lines, a small shipping company servicing the Visayas and Mindanao area – including the cities of Cebu, Maasin, Surigao, Tagbilaran, Dumaguete, and Iloilo – plans to raise passage rates by a minimum of P5 and a maximum of P200. Trans-Asia Shipping Lines, is also asking for a P10 to P105 increase for its Cebu-Iloilo, Cebu-Tagbilaran, and the Cagayan de Oro-Tagbilaran routes. George and Peter, another shipping company, wants to increase rates by P20 to P200 for its three routes, also in Southern Philippines.

DHL imposes fuel surcharge on delivery charges

June 4, 2004 – Continuing oil price hikes as reflected in the fuel index as of May proved to be intolerable for DHL, an international express and logistics firm. Effective 1 June DHL has imposed a fuel surcharge on delivery charges. DHL is one of the first air cargo companies to raise their rates due to the continuing oil price increases.

According to DHL communications manager Ann Recinto, the fuel surcharge is carried out due to oil price movements, while sometimes they do not implement a fuel surcharge. On the other hand, local airline companies and shipping firms are holding any fare hikes, pending developments in the world oil market.

Cable firms sign debt deal with creditors

2004-07-03T05:33:00.000+08:00

Elizabeth L. Sanchez
Inquirer News Service

CREDITORS of Sky Vision Corp. and Central CATV Inc. and Philippine Home Cable Holdings Inc. have agreed to restructure the P2.5-billion debt of the cable operators.

In a statement, SKYCable and Home Cable said the debt restructuring agreement would allow them to pay for the debt over the next seven years.

The restructured debt amounted to P1.66 billion for SKYCable and P1.35 billion for Home Cable. Juno Chuidian, SKYCable vice president for programming, said the successful debt restructuring paved the way for the continuous improvement of the firm's services.

"Our customers can expect us to offer more and better programming choices and to upgrade our distribution network," she said.

SKYCable and Home Cable will deploy set-up boxes beginning this year to allow subscribers flexibility in choosing the channels they want to receive.

The set-up boxes will also counter signal theft and piracy.

The creditors which signed the agreement were Asia United Bank, Asia United Bank-Trust, Chinatrust (Phils.) Commercial Bank Corp., Development Bank of the Philippines, Bank of the Philippine Islands, East West Banking Corp., International Commercial Bank of China, Keppel Bank Philippines Inc., Metropolitan Bank and Trust Co., Bangkok Bank, China Banking Corp., Equitable PCI Bank, Amalgamated Investment Bancorporation and PCI Capital Corp.

The cable operators started restructuring talks with creditors in 2001.

Analysis: Power company sale a test for Philippine economy

2004-07-01T07:15:00.000+08:00

MANILA: For sale: assets of a debt-swamped power firm losing $5 million a day in a country dogged by corruption, political instability, and regulatory uncertainty.

Time-wasters need not apply because the Philippines could hit a power crisis within three years and the government is keen to pare back its debilitating $3.6 billion budget deficit.

Analysts say there is no more important task for the next Philippine administration, but potential buyers of state-owned National Power Corp’s (Napocor) generation and transmission assets are not exactly breaking down the door.

“The power sector is a microcosm of what’s ailing the country,” said a former senior Napocor official, who is sceptical about the chance of a successful sale without deeper reforms.

“If you can’t reform the power sector, how can you reform the country?”

Experts say there are profits to be made, but that is being outweighed by familiar concerns about regulatory and political uncertainty, highlighted by the squabbling in Congress that is holding up the counting of votes from May 10 elections.

Filipinos and foreign investors are still waiting to see whether President Gloria Macapagal Arroyo, a US-trained economist, or movie hero Fernando Poe Jr will win.

The privatisation of Napocor’s transmission assets, valued by the government at $2 billion, was meant to go through last year, but stalled on a lack of interest. It has sold off only tiny chunks of its generating capacity, also priced at $2 billion, which accounts for three-quarters of national capacity.

Even if the government drops its price, which many analysts think it must, interested firms such as Singapore Power — the only bidder for the transmission assets last year — will be wary.

Investor graveyard: In 2001, the Supreme Court ordered Singapore’s Keppel Group to turn over a shipyard it had renovated and been operating for seven years in the northern Philippines to a rival.

A brand new airport in Manila is standing idle after Arroyo’s government tore up a contract that German airport operator Fraport AG signed with the previous government.

“Definitely, government needs to address that and revive investors’ confidence in the sanctity of contract in particular,” said Patrick Giraud, director of Southeast Asia infrastructure at the Manila-based Asian Development Bank.

More buying interest for Napocor assets should emerge if, as expected, Arroyo is declared the winner by June 30, he said.

But with power firms enjoying a strong global market as demand from China tightens energy supply, others question why foreign providers would risk a major foray in the Philippines without more deep-seated reforms or firesale prices.

The government has much to gain by jettisoning Napocor, whose losses and debts have rocketed since the 1997 Asian economic crisis caused a crash in power demand and the peso’s value.

The IMF has warned that Napocor’s losses, to be funded by $1.5 billion in sovereign-guaranteed bonds this year, are keeping the Philippines stuck in its twin deficit and debt traps. Government debt was 77 percent of GDP at the end of 2003 but public debt, which includes Napocor, was a huge 128 percent.

Earlier this week, Arroyo’s spokesman said the government had decided to “bite the bullet” and assume all 500 billion pesos of Napocor debt, up from 200 billion previously planned, in an apparent bid to speed its sale.

Some estimates put its debt at 600 billion pesos or higher.

Mixed signals: The next day, however, the Supreme Court underscored investor concerns by blocking a plan by the biggest electricity distributor, Manila Electric Co, to raise rates by two percent. Consumer groups had campaigned against it.

“Incredible, incredible,” said Peter Wallace, president of the Manila-based Wallace Business Forum consultancy. “It (the court) thinks it understands economics and business but it doesn’t at all. This is coming through clearer and clearer.”

Filipinos, among the poorest people in Asia, are angry that they have some of the region’s highest power rates, a legacy of the early 1990s when widespread black-outs prompted the desperate government to guarantee attractive returns for independent power firms.

“Now it looks like they are repeating the same mistake, leaving it to the last minute and having to give away more than they should. It’s very depressing,” said Wallace.

The government, whose limits on power prices are partly to blame for Napocor’s woes, would need courage to allow prices to rise. But Wallace and others say that with demand set to outstrip capacity in the next few years, consumers will either have to pay more to attract investment or face a rerun of the early 1990s. —Reuters

Interphil Buys Back Shares

2004-07-01T07:13:00.000+08:00

PHILIPPINES BUSINESS BRIEFS: Interphil Buys Back Shares: "Friday June 25, 8:52 AM
PHILIPPINES BUSINESS BRIEFS: Interphil Buys Back Shares
MANILA (Dow Jones)--Interphil Laboratories Inc. (ILI.PH) bought back 18,000 A shares and 16,000 B shares at 1.90 pesos ($1=PHP56.035) each Thursday, as part of the pharmaceutical company's share buyback program to improve shareholder value. A shares are exclusive to local investors, while B shares are open to local and foreign investors.
Salcon Power Corp. (SPC.PH) estimates it will spend $0.841 million repairing its Cebu Thermal Power Plant in central Philippines, which suffered a crack in its turbine rotor and had to be shut down in May. The repair will be undertaken by U.S. based TurboCare Inc. and is expected to be completed in July. Salcon faces a $2.6 million fine if it fails to restart the thermal plant by mid-August, when it would have exceeded the annual power outage allowed by its contract with state utility National Power Corp. (NAP.YY).
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Philippine Long Distance Telephone Co. (TEL.PH) Friday will list 19,559 common shares issued under a stock option plan for executives. This will bring the total number of shares issued under the program to 68,574. PLDT has set aside 1.29 million common shares at 814 pesos ($1"

ATI Passes Intl Standards

2004-06-29T01:22:00.000+08:00

MANILA (Dow Jones)--Philippine port operator Asian Terminals Inc. (ATI.PH) said it has been certified as fully compliant with the International Ship and Port Facility Security Code. The Code sets standards by which ships and ports transport and handle goods. Philippine shipments to the U.S. would run the risk of being refused entry if neither the ship nor any of its last 10 ports of call is compliant with the Code.

Export & Industry Bank Inc. (EIB.PH) said its board approved Monday an increase in its authorized capital stock to PHP8.5 billion from PHP7.5 billion. The move will facilitate the creation of PHP1 billion worth of preferred shares that the bank plans to issue in the future after regulatory approval.

Philippine Long Distance Telephone Co. (TEL.PH) said it will list 1,300 new common shares on Tuesday. The shares were issued under its executive stock option plan. The new shares bring to 69,874 the number of option shares issued and listed on the stock exchange.

Imelda gets documentary blocked in Philippines

2004-06-29T01:21:00.000+08:00

Manila -- The widow of dictator Ferdinand Marcos has won a temporary court order to keep a documentary about her life out of theatres in the Philippines.

Imelda Marcos, who became a symbol of the extravagance of dictatorship with her enormous shoe collection, petitioned the Makati Regional Trial Court to ban Imelda. She argued that she'd approved the film only as a college thesis project.

A 20-day restraining order was issued Thursday by Judge Maria Cristina Cornejo. Imelda had been set to open in theatres in the Philippines on July 7.

The documentary, directed by Ramona S. Diaz, won the cinematography award at this year's Sundance Film Festival.

Vic Alvaro, Marcos' lawyer, said the former first lady felt the film was full of "malice, inaccuracies and innuendoes." AP

Aboitiz Transport Raises Cap

2004-06-29T01:19:00.000+08:00

MANILA (Dow Jones)--Aboitiz Transport System Corp. (ATS.PH), a Philippine shipping concern, said its shareholders have approved the increase in its authorized capital stock to 2.53 billion pesos ($1=PHP56.14) from PHP1.78 billion.

First Philippine Holdings Corp. (FPH.PH) Tuesday will list 1.24 million shares issued under its executives and employees stock option plans. This will bring to 13.3 million the number of shares issued under the company's stock option plans and listed on the stock exchange.

Philippine port operator Asian Terminals Inc. (ATI.PH) said it has been certified as fully compliant with the International Ship and Port Facility Security Code. The Code sets standards by which ships and ports transport and handle goods. Philippine shipments to the U.S. would run the risk of being refused entry if neither the ship nor any of its last 10 ports of call is compliant with the Code.

Export & Industry Bank Inc. (EIB.PH) said its board approved Monday an increase in its authorized capital stock to PHP8.5 billion from PHP7.5 billion. The move will facilitate the creation of PHP1 billion worth of preferred shares that the bank plans to issue in the future after regulatory approval.

Philippine Long Distance Telephone Co. (TEL.PH) said it will list 1,300 new common shares on Tuesday. The shares were issued under its executive stock option plan. The new shares bring to 69,874 the number of option shares issued and listed on the stock exchange

San Miguel expects healthy H1 rise : just-drinks.com News

2004-06-29T01:18:00.000+08:00

The Philippine food and drink group San Miguel Corp is anticipating its first half net profit to rise 30% compared to the same period last year.

Speaking to journalists, San Miguel president and chief operating officer Ramon Ang said: "Compared to last year, the first six months is 30% better this year. In terms of revenues, we are tracking 16% better than last year."

Late last week, the company said that its net profit leapt 32% in the five months since January, compared to the same period last year, to 3.29 billion pesos (US$59 m).

The company cited an increase in the sale of beer and soft drinks as the reason for the jump.

Waterfront Philippines Assumes Mgmt Control Of Acesite

2004-06-24T17:02:00.000+08:00

MANILA (Dow Jones)--Waterfront Philippines Inc. (WPI.PH), a hotel and gaming concern, has assumed management control of Acesite (Philippines) Hotel Corp. (DHC.PH) during the latter's annual stockholders meeting Thursday, according to a disclosure made by Waterfront to the stock exchange.

Waterfront acquired 75% of Acesite early last year. The Acesite stake was pledged as collateral in exchange for a $5 million loan granted by Equitable PCI Bank Inc. (EBC.PH) in 1988.

Equitable PCI transferred rights over the mortgaged shares to Waterfront in February last year in exchange for $2.06 million after Acesite's shareholders failed to settle their loan with the bank.

Soon after the deal between Waterfront and Equitable PCI was forged, Acesite Philippines' parent, Acesite Ltd., filed a suit before a lower court seeking to stop the sale.

Waterfront said the case is still pending before the regional trial court of Makati City, but pending the final ruling, the court allowed the transfer of the contested Acesite shares to Equitable PCI, which then transferred the shares to Waterfront.

Acesite Philippines owns an upscale hotel in the heart of Manila. Waterfront owns and operates two hotels on the central island of Cebu and another in Davao City, in the southern Philippines.

San Miguel To Pay Cash Div

2004-06-24T16:55:00.000+08:00

The board of Philippine food and drink group San Miguel Corp. (SMCB.PH) has approved a 0.35-peso ($1=PHP56.076) cash dividend for shareholders on record as of July 9. The dividend is payable July 30.

Restaurant operator Pancake House Inc. (PCKH.PH) completed Wednesday the purchase of Dencio's Foods Specialists Inc., which holds the franchise, restaurant and food services operations of locally based Dencio's Bar & Grill Restaurant, for 160 million pesos ($1=PHP56.076).

Sugar concern Roxas Holdings Inc.'s (ROX.PH) board Wednesday declared a 0.06 peso ($1=PHP56.225) cash dividend to shareholders of record July 8. The dividend is payable July 30.

IFC to boost financing for power projects in region

2004-06-18T07:16:00.000+08:00

By LEE C. CHIPONGIAN

The International Finance Corp., the World Bank corporate arm, is looking to improve funding facilities in the power sector especially in the Asia Pacific region, a high-ranking official said.

IFC country manager Vipul Bhagat said the region offers more possibility for energy investments and funding should be made available. "The Philippines is one of the countries in the region that merits more attention (as far as energy investments are concerned)," he said.

IFC has signed financing of $1.2 billion in addition to the $1.3 billion syndicated dedicated to its power sector portfolio. East Asia and the Pacific currently have a significant share of this portfolio or 31 percent while the Middle East and Africa has the largest with 35 percent. Latin America and the Caribbean have 15 percent of the $2.5 billion financing from the World Bank unit.

In total, IFC has $17 billion in capital investments or in its global portfolio for this year. Of this $1.592 billion have been invested in power utilities and $1.048 billion in oil and gas exploration. The biggest of the funding or $4.8 billion is reserved for the financial sector.

In the energy sector, Bhagat said IFC has about $15 billion in aggregate project costs or equivalent to 9, 500 megawatt capacity. In all there are 56 projects in 27 countries. Eighteen are in diesel and gas projects, 17 in hydropower and 15 in thermal and steam.

In Asia, IFC’s power investment portfolio is mostly in India with 37 percent of funding going to the country, 13 percent in the Philippines and 10 percent in China/Nepal.

Its Philippine investments are in the two Mirant Corp. projects in Pagbilao, Quezon and Sual, Pangasinan. These are the 1, 119-MW Sual Generating Plant and the 704-MW Pagbilao Generating Plant. Mirant is a low-cost power producer in Asia. In the Philippines it has 2,200 MW of generating capacity.

IFC also has investments in the Northern Mindanao Power Corp., Efficient Lighting Initiative and the Cepalco PV Solar Plant. It extended funding for Manila Electric Co. but has already completed its financing deal and are no longer in business with the Lopez utility firm.

As a private World Bank entity, IFC takes no government subsidies. It offers debt, equity, credit guarantee, local currency funding and risk management.

Its most recent Philippine investment is the $1.36 billion coal-fired 1,200-MW Pangasinan Electric Corporation (PEC).

IFC financing consists of loans of up to $30 million for its own account and up to $200 million for the account of international commercial banks and financial institutions.

The World Bank subsidiary will also subscribe up to $17.5 million in the share capital of PEC, amounting to about 5 percent of the total equity.

Australia's TransGrid Studying Philippine Grid for Investor

2004-06-17T07:18:00.000+08:00

June 17 (Bloomberg) -- TransGrid, the biggest power transmission company in New South Wales state, is studying the Philippines' national power grid on behalf an Australian investment group and isn't considering a bid itself.

Philippine Energy Secretary Vincent Perez last Friday told the APEC energy forum in Manila that AES Corp. and TransGrid may bid for the grid, which the government has been trying to sell for the past two years. It's the government's third attempt to sell the nation's electricity grid after two previous sales were scrapped because only Singapore Power Ltd. submitted a bid.

TransGrid is examining the asset under a contract for ``an Australian investment underwriter,'' said Joe Zahra, manager corporate at the Australian company. It has no association with Arlington, Virginia-based AES in any bid for the Philippine power grid, run by National Transmission Corp., he said.

``We have no interest in the bid at all -- we have no association with AES,'' Zahra said in an interview. ``We are working for an Australian investment underwriter and we have an agreement to do a due diligence on the transmission assets.''

TransGrid's work, which involves examining the technical quality of the Philippine high-transmission network, is still underway, Zahra said.

Philippines Eyes New Export Markets For Chicken

2004-06-16T05:47:00.000+08:00

PHILIPPINES - Philippine poultry raisers are gearing up to tap new chicken export markets such as South Korea and Malaysia.

The Philippine Association of Broiler Integrators Inc. (PABI) said that members would continue looking for new markets even if there is a shortage in the local market.

PABI is composed of the country's largest agri-business firms, including San Miguel Foods Corp., RFM Swift Foods Corp., Tyson Agro Ventures Inc., Universal Robina Corp. and Vitarich Corp.

PABI spokesperson Ruben Pascual said that going for South Korea and Malaysia was part of the industry's bid to corner a portion of the $500-million export market for chicken products.

He said that aside from San Miguel Foods and RFM-Swift Foods, Tyson Agro-Ventures and Vitarich Corp. plan to export to Malaysia within the next six months, although the volume has not yet been finalized.

SMC-Foods and RFM exported more than 50,000 kilos of deboned chicken meat to Japan from February to April amid the bird flu scare that gripped most of East Asia.

The Philippines remains free of the dreaded avian flu virus.

Agriculture and trade officials, however, claimed that the country would need to import at least 5,000 metric tons of chicken to shore up the local supply in the coming months.

Government officials said the chicken imports would avert another spike in the price reminiscent of the December 2003 holiday surge when retail prices rose to as high as 140 to 150 pesos per kilo.

Philippines govt to assume Napocor debt

2004-06-14T07:19:00.000+08:00

Manila, Philippines, Jun. 14 (UPI) -- The Philippines government will assume $8.9 billion in debt held by the state-owned National Power Corporation as part of an energy sector restructuring.

Napocor's huge debts and operating losses have delayed its planned privatization for over a year.

Though the move is expected to add to the budget deficit, the government is still committed to achieving a balanced budget by 2009, officials said.

Finance Secretary Juanita D. Amatong said the state-owned power firm's debts are expected to be manageable since maturities extend up to 2020, BusinessWorld reported. She declined to say, however, how much is due this year.

Korea Elec Pwr Eyes 200-MW Coal Plant Proj In Philippines

2004-06-11T22:35:00.000+08:00

MANILA (Dow Jones)--Korea Electric Power Corp. (015760.SE) is interested in building and operating a 200-megawatt coal-fired power plant on the central island of Cebu, the Philippines' Department of Energy said Thursday.

"We welcome Korea's move to put up an additional plant in the Philippines, especially so because this will provide additional capacity that will help plug the power supply requirement of Cebu," said Energy Secretary Vincent Perez.

Kepco owns and operates a 1,200-MW natural gas-fired power plant in Ilijan, a town south of Manila, and a 650-MW oil-fired power plant in Rizal province, east of Manila.

The Visayas grid in central Philippines, which covers Cebu, is facing a power supply shortfall due to rising demand for electricity. The grid has a peak demand of around 844 MW, while supply is only 825 MW.

A memorandum of understanding regarding Kepco's plan was signed by Perez and Lee Hee-Beom, South Korea's minister of commerce, industry and energy, late Wednesday on the sidelines of the 22nd meeting of energy ministers from the Association of Southeast Asian Nations, or ASEAN.

KEPCO to build 200 MW coal-fired power plant in RP

2004-06-10T18:46:00.000+08:00

STATE-RUN Korea Electric Power Corp. (KEPCO) plans to build a 200-megawatt coal-fired power plant in the central Philippines, the energy department said Thursday.

South Korean Commerce Industry and Energy Minister Lee Hee-Beom signed a memorandum of understanding late Wednesday with his Filipino counterpart Vincent Perez to work together to undertake preparatory work for the plant, it said.

The agreement states KEPCO's interest in building the power plant on Cebu island, the department said without giving a timetable.

"We welcome Korea's move to put up an additional plant in the Philippines, especially so because this will provide additional capacity that will help plug the power supply requirements of Cebu," Energy Secretary Perez said.

He said the central Philippines grid was threatened by power shortfalls due to rising electricity demand in the region.

Grid demand of 844.30 Megawatts now outstrips the supply of 825.20 Megawatts, he added.

KEPCO runs a natural gas-fired 1,200 Megawatt power plant in Ilijan town south of Manila as well as a 650 Megawatt oil-fired power plant near the capital.

Governance should top Arroyo's economic agenda

2004-06-10T05:11:00.001+08:00

Fidel Ramos is visibly surprised by the question. The former Philippine president shifts in his seat, and pulls his trademark cigar out of his mouth. "To answer your question, no, the Philippines is not the Argentina of Asia!" Ramos, 76, says.
.
Yet convincing investors that Philippine debt won't spiral out of control is easier said than done.
.
They have a funny way of remembering when nations declare a moratorium on foreign debt payments, as the Philippines did 20 years ago and Argentina did in 2001. Some observers wonder if it could happen again in Manila.
.
It doesn't help that the Philippines carries a junk rating. Moody's Investors Service rates its foreign-currency bonds Ba2, two levels below investment grade. The nation has failed to reduce its $61 billion of debt, half of which is owed to overseas creditors.
.
A third of the national budget goes to servicing debt - not infrastructure, education, health or poverty reduction.
.
Politics also is undermining Southeast Asia's fifth-largest economy. Consumer confidence in Manila fell in May as opposition members delayed the official count of the May 10 presidential election and oil prices rose, according to the BusinessWorld newspaper. President Gloria Arroyo is the projected winner.
.
So what's a president to do? To get a read on how Arroyo should proceed, you could do worse than ask Ramos, who was president from 1992 to 1998.
.
It was on his watch, in 1997, that the Philippines last enjoyed a budget surplus. He also held the reins during the Asian financial crisis, a trying time for the country.
.
"The most important thing that investors are looking for, whether domestic or foreign, is good governance," Ramos said in an interview in Tokyo. If a nation "has good governance, which is homegrown, then it can expect investments to come in. Why? No country can import good governance, it must be homegrown. This should be the main mission of the incoming administration."
.
It may seem like an obvious point, though the Philippines has been working on this goal for decades now. Arguably, it has little to show for the efforts.
.
Eighteen years after the dictator Ferdinand Marcos was ousted, the Philippines still can't get many citizens and companies to pay taxes. It ranked fourth-worst in Asia in a corruption survey by the Hong Kong-based Political Economic Risk Consultancy.
.
There also are problems politicians can't even discuss - like a national birthrate that consistently exceeds economic growth.
.
Because the Philippines produces more people than jobs, at least one in 10 works overseas to support families. Far more would do so if immigration hurdles were lifted. The Catholic Church muzzles serious discussion of population control in the predominantly Roman Catholic nation of 85 million.
.
Yet for all the gloom scaring capital away from the Philippines - foreign direct investment fell 26 percent in 2003 - there's reason for hope. Arroyo, when she is finally sworn in again, will have something she lacked in her first term: a mandate.
.
After replacing the ousted Joseph Estrada in 2001, Arroyo was preoccupied with staying in office. Her government never got beyond questions about legitimacy and a steady flow of coup-attempt rumors. Winning her own presidency puts those concerns aside, allowing her to shake things up.
.
Arroyo "has had two and a half years on the learning curve and now she's starting a new six-year term," Ramos said. "It's an advantage."
.
Let's hope so. The long-neglected economy needs bolder and more sweeping reforms than any leader has tried for decades. Arroyo's to-do list is a formidable one for any nation, but it's especially daunting in one shackled for so many years by incompetent and corrupt governments.
.
Whether Arroyo can take on entrenched interests fighting change at every turn is an open question. What's not in question is that she needs to act fast. Every month that goes by without progress on the deficit is a lost opportunity to lower bond yields and attract investors. It's also time not spent improving life for the 33 percent or so Filipinos classified as poor.
.
"You see lots more Mercedes and fancy restaurants popping up in Manila, but I don't see prosperity reaching down very far into the population," says Irving Ackerman, president of the Manila brokerage firm I. Ackerman Associates.
.
The risk of complacency looms large. Officials in Manila like to highlight the 2.2 percent growth the Philippines enjoyed in the first quarter. They also point to the $7 billion of remittances sent home each year from citizens working overseas.
.
Far less attention gets paid to the 4.14 percent drop in the peso versus the dollar over the last 12 months. Consider, too, the alarming frequency with which the government has to reject bids at bond auctions. Investors demanding higher yields than a nation is willing to pay is never a good sign.
.
Arroyo has won a second chance from voters. Now comes the really hard part: convincing foreign investors that the Philippines isn't Asia's answer to Argentina.
.
"It won't be easy, but it is doable," Ramos said. "What I'm saying is, don't panic."
.
Bloomberg News

See more of the world that matters - click here for home delivery of the International Herald Tribune.
< < Back to Start of Article
Fidel Ramos is visibly surprised by the question. The former Philippine president shifts in his seat, and pulls his trademark cigar out of his mouth. "To answer your question, no, the Philippines is not the Argentina of Asia!" Ramos, 76, says.
.
Yet convincing investors that Philippine debt won't spiral out of control is easier said than done.
.
They have a funny way of remembering when nations declare a moratorium on foreign debt payments, as the Philippines did 20 years ago and Argentina did in 2001. Some observers wonder if it could happen again in Manila.
.
It doesn't help that the Philippines carries a junk rating. Moody's Investors Service rates its foreign-currency bonds Ba2, two levels below investment grade. The nation has failed to reduce its $61 billion of debt, half of which is owed to overseas creditors.
.
A third of the national budget goes to servicing debt - not infrastructure, education, health or poverty reduction.
.
Politics also is undermining Southeast Asia's fifth-largest economy. Consumer confidence in Manila fell in May as opposition members delayed the official count of the May 10 presidential election and oil prices rose, according to the BusinessWorld newspaper. President Gloria Arroyo is the projected winner.
.
So what's a president to do? To get a read on how Arroyo should proceed, you could do worse than ask Ramos, who was president from 1992 to 1998.
.
It was on his watch, in 1997, that the Philippines last enjoyed a budget surplus. He also held the reins during the Asian financial crisis, a trying time for the country.
.
"The most important thing that investors are looking for, whether domestic or foreign, is good governance," Ramos said in an interview in Tokyo. If a nation "has good governance, which is homegrown, then it can expect investments to come in. Why? No country can import good governance, it must be homegrown. This should be the main mission of the incoming administration."
.
It may seem like an obvious point, though the Philippines has been working on this goal for decades now. Arguably, it has little to show for the efforts.
.
Eighteen years after the dictator Ferdinand Marcos was ousted, the Philippines still can't get many citizens and companies to pay taxes. It ranked fourth-worst in Asia in a corruption survey by the Hong Kong-based Political Economic Risk Consultancy.
.
There also are problems politicians can't even discuss - like a national birthrate that consistently exceeds economic growth.
.
Because the Philippines produces more people than jobs, at least one in 10 works overseas to support families. Far more would do so if immigration hurdles were lifted. The Catholic Church muzzles serious discussion of population control in the predominantly Roman Catholic nation of 85 million.
.
Yet for all the gloom scaring capital away from the Philippines - foreign direct investment fell 26 percent in 2003 - there's reason for hope. Arroyo, when she is finally sworn in again, will have something she lacked in her first term: a mandate.
.
After replacing the ousted Joseph Estrada in 2001, Arroyo was preoccupied with staying in office. Her government never got beyond questions about legitimacy and a steady flow of coup-attempt rumors. Winning her own presidency puts those concerns aside, allowing her to shake things up.
.
Arroyo "has had two and a half years on the learning curve and now she's starting a new six-year term," Ramos said. "It's an advantage."
.
Let's hope so. The long-neglected economy needs bolder and more sweeping reforms than any leader has tried for decades. Arroyo's to-do list is a formidable one for any nation, but it's especially daunting in one shackled for so many years by incompetent and corrupt governments.
.
Whether Arroyo can take on entrenched interests fighting change at every turn is an open question. What's not in question is that she needs to act fast. Every month that goes by without progress on the deficit is a lost opportunity to lower bond yields and attract investors. It's also time not spent improving life for the 33 percent or so Filipinos classified as poor.
.
"You see lots more Mercedes and fancy restaurants popping up in Manila, but I don't see prosperity reaching down very far into the population," says Irving Ackerman, president of the Manila brokerage firm I. Ackerman Associates.
.
The risk of complacency looms large. Officials in Manila like to highlight the 2.2 percent growth the Philippines enjoyed in the first quarter. They also point to the $7 billion of remittances sent home each year from citizens working overseas.
.
Far less attention gets paid to the 4.14 percent drop in the peso versus the dollar over the last 12 months. Consider, too, the alarming frequency with which the government has to reject bids at bond auctions. Investors demanding higher yields than a nation is willing to pay is never a good sign.
.
Arroyo has won a second chance from voters. Now comes the really hard part: convincing foreign investors that the Philippines isn't Asia's answer to Argentina.
.
"It won't be easy, but it is doable," Ramos said. "What I'm saying is, don't panic."
.
Bloomberg News
Fidel Ramos is visibly surprised by the question. The former Philippine president shifts in his seat, and pulls his trademark cigar out of his mouth. "To answer your question, no, the Philippines is not the Argentina of Asia!" Ramos, 76, says.
.
Yet convincing investors that Philippine debt won't spiral out of control is easier said than done.
.
They have a funny way of remembering when nations declare a moratorium on foreign debt payments, as the Philippines did 20 years ago and Argentina did in 2001. Some observers wonder if it could happen again in Manila.
.
It doesn't help that the Philippines carries a junk rating. Moody's Investors Service rates its foreign-currency bonds Ba2, two levels below investment grade. The nation has failed to reduce its $61 billion of debt, half of which is owed to overseas creditors.
.
A third of the national budget goes to servicing debt - not infrastructure, education, health or poverty reduction.
.
Politics also is undermining Southeast Asia's fifth-largest economy. Consumer confidence in Manila fell in May as opposition members delayed the official count of the May 10 presidential election and oil prices rose, according to the BusinessWorld newspaper. President Gloria Arroyo is the projected winner.
.
So what's a president to do? To get a read on how Arroyo should proceed, you could do worse than ask Ramos, who was president from 1992 to 1998.
.
It was on his watch, in 1997, that the Philippines last enjoyed a budget surplus. He also held the reins during the Asian financial crisis, a trying time for the country.
.
"The most important thing that investors are looking for, whether domestic or foreign, is good governance," Ramos said in an interview in Tokyo. If a nation "has good governance, which is homegrown, then it can expect investments to come in. Why? No country can import good governance, it must be homegrown. This should be the main mission of the incoming administration."
.
It may seem like an obvious point, though the Philippines has been working on this goal for decades now. Arguably, it has little to show for the efforts.
.
Eighteen years after the dictator Ferdinand Marcos was ousted, the Philippines still can't get many citizens and companies to pay taxes. It ranked fourth-worst in Asia in a corruption survey by the Hong Kong-based Political Economic Risk Consultancy.
.
There also are problems politicians can't even discuss - like a national birthrate that consistently exceeds economic growth.
.
Because the Philippines produces more people than jobs, at least one in 10 works overseas to support families. Far more would do so if immigration hurdles were lifted. The Catholic Church muzzles serious discussion of population control in the predominantly Roman Catholic nation of 85 million.
.
Yet for all the gloom scaring capital away from the Philippines - foreign direct investment fell 26 percent in 2003 - there's reason for hope. Arroyo, when she is finally sworn in again, will have something she lacked in her first term: a mandate.
.
After replacing the ousted Joseph Estrada in 2001, Arroyo was preoccupied with staying in office. Her government never got beyond questions about legitimacy and a steady flow of coup-attempt rumors. Winning her own presidency puts those concerns aside, allowing her to shake things up.
.
Arroyo "has had two and a half years on the learning curve and now she's starting a new six-year term," Ramos said. "It's an advantage."
.
Let's hope so. The long-neglected economy needs bolder and more sweeping reforms than any leader has tried for decades. Arroyo's to-do list is a formidable one for any nation, but it's especially daunting in one shackled for so many years by incompetent and corrupt governments.
.
Whether Arroyo can take on entrenched interests fighting change at every turn is an open question. What's not in question is that she needs to act fast. Every month that goes by without progress on the deficit is a lost opportunity to lower bond yields and attract investors. It's also time not spent improving life for the 33 percent or so Filipinos classified as poor.
.
"You see lots more Mercedes and fancy restaurants popping up in Manila, but I don't see prosperity reaching down very far into the population," says Irving Ackerman, president of the Manila brokerage firm I. Ackerman Associates.
.
The risk of complacency looms large. Officials in Manila like to highlight the 2.2 percent growth the Philippines enjoyed in the first quarter. They also point to the $7 billion of remittances sent home each year from citizens working overseas.
.
Far less attention gets paid to the 4.14 percent drop in the peso versus the dollar over the last 12 months. Consider, too, the alarming frequency with which the government has to reject bids at bond auctions. Investors demanding higher yields than a nation is willing to pay is never a good sign.
.
Arroyo has won a second chance from voters. Now comes the really hard part: convincing foreign investors that the Philippines isn't Asia's answer to Argentina.
.
"It won't be easy, but it is doable," Ramos said. "What I'm saying is, don't panic."
.
Bloomberg News
Fidel Ramos is visibly surprised by the question. The former Philippine president shifts in his seat, and pulls his trademark cigar out of his mouth. "To answer your question, no, the Philippines is not the Argentina of Asia!" Ramos, 76, says.
.
Yet convincing investors that Philippine debt won't spiral out of control is easier said than done.
.
They have a funny way of remembering when nations declare a moratorium on foreign debt payments, as the Philippines did 20 years ago and Argentina did in 2001. Some observers wonder if it could happen again in Manila.
.
It doesn't help that the Philippines carries a junk rating. Moody's Investors Service rates its foreign-currency bonds Ba2, two levels below investment grade. The nation has failed to reduce its $61 billion of debt, half of which is owed to overseas creditors.
.
A third of the national budget goes to servicing debt - not infrastructure, education, health or poverty reduction.
.
Politics also is undermining Southeast Asia's fifth-largest economy. Consumer confidence in Manila fell in May as opposition members delayed the official count of the May 10 presidential election and oil prices rose, according to the BusinessWorld newspaper. President Gloria Arroyo is the projected winner.
.
So what's a president to do? To get a read on how Arroyo should proceed, you could do worse than ask Ramos, who was president from 1992 to 1998.
.
It was on his watch, in 1997, that the Philippines last enjoyed a budget surplus. He also held the reins during the Asian financial crisis, a trying time for the country.
.
"The most important thing that investors are looking for, whether domestic or foreign, is good governance," Ramos said in an interview in Tokyo. If a nation "has good governance, which is homegrown, then it can expect investments to come in. Why? No country can import good governance, it must be homegrown. This should be the main mission of the incoming administration."
.
It may seem like an obvious point, though the Philippines has been working on this goal for decades now. Arguably, it has little to show for the efforts.
.
Eighteen years after the dictator Ferdinand Marcos was ousted, the Philippines still can't get many citizens and companies to pay taxes. It ranked fourth-worst in Asia in a corruption survey by the Hong Kong-based Political Economic Risk Consultancy.
.
There also are problems politicians can't even discuss - like a national birthrate that consistently exceeds economic growth.
.
Because the Philippines produces more people than jobs, at least one in 10 works overseas to support families. Far more would do so if immigration hurdles were lifted. The Catholic Church muzzles serious discussion of population control in the predominantly Roman Catholic nation of 85 million.
.
Yet for all the gloom scaring capital away from the Philippines - foreign direct investment fell 26 percent in 2003 - there's reason for hope. Arroyo, when she is finally sworn in again, will have something she lacked in her first term: a mandate.
.
After replacing the ousted Joseph Estrada in 2001, Arroyo was preoccupied with staying in office. Her government never got beyond questions about legitimacy and a steady flow of coup-attempt rumors. Winning her own presidency puts those concerns aside, allowing her to shake things up.
.
Arroyo "has had two and a half years on the learning curve and now she's starting a new six-year term," Ramos said. "It's an advantage."
.
Let's hope so. The long-neglected economy needs bolder and more sweeping reforms than any leader has tried for decades. Arroyo's to-do list is a formidable one for any nation, but it's especially daunting in one shackled for so many years by incompetent and corrupt governments.
.
Whether Arroyo can take on entrenched interests fighting change at every turn is an open question. What's not in question is that she needs to act fast. Every month that goes by without progress on the deficit is a lost opportunity to lower bond yields and attract investors. It's also time not spent improving life for the 33 percent or so Filipinos classified as poor.
.
"You see lots more Mercedes and fancy restaurants popping up in Manila, but I don't see prosperity reaching down very far into the population," says Irving Ackerman, president of the Manila brokerage firm I. Ackerman Associates.
.
The risk of complacency looms large. Officials in Manila like to highlight the 2.2 percent growth the Philippines enjoyed in the first quarter. They also point to the $7 billion of remittances sent home each year from citizens working overseas.
.
Far less attention gets paid to the 4.14 percent drop in the peso versus the dollar over the last 12 months. Consider, too, the alarming frequency with which the government has to reject bids at bond auctions. Investors demanding higher yields than a nation is willing to pay is never a good sign.
.
Arroyo has won a second chance from voters. Now comes the really hard part: convincing foreign investors that the Philippines isn't Asia's answer to Argentina.
.
"It won't be easy, but it is doable," Ramos said. "What I'm saying is, don't panic."
.
Bloomberg News

Governance should top Arroyo's economic agenda

2004-06-10T05:11:00.000+08:00

Taiwan company may increase stake in R.P. operator of 7-Eleven

2004-06-10T05:10:00.000+08:00

Taiwan's President Chain Store Corp. may increase its stake in Philippine Seven Corp., the local operator of the 7-Eleven convenience store chain.

Philippine Seven chairman Vicente Paterno said he will meet with the officials of the Taiwan-based parent company next month to discuss the possibility of additional capital infusion. The company needs funds for its major expansion program this year, which will bring its total stores to 260 by the end of the year.

“This is one of the things we will discuss because we can’t rely on continued borrowings. We are already above the 1:1 debt-to-equity ratio. Depending on the answers from Taiwan, the shareholders would also have to assess whether they are willing to, in effect, keep up the pace,” he said.

Although discussions will be made in July, Philippine Seven president Yeong-Hsiang Yeh said President Chain Store Corp. has initially expressed willingness to infuse additional funds in the company.

Philippine Seven is owned by 56.59 percent by President Chain Store (Labuan) Holdings Ltd., an investment holding firm incorporated in Malaysia. The ultimate parent company is President Chain Store Corp., which is the licensee of 7-Eleven in Taiwan.

The remaining 43.41 percent is divided among the Paterno group (12 percent), group of former trade secretary Jose Pardo (12 percent) and Araneta Center chairman and president Jorge Araneta (10 percent), while the rest is publicly held.

Paterno said this is the right time to discuss the possible capital infusion in Philippine Seven after the company posted a net income of P9.3 million last year. This was the first time the company recorded a net profit after three years of losses.

The additional capital infusion from President Chain Store is needed by Philippine Seven for new store openings, technology upgrade and renovation of its existing stores. Capital expenditures is pegged at P110 million this year.

If President Chain Store decides to hike its investments in Philippine Seven, Paterno said the Filipino shareholders would have to decide whether to also increase its investments or allow their shares to be diluted.

“Are the Filipino shareholders also willing to put in money or are they resigned o decreasing their equity share in the company? It would depend on Taiwan’s idea, whether we should continue borrowings or put in money by how much,” he said.

President Chain Store had acquired 50.4 percent of Philippine Seven’s outstanding capital stock in 2000, after the retail trade liberalization law was passed.

Earlier this year, Philippine Seven had obtained P130 million in loans to finance its acquisition of 35 Binggo convenience stores from Jollimart Philippines Corp. The loans were guaranteed by President Chain Store.

The additional convenience stores are expected to help Philippine Seven double its net income by the end of 2004. An additional 25 new stores are expected to be opened throughout the year.

Car sales increase 80% in first 5 months

2004-06-10T05:07:00.000+08:00

Passenger car sales went up a substantial 80 percent growth in the first five months this year to 13,073 units versus 2,438 units in the same period last year as buyers went on with their purchases which they held until the new value-based excise tax was implemented.

This contrast with the 30 percent decline in the commercial vehicle segment for the same period that pulled the total industry sales figure to decline by 9 percent as sales reached only 34,588 units compared to 38,069 units in the same January-May figure last year.

An official joint report by the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA) attributed the drop in sales to some factors including the fuel price increases and its effect on inflation, retail price increase due to peso depreciation and re-allocation of household budget due to school expenditure that have dampened the expected growth.

Elizabeth Lee, who is TMA president and CAMPI vice president, said "a more robust growth is seen in the months ahead once a President is proclaimed."

Lee explained the decline in the overall industry sales was caused by the decline in the sale of commercial vehicles having reached only 21,515 units or 30.2 percent down from 30,804 units in the first five months last year.

"This is the net effect of the rush buying behavior of the market in the commercial vehicle segment during the same period in 2003 in anticipation of price increases due to the new excise tax system," Lee said.

But Lee noted that commercial vehicles in May grew by 16.7 percent to 4,540 units versus the previous month’s 3,889 units due to the positive sales performance of light commercial vehicles and Asian utility vehicles. This growth, however, was not enough to counter the net effect of the previous decreases in the first three months of the year.

Lee futher pointed out that the significant 14.5 percent growth in AUV sales in May versus April this year clearly showed that the AUV segment has found its own level with regards to pricing and this was boosted by the introduction of new models (RevoVX240D, Adventure, Crosswind Ltd. ed).

But on a year to date, AUV sales declined sharply by 53.8 percent compared to the same period last year which Lee said was due to the acceleration of AUV sales last year as consumers took advantage of the tax-exempt status of AUVs.

Positive signs were seen in the light commercial vehicle (LCV) sector, which grew by 17.3 percent in the January-May period this year versus last year and a more encouraging 20.2 percent growth for May versus the previous month.

"The growth is due to increased sales of compact sports utility vehicles and vans and sustained performance for the pick-up and large SUV segments," Lee added.

Combined sales of trucks and buses also exhibited a 34 percent drop year-to-date, which was attributed to the unhurried insitutional expansion in 2004 associated with preelection jitters and uncertainty in the new government.

Among the 17 CAMPI and TMA members, Toyota Motor Philippines Corp. topped with total sales of 12,293 units and cornering the biggest market share of 35.54 percent in the first five months this year an improvement from the 28.61 percent market share in the same period last year.

Honda Cars Phils. Inc. came in a poor second with only 4,949 units while Mitsubishi Motor Philippines followed closely with 4,780 units.

Isuzu Phils. Corp. came in fourth with 3,685 units sold in the January-May period this year while Ford Motor Company Phils. Inc. sold 2,671 units. (BCM)

Pak, Philippines to discuss rice import limit

2004-06-09T10:26:00.000+08:00

Pakistan has formally notified the World Trade Organization of its intention to negotiate with the Philippines regarding Manila’s bid to maintain quantitative restrictions on its rice imports, a senior government official said Tuesday.

Gregorio Tan, deputy administrator of the National Food Authority and lead negotiator for the Philippines, said Pakistan is the second WTO member country to express the desire to negotiate with Manila on the issue. Australia was the first.

Between 1998 and 2000, Pakistan sold some rice to the Philippines, Mr Tan said, without providing the exact volumes.

By maintaining quantitative restrictions on rice imports, the government is able to set a limit on the country’s annual rice import volume. Lifting the restrictions would allow the unlimited entry of rice as long as importers pay a tariff.

In April, the Philippines notified the WTO of its intention to maintain the quantitative restrictions on rice imports.

Mr Tan earlier said WTO member-countries have until June 27 to indicate their intention to negotiate with the Philippines.

Major suppliers of rice to the Philippines, which include Thailand, China, India and the US, are expected to engage the Philippines in separate bilateral negotiations. —Dow Jones Newswires

Philippines' Benpres Expects To Return To Profit In 2004

2004-06-08T07:33:00.000+08:00

Benpres Holdings Corp. (BPC.PH), a diversified Philippine holding concern, is poised to return to profit this year on the strength of its operating units and the completion of the major provisioning of recent years, a senior executive said Monday.

"The days of major loss provisioning are behind us," Benpres President and Chief Operating Officer Angel Ong told shareholders during the company's annual meeting Monday.

Ong later told reporters that the company expects to wipe out its capital deficit of around 8.2 billion pesos ($1=PHP55.819) in four to five years, which he said could be achieved by earning about PHP2 billion a year on average.

The company also expects its major units ABS-CBN Broadcasting Corp. (ABS.PH) and First Philippine Holdings Corp. (FPH.PH) to declare cash dividends, which the parent will use to pay off debts.

Benpres owns 47.02% of First Holdings, a power producer, and 57.38% of ABS-CBN through Lopez Inc. ABS-CBN is the country's largest media broadcast network.

The holding concern has been booking net losses since 2000 owing to provisioning for liabilities from loan guarantees and commitments. The company also suffered from the court-ordered refund for over-billing by its affiliate, Manila Electric Co. (MERB.PH). The refund began last year. First Holdings owns around 17% of Meralco.

Last year, Benpres booked a net loss of PHP1.907 billion, narrower than the PHP4 billion loss in 2002.

Benpres continues to work with its creditors to come up with a restructuring agreement covering $548 million in debts. Ong said the debt level is expected to go down to about $400 million this year as a result of $3 million in interest payments and the agreement to return the water concession of Benpres unit Maynilad Water Services Inc. to the government, which will remove its guarantee on $145 million in debt incurred by Maynilad.

The company also plans to unload its stakes in a tollway project, Rockwell Land Corp., and a cable television venture, said Ong.

Benpres own 49% of a joint venture that holds 60% of the Manila North Tollways Corp., which is upgrading the 84-kilometer North Luzon Expressway. The project is expected to be completed in October.

Ong said any sale will depend on the government's final approval of a proposed toll fee that will raise the per-kilometer charge to PHP2.49 from PHP0.55.

Benpres holds a 24.5% stake in Rockwell, which is developing a 15 hectare property near the financial district of Makati.

SEC OKs Fortune-Premier Union

2004-06-08T07:29:00.000+08:00

The Securities and Exchange Commission has approved a plan by Fortune Cement Corp. (FCC.PH) to absorb its unit Premier Cement Corp. to simplify the "legal structure and promote significant cost efficiency improvements." The merger plan was approved by Fortune's board in December and approved by Fortune shareholders in February.

SPI Technologies Inc.'s (SPI.PH) board has approved a merger with SPI Acquisition Co. that leaves SPI Acquisition as the surviving entity. The move is in line with the acquisition of 99.72% SPI Technologies by the group of TH Lee Putnam Ventures for about $100 million. SPI Technologies is an international outsourcing company.

Philippine Shares End Dn On Security, Political Concerns

2004-06-08T07:27:00.000+08:00

Philippine shares ended lower Monday, weighed down by security and political concerns, reversing an early rise, traders said.

The 30-company Philippine Stock Exchange Index ended down 7.28 points, or 0.5%, at 1517.17, adding to Friday's 0.5% loss.

Blue-chip Philippine Long Distance Telephone Co., or PLDT, was the most actively traded stock, down 5 pesos ($1=PHP55.822), or 0.5%, at PHP1,065, on quick profit-taking after the stock gained early in the session, hitting an intraday high of PHP1,080. The stock's decline mirrored the 0.2% loss suffered by the company's American Depositary Receipts in New York Friday.

The market was initially neutral to the grenade attack on the former headquarters of oil refiner Petron in the Makati financial district early Monday, as there were no casualties or injuries. However, the attack eventually took its toll on the market as trading progressed, as it rekindled worries about terror threats.

No one has claimed responsibility for the attack, though police suspect communist rebels were behind the incident.

"Regional markets were up and very strong," said Westlink Global Equities chairman Rommel Macapagal. "But the grenade blast dampened sentiment in the local market."

Concerns over the sluggish pace of Congress' canvassing of votes for president and vice president in last month's general elections also took their toll on the market, said Macapagal. The canvassing officially began Friday, nearly a month after the polls, but there is talk the opposition party will continue to delay the process.

An unofficial vote count and an exit poll show market-favored incumbent Gloria Macapagal Arroyo ahead of opposition bet Fernando Poe Jr., but Poe's supporters insist he was cheated of victory.

"Jitters over the canvassing also affected market sentiment. There are concerns over possible surprises like walkouts by the opposition and rumors of a no-proclamation scenario," said Macapagal.

The proclamation of the country's new president and vice president is set for June 30.

The market is expected to remain in consolidation, initially between the 1500 and 1520 range, until a clearer political picture emerges, traders said.

Other active stocks included Bank of the Philippine Islands, down PHP0.50, or 1.2%, at PHP40.50, and Ayala Corp., down PHP0.10, or 1.9%, at PHP5.20.

Volume traded was 118.6 million shares valued at PHP433.9 million, compared with Friday's 144.9 million shares valued at PHP302.9 million.

Decliners led gainers 16 to 13, while 40 stocks were unchanged.

Monday Previous Change
PSE Index 1517.17 1524.45 dn 7.28
All Shares Index 975.43 965.68 up 9.75
Commercial-Industrial Index 2352.28 2364.93 dn 12.65
Property Index 526.52 526.16 up 0.36
Banks-Financial Index 458.72 460.48 dn 1.76
Mining Index 1339.53 1356.90 dn 17.37
Oil Index 1.38 1.38 unchanged

WTO not likely to postpone lifting quotas on garments

2004-06-08T07:25:00.000+08:00

The World Trade Organization (WTO) is not likely to bow to pressures from garment and textile makers from the Philippines and 37 other countries pressing for a three-year delay to remove quotas on apparel shipments from developed nations. This was the assessment given reporters on Friday by Garment and Textile Export Board (GTEB) executive director Serafin Juliano based on recent discussions with the local industry. Juliano said major producers like India, Pakistan and China are strongly objecting to a further extension of the garments quota system. For over three decades, the Philippines and other developing countries have enjoyed guaranteed market access for their garment and textile exports to the United States, Canada and Europe, until WTO decided in 1995 to phase out quotas in ten years. The Philippines had joined 36 other nations in signing the so-called Istanbul Declaration which is asking the WTO to put off for three years or until Dec. 31, 2007, the phase out of the quota garments system. The pleading was prompted by a fear most countries would be powerless to compete against the Chinese juggernaut, which is expected to corner about two-thirds of the global garments trade once the quotas are lifted. The GTEB has doubts, however, that the proposal would sail, since lobbying nations have barely six months to convince WTO’s 145 member-states to back up their proposal. “There are actually a few chances to get the three-year delay. Any global negotiations would require months of discussions with major WTO members opposing any postponement,” Juliano said, adding that GTEB is set to conduct further consultations with the local industry on the quota plans. Juliano disclosed that there are only 71 global garments industry associations who support the extension and some are amenable to an alternative solution which would involve the use of safeguards against China. Garments and textiles have been the Philippines’ second-largest export earner, thanks to quotas developed nations put in place in 1973 to assist poorer countries. Quota countries purchase about 90 percent of the country’s shipments, cushioning the industry from sluggish growth across Asia, in view of stiffer competition from China and India. China already accounts for about 40 percent of total worldwide trade of garments and textiles, and the communist giant has moved so aggressively the past two years that it already corners 60 percent of the United States’ textile market. - Agencies. June 07, 2004(today)

Philippine ISP plans online betting for cockfights

2004-06-08T07:19:00.000+08:00

Philweb estimates online cockfight betting may bring in annual revenue of $1 million

By Francisco Alcuaz Jr. and Ian Sayson
Bloomberg News

A Philippine Internet-service provider said it's proposing what may be the first online betting for cockfights, aiming to draw some of the thousands of dollars that change hands during contests into a central system.

Philweb Corp. wants to cash in on the tens of thousands of cockfights held a year in a nation where enthusiasts say cockpits may outnumber pulpits in the predominantly Roman Catholic country.

Much of the betting now is done through hand signals before two roosters, fitted with 3-inch steel blades on their feet, are thrown at each other in a clash usually to the death.

"With the popularity of cockfighting in the Philippines, we are extremely optimistic about the potential of this new format," Roberto Ongpin, chairman of listed Philweb, said in a statement to the stock exchange in Manila.

Philweb, which operates online casino gambling and sports betting in the Philippines, estimates cockfight betting online may generate annual revenue of 60 million pesos ($1 million).

State-owned Philippine Amusement and Gaming Corp., which regulates gambling and gets a cut of the proceeds, said it hasn't committed to the proposal.

The agency generated 10 billion pesos in taxes and other funds, or 1.6 percent of the government's annual revenue last year.

Cockfight betting online "might work," said Gerardo Lafiguera, a computer engineer and breeder of about 150 fighting cocks south of Manila. "If you're someone looking for something to bet on, it'll do."

Other enthusiasts say they can't do without the noise, sweat and flying feathers that come with matches between fowls whose naturally aggressive instincts are sometimes hyped by drugs.

A true supporter of the sport would want to see what he's betting on, said Mon Medina, a car-rental business owner who spends his weekends at cockfights, cheering for his two birds or betting on other fowl.

The aficionado "wants to see how he wins and how he loses," Medina said. "I have to go to the cockpit to choose whom I'll bet on. It's a very different feeling, the thrill in the cockpit."

The height of cockfight betting usually occurs during the World Slasher Cup, a four-decade-old competition considered the prize event. The Slasher Cup draws competitors to Manila twice a year from around the globe, particularly the U.S., where cockfights are illegal in all but three states.

Cockfighting is popular elsewhere in Southeast Asia, in Latin America, Africa and the Middle East. In Manila, as many as 10,000 fans pay $10 each to attend the Slasher Cup, which takes place in the air conditioned 32,000-seat Araneta Coliseum, where boxer Muhammed Ali beat Joe Frazier in the 14th of a 15-round bout on Oct. 1, 1975.

During the Slasher Cup, as many as 60 cockfight competitors each pay a $1,000 entrance fee, and an estimated $600,000 changes hands nightly, according to Web site Hey-Joe.net. The total purse is about $75,000, with about $50,000 going to the winner, according to the Internet site. A message left with Slasher Cup coordinator Dong Lamoste wasn't returned.

Cockfighting is already a hot topic on the Internet. Sabong.net.ph, which calls itself the most popular Philippine cockfighting Web site, lists contests, has links to feedmakers for breeders, and photos of fowl with names such as Lemonbutcher.

"Cockfighting has a very big market," said Oscar Rivera, operator of an off-track betting station in Manila for horse racing. "It appeals to a wider audience than horse racing."

Philippines leaves interest rates unchanged

2004-06-05T04:46:00.000+08:00

The central bank of the Philippines left interest rates unchanged Thursday as it concluded inflation was still within this year's target.

This was the tenth straight month interest rates were kept at 6.75 percent for overnight borrowing and 9 percent for overnight lending rates.

Central bank governor Rafael B. Buenaventura said inflationary pressures are not enough to require monetary action, though he conceded that inflation was likely to push upward next year above the 4-5 percent target. However, these are not expected to be permanent and should not require a monetary policy response, he added.

The bank's deputy governor, Amando M. Tetangco, Jr., said oil prices, while on the uptrend, are expected to average $33 per barrel. Monetary officials believe oil-producing countries cannot risk keeping prices too high, BusinessWorld reported.

Taiwan seeking FTA with the Philippines

2004-06-05T04:43:00.000+08:00

MANILA - Taiwan hopes to sign a free trade agreement (FTA) with the Philippines to further promote two-way trade and mutual benefits, an official of the Republic of China's government said on Thursday.

Taiwan's vice economics minister Shih Yen-hsiang, while visiting Manila as the head of a trade mission, said the two nations signed a memorandum of understanding (MoU) at last November's Taiwan-Philippine trade and economic cooperation meeting, pledging to further promote bilateral trade and exchange of information.

Given regional economic integration is a new global trend, Shih said Taiwan expects to sign an FTA with its neighbor.

The Philippines is Taiwan's 10th-largest trading partner and the second-largest in Southeast Asia, with two-way trade of US$5.3 billion (NT$178 billion) recorded last year, leaving a surplus of $780 million in the Philippines' favor, Shih noted.

Furthermore, Taiwan's investment in the Philippines had accumulated to $1.1 billion as of 2003.

For his part, the Philippine vice minister of trade and industry said Taiwan-Philippines economic relations has extensive room for improvement, given their geographic proximity.

(Asia Pulse/CNA)

Manila Water expects to raise $75M from IPO

2004-06-02T06:22:00.000+08:00

Manila Water expects to raise $75M from IPO

AYALA Corp. unit Manila Water Co. expects to raise 75 million dollars from its planned offer of a 20-25 percent stake to the public early next year, its president Antonino Aquino said Tuesday.

In a press conference, the company also announced that the International Finance Corp. (IFC), the World Bank's investment arm, has agreed to invest 45 million dollars in Manila Water through a 30-million-dollar, 13-year loan facility and a direct equity infusion worth 15 million dollars.

Together with a loan of 30 million dollars extended last year, IFC's exposure in the Ayala-led water concessionaire now stands at 75 million dollars, representing nine percent equity in the water firm.

Aquino said Manila Water, which supplies potable water to Metro Manila's east zone, would use the initial public offering (IPO) proceeds and the fresh equity to reduce system losses, develop new water sources and fund possible business ventures outside the metropolis.

Its capital expenditure budget is set at 19 billion pesos over a five-year period.

"Our programmed spending would largely go to the east concession, bulk of which would go to our non-revenue water reduction program. We have to do a lot of pipe replacement because a lot of the pipes we have in our zone have been there for at least 50 years. That will be the most expensive component of our capital spending program," Aquino said.

A portion of the budget would be used to pay the company's concession fees that would fund new projects such as the development of new water sources.

"Manila Water is eyeing vast opportunities in the country. We are in fact looking at a project in Cebu. We have also gotten offers outside the country," the company's chief financial officer Sherisa Nuesa said.

Aquino said IFC's investment suggests investors' continued confidence in the Philippines.

"This investment by IFC is very significant. While most foreign companies prefer to remain in the sidelines until they see the final results of the May 10 national elections, IFC chose to immediately affirm its confidence in the country's business climate, and in Manila Water as a highly viable company," Aquino said.

IFC has become the fifth major stockholder of Manila Water, which is majority owned by Ayala Corp with a 43.6-percent stake. This is IFC's first investment in a water venture in East Asia.

Other shareholders include British firm United Utilities with 16.9 percent, Mitsubishi Corp with 9.7 percent and BPI Capital Corp. with 9.8 percent. The remaining shares are held by employees of the company.

Manila Water earlier reported a first quarter to March net profit of 309 million pesos, up 13 percent year-on-year.

Aquino said the company expects to exceed last year's net profit of 1.1 billion pesos on the back of improved efficiency given the substantial reduction in its system losses.

"Our water supply has been reduced by five percent, but we're still tracking all our targets ahead of time," Aquino said.

Non-revenue water has gone down to 49 percent of total water supply at end-April from a high of 67 percent in 1996, when the company bagged the east zone concession from Metropolitan WaterWorks and Sewerage System (MWSS).

Aquino explained that as a rule of thumb, every percentage point reduction in non-revenue water translates into a two percentage point increase in its net profit, or roughly 72 million pesos.

"It is to our advantage that we reduce our system loss because it has a direct impact on our revenues," Aquino said.

PHILIPPINES BUSINESS BRIEFS: Pancake House Sets Cash Div

2004-05-28T23:29:00.000+08:00

PHILIPPINES BUSINESS BRIEFS: Pancake House Sets Cash Div
MANILA (Dow Jones)--The board of Pancake House Inc. (PCKH.PH), a Philippine restaurant operator, has approved a 0.16 peso ($1=PHP55.831) cash dividend to shareholders as of June 15, payable on or before June 30. The cash dividend payments will amount to PHP30.18 million.

Philippine Long Distance Telephone Co. (TEL.PH) will Monday list 6,491 common shares issued under a stock option plan for executives. PLDT set aside 1.29 million common shares at 814 pesos ($1=PHP55.83) each for the plan. The shares to be listed will bring the total number issued under the program to 31,765.

Jollibee Foods Corp. (JFC.PH) will Friday list 13,382 additional common shares sold under the fast-food company's stock purchase and option plan. This will bring the total shares issued under the stock option plan to 12.438 million out of the 26.4 million set aside for the program.

Interphil Laboratories Inc. (ILI.PH) bought back 1,000 B shares Thursday at 1.90 pesos ($1=PHP55.875) each, as part of the pharmaceutical company's share buyback program to improve shareholder value. A shares are exclusive to local investors, while B shares are open to local and foreign investors.

-By Manila Bureau; Dow Jones Newswires; (632

PSE eyes 2-5 company listings

2004-05-28T23:28:00.000+08:00

THE PHILIPPINE Stock Exchange (PSE) said Friday it aims to convince two to five companies to go public and list their shares on the local bourse this year, confirming reported comments by PSE president Cayetano Paderanga Jr.

Major dailies earlier reported that the PSE was targeting between two and five firms for possible listing, with Paderanga quoted as saying that the stock exchange is looking at industries where there is a requirement for companies to go public.

The oil deregulation law, enacted in 1998, requires oil refiners to list at least 10 pct of their outstanding shares on the local bourse by 2001. Poor market conditions have however delayed their mandated public offerings.

The congressional franchise of top mobile phone operator Smart Communications Inc also requires the firm to go public.

Meralco to rollover debt; expects electricity sales to improve by 5% in '04

2004-05-26T03:40:00.000+08:00

By CATHY ROSE A. GARCIA
TODAY Senior Reporter

Manila Electric Co. (Meralco), the country’s largest distribution utility, is looking at alternative options to refinance $200 million in obligations this year, if plans to raise funds through the issuance of bonds in the international market fail.

Meralco vice president and treasurer Rafael Andrada Tuesday said short-term creditors are expected to provide another extension on some $80 million in obligations falling due in mid-June.

“Short-term creditors will continue to provide the extension until such time we are able to complete the refinancing program. Whether it’s a bond or other forms, we have other options open to us but not limited to the bond. We are in constant dialogue with our long-term creditors and we lined up several alternatives.. Basically it’s a capital market exercise and traditional bank markets,” he said in a press briefing.

Meralco has been in talks with long-term and short-term creditors for a plan to issue between $200 million and $250 million worth of bonds in the overseas market. The bond float, which is part of Meralco’s comprehensive liability management program (CLMP), has already been postponed several times.

Andrada admitted the impending rise of US interest rates is a source of concern, although there are other available financial instruments that could mitigate the impact.

The Meralco board is also continuing to look into the possible divestment of noncore businesses and assets to address its financing needs. “One of the directives of the CLMP is to look into the noncore business for possible disposition. The mandate is still in place. Given the magnitude of the requirements and short-time frame, and property market, refinancing is still the optimal solution,” Andrada said.

Meanwhile, Meralco president Jesus P. Francisco Tuesday said the company is expected to have a better financial performance this year, as it projects a 5-percent growth in electricity sales on the back of higher demand from commercial users.

“We expect sales to grow by 5 percent in 2004, higher than the 4.4 percent in 2003,” he said. Sales volume grew at 2.2 percent in the first quarter, but increased 5.2 percent in April alone.

Francisco cited potential growth areas such as the addition of new department stores, shopping malls, call centers, fast-food chains and Light Rail Transit and Metro Rail Transit stations in Meralco franchise areas this year.

In 2003, commercial energy sales accounted for 35.1 percent of total energy sales, second only to residential sales of 35.8 percent.

However, Francisco admitted there are several factors that could affect Meralco’s performance for the rest of the year, such as the pending 12-centavo rate increase and actual sales volume. He noted the bottomline would be “definitely better” than the P907 million full-year net income achieved in 2003.

Meralco posted a first-quarter net income of P344 million against a net loss of P325 million last year.

At the same time, Meralco will submit the refund mode for industrial and commercial customers to the Energy Regulatory Commission by June. The refund for industrial and commercial customers, worth P18.6 billion, is part of the P30-billion refund undertaken by Meralco after the Supreme Court ruled it cannot include income tax payments in operating costs and pass this on to consumers. Meralco had to refund customers for overcharges between 1994 and 2003.

Leo Mabale, head of Meralco’s refund task force, said small commercial and industrial users would have a fixed credit option wherein the refund would be credited to their bills for the next three years.

For medium and large industrial and commercial users, a fixed credit option or a refund note is available. Under the fixed credit option, the refund would be credited to their bills for the next five years. The refund notes, on the other hand, are interest-bearing zero coupon bonds or instruments that can be sold at prices lower than their actual value before maturity date. It can be traded in the Philippine Stock Exchange’s fixed-income exchange.

Out of the P18.6 billion, P14 billion will be refunded to the medium and large industrial and commercial users. The remaining P4.6 billion will be refunded to small users and terminated accounts.

“The refund note is a win-win solution for both Meralco and the customers…Investment houses are looking at these notes to perk up the capital markets,” Mabale said.

Meanwhile, Meralco is not expected to declare any cash dividends to its stockholders until the refund to consumers is completed.

Meralco chairman Manuel Lopez said the company is currently prioritizing the Supreme Court-ordered refund and capital expenditure program, before resuming cash dividend declarations. Meralco last declared a cash dividend to shareholders in 1999.

Gov’t approves chicken import of 5,000 MT

2004-05-26T03:37:00.000+08:00

The Department of Agriculture (DA) is allowing the importation of 5,000 metric tons (MT) of chicken at a special mechanism, but local broiler producers are opposing the move saying government has mindlessly approved the special import without studying the present situation to the detriment of local producers.

Agriculture Secretary Luis P. Lorenzo Jr. said in a statement that DA is allowing the importation of 5,000 MT of chicken from June to August this year to ease down tight chicken supply that has caused price in the wet market to shoot up to P110 to P120 per kilo from earlier levels of P85 to P100 per kilo.

It appears illogical, though, that the importation aims to bring down local price, it will still carry a 40 percent tariff similar to existing tariff even if chicken is an openly-traded commodity.

Nevertheless, DA said that the import will invoke the Safeguards Measures Act (SMA) to protect local producers under which imports will be slapped a higher tariff if landed price goes below the P94 per kilo trigger price.

Despite the supposed industry protection, local broiler integrators are opposing the government’s move.

Gregorio A. San Diego, president of the United Broiler Raisers Association (UBRA), said that while chicken demand rose last election that propped price up, he said that DA is not really solving the real problem as supply will surge by the end of the month and that the importation is untimely as farmgate price already dropped to P69 per kilo from more than P70.

"The problem is retailers are acting independently even if farm-gate price already dropped. Retailers and middlemen do not immediately pass on the lower price to consumers. We’re making money at P69 even if cost production is high. But government’s solution every time is to import," he said.

San Diego said a solution to the price crisis is the imposition of a price control. "That’s why I’m in favor of price control so that profits will be reasonable," he said. Because of government’s importation solutions, San Diego said farmers are discouraged from raising poultry, knowing that cheaper imports will come in. "Farmers are no longer raising stocks because they’re going to import," San Diego said. Bong F. Fornal, processed foods group head of Tyson Agro Ventures Inc., one of the Philippines’ largest broiler integrators, said importation will not likely bring down price in the wet market nor benefit consumers. This would rather just benefit certain institutions as fast food chains Jollibee which would definitely not bring down retail price of cooked chicken.

"That is the problem with government, it does not think seriously of its moves," he said. Besides, poultry price in the world market is also high due to supply tightness. Whatever volume is brought in, he said this will definitely hurt the local industry.

Fornal said government should have predicted that supply will increase by June as it has its own Broiware, a forecasting model that determines next volume of production based on grandparent stock (breeders of day-old chicks) importation as DA itself issues the permit for such importation.

The poultry industry is projected to produce more than 500,000 MT of dressed chicken this year, growing from 492,000 MT last year.

Big poultry integrators such as Tyson, Swift, and San Miguel Corp. are beefing up stock in order to export chicken to the world market.

Philippines Cebu Pacific Air Plans $300M Re-Fleeting

2004-05-25T03:50:00.000+08:00

MANILA (Dow Jones)--Cebu Pacific Air, the budget airline unit of Philippine conglomerate JG Summit Holdings Inc. (JGS.PH), is seeking tax breaks and other incentives for its $300 million re-fleeting program scheduled to start next year.

Cebu Pacific General Manager Danilo Mojica said in a statement that the airline has sought the incentives from the Board of Investments for its plan to purchase 14 new aircraft to replace its existing fleet of 12 DC9-32 McDonnell Douglas airplanes, which are 25 to 27 years old.

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"We need to re-fleet because the fast growing airline industry is making it necessary for us to deliver better products and services," said Mojica.

Cebu Pacific now flies to 13 domestic destinations, and to several Asian nations such as China and South Korea.

Mojica said the company is looking at buying 125-seater Boeing 717-200s and 134-seater Airbus A319s. Each aircraft is expected to cost at least $20 million.

The re-fleeting program will not only reduce the age of Cebu Pacific's aircraft, it will also raise passenger capacity by 20%.

Under the country's investment priorities plan, airline modernization programs are entitled to, among other incentives, up to six years of income tax holiday.

Philippines' Arroyo Wins Elections - Poll Official

2004-05-25T01:07:00.000+08:00

MANILA (Reuters) - President Gloria Macapagal Arroyo has won the Philippines presidential election by less than a million votes over action movie hero and political novice Fernando Poe Jr, a senior elections commission official said on Monday.

The official from the Commission on Elections (Comelec), who did not want to be identified, said Arroyo won by only 900,000 votes over Poe based on 174 certificates of canvass (COCs) that the poll body received.

The Philippines Congress on Tuesday will begin an official tally of the ballots that Comelec is handing over.

"Don't quote me, but Arroyo won (by) less than one million votes," said the poll official, adding the president got 12,409,109 votes against Poe's 11,486,601.

Comelec Chairman Benjamin Abalos told reporters the commission is also counting votes but could not reveal the results because Congress has the sole authority to declare the winners for president and vice president.

Ballot boxes containing the COCs are to be delivered to House of Representatives on Tuesday for the count.

Edgardo Angara, a senator and leader of the opposition bloc supporting Poe, expressed surprise over the leak by a senior official from the election commission.

"That is an outrageous statement," Angara told Reuters. "He has no business saying that because the constitutional body that should make that kind of announcement is the Congress based on a national canvass..."

"I think it's an outrageous statement and wholly uncalled for if it's true," he said.

PHILIPPINES BUSINESS BRIEFS: Cityland To Pay Cash Div

2004-05-24T01:12:00.000+08:00

MANILA (Dow Jones)--Cityland Development Corp. (CDC.PH), a Philippine property developer, said its board has approved the payment of a 0.1288-peso ($1=PHP55.927) cash dividend to shareholders of record June 4, payable June 29.

Philippine Long Distance Telephone Co. (TEL.PH) will Monday list 800 common shares issued under a stock option plan for executives. PLDT set aside 1.29 million common shares at 814 pesos ($1=PHP55.927) each for the plan. The shares to be listed will bring the total number issued under the program to 25,274.

Slippery slope for new Philippines leader amid oil spike

2004-05-24T01:11:00.000+08:00

Record-high global oil prices threaten to cut short the honeymoon of the new president of the Philippines, making it more difficult to pass urgent measures to replenish its empty coffers, economists said.

Analysts polled by AFP agree the Southeast Asian nation's economic growth prospects for the year are not under immediate threat from soaring crude prices that have topped 40 dollars a barrel over the past week.

However, they said the upward pressure on consumer prices from higher transport costs could swiftly erode the goodwill gained from a fresh electoral mandate and spark discontent among the population, more than half of who earn two dollars a day.

Exit polls show incumbent leader Gloria Arroyo defeated movie-star rival Fernando Poe. After a slow manual count, the new president will be sworn into office on June 30, while the new legislature will start sessions in late July.

Public transport firms raised the basic fare by a whopping 37.5 percent to 5.50 pesos (9.8 US cents) last week, and business leaders expect a fresh round of pump price increases next month.

Trade unions want the government to raise the minimum wage by up to 61 percent to 460 pesos (8.24 dollars).

"For sure there would be some political backlash whoever wins," said Erlinda Medalla, an economist for the semi-official Philippine Institute of Development Studies (PIDS).

"Even with a fresh mandate, it is still going to be very difficult to govern and convince the people to prepare for hard times," she told AFP.

Election-year politicking, a failed military revolt in 2003, and the bitter political fallout of the bloodless popular revolt that ousted the elected leader Joseph Estrada in 2001 had stalled tax bills in Congress, causing government debt to soar.

Donald Dee, an official of the Employers Confederation of the Philippines, warned that state-enforced minimum wage adjustments minus productivity improvements would force some companies to downsize, or even shut down.

"Small- and medium-size enterprises that are labor-intensive, such as garments, will be hardest-hit," he said.

The Asian Development Bank (ADB) says economic growth should improve to between 4.5 and 5.5 percent this year due to buoyant consumer spending and improved global electronics demand.

But it warned that sustained high oil prices and higher interest rates pose a risk.

Despite the oil spike, Manila insists the gross domestic product (GDP) growth target of 4.9-5.8 percent for 2004 was within reach, while the central bank said full-year inflation should remain within the target of four to five percent.

ADB economist Jesus Felipe told AFP the Manila-based bank was retaining its 4.5-5.5 percent GDP growth forecast for the Philippines for the time being.

However, he agreed that higher oil prices "will be an important issue" when it comes time to convince Congress to pass the pending tax bills.

PIDS chief Mario Lamberte said the budget deficit would be the main challenge -- along with a looming energy crisis which he predicts would come in two years due to lack of investment in new power generating capacity.

He said boosting state revenues, which were at a low 14.4 percent to GDP last year, would help improve decrepit infrastructure and attract investments.

It would also allow the government to pension off redundant employees to downsize the bloated, 1.5 million-strong bureaucracy.

Manila has kept the budget deficit on target this year by "deferring payments to contractors," said Bear Stearns emerging markets analyst John Stuermer.

"Not only will President Arroyo need to raise more revenue, she should also be reducing the head count of the Philippines' over-staffed civil service, and using the resulting savings to reduce the budget deficit or spend more on upgrading the Philippines' poor infrastructure, or both."

- AFP

PRESS RELEASE: Moody's Affirms Universal Robina Ba3 Rtg

2004-05-20T09:42:00.000+08:00

Following is a press release from Moody's Investors Service.

Hong Kong, May 19, 2004 -- Moody's Investors Service has affirmed the Ba3 senior unsecured debt rating for Universal Robina Corp. (URC). The rating outlook is stable.

The Ba3 rating reflects URC's strong market position in the Philippines' branded consumer food industry, supported by its diversified product portfolio, well-established brand equity, product innovation and nationwide distribution network. The rating is also underpinned by the strong growth trend for the company's international branded food business and its relatively sound financial profile.

At the same time, the rating considers URC's exposure to adverse currency movements, since its revenues are primarily earned in pesos but a significant portion of its input costs and debt is denominated in U.S. dollars. The rating also reflects URC's acquisitive strategy in expanding into regional food businesses and its close relationship with its parent company, JG Summit Holdings Inc. (unrated), which has a weaker financial profile than URC.

URC currently maintains strong balance sheet liquidity, with a high level of liquid reserve (PHP14.7 billion as of March 31, 2004) in the form of U.S. dollar marketable securities. Moody's expects the company will fund potential new acquisitions by liquidating part of this investment portfolio, and therefore factors into the rating uncertainty about the liquid reserve being available on a permanent basis.

Moody's recognizes that URC reported weaker FY2003 results than it had expected. This was primarily due to the competitive business environment and increases in raw materials costs and operating expenses, which couldn't be fully passed on to consumers. Recent quarterly performance has shown improvement in profit margins, supported by the company's competitive position in the domestic branded food market and improving international operations.

However, Moody's notes that rating pressure will arise if there is evidence of further deterioration in URC's existing core business operating margins. Also, the use of liquid reserve on new investments that don't generate adequate returns could trigger a rating downgrade.

On the other hand, positive rating pressure could evolve over time if URC demonstrates the ability to deliver its projected results and improve its operating margins on a sustainable basis. Greater transparency revealing liquid reserve being used on new investments that enhance the company's profitability and operating margins could also be positive for the rating.

Universal Robina Corp., headquartered in Manila, Philippines and listed on the Philippines Stock Exchange, is one of the largest branded consumer food companies in the country. It also has production facilities in Thailand, Malaysia, China and Indonesia, and sales/marketing offices in Hong Kong, Singapore and Vietnam. URC is also engaged in agroindustrial products, sugar milling, flour milling and packaging businesses in the Philippines.

Copyright 2004, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.

Forbes.com: Philippines urges Asian oil stockpile, output rise

2004-05-20T09:32:00.000+08:00

MANILA, May 19 (Reuters) - The Philippines asked its Asian neighbours on Wednesday to set up a strategic oil reserve and urged OPEC members Saudi Arabia and Indonesia to raise oil production as crude prices held near their 21-year peak.

Vincent Perez, energy secretary for the Philippines, which imports nearly all of its oil, said more crude production was needed from Indonesia and Saudi Arabia "because we are now in near-crisis levels of oil in the world."

He made the appeal while attending an Asia Cooperation Dialogue (ACD) meeting in Manila. Public and private-sector representatives from the 22-member ACD opened a two-day meeting on Wednesday to discuss cooperation to ensure energy sufficiency in the region.

The group comprises Bahrain, Bangladesh, Brunei, China, Cambodia, India, Indonesia, Japan, Kazakhstan, South Korea, Kuwait, Laos, Malaysia, Myanmar, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand and Vietnam.

"I strongly encourage the members of ACD to prioritise discussion on escalating oil prices, its effects on our respective energy security policies and possible solutions, which may include regional oil stockpiling," Philippine Energy Undersecretary J.V. Emmanuel de Dios told the delegates. Asia-Pacific countries consumed 21.99 million barrels a day of oil in 2003, according to the latest estimates from the International Energy Agency. The agency expects the region's demand to rise to 23 million bpd this year, largely because of a surging demand to feed China's booming economic growth.

Crude oil prices in the benchmark U.S. market surged to the highest level in 21 years this week, hitting $41.85 a barrel on concerns that world supplies will not be sufficient to meet strong demand due to healthy global economic growth.

Fears of sabotage attacks on oil infrastructure in the Middle East, which supplies more than 70 percent of Asia's oil imports, have also kept crude prices high. "The global rise in oil prices must be discussed given its potentially detrimental effect on economies worldwide," de Dios said.

He said the 10-member Association of South East Asian Nations (ASEAN) and China, Japan and Korea were discussing similar proposals to set up a regional petroleum stockpile to secure supplies.

Last year, Japan urged its oil-deficient neighbours to invest in emergency stockpiles, saying that ASEAN countries should use Europe as a model for cooperation to build vital reserves.

Copyright 2004, Reuters News Service

Philippines May Waive Overbought Limit For BPI, Landbank

2004-05-20T09:24:00.000+08:00

MANILA (Dow Jones)--In what could set a precedent for debt restructuring deals of Philippine firms, the central bank said Wednesday it is open to exempting creditors of Pilipino Telephone Corp. (PLTL.PH) from the overbought limit on dollar holdings imposed on all banks.

Bank of the Philippine Islands (BPI.PH) and Land Bank of the Philippines (LBP.PH), the second- and third-largest lenders in the country, respectively, stand to exceed the overbought limit if they accept the dollar bonds Smart Communications Inc. is offering to retire the debts of its sister company Piltel.

BPI and Landbank need the exemption so the sovereign dollar bonds won't be included in the computation of overbought limit. A higher dollar overbought position limits the ability of banks to transact in the foreign exchange market, a lucrative business for many banks.

Central bank Deputy Governor Alberto Reyes said the monetary authority may agree to the proposal, noting the special circumstances of the case.

"In principle, it is OK, but we will still evaluate it," Reyes told reporters.

Smart made an offer in March to Piltel's creditors to buy the debt owed them by its sister company either for cash, U.S. dollar-denominated Smart bonds maturing in 2014, or Philippine sovereign dollar bonds maturing in 2016.

BPI and Landbank, which together hold 28% of Piltel's debt, are willing to agree to the terms if Smart can persuade the central bank to exempt them from the overbought limit.

This limit, which represents a bank's dollar-denominated holdings, is set at $5 million or 2.5% of its unimpaired capital, whichever is lower.

Reyes said agreeing to Smart's proposal would require the central bank to set up safeguards to ensure the additional foreign exchange assets the banks would get aren't used for dollar speculation.

Landbank officials said they are hopeful of getting the rule exemption because the debt swap with Smart isn't a regular dollar transaction but part of a corporate rehabilitation. They said the bank doubts the debt restructuring will push through if Landbank and BPI won't participate.

Reyes expects a positive action from the central bank within the next two weeks.

IHT: In Philippines, political clans hold their ground

2004-05-20T09:10:00.000+08:00

MANILA For generations, a few famous and wealthy families have dominated politics in the Philippines, and early results of this month's elections indicate that they still do.
.
Across the country, political clans are winning in the national and local elections held on May 10. Reports and allegations of fraud and violence aimed at keeping voters at home and disrupting the vote count also indicate that their methods of holding onto power remain the same.
.
President Gloria Macapagal Arroyo herself is the head of a family that has been in politics since the 1950s, when her father was a legislator and then became president.
.
Arroyo is leading in the presidential race, with 5.89 million votes so far over her main rival, the actor Fernando Poe Jr., with 4.54 million votes. The early results are from a "quick count" being done by the independent National Citizen's Movement for Free Elections, representing 42 percent of the total votes cast. Final results are not expected until late May or early June.
.
Most of the top 15 candidates for Senate belong to political families with several members already in public office.
.
In the provinces, such families are still dominant. Among them are the heirs of the late President Ferdinand Marcos as well as his political allies, like the family of Eduardo Cojuangco, chairman of San Miguel Corp., the largest food and beverage company in the Philippines, and Juan Ponce Enrile, Marcos's former defense secretary, who looks likely to win another term as senator.
.
Political dynasties here became notorious for kowtowing during the Marcos years. A recent study by the Philippine Center for Investigative Journalism found that two-thirds of the members of Congress are from political dynasties. The study traced the emergence of dynasties in the Philippines to the introduction by the Americans of electoral politics in the early 20th century, when voting was initially limited to property owners and the wealthy, who monopolized public office.
.
"Political dynasties are a terrible indictment of the kind of politics we have," said Senator Aquilino Pimentel Jr., one of the few in the Senate who does not have relatives in public office. "I do not believe that any one family has the monopoly of talent to run government."
.
After the fall of Marcos, there were attempts to curtail political dynasties - for example, by limiting the number of family members who could run for office - but the efforts did not succeed in the legislature.
.
Encarnacion Teresa Tadem, director of the Third World Studies Center at the University of the Philippines, said change was imminent. "Many members of these dynasties are now better educated - they study at the universities and abroad. I am optimistic that when they go back to their provinces, they will inject some change," she said.
.
The large number of political clans is itself a factor that drives this change, Tadem added. "There is bound to be competition among the dynasties and that could translate into better public service," she said.
.
Some dynasties, however, have not quite gotten out of the old mold. One is the Dy dynasty, which has ruled the province of Isabela, in the northern Philippines, for more than 30 years. In this month's elections, the Dys were accused of fraud and violence in an effort to defeat Grace Padaca, a 40-year-old political neophyte and polio victim who looks likely to end the Dys's dominance.
.
Padaca decided to run for governor against one of the Dys because, she said, "people demanded change." She received strong support in her campaign from the public and civic and religious groups. It is perhaps not a coincidence that Padaca is single and childless.
.
"My constituents are confident," she said, "that I can never form my own political dynasty."
.
International Herald Tribune

See more of the world that matters - click here for home delivery of the International Herald Tribune.
< < Back to Start of Article MANILA For generations, a few famous and wealthy families have dominated politics in the Philippines, and early results of this month's elections indicate that they still do.
.
Across the country, political clans are winning in the national and local elections held on May 10. Reports and allegations of fraud and violence aimed at keeping voters at home and disrupting the vote count also indicate that their methods of holding onto power remain the same.
.
President Gloria Macapagal Arroyo herself is the head of a family that has been in politics since the 1950s, when her father was a legislator and then became president.
.
Arroyo is leading in the presidential race, with 5.89 million votes so far over her main rival, the actor Fernando Poe Jr., with 4.54 million votes. The early results are from a "quick count" being done by the independent National Citizen's Movement for Free Elections, representing 42 percent of the total votes cast. Final results are not expected until late May or early June.
.
Most of the top 15 candidates for Senate belong to political families with several members already in public office.
.
In the provinces, such families are still dominant. Among them are the heirs of the late President Ferdinand Marcos as well as his political allies, like the family of Eduardo Cojuangco, chairman of San Miguel Corp., the largest food and beverage company in the Philippines, and Juan Ponce Enrile, Marcos's former defense secretary, who looks likely to win another term as senator.
.
Political dynasties here became notorious for kowtowing during the Marcos years. A recent study by the Philippine Center for Investigative Journalism found that two-thirds of the members of Congress are from political dynasties. The study traced the emergence of dynasties in the Philippines to the introduction by the Americans of electoral politics in the early 20th century, when voting was initially limited to property owners and the wealthy, who monopolized public office.
.
"Political dynasties are a terrible indictment of the kind of politics we have," said Senator Aquilino Pimentel Jr., one of the few in the Senate who does not have relatives in public office. "I do not believe that any one family has the monopoly of talent to run government."
.
After the fall of Marcos, there were attempts to curtail political dynasties - for example, by limiting the number of family members who could run for office - but the efforts did not succeed in the legislature.
.
Encarnacion Teresa Tadem, director of the Third World Studies Center at the University of the Philippines, said change was imminent. "Many members of these dynasties are now better educated - they study at the universities and abroad. I am optimistic that when they go back to their provinces, they will inject some change," she said.
.
The large number of political clans is itself a factor that drives this change, Tadem added. "There is bound to be competition among the dynasties and that could translate into better public service," she said.
.
Some dynasties, however, have not quite gotten out of the old mold. One is the Dy dynasty, which has ruled the province of Isabela, in the northern Philippines, for more than 30 years. In this month's elections, the Dys were accused of fraud and violence in an effort to defeat Grace Padaca, a 40-year-old political neophyte and polio victim who looks likely to end the Dys's dominance.
.
Padaca decided to run for governor against one of the Dys because, she said, "people demanded change." She received strong support in her campaign from the public and civic and religious groups. It is perhaps not a coincidence that Padaca is single and childless.
.
"My constituents are confident," she said, "that I can never form my own political dynasty."
.
International Herald Tribune MANILA For generations, a few famous and wealthy families have dominated politics in the Philippines, and early results of this month's elections indicate that they still do.
.
Across the country, political clans are winning in the national and local elections held on May 10. Reports and allegations of fraud and violence aimed at keeping voters at home and disrupting the vote count also indicate that their methods of holding onto power remain the same.
.
President Gloria Macapagal Arroyo herself is the head of a family that has been in politics since the 1950s, when her father was a legislator and then became president.
.
Arroyo is leading in the presidential race, with 5.89 million votes so far over her main rival, the actor Fernando Poe Jr., with 4.54 million votes. The early results are from a "quick count" being done by the independent National Citizen's Movement for Free Elections, representing 42 percent of the total votes cast. Final results are not expected until late May or early June.
.
Most of the top 15 candidates for Senate belong to political families with several members already in public office.
.
In the provinces, such families are still dominant. Among them are the heirs of the late President Ferdinand Marcos as well as his political allies, like the family of Eduardo Cojuangco, chairman of San Miguel Corp., the largest food and beverage company in the Philippines, and Juan Ponce Enrile, Marcos's former defense secretary, who looks likely to win another term as senator.
.
Political dynasties here became notorious for kowtowing during the Marcos years. A recent study by the Philippine Center for Investigative Journalism found that two-thirds of the members of Congress are from political dynasties. The study traced the emergence of dynasties in the Philippines to the introduction by the Americans of electoral politics in the early 20th century, when voting was initially limited to property owners and the wealthy, who monopolized public office.
.
"Political dynasties are a terrible indictment of the kind of politics we have," said Senator Aquilino Pimentel Jr., one of the few in the Senate who does not have relatives in public office. "I do not believe that any one family has the monopoly of talent to run government."
.
After the fall of Marcos, there were attempts to curtail political dynasties - for example, by limiting the number of family members who could run for office - but the efforts did not succeed in the legislature.
.
Encarnacion Teresa Tadem, director of the Third World Studies Center at the University of the Philippines, said change was imminent. "Many members of these dynasties are now better educated - they study at the universities and abroad. I am optimistic that when they go back to their provinces, they will inject some change," she said.
.
The large number of political clans is itself a factor that drives this change, Tadem added. "There is bound to be competition among the dynasties and that could translate into better public service," she said.
.
Some dynasties, however, have not quite gotten out of the old mold. One is the Dy dynasty, which has ruled the province of Isabela, in the northern Philippines, for more than 30 years. In this month's elections, the Dys were accused of fraud and violence in an effort to defeat Grace Padaca, a 40-year-old political neophyte and polio victim who looks likely to end the Dys's dominance.
.
Padaca decided to run for governor against one of the Dys because, she said, "people demanded change." She received strong support in her campaign from the public and civic and religious groups. It is perhaps not a coincidence that Padaca is single and childless.
.
"My constituents are confident," she said, "that I can never form my own political dynasty."
.
International Herald Tribune MANILA For generations, a few famous and wealthy families have dominated politics in the Philippines, and early results of this month's elections indicate that they still do.
.
Across the country, political clans are winning in the national and local elections held on May 10. Reports and allegations of fraud and violence aimed at keeping voters at home and disrupting the vote count also indicate that their methods of holding onto power remain the same.
.
President Gloria Macapagal Arroyo herself is the head of a family that has been in politics since the 1950s, when her father was a legislator and then became president.
.
Arroyo is leading in the presidential race, with 5.89 million votes so far over her main rival, the actor Fernando Poe Jr., with 4.54 million votes. The early results are from a "quick count" being done by the independent National Citizen's Movement for Free Elections, representing 42 percent of the total votes cast. Final results are not expected until late May or early June.
.
Most of the top 15 candidates for Senate belong to political families with several members already in public office.
.
In the provinces, such families are still dominant. Among them are the heirs of the late President Ferdinand Marcos as well as his political allies, like the family of Eduardo Cojuangco, chairman of San Miguel Corp., the largest food and beverage company in the Philippines, and Juan Ponce Enrile, Marcos's former defense secretary, who looks likely to win another term as senator.
.
Political dynasties here became notorious for kowtowing during the Marcos years. A recent study by the Philippine Center for Investigative Journalism found that two-thirds of the members of Congress are from political dynasties. The study traced the emergence of dynasties in the Philippines to the introduction by the Americans of electoral politics in the early 20th century, when voting was initially limited to property owners and the wealthy, who monopolized public office.
.
"Political dynasties are a terrible indictment of the kind of politics we have," said Senator Aquilino Pimentel Jr., one of the few in the Senate who does not have relatives in public office. "I do not believe that any one family has the monopoly of talent to run government."
.
After the fall of Marcos, there were attempts to curtail political dynasties - for example, by limiting the number of family members who could run for office - but the efforts did not succeed in the legislature.
.
Encarnacion Teresa Tadem, director of the Third World Studies Center at the University of the Philippines, said change was imminent. "Many members of these dynasties are now better educated - they study at the universities and abroad. I am optimistic that when they go back to their provinces, they will inject some change," she said.
.
The large number of political clans is itself a factor that drives this change, Tadem added. "There is bound to be competition among the dynasties and that could translate into better public service," she said.
.

Pig Industry News - Philippines Chicken And Pork Imports Pushed To Reduce Prices - Brought to you by ThePigSite

2004-05-20T09:07:00.000+08:00

PHILIPPINES - The Department of Trade and Industry in Philippines is pushing for the importation of chicken and pork to stabilize prices that have been rising because of a shortage, an official said Tuesday.

The proposed importation is to be on a "temporary basis," until prices and supply stabilize, Trade and Industry Undersecretary Adrian Cristobal Jr. told reporters.

"The prices of chicken have been rising the past month," he said. "We're pushing hard for the importation of chicken, even on a temporary basis. We already have a mechanism in place."

Cristobal said pork prices have been stable at 140 pesos a kilogram "but that's still high compared with last year" at 110 pesos a kilogram, he said. "The problem is supply, so we'll also have to import."

According to him, the Department of Trade and Industry had discussed the matter with the Department of Agriculture, explaining that poultry and hog raisers could no longer meet the growing demand with their production.

Poultry raisers have assured the government that they can meet demand but has so far not done so, he said. "They've assured the government that they'll meet the demand with their supply, but prices have now reached 110 pesos a kilo from just 95 pesos a month ago," he added. "We're already getting complaints from wet markets and groceries, mainly about lack of supply and high prices."

Cristobal commented that the Department of Trade and Industry would work closely with the Department of Agriculture on the proposed importation of chicken and pork. This is to ensure that consumers would have enough supply of both at prices lower than current levels.

Other than those of chicken, pork and flour, prices of other commodities have remained stable despite the one-peso increase in fuel product prices that oil companies have made in the past four days, Cristobal revealed.

TheStar.com - Sun Life Financial eyes U.S. acquisitions

2004-05-20T09:03:00.000+08:00

Sun Life Financial is looking for more acquisitions in the United States — despite costly troubles with a subsidiary there — on the heels of amazing insurance sales growth in India and China, CEO Donald Stewart says.

Individual insurance sales in India have grown almost 200 per cent and the direct sales force has grown to 10,000 from 5,500 a year ago, Stewart told the firm's annual meeting today.

Sun Life Financial operates in India through a joint venture with Aditya Birla Management Corp. and has 33 branches in 27 cities.

"The picture for China is also bright," Stewart said. ``Following our expansion into Tianjin only two years ago — where insurance sales have increased by 80 per cent — our joint venture with China Everbright Group has begun selling life insurance to the 13 million people in Beijing, China's capital city."

Sun Life Financial (TSX: SLF) has more than 2,000 agents in Tianjin and 500 agents in Beijing.

Stewart also told shareholders the Toronto-based company intends to grow in the United States, where investment subsidiary Massachusetts Financial Services Co. has run afoul of market regulators and faced more than $400 million worth of fines.

"We continue to assess transactions that will build on our existing U.S. businesses. We are `in the market' and actively looking for acquisitions in the United States that are the right fit, right price and right quality."

On the recent financial settlements between MFS and the U.S. Securities and Exchange Commission in the U.S., he said Sun Life acted quickly and decisively. The Canadian firm paid $410 million in two instalments to the SEC over irregularities at Boston-based MFS and replaced the subsidiary's CEO in February.

"We appointed new leadership, changed policies and strengthened our governance frameworks," Stewart said. Sun Life has two U.S. business groups: MFS and life insurance-annuity operations.

In Canada, Stewart said, Sun Life has "finished one of the largest integrations in Canadian corporate history — our merger with Clarica — on time, on target and on the money."

Sun Life reported previously that it earned a record $366 million, or 61 cents per share, in the quarter ended March 31. That compared with earnings of $343 million, or 56 cents a share, in the year-earlier quarter. Revenue dropped to $5.54 billion from $5.76 billion.

Sun Life Financial and its partners have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of March 31, Sun Life had total assets under management of $370 billion.

On the Toronto stock market Wednesday, Sun Life shares (TSX: SLF) rose 35 cents to $36.53.

Jobs Test

2004-05-20T00:40:00.000+08:00

Philippines to promote itself as an outsourcing hub

2004-05-19T13:36:00.000+08:00

The Philippines is to engage in a promotion program in the US aimed at presenting the country as Southeast Asia’s IT hub. The country presently ranks sixth in A.T. Kearney’s overall 2004 offshore location attractiveness index and is the fourth choice location in Asia, preceded by India, China and Malaysia.

In a coordinated effort between the Philippine government and the Philippine Long Distance Telephone Co. (PLDT), the company will establish a marketing office in the US to promote the country’s outsourcing services, which include call centers, application systems and software development, animation, medical transcription, engineering and architectural design, and BPO services.

Aside from English proficiency and affinity to American culture the Philippines offers other advantages. In other recent survey the country was ranked among the lowest operational cost location in a recent survey of over 100 world cities. Infrastructure in Metro Manila and newly opened IT locations such as Cebu are superior relative to India and China.

Trade Secretary Cesar Purisima has stated that he expects in the next five years the Philippines to be able to attract 50% of the worldwide call-centre business.

Euro-Med Stkholders Ok Div

2004-05-19T13:33:00.000+08:00

MANILA (Dow Jones)--Euro-Med Laboratories (EURO.PH), a Philippine pharmaceutical products maker, said its stockholders approved the 10% stock dividend declared by its board in December. The record date will be set after the Securities and Exchange Commission and the stock exchange approve the dividend. In line with the dividend payment, stockholders also approved the issuance of 200 million shares with a par value of 1 peso ($1=PHP55.791) each, from its authorized and unissued capital.

EEI Corp. (EEI.PH) said its board has approved the increase in the Philippine construction company's preferred shares to 200 million from 120 million, with the par value of each preferred stock raised to 1 peso ($1=PHP55.817) from PHP0.50. EEI's board also deferred an earlier plan to form a holding company that it plans to list on the bourse.

Philippines' Jollibee To Absorb 3 Food Units >JFC.PH

2004-05-13T21:46:00.000+08:00

MANILA (Dow Jones)--Jollibee Foods Corp. (JFC.PH), the Philippines' largest fast-food operator, Thursday said its board has approved a plan for the group to absorb its three wholly owned food units as part of efforts to consolidate operations.

Mary's Foods Corp., Donut Magic Philippines Inc. and Ice Cream Copenhagen Philippines Inc. will be absorbed by Jollibee through a merger with Jollibee as the surviving entity.

"The primary purpose of the merger is to consolidate ownership of the three non-operating subsidiaries into Jollibee Foods Corp. The merger and consolidation are expected to result in tax, cost and administrative efficiency," said Jollibee in a disclosure to the stock exchange.

The merger plan will be submitted to stockholders for approval during the company's annual meeting on June 18

Philippines' Arroyo Retakes Lead in Unofficial Counting of Vote

2004-05-13T21:45:00.000+08:00

May 13 (Bloomberg) -- Philippine President Gloria Arroyo today retook the lead from movie star Fernando Poe Jr. in the country's presidential election, according to unofficial preliminary returns.

Arroyo had 912,807 votes compared with Poe's 826,061 at 5 p.m. Manila time, with 7.2 percent of Monday's ballots counted, according to the National Citizens' Movement for Free Elections, a government-sanctioned collator of precinct tallies. The lead shifted three times today.

Arroyo will win the election with 41 percent of the vote, according to a post-election survey released on Tuesday by Social Weather Stations, one of the Philippines' two main pollsters. The survey gave Poe 32 percent.

Official results may take weeks. Ballots are counted by hand in an election with as many as 400,000 candidates running for national, provincial and local posts. About 43 million of the nation's 83 million people are registered to vote. An average four of five registered Filipinos voted in past presidential elections. This year's turnout hasn't been reported.

Philippines' Ayala Land 1Q Net PHP536M Vs PHP510M

2004-05-06T22:28:00.000+08:00

Ayala Land Inc. (ALI.PH) - Manila
1Q ended March 31:
Figures are in pesos (PHP)
2004 2003
Revenue PHP3.69 Bln PHP3.11 Bln
Cost and expenses 3.12 Bln 2.57 Bln
Net profit 536 Mln 510 Mln
($1=PHP55.528)

Results are based on Philippine accounting standards and are unaudited.

MANILA (Dow Jones)--Ayala Land Inc. (ALI.PH), the Philippines' largest property group, Thursday posted higher first-quarter earnings, boosted largely by its shopping mall operations.

The company said its first-quarter net profit rose 5.1% on year to PHP536 million from PHP510 million, as revenue expanded 19% to PHP3.69 billion from PHP3.11 billion.

"Ayala Land successfully launched new projects and maintained market interest in existing key developments amidst pre-election concerns," the company said in its financial statement. The country will hold national elections Monday.

Rental properties posted revenue growth of 9% to PHP947 million and comprised 26% of total revenue for the period. Shopping center rental revenue represented 79% of total rentals, and grew 12% on year.

The company's office buildings for lease maintained high occupancy rates which averaged 96%, and contributed 15% to total rentals.

Ayala Land started construction in March of a new office building - the 15,800-square-meter PeopleSupport call center in the financial district of Makati. It will be the country's first structure fully dedicated to call center and business process outsourcing operations.

Land sale revenue, representing 18% of total first-quarter revenue, improved 14% on year to PHP666 million, driven by the expansion of existing residential development, aggressive sales promotion, the completion of more amenities, and industrial lot sales.

Residential unit sales revenue rose 14% to PHP467 million, or 13% of total revenue.

Low-cost housing unit Laguna Properties Holdings Inc. saw sales increase 49% to 381 units on the launching of new projects. This translated into revenue of PHP474 million, or 13% of Ayala Land's total revenue for the first quarter.

Its hotel operations had revenue of PHP380 million, or 10% of total first-quarter revenue, and up 20% on year due to higher occupancy and room rates.

Makati Development Corp., which does construction projects, had revenue of PHP325 million, up 58% on year and contributing 9% to total revenue.

Community Innovations Inc., which focuses on the middle-income market, had revenue of PHP203 million, contributing 5% to total revenue, and more than double from a year ago.

As of end-March, Ayala Land had total assets of PHP68.2 billion, cash reserves of PHP4 billion and total borrowings amounting to PHP14.24 billion.

In the three months to March, Ayala Land spent PHP2.22 billion, or 23%, of its 2004 total budget of PHP9.5 billion for project and capital expenditure.

Philippines' ICTSI Says 1Q Rev Up 41% On Year

2004-05-06T22:22:00.000+08:00

MANILA (Dow Jones)--International Container Terminal Services Inc. (ICT.PH), a Philippine port operator, Thursday said its first-quarter revenue rose 41% on year due to contributions from a new unit operating in Poland.

The company didn't disclose actual revenue figures. Neither did it release other earnings data.

ICTSI's new unit, Baltic Container Terminal, took over the operations of the Polish port of Gdynia in mid-2003.

In the first quarter of 2003, ICTSI posted revenue amounting to 1.41 billion pesos ($1=PHP55.645).

Philippines Globe Says Worst Is Over In Subscriber Churn

2004-05-06T22:10:00.000+08:00

MANILA (Dow Jones)--Globe Telecom Inc. (GLO.PH), the Philippines' second-largest telecommunications company, said its high rate of disconnection in the first quarter won't likely occur again, and that net subscriber additions in April suggest the worst is over.

Globe said new subscribers totaled 2.23 million in the three months to March, but net subscriber additions came to only 277,197. This means that 1.95 million subscribers left, or churned, from Globe's network.

Philippine Long Distance Telephone Co. (TEL.PH), Globe's chief rival, added 1.4 million new cellular subscribers in the first quarter, more than four times that of Globe. PLDT's cellular operations are carried through unit Smart Communications and affiliate Pilipino Telephone Corp. (PLTL.PH).

Globe President Gerardo Ablaza said in a briefing on the company's first quarter results that around 70% of the clients that churned were recognized in January and February although they actually left the network last year.

It takes six months for Globe to recognize subscribers that have churned due to the expiry feature of its service.

"I think in terms of churn, the biggest challenge is behind us," said Ablaza. He added that from a high of 7% in February, churn declined to around 4.2% in March.

"The trend improved in April and March, when average monthly net additions totaled 370,000," Ablaza said. "The root cause of this (high) churn has been addressed."

Globe blames the high level of disconnection in the first quarter to its delayed reaction to Smart's free swap of subscriber identification module, or SIM, and electronic reload of call credits.

Smart lured subscribers from its competitors by offering to swap its SIM - basically a cellular phone line - for its competitors' SIM cards for free.

It also launched its E-Load service in mid-2003, which offered electronic reloading of call credits for prepaid lines. E-loads start at only 30 pesos ($1=PHP55.660), a third of the lowest denomination for call cards.

In response, Globe launched the over-the-air call credit reload in November, and mobilized an army of marketers early this year to win over its competitors' subscribers through SIM swaps.

Delfin Gonzalez, Globe's chief financial officer, said each SIM swap costs the company PHP100, but the company plans to continue with the program to maintain its market share.

Globe ended the first quarter with 9.1 million subscribers, and PLDT with 14.4 million cellular subscribers.

Philippines Cosmos Bottling 1Q Net Sales Up 35% On Yr

2004-05-06T22:03:00.000+08:00

MANILA (Dow Jones)--Cosmos Bottling Corp. (CBC.PH), a softdrinks unit of conglomerate San Miguel Corp. (SMCB.PH), Thursday said its net sales surged in the first quarter, helped by its wider distribution network.

"In the first quarter of 2004, CBC registered a 35% increase in net sales revenue versus last year," Cosmos President Roberto Huang said in the annual stockholders' meeting Thursday.

Huang didn't provide actual earnings figures, but the percentage rise suggests that net sales rose to 2.61 billion pesos ($1=PHP55.65) in the first quarter from PHP1.94 billion a year earlier.

He said Cosmos expects to post double-digit growth for full-year 2004, thanks to its wider reach as a result of its piggybacking on the distribution network of parent San Miguel.

Cosmos posted a 7% growth in sales volume in 2003, giving it a 22% share of the local softdrinks market and making it the second top industry player behind Coca-Cola.

In 2003, the company posted net sales of PHP9.9 billion, up 10% on year, and operating income of PHP872 million, up 9%.

PLDT net doubles in Q1 on strong mobile units

2004-05-04T20:28:00.000+08:00

PLDT , the country's largest phone firm, said on Tuesday its first-quarter net income more than doubled, driven by strong revenues as better and cheaper services persuaded more Filipinos to use mobile phones.

Philippine Long Distance Telephone Co. (PLDT), a quarter owned by Hong Kong's First Pacific Co. Ltd., said its first-quarter net income leaped to P5.24 billion from a year ago's P2.5 billion.

The first-quarter result beat market expectations for a net profit of P4.5 billion to P4.7 billion.

Reuters Research, a unit of Reuters Plc., forecasts PLDT's 2004 net income will rise 64 percent to P18.34 billion, which translates into an average quarterly profit of P4.58 billion for PLDT.

"This is a very good first quarter result for PLDT. It even exceeded the upgraded consensus forecast of P4.5 billion for the first quarter," said AB Capital economic analyst Jose Vistan.

The PLDT group -- which includes leading mobile firm Smart Communications Inc and third-ranked Piltel -- said it added a record number of over 1.4 million new mobile users in the first quarter to bring its total subscriber base above the 14.4 million mark.

Analysts said there was still a room for strong growth, with only 28 percent of the country's 82 million people estimated to own a mobile phone at the end of 2003.

At least one analyst predicted a penetration rate of 36 percent by the end of 2004, rising to 45 percent in 2006.

PLDT -- which accounts for 58 percent of the mobile phone industry through wholly-owned Smart Communications Inc. and 45-percent owned Pilipino Telephone Corp. (Piltel) -- is widely expected to benefit from a flood of voice calls and text messages around the national elections on May 10.

The share price of PLDT fell 2.1 percent in the first quarter, underperforming the stock market's 1.25 percent decline, due to political anxieties ahead of the elections.

PLDT was topping the active list and was up 3.26 percent or P35 at P1,110, pulling the main index 0.72 percent higher.

Philippines' ICTSI Plans $38M In Capital Spending

2004-04-30T21:29:00.000+08:00

MANILA (Dow Jones)-- International Container Terminal Services Inc. (ICT.PH), or ICTSI, a Philippine port operator, has earmarked as much as $38 million in capital spending this year, part of which will be spent on a security program for the Manila International Container Terminal, which it exclusively operates.

The port operator will spend about $16 million for its Poland facility, $12 million for its port operation in Brazil and $10 million to beef up security at its Manila terminal to meet tougher U.S. security requirements spawned by terror threats, Chairman and President Enrique Razon told reporters after the company's annual stockholders' meeting.

ICTSI is giving priority to the U.S. Container Security Initiative project this year as 40% of its Manila terminal container traffic are bound for the U.S., Razon said.

He added, however, that the company itself may not have to spend for the $10-million security program as the Philippine government is considering pursuing the project.

ICTSI will source its capital spending requirements from internally generated funds, Razon said.

Razon added that the company is eyeing potential port projects in other parts of Eastern Europe, Africa and the Middle East.

"Business was good in the first quarter," Razon said, but declined to provide details. ICTSI said it will release its first-quarter results on May 14.

In the first quarter of 2003, ICTSI posted a steep on year drop in net profit to 102.5 million pesos ($1=PHP56.023) from PHP1.88 billion, as the year-ago figure included extraordinary gains from the sale of some of its overseas interests.

Philippines Belle Corp 1Q Net PHP24.5M Vs PHP163.4M

2004-04-30T21:11:00.000+08:00

Belle Corp. (BEL.PH) - Manila
1st quarter ended March 31.
All figures are in pesos (PHP).
2004 2003
Net sales PHP60.3 mln PHP41.4 mln
Cost of sales 14.9 mln 15.9 mln
Gross profit 45.4 mln 25.5 mln
Depreciation 6.48 mln 11.7 mln
Operating expenses 19.2 mln 16.1 mln
Operating income 19.2 mln (2.28 mln)
Other income 7.94 mln 172.5 mln
Net profit 24.5 mln 163.4 mln
Earnings per share 0.004 0.026
($1=PHP56.04)

Notes:

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Item in parenthesis is a loss.

Results are based on Philippine accounting standards and are unaudited.

MANILA (Dow Jones)--Belle Corp. (BEL.PH), a Philippine property and gaming concern, Friday posted a first quarter net profit of PHP24.5 million, sharply lower than the PHP163.4 million posted a year earlier.

While sales were higher this year, Belle said net profit in the year-ago quarter included a PHp251 million one-off gain from the settlement of its floating rate notes.

Belle said real estate and club share sales in the January-March period this year jumped to PHP60.3 million from PHP41.4 million a year earlier, mainly due to sales of farm lots at its Plantation Hills project in the resort city of Tagaytay.

Plantation Hills was launched in the second half of 2003.

Belle said gross profit for the quarter rose to PHP45.4 million from PHP25.5 million.

Operating income totaled PHP19.2 million, reversing an operating loss of PHP2.28 million in the year-ago period.

Philippines stuck in debt trap

2004-04-29T20:23:00.000+08:00

MANILA - Heavy debt and low investment are clouding the long-term prospects for the Philippine economy, which now relies mainly on consumer spending, the Asian Development Bank has warned.
Gross domestic product (GDP) grew 4.5% last year with private consumption on a 13-year high, and the economy is expected to improve slightly to between 4.5 and 5.5% in the next two years, the Philippines-based lender said.

Meanwhile, the population has been growing at a 2.36 clip, leading to minimal growth in per capita income and with exports stuck in single-digit growth. Unemployment stands at 11%.

Foreign direct investment flows plunged to 320 million dollars last year from 1.8 billion dollars in 2002, with FDI growth expected to be below 1% in the next two years, the bank's deputy chief economist Jean-Pierre Verbiest said.

The country "needs to raise the investment rate. That is the only way to raise economic growth and generate employment," he said, adding that curbing the population growth rate "will help."

A second ADB economist, Jesus Felipe, said GDP growth would have to rise by at least 6% annually "for one decade", with per capita GDP growing at least 4.5% every year, to make a dent on widespread poverty.

Verbiest said the country was "losing a lot of competitiveness" in attracting foreign capital due to inadequate infrastructure, governance and regulatory issues, legal constraints to foreign investment in some sectors of the economy and a rigid labour market.

These structural problems go beyond the general uncertainty being ascribed to the May 10 presidential election, he added.
Felipe said the southeast Asian country was in a vicious cycle.

Bad infrastructure is linked to the "lack of investments over many years," which in turn is "related" to the Philippines' chronic budget deficits.

An ADB report warned that "without additional tax measures, the government may miss its (revenue) target" for 2004.
To make up for weak revenue streams, government debt has soared to about 100 billion dollars - half of it in external debt - or about 120% of GDP.

The high debt service load crowds out government spending on infrastructure and leaves precious little for improving the lot of the poor, who make up nearly 40% of the population according to government figures.

The "fiscal issue is central to the Philippines' economic outlook," Verbiest said.

"That debt has to decrease," he said. "Essentially, you have to raise revenues. You have no other alternatives."

Verbiest said the high debt made the Philippine economy vulnerable to a looming rise in interest rates in the United States expected in the second half.

Higher rates would raise the debt service, while a combination of higher rates and higher oil prices, which the bank projected to average at 30 dollars a barrel this year, "could influence the peso," he said.

The Philippines has only managed to post a national budget surplus six times over the past 30 years — four of them before the 1997 Asian financial crisis, Felipe said.

Meanwhile, the rate of nominal wage increases have been above that of productivity improvements in the past 20 years, he added.

The budget deficit picture should improve to about 4.2% of GDP this year from 4.6% of GDP in 2003, "but certainly there is much scope to raise revenues," Verbiest said.

The government's revenue-to-GDP ratio, at 10.4% in 2003, is among the lowest in the region. Verbiest said it has to rise above 20% at the very least.

AFP

Philippines to resume mango exports to US

2004-04-28T06:22:00.000+08:00

Philippines to resume mango exports to US
Posted: 4:13 PM | Apr. 27, 2004

Agence France-Presse

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THE PHILIPPINES will resume mango exports to the United States next month after having passed the inspection requirements of the US Department of Agriculture, a Filipino agricultural official said Tuesday.

Mango shipments to the United States have been on hold since December because of lack of funds for US inspection.

Manila has since raised sufficient money to bring in US inspectors to check the fruit produced in Guimaras province in the central Philippines, said Luben Marasigan of the quarantine division of the Bureau of Plant Industry.

However, even after shipments are resumed, only mangoes from Guimaras will be allowed into the United States as the US inspectors have certified that area as free from pests.

The Philippines expects to ship 300 tons of mangoes to the United States this year, the agriculture department said.

Philippines San Miguel Ppties '03 Net PHP233M >SMCB.PH

2004-04-28T06:07:00.000+08:00

San Miguel Properties Inc. (SMP.PH) - Manila
Financial year ended Dec. 31
All figures are in pesos (PHP)
2004 2003
Revenue PHP441.2 mln PHP379.9 mln
Cost of sales 69.7 mln 68.1 mln
Gross profit 371.5 mln 311.8 mln
Operating expenses 113.9 mln 142.1 mln
Operating income 255.5 mln 169.9 mln
Other income 22.2 mln (63.6 mln)
Net profit 233.0 mln 92.0 mln
Earnings per share 1.91 0.78
($1=PHP55.55)

Results are based on Philippine accounting standards and are unaudited.

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MANILA (Dow Jones)--San Miguel Properties Inc. (SMP.PH), a unit of food and beverage giant San Miguel Corp. (SMCB.PH), said Tuesday its net profit more than doubled in 2003 on strong sales of its residential projects and from leasing commercial space.

It said sales jumped to PHP233 million in 2003 from PHP92 million in the previous year as revenue jumped to PHP441.2 million from PHP379.9 million in 2002.

San Miguel Properties said it is now completing the sale of the remaining properties at its two residential projects.

"Most of the marketing and sales program for the remaining projects - Marvilla and Wedgewoods - are already in place amid expectations that the market is poised for growth this year," it said.

Its said expenses last year declined 20% on year to PHP113.9 million from 142.1 million.

Philippines' Meralco 1Q Net Pft PHP344M -2-

2004-04-28T06:01:00.000+08:00

Manila Electric Co. (MERB.PH) - Manila.
1st quarter ended March 31:
Figures are in pesos (PHP).
2004 2003
Operating revenue PHP32.47 bln PHP31.19 bln
Net profit 344 mln (325 mln)
($1=PHP55.55)
(The figure in parenthesis is a loss.)

Results are based on Philippine accounting standards and are unaudited.

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MANILA (Dow Jones)--Manila Electric Co., or Meralco, Monday said it swung to a first quarter net profit from a loss a year earlier on an increase in the volume of electricity sold and a steady expansion of its customer base.

Meralco, the country's largest power distributor, serves metropolitan Manila and its neighboring provinces that together produce about half of the Philippine gross domestic product.

In the three months to March, Meralco said it realized net profit of PHP344 million. That was a sharp reversal from the PHP325 million net loss in the year-ago quarter.

It said operating revenue rose to PHP32.47 billion in the first quarter from PHP31.19 billion a year earlier.

Electricity sales, the company said, rose 2.2% on year to 5.59 billion kilowatt-hours from 5.47 billion kilowatt-hours.

Its customer based expanded 3.3% on year to 4.1 million.

Meralco said electricity sales had a flat start in January due to the extended holiday season, which saw many of metropolitan Manila residents heading to the provinces. Sales, however, picked up 6.2% on year in February and 7.8% in March.

The first quarter historically contributes around 22% of Meralco's annual sales. The second quarter is usually the strongest quarter for Meralco, since demand for air conditioning is highest during these months.

Meralco said commercial customers were the main drivers of power sales due to the opening of retail establishments, particularly in shopping malls. Sales to the commercial segment rose 3.4% on year to 1.98 million kilowatt-hours.

"This trend is seen to continue with the opening and expansion of new and existing shopping malls within the year," the company said.

Shopping mall operators Robinsons Land Corp. (RLC.PH) and SM Prime Holdings Inc. (SMPH.PH) are set to open new retail facilities within Meralco's franchise area this year.

Electricity sales to industrial users still rose 1% on year to 1.57 million kilowatt-hours, despite the curtailment of the one-day power sales program of state utility National Power Corp. (NAP.YY) for 14 days.

Meralco said operating income for the first quarter nearly tripled to PHP2.37 billion from PHP732 million, due to an increase in the volume of electricity sold and the effect of the PHP0.0865 a kilowatt-hour increase in power rates implemented in June last year.

It said operating expenses declined 1.3% on year to PHP30.1 billion from PHP30.5 billion on account of lower depreciation and amortization and other taxes.

Other expenses for the first quarter surged 61% on year to PHP1.88 billion from PHP1.17 billion, due mainly to the cost of electricity lost either to pilferage or technical problems. Meralco is only allowed to recoup system loss of 9.5%, but its actual system loss stood at 13.38% in the first quarter.

Earnings per share stood at PHP0.14 in the first quarter compared with a loss of PHP0.50.

Capital expenditures for the first quarter amounted to PHP1.29 billion, down 9.8% from PHP1.43 billion. Almost all of the funds spent in the first quarter went to improving its electricity distribution network.

Meralco's earnings would have been higher if not for a Supreme Court order in January that stopped the implementation of a regulatory order, which would have raised power rates by PHP0.12 a kilowatt-hour.

Strong sales of Meralco is a good sign for the Philippines' economic performance in the first quarter.

Globe Telecom's Ringback Tone Service Surpasses 100,000 Subscribers in the First Week of Launch

2004-04-28T05:59:00.000+08:00

Globe Telecom's Ringback Tone Service Surpasses 100,000 Subscribers in the First Week of Launch

SEOUL, Korea, April 27 /PRNewswire/ -- In a move that firmly places ringback tone as the rapidly emerging mobile data service second only to ring tones in terms of popularity and market success, Globe Telecom of the Philippines has made this service available to its subscribers. The service launched on April 17, 2004, under the service name of "MyGlobe Ringback," has surpassed 100,000 subscribers in just one week of the launch with multiple downloads by a majority of the users.

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The industry leading solution and service operation provided by WiderThan.com has been highly credited for its high sound quality and IVR Pre-Listening feature pushed through local SMS promotion where SMS usage rate is the highest in the world with a remarkable average response rate of 30%. The IVR Pre-Listening has recorded a high rate of simultaneous connections per second.
"MyGlobe Ringback, will provide our users with an exciting and new mobile communication experience that will further enhance the level of personalization," said Mr. Gerardo C., Ablaza, Jr., CEO of Globe Telecoms. "Having WiderThan.com as a reliable partner for end-to-end service delivery gives us a competitive edge and opportunity to boost revenues in our mobile data services," he added.
WiderThan.com's CEO, Mr. Jinwoo So, stated, "Globe's adoption of ringback tone service is of great significance for WiderThan.com as it represents a market first export of ringback tone ASP (Application Service Provider) operational expertise to international markets," adding, "The modular system architecture of WiderThan.com's ringback tone solution can guarantee easy and cost effective system expansion. No matter what the network environment entails, WiderThan.com can offer flexible end-to-end deployment."
As a leading mobile carrier in the Philippines with more than 9 million subscribers, Globe Telecom has chosen WiderThan.com's technology based on the company's successful business model with SK Telecom, which includes over four years' proven operational skills and a number of other significant ringback tone service deployments around the world with more ringback tone deployments in Europe and USA to be announced in the coming months. WiderThan.com will be announcing more of its market proven ringback tone solution deployments in Europe and North America in the coming months.
About Globe Telecom
Globe Telecom, Inc. is a publicly listed corporation in the Philippine Stock Exchange (PSE). Globe Telecom is one of the leading providers of digital wireless communication services in the Philippines utilizing a fully digital network based on Global System for Mobile Communication (GSM) technology. It also offers a broad range of wireline voice communication and data transmission services, as well as domestic and international long distance communication services or carrier services. (http://www1.globe.com.ph/)
About WiderThan.com
WiderThan.com is the world's first ringback tone solution and service provider currently managing service operation for the largest base of ringback tone service subscribers. Founded in June 2000, the company is dedicated to development and delivery of market-driven mobile Internet solutions and services in the area of multimedia, mobile entertainment and mobile advertisement for operators worldwide. As an integral player in the mobile Internet value chain, WiderThan.com's key differentiators are its proven mobile Internet market experience and technical expertise. WiderThan.com currently has over 250 employees worldwide and has achieved significant revenue of three-digit growth rate since its establishment. Major customers include SK Telecom in Korea, Orange in Israel, APBW in Taiwan, M1 in Singapore, SLD Telecom in Vietnam, Guangdong Unicom and China Mobile in China. (http://www.widerthan.com/)
About WiderThan.com's Ringback Tone Solution
Ringback tone is personalized mobile music service where the caller hears music clips or voice instead of the traditional switchboard "ring-ring" tone. The world's first ringback tone service widely known as, COLORing(TM), was launched in May, 2002 by SK Telecom resulting in tremendous success with over 6.5 million subscribers currently enjoying this service. The ringback tone service provides mobile operators with an important source for generating revenue. WiderThan.com has diversified its ringback tone solution to address different system environments of mobile operators worldwide.
(*COLORing(TM) is a branded ringback tone service of SK Telecom in Korea)

Contact: Theresa Park
+82-11-9999-0942
nhpark@widerthan.com

WiderThan.com Co., Ltd.

CONTACT: Theresa Park of WiderThan.com Co., Ltd., +82-11-9999-0942,nhpark@widerthan.com

Web site: http://www.widerthan.com/http://www1.globe.com.ph/

IMF upgrades growth outlook for Philippines

2004-04-23T04:30:00.000+08:00

IMF upgrades growth outlook for Philippines
Posted: 11:19 PM | Apr. 22, 2004

Inquirer News Service

THE INTERNATIONAL Monetary Fund has upgraded its 2004 economic growth outlook for the Philippines from 4.0 percent to 4.5 percent in terms of gross domestic product (GDP), but expects the country to remain as the laggard among Asia's emerging economies.

Despite the upgrading, the growth forecast for the Philippines is the lowest by IMF for countries in the ASEAN region this year. The IMF projects 7.0-percent growth for Thailand, 5.7 percent for Malaysia, and 4.8 percent for Indonesia.

The IMF projects growth in these the four ASEAN countries together at 5.4 percent, compared with the 5.0 percent they registered last year.

"In the Philippines, vulnerabilities remain, so it is important -- especially during the run-up to the presidential election in May -- to stay on the fiscal course and stand ready to tighten monetary policy should exchange rate depreciation pose a threat to the attainment of the inflation target," the IMF said in its latest world economic outlook, which it released on Thursday.

"The priorities are to act forcefully and without delay to increase tax revenue, restructure the power sector, strengthen the banking system and improve the business environment," it said.

The increased GDP growth projection for the Philippines is in line with an expectation of the IMF of a strong rebound in emerging Asian economies after the outbreak of killer virus SARS last year.

The IMF said "emerging Asia" -- which it defines as including China, Hong Kong, India, Indonesia, South Korea, Malaysia, Singapore, Taiwan, Thailand and the Philippines -- grew rapidly over the past three decades and was an increasingly dynamic force in the global economy.

It said the sharp rise in intra-regional trade suggested that the region as a whole was becoming less dependent on the rest of the world and more of an autonomous engine of growth.

It cited China in particular as an important consumer of final goods, contributing to growth in the rest of the world especially Japan.

The IMF projected emerging Asia to grow by 7.2 percent this year, sustaining the same level of growth posted last year.

"With the recovery following the Asian financial crisis, emerging Asia's imports from the rest of the world now account for almost 2.5 percent of GDP of the rest of the world, compared with 4 percent for the European Union and 5.5 percent for the United States," its report said.

With China's increasing integration and its dual role as a production hub and emerging consumer of final goods, its imports were increasingly rapidly from all trading partners.

The IMF projects an 8.5-percent growth for China this year, making China the only country in emerging Asia that it expects to outperform the 7.2-percent forecast growth for the region.

It projects growth in the newly industrialized Asian economies -- South Korea, Taiwan, Hong Kong and Singapore -- to average 5.3 percent, with Hong Kong and South Korea projected to grow the fastest at a rate of 5.5 percent. With INQ7.net

PHILIPPINES BUSINESS BRIEFS: Union Bk NPL Ratio 16.45%

2004-04-20T03:31:00.000+08:00

MANILA (Dow Jones)--Union Bank of the Philippines' (UBP.PH) nonperforming loans totaled 4.75 billion pesos ($1=PHP55.767), or 16.45% of its loan portfolio, based on its published consolidated statement of condition as of March 23. In the period ended Dec. 16, Union Bank's nonperforming loans totaled PHP4.67 billion, or 13.87% of its loan portfolio.

Jollibee Foods Corp. (JFC.PH) will Monday list 47,140 additional common shares sold under the fast-food company's stock purchase and option plan. This will bring the total shares issued under the stock option plan to 12.335 million out of the 26.4 million set aside for the program.

Philippine Savings Bank (PSB.PH), or PSBank, reported its nonperforming loans totaled 1.27 billion pesos, or 5.72% of its loan portfolio, as of March 23. The bank ended 2003 with a nonperforming loan ratio of 5.7%. PSBank is a unit of Metropolitan Bank & Trust Co. (MBT.PH), the country's largest bank in terms of assets.

Metropolitan Bank & Trust Co.'s (MBT.PH) nonperforming loans stood at 34.23 billion pesos ($1=PHP55.767), or 13.26% of its total loan portfolio, as of Mar. 23. In the period ended Dec. 16, Metrobank's bad loans stood at PHP34.96 billion, or 13.69% of total loans. The bank is the largest in the Philippines in terms of assets.

-By Manila Bureau; Dow Jones Newswires; (632) 885-0290; djn.manila@dowjones.com

Philippines Belle 2003 Net PHP172.8M Vs PHP118.9M

2004-04-19T11:48:00.000+08:00

Friday April 16, 2:23 PM
Philippines Belle 2003 Net PHP172.8M Vs PHP118.9M

Belle Corp. (BEL.PH) - Manila
FY ended Dec. 31
Figures in pesos (PHP)
2003 2002
Revenue PHP274.9 Mln PHP320.9 Mln
Costs and expenses 233.9 Mln 295.7 Mln
Operating income 40.94 Mln 25.24 Mln
Other income 112.8 Mln 62.29 Mln
Net profit 172.8 Mln 118.9 Mln
EPS 0.017 0.013
($1=PHP55.752)

Results are based on Philippine accounting standards and are audited.

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MANILA (Dow Jones)--Belle Corp., a Philippine property and gaming concern, Friday posted higher 2003 earnings on lower expenses, reduced exposure to noncore businesses and a successful debt restructuring effort, which began the year before.

The company said its net profit last year rose 45% to PHP172.8 million from PHP118.9 million, as cost and expenses fell 21% to PHP233.9 million from PHP295.7 million on lower depreciation expenses resulting from the company's disposal of unnecessary fixed assets.

"The company's profitability was significantly enhanced by its reduction in exposure to non-core investees and its successful debt restructuring efforts in 2002," Belle said in its audited financial report.

Losses from noncore businesses fell 94% to PHP18.4 million last year from PHP329 million in 2002.

The company's lower debt levels, especially in its dollar-denominated debt, greatly reduced its interest rate and foreign exchange risk. As a result, interest expense fell 34% to PHP234.5 million in 2003 from PHP357.7 million a year earlier.

Belle said its net foreign exchange losses incurred from its dollar-denominated debt fell 64% to PHP51.3 million last year from PHP144.2 million in 2002.

However, Belle still had to contend with a 14% contraction in revenue to PHP274.9 million last year from PHP320.9 million in 2002, due to an extraordinary gain from the sale of an undeveloped piece of land in the previous year.

Real estate and club shares sale, however, improved to PHP254 million from PHP240.4 million for the period, due mainly to the launch of a new residential development project.

PHILIPPINES: Cosmos 2003 income falls by third : just-drinks.com News

2004-04-18T08:04:00.000+08:00

16 Apr 2004
Source: just-drinks.com editorial team

Cosmos Bottling has posted a dramatic fall in net income for 2003. The soft drink manufacturer said yesterday in a filing to the Securities and Exchange Commission, that net income last year dropped by 37% to PHP544m (US$9.76m) from PHP860m in 2002.

In the filing, the company said: “This marked the second consecutive year the company experienced single-digit volume growth of 7% in 2003 and 2% in 2002. The minimal increase is principally attributed to the concentrate shortage experienced by the company in first semester of 2003 and the peculiar weather conditions during the year.”

Net sales for 2003 rose slightly to PHP9.9 billion from PHP9 billion the previous year.

Manila praised for beating budget deficit target

2004-04-17T21:57:00.000+08:00

By Roel Landingin in Manila
Published: April 17 2004 5:00 | Last Updated: April 17 2004 5:00

The Philippine government kept its budget deficit within target for the first three months of this year, as improved revenue collection and lower interest payments helped offset higher than expected spending ahead of May's presidential polls.

The first-quarter budget shortfall was 56.8bn pesos ($1bn, €850m, £570m), about 4 per cent below the target limit of 58.9bn pesos, said the department of finance. Revenue was 1.3bn pesos higher and expenditure 688m pesos less than expected, the latter mainly reduced by lower interest payments.

"Because of the below-target deficit we have achieved in the first quarter, we expect the second quarter to be better," said Juanita Amatong, the finance secretary.

Economists commend the Philippine Treasury for its debt management but the country's debt position continues to deteriorate because successive governments and legislatures have failed to cut budget deficits. The Philippines has a projected deficit of 197bn pesos this year and requires at least $1.8bn in foreign borrowing to help cover the shortfall.

In the first quarter, spending by government agencies, which accounts for about two-thirds of total cash outlays, exceeded the target by 4.6bn pesos, or 3.3 per cent, as election campaigns began.

This overspending was offset by lower interest payments, which were 5.3bn pesos, or 7.2 per cent, lower than expected. Mina Figueroa, the government's treasury chief, said interest payments had been cut because the government had reduced its borrowing from domestic lenders.

She said many of the bids in treasury bill and bond auctions had been rejected because of the high yields investors were demanding. Unlike other Asian governments that have accumulated large foreign exchange reserves and paid down debt, the Philippines has seen its risk premium rise sharply.

News that the government's first-quarter deficit stayed within target brought some cheer to investors and analysts who are worried that election-related spending could bloat the budget shortfall.

"Overall, I'd say the government is doing a good job," said Luz Lorenzo, chief economist at ATR Kim Eng Securities, a regional stock broker.

While praising the Bureau of Internal Revenue, the tax collection agency, for implementing innovative measures to improve tax compliance, Ms Lorenzo said new measures, such as linking "sin taxes" on alcohol and cigarettes to inflation, needed to be approved by Congress.

The delayed enactment of the new tax measure is making it difficult for the BIR to meet its collection target.

The Philippines want to close down PNG work scam

2004-04-16T08:01:00.000+08:00

The Philippine embassy in Port Moresby is working to close down a bogus employment scheme that lured Filipino women into Papua New Guinea on false promises of jobs.

Hermoso Belarmino from the Philippine Embassy says the women entered PNG on tourist visas, expecting they could make money working in clubs, restaurants and offices.

However, Mr Belarmino says there were no jobs, and the women have been deceived into spending considerable amounts of money.

"It is very expensive flying in here, $US1,000, then you have to pay for your visa. It's big money really. And others, they mortgaged their properties, their houses."

PHILIPPINES PRESS: Maynilad Creditors Reject Govt Deal

2004-04-16T07:55:00.000+08:00

MANILA (Dow Jones)--The Philippine government's takeover of Benpres Holdings Corp. (BPC.PH) unit Maynilad Water Services Inc. hit a snag after several creditors rejected the terms of the water utility's compromise agreement with state-run Metropolitan Waterworks and Sewerage System, or MWSS, the BusinessWorld reports.

Banks that guaranteed the payment of Maynilad's $120-million performance bond said they won't allow a partial draw on the security by April 25.

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Under the compromise deal between the government and Maynilad, MWSS will be allowed to draw $50 million of the $120-million bond as partial payment for Maynilad's concession fees, which has been unpaid since March 2001.

As of December, Maynilad's concession fee arrears totaled PHP7.3 billion.

Thirteen local and foreign banks and financial institutions comprise the consortium that guaranteed the $120-million performance bond. These include Citibank N.A., the Manila offshore branch of Credit Lyonnais, the Singapore branch of Credit Industriel et Commercial S.A. (12005.FR), Fortis Bank, Chinatrust Philippines Commercial Bank Corp. (CHTR.PH) and Rizal Commercial Banking Corp. (RCB.PH).

Newspaper Web site: http://www.bworld.com.ph

-By Manila Bureau; Dow Jones Newswires; (632) 885-0290; djn.manila@dowjones.com

Shares close slightly lower

2004-04-14T16:36:00.000+08:00

Agence France-Presse

Share prices closed slightly lower Wednesday as profit-taking in the telecommunications stocks offset modest early gains, dealers said.

The market was directionless and investors remained largely sidelined, with Wall Street's losses overnight undermining sentiment.

However, dealers said they saw strong support at the 1,480-point level, indicating that the market may be ready to resume its upward trek soon after three days of technical correction.

The composite index closed down 2.04 points or 0.14 percent at 1,483.43 having traded moved between 1,477.21 and 1,488.98.

Turnover fell to 96.4 million shares worth 500.1 million pesos (8.93 million dollars) from Tuesday's 213.5 million shares worth 603.7 million pesos.

Gainers led losers 23 to 21, with 41 stocks unchanged.

The all-shares index was down 5.11 points at 971.20, the commercial-industrial index fell 2.80 to 2,334.28, property lost 0.02 to 522.84, while mining rose 8.49 to 1,457.40 and oil was unchanged at 1.11.

Banking and financial services shed 1.06 to 423.32.

"There are no fresh leads on the corporate front while investors were still hesitant to trade given the market's lack of clear direction," said Gomer Tan of Regina Capital Development Corp.

Dealers said investors were expected to stay cautious as the May 10 presidential elections approaches but there could be further accumulation in select stocks in anticipation of good first quarter results, which may start coming in later this month.

Top-traded Philippine Long Distance Telephone was down 15 pesos at 1,040 while Globe, the second most active stock, lost 25 pesos at 855.

PLDT's shares rose in recent sessions to their highest level in more than four years on expectations of impressive earnings in the telecom sector in the first quarter.

Manila Electric (Meralco) B, available to foreign investors, rose 1.50 pesos to 27 while Meralco A gained 50 centavos to 18.50 pesos. Meralco parent First Philippine Holdings advanced 50 centavos to 22.50 pesos.

Ayala Land was up 10 centavos at 5.60 pesos, while parent Ayala Corp. rose 30 centavos to 5.30 pesos.

Dealers said the peso's strong rebound against the dollar and the improving chances of incumbent Gloria Macapagal-Arroyo, the financial markets' favorite, at the May 10 presidential polls are factors that should help lift sentiment in the coming sessions.

The President now leads opinion polls for the presidential race against main rival Fernando Poe, Jr.

Her lead over Poe, whose candidacy has spooked financial markets because of his lack of experience in public service, is seen widening further after presidential candidate Raul Roco announced his decision to withdraw from the campaign trail to seek medical treatment in the US for lower back pain.

There have been speculations that Roco, who has consistently been in a distant third in opinion polls, behind Arroyo and Poe, is seeking a "graceful exit" from the presidential race.

Philippine shares close lower Wednesday on profit-taking

2004-04-14T16:34:00.000+08:00

MANILA, Philippines (AP) - The main Philippine stock index finished lower Wednesday on profit-taking following Wall Street's overnight losses, traders said.

The 30-company Philippine Stock Exchange Index ended down 2.04 points, or 0.1 percent, at 1483.43, after falling 1.7 percent Tuesday.

The main index has lost 2.2 percent since Monday.

"The market was up for six consecutive sessions recently, so I think there was just some profit-taking,'' said AB Capital Securities economist Jose Vistan, referring to the 8.8 percent gain notched by the main index from March 30 to April 6.

Philippine Long Distance Telephone Co. fell 15 pesos, or 1.4 percent, to 1,040 pesos, while Globe Telecom lost 25 pesos, or 2.8 percent, at 855 pesos.

Wall Street's decline Tuesday gave investors another reason to sell.

The Dow Jones industrial average fell 1.3 percent, and the Nasdaq composite index declined 1.7 percent.

Bargain-hunting in select stocks limited the market's losses, with advancers leading decliners 23 to 21, while unchanged stocks totaled 41.

Manila Electric B rose 1.50 pesos, or 5.9 percent, to 27 pesos, while Ayala Land was up 0.10 peso, or 1.8 percent, at 5.60 pesos.

Traders said losses weren't that big, possibly because of the latest presidential survey released Monday.

It showed President Gloria Macapagal Arroyo, a favorite of financial markets, slightly ahead of action film star Fernando Poe Jr., a political neophyte.

Also, the peso continued to climb against the dollar. - AP

Latest business news from AP-Wire

Asean must hasten reforms to draw more foreign capital - April 12, 2004

2004-04-14T01:12:00.000+08:00

Grouping not doing enough to capitalise on brightening economic prospects

IGNORING the maxim that you should make hay while the sun shines, South-east Asia is taking only baby steps towards badly needed financial and economic integration despite the region's brightening economic prospects.

Even as global investors beat a door to China and India, the main decisions taken by Asean finance ministers at their annual meeting last week were to mount roadshows to raise the group's profile and to explore linkages between securities markets.

To be sure, host Singapore had billed Wednesday's talks as a low-key occasion to take stock of progress since the 10 leaders of Asean adopted a roadmap in October for the financial integration of the group by 2020.

What's more, portfolio capital inflows are buoyant, currency markets are calm and regional growth is set to quicken this year. So ministers felt no compulsion to act urgently.

But one business consultant said this was precisely the time for Asean to speed up a range of reforms to attract more foreign capital to the region and make sure it stays. Capital inflows have shrivelled since the 1997 Asian financial crisis, with Asean being no match for the pulling power of China's huge, booming market.

'Asean markets have had a good year, but it's in their interest to make sure that when the yield goes up somewhere else there are still people interested in Asean,' the consultant said.

Ministers patted themselves on the back for setting up a regional capital market training programme. Another idea floated was to explore creating a pan-Asean index of 100 top stocks.

But can Asean, with its fierce respect for consensus, make progress fast enough to expand the potential of financial markets that, in the words of Singapore Deputy Prime Minister Lee Hsien Loong, are small and fragmented by international standards?

'Integrating our economies requires hard work, political will and, often, tough decisions,' he said.

Mr Lee said Asean's 2020 deadline for creating a single market for goods, services and capital is a long time away, so once one or two countries are ready to press ahead, they should not have to wait for the other members of the group.

This cuts to the heart of the perennial Asean problem: how to knit together an eclectic mix of states that runs the gamut from first-world democracy Singapore to poor, military-ruled Myanmar. Asean's other members are Indonesia, Thailand, Malaysia, the Philippines, Brunei, Laos, Vietnam and Cambodia.

Ministers got a rude reminder from the private sector that this diversity, a source of pride to Asean, can be a big put-off for the investment community.

A single focus during roadshows planned for later this year will fail because Asean's canvas is too wide, said Sanjiv Misra of the US-Asean Business Council's financial services working group.

'The notion of having an Asean roadshow to the US is fraught with risk that it is not relevant to anyone at the end of the day,' Mr Misra told reporters after a meeting with ministers.

On the economic front, too, some analysts fret that Asean could hit turbulence if China's high-flying economy suffers a hard landing instead of gliding smoothly to a slower growth path.

Ministers expect their economies to grow between 5.5 per cent and 5.9 per cent this year, up from 5 per cent in 2003, bolstered by booming exports of commodities and raw materials to feed China's thrumming industrial machine.

The Philippines' exports to China last year grew by 58 per cent; Thailand's by 55 per cent, Singapore's by 41 per cent, Indonesia's by 30 per cent and Malaysia's by 22 per cent.

Asean's overall share of China's imports jumped to 11.4 per cent last year from 8.6 per cent in 1997.

But Morgan Stanley for one frets that China may raise interest rates and crack down further on capital inflows to prick an investment bubble that has become so big it could threaten political stability.

'If China slows, as I now suspect, Asia's nascent economic recovery could be in serious trouble. That remains a key risk in the second half of 2004 in my view,' Stephen Roach, the bank's chief economist, said in a recent report. - Reuters

PHILIPPINES PRESS: PNOC-EDC Gets Ctrl Bk OK For $75M Loan

2004-04-13T12:01:00.000+08:00

PHILIPPINES PRESS: PNOC-EDC Gets Ctrl Bk OK For $75M Loan
MANILA (Dow Jones)--The Philippine central bank's policy making Monetary Board has approved in principle the planned $75-million borrowing of the geothermal unit of state-owned Philippine National Oil Co. (PIL.YY), BusinessWorld reports.

PNOC-Energy Development Corp., or PNOC-EDC, is borrowing the money to refinance maturing obligations for the year.

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Paul Aquino, PNOC-EDC president, said the company expects to get formal approval for the loan within this week.

PNOC-EDC needs Monetary Board approval for the loan because it carries a sovereign guarantee.

Newspaper Web site: http://www.bworld.com.ph

-By Manila Bureau; Dow Jones Newswires; (632)

Stocks down 6.23 points

2004-04-12T23:16:00.000+08:00

Shares ended lower Monday as investors cashed in on gains made in the past five sessions.

The 30-company Philippine Stock Exchange Index was down 6.23 points, or 0.4%, at 1510.58, after rising 1.8% last Tuesday.

Financial markets were closed from Wednesday last week for the Easter break. The main index has risen 8.7% from March 31 to April 6.

The commercial-industrial, all shares, property, and banks and financial services subindexes retreated. The oil and mining subindicators also declined.

Decliners led gainers 33 to 12, 32 stocks are unchanged. Volume is at 242,761,514 million shares valued at P716,582 million.

Blue chip Philippine Long Distance Telephone Co. is among the most actively traded stocks, down P5 ($1=P56.242), or 0.5%, at P1,055 on profit-taking.

"There might be profit-taking since the market is near overbought levels already," said BPI Securities senior manager Roberto Cano.

Speculation in financial markets that the central bank may tighten monetary policy following the spike in inflation in March, hasn't had much impact on the market.

"We don't think that's too much of a factor," Cano said.

The market is expected to be mixed the rest of the session, with share prices' downside capped by follow-through bargain-hunting, traders said.
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Gov't invites bids for 28-yr Manila water supply project

2004-04-12T15:33:00.000+08:00

Posted: 1:24 PM | Apr. 12, 2004

Agence France-Presse

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The Philippines is to seek bids to supply the capital with tap water over the next 28 years, a government agency said Monday.

The National Economic and Development Authority (NEDA) said Monday it has given provisional approval to tender for the project, which aims to end water shortages in the metropolis of about 12 million people.

The winning bidder would be required to deliver 400 million liters of water daily to the state regulator, Manila Waterworks Sewerage System.

The regulator would in turn sell the water for distribution to private companies Maynilad Water Services Inc. and Manila Water Co. Inc., which hold the distribution franchises for the capital.

The winning bidder will be responsible for financing the entire project, including acquisition of right-of-ways, required permits and environmental compliance certificates, NEDA said.

It did not say when the bidding would start, or how much the total project would cost.

NEDA public investment official Jonathan Uy said the total "cooperation period" between the government and the bidder would be 28 years under a build-operate-transfer (BOT) scheme.

A study by the Japan International Cooperation Agency in February said that the water "demand-supply gap" would reach 900 million liters daily by 2013.

ASEAN talks good story but pace of change slow

2004-04-12T02:01:00.000+08:00

SINGAPORE: Ignoring the maxim that you should make hay while the sun shines, Southeast Asia is taking only baby steps toward badly needed financial and economic integration despite the region’s brightening economic prospects. Even as global investors beat a door to China and India, the main decisions taken by ASEAN finance ministers at their annual meeting this week were to mount roadshows to raise the group’s profile and to explore linkages between securities markets.

To be sure, host Singapore had billed Wednesday’s talks as a low-key occasion to take stock of progress since the 10 leaders of the Association of South East Asian Nations adopted a roadmap in October for the financial integration of the group by 2020.

What’s more, portfolio capital inflows are buoyant, currency markets are calm and regional growth is set to quicken this year.

So ministers felt no compulsion to act urgently.

But one business consultant said this was precisely the time for ASEAN to speed up a range of reforms to attract more foreign capital to the region and make sure it stays. Capital inflows have shrivelled since the 1997 Asian financial crisis, with ASEAN no match for the pulling power of China’s huge, booming market.

“ASEAN markets have had a good year, but it’s in their interest to make sure that when the yield goes up somewhere else there are still people interested in ASEAN,” the consultant said.

Ministers patted themselves on the back for setting up a regional capital market training programme. Another idea floated was to explore creating a pan-ASEAN index of 100 top stocks.

But can ASEAN, with its fierce respect for consensus, make progress fast enough to expand the potential of financial markets that, in the words of Singapore Deputy Prime Minister Lee Hsien Loong, are small and fragmented by international standards?

“Integrating our economies requires hard work, political will and, often, tough decisions,” Lee said.

Fraught with risk: Lee said ASEAN’s 2020 deadline for creating a single market for goods, services and capital was a long time away; so once one or two countries were ready to press ahead, they should not have to wait for the other members of the group, he argued.

This cuts to the heart of the perennial ASEAN problem: how to knit together an eclectic mix of states that runs the gamut from first-world democracy Singapore to poor, military-ruled Myanmar.

ASEAN’s other members are Indonesia, Thailand, Malaysia, the Philippines, Brunei, Laos, Vietnam and Cambodia.

Ministers got a rude reminder from the private sector that this diversity, a source of pride to ASEAN, can be a big put-off for the investment community.

A single focus during roadshows planned for later this year will fail because ASEAN’s canvas is too wide, said Sanjiv Misra of the U.S.-ASEAN Business Council’s financial services working group.

“The notion of having an ASEAN roadshow to the U.S. is fraught with risk that it is not relevant to anyone at the end of the day,” Misra told reporters after a meeting with ministers.

On the economic front, too, some analysts fret ASEAN could hit turbulence if China’s high-flying economy suffers a hard landing instead of gliding smoothly to a slower growth path.

Ministers expect their economies to grow between 5.5 percent and 5.9 percent this year, up from five percent in 2003, bolstered by booming exports of commodities and raw materials to feed China’s thrumming industrial machine.

The Philippines’ exports to China last year grew by 58 percent; Thailand’s by 55 percent, Singapore’s by 41 percent, Indonesia’s by 30 percent and Malaysia’s by 22 percent.

ASEAN’s overall share of China’s imports jumped to 11.4 percent last year from 8.6 percent in 1997.

But Morgan Stanley for one frets that China may raise interest rates and crack down further on capital inflows to prick an investment bubble that has become so big it could threaten political stability.

“If China slows, as I now suspect, Asia’s nascent economic recovery could be in serious trouble.

That remains a key risk in the second half of 2004 in my view,” Stephen Roach, the bank’s chief economist, said in a recent report. —Reuters

United Press International: Faces of Globalization:Home away from home

2004-04-11T01:21:00.000+08:00

By Kathleen Hwang
UPI Correspondent
Published 4/9/2004 2:49 PM
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HONG KONG, April 9 (UPI) -- It's a sunny Sunday morning in Hong Kong, a perfect day for a picnic in one of the city's parks, the gathering spots for thousands of Filipina and Indonesian women enjoying their lone day off from jobs as domestic helpers.

Clustered in small groups, they sit on benches, on low walls, on newspapers on the ground. They are chatting, eating, sharing photographs of their families, writing letters. One group sits in a circle singing hymns from homemade songbooks.

Like almost all the other women hanging out in Statue Square, Jocelyn Sanchez, 45, works as a domestic helper for a Hong Kong family. She has worked for the same Chinese family since she left the Philippines eight years ago.

"My employers are so good, they treat me like family. The children love me," she says. She has loved and cared for two children, a girl age 8 and a boy of 4, since babyhood.

Her own daughter, aged 3 when her mother left home, has only had a mother's love from long distance. Now 11, she lives with her father and grandparents in a rural community in the Philippines. She sees her mother twice a year.

Sanchez is cheerful by nature, but her eyes grow sad when she speaks of her family. She explains that she and her husband, a farmer, cannot earn enough at home. Working here, she is able to send 10,000 pesos ($178) home each month.

There are 216,860 foreign domestic helpers working in Hong Kong. The 126,560 domestics from the Philippines are part of an army of 7.4 million Filipino workers around the world, who sent back $7.2 billion to their country in 2002. According to the Philippines Bureau of Labor and Employment, this remittance was 8.6 percent of the country's Gross Domestic Product.

Sanchez's day is typical. It begins at 5 a.m. when she gets up to prepare breakfast for the family. She does the cooking, cleaning, grocery shopping, laundry, ironing and babysitting, finishing around 10:00 p.m. She receives the minimum wage of $420 per month, in addition to her tiny room and meals.

She is among the lucky ones.

Venita (not her real name) has been less fortunate. The 24-year-old came from Sri Lanka last September to work for an Indian family in Hong Kong. The husband and wife and their 1-year-old child live in a three-story house and own two cars. Theirs is a distinctly upper-class lifestyle in Hong Kong.

Despite their spacious home, Venita was made to sleep on the floor in a room used as an office. In addition to the chores Sanchez does, Venita was expected to clean the big house, wash both cars twice a week, look after the garden, and watch the baby at all times. At night, she slept with a device in her ear so she could hear the baby if he cried.

For all this, her employers paid her less than half the minimum wage and granted her one day off each month, in violation of local labor laws.

"They never call me my name, they always call me maid," Venita said. "The madam, she always angry. If for one minute I have no work, she don't like. At 10 at night I have to start ironing and work until I'm finished."

When the couple went off on vacation, leaving Venita in the house with no food or money, she decided she'd had enough. Guided by a cousin who also works for a family, she found her way to an organization called Helpers for Domestic Helpers, which assisted her in filing a case against her employers.

"We have a 75-80 percent success rate if a case goes to court," says Holly Carlos Allan, manager of the support group that provides free counseling and paralegal services for domestic helpers. She sees 40 to 50 new cases each month of abuse, wrongful termination, non-payment and immigration or police problems.

From her perspective, there are serious flaws in a system that lures hundreds of thousands of women to work far from their families to jobs that are demanding and often demeaning, for low wages, with few legal protections. Many have been trained as teachers, nurses, or engineers, but they can earn five to 10 times more as overseas domestic helpers.

"It starts from their home country," says Allan. "They have to pay exorbitant agency fees to get a job in Hong Kong. It can cost from HKD10,000 to HKD12,000 ($1,200-$1,500) to get a job. If they don't have it, they're forced to sign a loan agreement. These are illegal fees, and there are no receipts."

Once overseas, the workers are desperate to keep their jobs in order to repay the loans, and those who fall victim to cruel or unfair employers may endure prolonged mistreatment.

Allan has seen cases of near starvation, of physical and sexual abuse, and of wrongful accusations of criminal conduct. She says police tend to treat the victim as the offender in such cases, unless there is strong evidence that the employer is guilty of abuse.

The workers have no one to turn to except the volunteer organizations, like the Helpers and several others linked to local religious groups. The home country's consulate rarely gets involved, and in some cases, seems to be part of the problem.

"The job description of the labor attaché is to find markets for our workers," says Gi Estrada, an officer of the Asia Pacific Mission for Migrants. "If you want to fight for the rights of the workers it's contradictory."

Estrada says that Filipino workers are better organized than others and thus better protected in Hong Kong and elsewhere in Asia, such as Japan and Taiwan. Organizations like his work to inform them of their rights and fight abuse. Indonesian workers are more readily subject to exploitation in Hong Kong, he says.

The number of Indonesian domestic helpers was up to 81,030 by the end of last year, a number that has steadily increased from just over 10,000 in 1994. Indonesian workers are typically paid just HKD2,000 ($260) per month, in violation of local law.

Like the Philippines, Indonesia benefits hugely from remittances from overseas workers, with some 4 million workers sending $2.8 billion home in 2002. Yet the country has no laws to protect its migrant workers, Estrada says.

According to U.N. figures, remittances from migrant workers to their home countries in Asia totaled $80 billion in 2002, more than the total for foreign direct investment. But not everyone agrees that the benefits are worth the price.

"There's a huge social cost to the Philippines," says Allan. "Mothers leave their young children, there are many broken families, husbands turn to other women, children turn to drugs and leave school."

There's a huge personal cost to the workers as well. Delia Castro, 36, is from the same region of the Philippines as Sanchez. She has been working in Hong Kong for seven years, sending almost all her money home to her mother, her brothers and sisters and their children.

Castro is lively and attractive, but unmarried; she says she hopes to meet someone and have her own children someday. But so far, she says, "My priority is my family. I have a poor family and they need my help. I spent all my mind and effort to my family and I forgot my heart."

-0-

Faces of Globalization -- The above piece by UPI Hong Kong correspondent Kathleen Hwang is part five of a half-year series by United Press International which focuses each week on the human face of globalization in locales ranging from India to the heartland of the United States. The series looks at the complex array of social and economic issues facing workers, managers, students and others, who have been affected by the growing worldwide investment, trade and technological interconnections that have come to be known as globalization.

-0-

Series edited by T.K.Maloy, UPI Deputy Business Editor. (tmaloy@upi.com)

Elections in Philippines promise more of same in a country going backwards

2004-04-10T16:29:00.000+08:00

MANILA: When former Philippine strongman Ferdinand Marcos was ousted in the so-called People's Power Revolution in 1986 his departure promised so much for this nation of 82 million people.

Eighteen years after democracy was restored many must be wondering whether it was all worth it.

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The Philippines has fallen from being one of the most outstanding economies in Asia 40 years ago to being one of the worst in the region.

In 1957 the World Bank said the Philippines had "achieved a position in the Far East second only to Japan, both in respect to its level of literacy, and to per capita production capacity."

It went on to say that the prospects of the Philippine economy for sustained long-term growth were "good".

But corruption, poverty and debt have all weighed heavily on the country and stunted its potential. The 35-year-old war with the communist New People's Army and the Muslim unrest in the southern province of Mindanao has not helped.

The country's debt is nearing 90 percent of gross domestic product while interest eats up 37 percent of the national budget.

The International Monetary Fund recently underlined the urgent need to "implement comprehensive reforms, in order to set the economy on a high and sustainable growth trajectory, reduce still pervasive poverty, improve debt sustainability and the economy's resilience to adverse shocks."

The Philippines has the highest birth rate in Asia at 2.36 percent a year or 1.7 million new births.

At this rate, according to Tomas Osias executive director of the Commission on Population, the nation's population could effectively double to between 160-170 million within the next 30-years which would have a major impact on the social and economic development of the entire nation.

"If our birth rate is to go unchecked, it will impact on food production, health and education services, the environment, housing and so on. It will be a major problem for any government," he said in an interview recently.

Already 51 percent of the population lives on less than two dollars a day, according to the World Bank's Philippines Development Policy Update released last October.

Corruption is endemic right from the taxi driver through to government. In many ways it has become part of the fabric of life.

It is easy to blame Marcos for all that is wrong with the Philippines but the problem goes deeper than just one man's excesses.

Here is a country where some five percent of the population control anywhere from 90 to 95 percent of the nation's wealth. Those who make the rules belong to the same web of interlocking political and business families who have always been among the ruling elite of the country.

A recent study by the Philippine Centre for Investigative Journalism called "The Rulemakers" said: "the country's lawmakers have used their powers to further enrich themselves and entrench their families in power."

"They make the laws, conduct legislative inquiries, examine national budgets and vet presidential appointments. These powers have been used by legislators to get benefits for themselves, their allies and their kin..."

"Presidents have tended to reinforce the basest behaviour of legislators and to give free rein to the wanton abuse of congressional powers. As an institution, Congress has been a stumbling block to the changes that reform-minded presidents had wanted to introduce."

"Presidential largesse is distributed to get Congress to do the executive's bidding. But in the end, presidential patronage only enriched and empowered the same legislators who were the most obdurate opponents to reform."

With a month to go before the May 10 presidential election it is questionable whether the two leading contenders -- Fernando Poe and incumbent Gloria Arroyo -- have all the answers or the will to bring about lasting change.

High-school drop-out turned movie star Poe appeals to ordinary Filipinos who see him as a man of the people while US-educated economist Arroyo has a track record.

Neither candidate, however, has produced anything that remotely resembles a policy platform. Important issues such as the economy and birth control are glossed over for fear of alienating business or the church.

Peter Wallace who has lived in the Philippines for 30 years and is an advisor to multinational corporations wonders whether either one of the two leading candidates has what it takes to implement the sort of reforms that will prevent it the Philippines from becoming the "basket case" of Asia.

Wallace believes there are nine areas that need to be addressed. Politics, that is vested interests versus the national good; uncontrolled population growth; a weak education system; corruption; inadequate infrastructure; an agricultural system that has not improved in 27 years; an inadequate focus on job creation; a judiciary in need of improvement and security.

"Without absolutely fundamental change in these nine issues and the cultural change to go with it, the Philippines will be the basket case of Asia in one generation from now.

"It won't change if the culture, the attitude (of the leaders) doesn't change.

"It will not be easy, it will not be popular, it will need a skillful balancing act between pandering to politicians, generating public support and effecting major reform. Greater leaders were so because they had a long-term vision and gambled their careers to achieve it."

Roberto de Ocampo, who was finance secretary under former president Fidel Ramos and is now president of the Asian Institute of Management, said recently that the challenges ahead for any incoming administration would be "difficult but not insurmountable."

"What we need to concentrate on is to have a national vision that gives every Filipino a star to latch on to. Such a vision must ensure the national interest, and not the fleeting power and glory of a few years in office."

An editorial in the Philippine Daily Inquirer recently said: "More than 2,000 years after the crucifixion of Christ, the Filipino nation is impaled on the cross of poverty and corruption.

"How much longer will it suffer excruciating and agonising pain? Will this 'crucifixion' every end? Who will be the 'messiah' who will save the nation from its misery and pain?"

- AFP

KRT Wire | 04/09/2004 | Bangkok Post, Thailand, Ahead of the Curve Column

2004-04-10T01:12:00.000+08:00

Bangkok Post, Thailand, Ahead of the Curve Column

By Michael Preiss, Bangkok Post, Thailand Knight Ridder/Tribune Business News

Apr. 9-- ALL EYES ON THAI BOND MARKETS: Last year Thailand was the market for equities. The SET was the best performing Asian equity market, up 117 percent on the year, and the Thai baht rose 8.7 percent against the US dollar. This year the story in Thailand is bonds.

The Asian Bond Market Secretariat has been set up under the auspices of the Finance Ministry and several initiatives have been launched to promote and deepen the domestic baht-denominated bond markets.

Asian bond markets excluding Japan can generally be categorised into four groups. The first is effective but underused: Hong Kong and Singapore. Effective but not efficient: Korea, Malaysia and Taiwan. Semi-effective: India, Thailand, Indonesia and the Philippines. Underdeveloped: China.

The operation of financial markets reflects the characteristics of underlying flows of capital. There is talk in the markets that Thailand may reduce its limits on the ratio of government debt to gross domestic product to 50 percent from 55 percent as part of a new fiscal policy.

The changes are needed because the existing fiscal framework is considered inappropriate in the current booming economy. The significance of corporate bonds as such is rising while that of government bonds is declining. The economy is forecasted to expand as much as 8 percent this year, faster than the 6.7 percent growth rate in 2003.

The domestic market has grown rapidly since the 1997 Asian financial crisis and is now becoming a cornerstone of Finance Minister Somkid Jatusripitak's economic development plan. The deepening of the fixed income market helps the government's objective of not only having quantity of growth but also "quality" of growth.

This is because of a number of reasons. Corporate bonds provide added fuel for the booming economy while reducing the risk of overheating.

The reason being that it offers companies and investors a less risky alternative to the stock market, better asset allocation, capital structures and as an end result, better risk and capital raising diversification.

Bonds issued in Thailand are of two kinds: government and corporate bonds. Government bonds are medium- to long-term and issued by the Finance Ministry. They consist of three types: investment bonds, loan bonds and savings bonds. In addition, there are T-bills, BoT (Bank of Thailand) bonds, and state-owned enterprise (SOE) bonds.

The Thai bond market is dominated by government debt securities which at present are estimated to amount to 85 percent of the total market.

One of the key developments in the Thai government bond market has been the introduction of savings bonds, issued to provide households with an alternative source of savings. With the issuance of 300 billion baht in savings bonds in 2002, retail investors have become the largest single investor segment in the Thai fixed income markets, surpassing banks. Originally, savings bonds were introduced to finance losses of the Financial Institutions Development Fund after the Asian Crisis.

Next month, the finance ministry plans to sell 60 billion baht of savings bonds to cover losses at the central bank's Financial Institution Development Fund (FIDF). The bonds are part of the ministry's plan to sell as much as 250 billion baht this fiscal year.

Originally, 1.4 trillion baht of losses were incurred by the FIDF, which the government used to help close 56 non-bank finance companies and to seize half of the nation's 14 commercial banks after the 1997 economic crisis.

Loan bonds still make up the majority of the bond market because they are issued for financing budget deficits. Thailand, however, is expected to have a balanced budget next year, three years earlier than previously forecast.

Investment bonds have not been issued since 1991 and there are only a few issues remaining in the market. SOE bonds are medium- to long-term and of two types: guaranteed and non-guaranteed by the Ministry of Finance. Guaranteed bonds are said to amount to 86 percent of total.

Thailand's corporate sector has begun to issue corporate bonds in significant quantities only since 1992, after the Securities and Exchange Commission passed an act that eased criteria for companies to issue debt. Structures of corporate bonds usually include straight, floating-rate notes, amortising, and convertible. Bonds with more varying features are increasingly being issued.

Before the launch of the BMX (Bond Market Exchange), a new trading platform for corporate bonds set up at the Stock Exchange of Thailand last year, only 53 of Thailand's 415 listed companies had raised funds through the bond market. This year, however, this is changing and we are seeing many more Thai companies tapping the local bond markets. Trading liquidity for the bonds of listed companies is improving, an efficient clearing and settlement system has been introduced and as a result a wider array of alternatives for investors has been provided.

The bond market in Thailand is still in its early stages. A strong educational push is needed, but there is a lot of room to grow and the outlook is very promising.

Michael Preiss is chief investment strategist at CFC Securities in Hong Kong. He can be reached at mpreiss@cfcgroup.com

United Press International: Feature: Promoting ASEAN with investors

2004-04-09T03:19:00.000+08:00

Feature: Promoting ASEAN with investors
By Sonia Kolesnikov-Jessop
UPI Business Correspondent
Published 4/7/2004 12:20 PM
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SINGAPORE, April 7 (UPI) -- Seven years have passed since the Asian financial crisis of 1997 sent the ASEAN economies into a tailspin and with the recovery well along its time to heavily promote the region amongst investors, ministers from member country say.

At an ASEAN finance ministers' meeting Wednesday in Singapore, ministers decided to set up a committee to study how best to profile and promote the region to the world, including having a traveling promotional roadshow.

Singapore Deputy Prime Minister Lee Hsien Loong explained this roadshow concept would be a way of drawing some international focus away from regional giants China and India and help keep ASEAN "on the radar screens of international investors."

Lim Hng Kiang, Singapore second minister of finance added the region had made great restructuring efforts, which were not always "clearly understood" by the investment community. "We intend to embark on a promotional effort...to present the ASEAN story better to the outside world," he told reporters.

While Singapore is to host the International Monetary Fund and World Bank's annual meeting in 2006, which will be the perfect occasion to showcase the region, ASEAN ministers also felt the promotional efforts should start as soon as possible with Southeast Asian finance ministers staging joint roadshows in the United States and Europe when ever possible.

Lim indicated that the first opportunity for such promotional efforts would likely be in New York ahead of the next IMF annual meeting in Washington at the end of September, as many senior officials from the region will be traveling to the United States for the occasion.

Nor Mohamed Yakcop, Malaysia's second finance minister noted that the fact that Singapore was encouraging ASEAN members to promote themselves during the 2006 IMF meeting was an "excellent reflection" of the level of friendship and cooperation that existed throughout the region.

ASEAN has been losing out to China and India in terms of attracting foreign investments, but Lee pointed out the region had a combined population of 560 million people and gross domestic product of $330 billion comparable with China's coastal region. ASEAN encompasses Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

"ASEAN must once again band together to maximize our strengths. Our fundamentals are strong and can be further exploited," he said.

Indeed, the region has a good story to tell. Following the 8th ASEAN Finance Ministers' Meeting here, a joint press statement said minister expected the region to "continue its growth momentum in 2004 with a projected GDP growth of 5.5 to 5.9 percent."

"Growth is expected to be broad based, with both domestic and external demand providing the impetus for expansion," it added. The communiqué noted that proactive policy responses and robust domestic and external demand during the second half of last year resulted in a higher annual growth of 5 percent across ASEAN countries compared to 4.5 percent in 2002.

"ASEAN is now back on its feet, up and running again," Lee said in his opening address to the meeting.

Yet, despite the general optimism, ministers also noted that downside risks existed, in particular in relation with the current account and fiscal imbalances in some major industrial countries (like the United States) which may cause misalignments and volatility in the financial markets. "A gradual adjustment to these imbalances is necessary so as to avoid putting undue stress on the global and regional economic prospects," it said.

Lee also warned that to attract investments the region needed to accelerate the integration of its capital markets.

"While regional capital markets have generally experienced strong growth since the financial crisis, our potential is limited because by international standards the regional equity and bond markets are small and fragmented," he noted.

He suggested ASEAN countries could develop greater links between stock markets, or harmonize standards and conventions to make it easier for investors to operate in the region. "In such initiatives, we do not have to wait for all ASEAN members to be ready. Once two or more ASEAN members are ready to make the move, they can work together as pathfinders for the whole region," Lee said.

Last year, ASEAN leaders agreed on a roadmap aimed at achieving a European Union-style common market by 2020 or sooner. This "Roadmap for Integration of ASEAN" includes greater financial cooperation on capital market development, capital account liberalization, financial services liberalization and currency cooperation.

Financial services are a significant part (6-7 percent) of the regional economy and is a growing sector.

"The Asian Crisis has demonstrated that with globalization and greater ease in transferring funds around the world, it is more critical than ever that our financial sectors be sound, and our economies not be weakened by excesses," Lee said.

At their meeting, ministers agreed to set up a task force to explore ways to forge alliances and linkages within the ASEAN securities markets.

Copyright © 2001-2004 United Press International

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S&P: Strong Econs Check Political Uncertainty In Asia

2004-04-09T01:04:00.000+08:00

Thursday April 8, 7:37 PM
S&P: Strong Econs Check Political Uncertainty In Asia
(This article was originally published Wednesday)

By Charles Roth
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Elections and political turbulence in a handful of Asian countries isn't prompting Standard & Poor's to change its stable outlook on ratings for Indonesia, Philippines, South Korea and Taiwan, thanks in large part to solid economic performance.

"All these ratings try to work through political cycles," said John Chambers, managing director of sovereign ratings at S&P in New York. They incorporate the policies of incumbent governments and opposition parties seeking to unseat them. Policy implementation, or the lack thereof, is also taken into account, he added.

Preliminary results from Monday's parliamentary elections in Indonesia indicate President Megawati Sukarnoputri's reelection bid in July may be challenging. So far, with 18% of the votes counted, her Democratic Party of Struggle led with 20.8% of the votes cast, while the Golkar party of former dictator Suharto had 20.2%.

"I don't believe the outcome will change our view on the politics and ability of this government, or the next government, to press forward with deep economic reform," Chambers said. The stable outlook "takes into account the likely outcome of this election and the July balloting."

S&P rates Indonesia's foreign currency sovereign debt at "B", or five notches below investment grade.

"At this rating level, as long as the elections are conducted in an open and transparent way, and don't engender civil conflict, which is our base view, the outcome won't have an impact on our rating," Chambers told Dow Jones Newswires. No such conflict has materialized.

He noted the support that strong oil prices have lent to Indonesia's fiscal and external accounts, helping fuel economic growth of 4.1% last year and chip away at the country's stock of external debt. Economists expect the economy to expand about 4.6% this year.

Next door, the May 10 presidential election in the Philippines isn't a worry per se, but the government's fiscal position - especially leading up to the poll - is a concern. Economists expect the country's fiscal deficit to run about 4.5% of GDP this year.

"The key remains the fiscal stance," Chambers said, noting that slippage could further pressure the peso ($1=PHP56.295).

Depreciation of the peso, he said, has "an immediate impact" on the country's external debt, which S&P rates two steps below investment grade at "BB". "The Philippines can't afford to increase its debt burden," Chambers said, pointing out that total public sector foreign debt about equals gross domestic product, while general government debt amounts to roughly 80% of GDP.

But at least the economy is growing smartly, and likely expanded 4.1% in the first quarter from the year before, Planning Minister Romulo Neri said Tuesday. As in Indonesia, though, the growth doesn't seem to be translating into high voter support for the incumbent's reelection bid.

According to a poll released Monday, President Gloria Macapagal Arroyo, who has a doctorate in economics, is running neck and neck with challenger Fernando Poe Jr., a movie actor with no political experience. If Arroyo doesn't win, many investors fear needed economic reforms won't happen.

The prospect of stalled reforms is also hanging over Taiwan, where the fallout from last month's disputed presidential election promises to linger.

Opposition candidate Lien Chan is challenging the reelection of Chen Shui-bian, who won by a razor-thin margin. Lien has asked the Supreme Court to nullify the vote and order a new one. He has also pushed for a recount, to which Chen has agreed.

"We think that President Chen has a weak mandate, and it will be difficult for him to press forward with financial sector reform," Chambers said. The reform is key, he added, noting S&P has "lowered its expectations on that being passed."

Still, Taiwan's "economy appears resilient to domestic political" uncertainty, helping to bolster the agency's "AA-" rating on the credit.

Driven by global demand for its technology and other exports, Taiwan's economy grew 5.2% in the fourth quarter and 3.2% for all of 2003. Officials forecast an expansion of 4.7% this year.

South Korea's political woes also appear to be having little impact on its economy, growth in which appears robust enough to support S&P's "A-" rating on the credit.

South Korea's conservative opposition lawmakers impeached President Roh Moo Hyun on March 12. The action didn't go over well with the general public, causing a surge in support for the small, liberal Uri Party ahead of April 15 parliamentary elections. Roh doesn't belong to the Uri party, but has said he will join it. He has also pledged to step down if Uri doesn't fare well in the balloting.

In any case, the Constitutional Court now has six months to decide if Roh should remain in office.

"We haven't seen the turmoil in (South Korea's) domestic politics spill over into economic performance yet," Chambers said.

Indeed, the economy's first quarter expansion likely exceeded the official 4.3% on-year growth forecast, thanks to booming exports - which surged more than 30% in the first three months of the year. Economists predict the country's output will grow between 5% and 7% this year.

"Korea's democratic institutions are still rather young," Chambers said. "Domestic party politics are still fluid. That notwithstanding, you generally see good economic policy implementation."

For S&P, he added, "what's important moving forward is the ability for Roh to consolidate his power base and thus strengthen his mandate, and press forward with economic reform."

While the outcome of next week's elections could have an impact on Seoul's foreign policy, it won't have any effect on economic policy, Chambers noted.

The stable outlook on the credit encompasses not just the solid economic performance and unclear political scenario, but also the international talks with North Korea, "which we expect will be protracted and inconclusive," he pointed out.

It also includes "the eventual costs of reunification, which we expect to happen at some date - maybe soon, maybe not so soon - and those costs will be high," Chambers added.

Predictions for reunification costs run between 50% of South Korea's GDP to 300% of GDP.

Car sales post 56% hike in 1st 3 months

2004-04-09T00:33:00.000+08:00

But overall motor vehicles sales fall 13%

By BERNIE CAHILES-MAGKILAT

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) reported that sales of passenger cars reached 8,148 units or 56 percent higher than the 5,224 units sold in the first three months of last year as buyers continued to shift their preferences due to price difference in favor of cars brought about about by the value-based excise taxation.

On the other hand, commercial vehicle sales reached 12,815 units or a 32 percent decline from the 18,953 units in the first quarter of 2003.

Overall motor vehicles sales in the first quarter this year declined by 13 percent to 20,963 units from 24,177 units in the same period last year weighed down by the continuing slow down in the sale of commercial vehicles.

Promotional offers by assemblers helped a lot in achieving an 11.8 percent increase in March with sales hitting 7,423 units from February’s 6,636 units.

CAMPI noted "rushbuying" before the long holidays of Holy Week and in anticipation of price increase for some segments.

But the growth on a month-tomonth basis, was not sufficient enough to surpass the market performers for the first three months of last year.

CAMPI also cited limited stocks of some models as one factor affecting the lower sales in the first quarter.

In terms of category, sales of Asian utility vehicles reached 5,611 units while light commercial vehicles contributed 6,600 units.

Of the 17 CAMPI members, Toyota Motor Philippines Corp. maintained its leadership with total sales of 7,481 units to corner 35.59 percent share of the market.

Honda Cars Philippines Inc. was a poor second with 3,229 units for 15.4 percent of the market and Mitsubishi Motor Philippines Corp. following closely with 3,184 units.

Isuzu Philippines Corp. sold a total of 2,205 units to land in the fourth slot while Ford Motor Corp. Philippines Inc. managed to climb for the first in the top five with sales soaring to 1,553 units.

Ford’s performance could be largely attributed to its promos for its Lynx car model.

CAMPI has targetted total sales of 100,000 units this year from 90,535 units sold last year. The third quarter sales of this year represent 21 percent of that target.

Competition emerging against India's BPO advantage: study

2004-04-08T16:07:00.000+08:00

New Delhi, Apr 7 (IANS) :

The advantage enjoyed by India in the world of business process outsourcing (BPO) might be difficult to sustain with competition fast emerging from other countries, says a new industry study.

The main emerging challengers to India are countries like the Philippines, China, Mexico, Ireland, Canada, Russia and South Africa, said a study by the BPO committee of the Associated Chambers of Commerce and Industry of India (Assocham) and International Data Corporation released Wednesday.

The BPO segment, which was virtually a non-existent segment until a few years ago, has risen to become a $2 billion industry in a short span of time.

"With the continuing slowdown in the global IT spending, declining revenues and depleting margins, the very business sustenance of Indian IT players is being questioned," the study noted.

The main problem seen ahead is for large IT players and business houses, for which the BPO opportunity came as a blessing in disguise.

"BPO brought in the much-needed new revenue streams at an additional cost from the same clients, as these players could leverage on their global marketing infrastructure and established client relationships," the study said.

Another segment that could face pressure are independent third party service providers like EXL Service and Vcustomers, which have successfully placed themselves on the global BPO map. Most of these units are either professionally promoted or are funded by venture capital firms.

"It has been really tough for the players in this segment. Upfront capital requirements, increasing competition, declining pricing and the much needed market reach in prominent markets like the United States and Europe are business critical issues that the players have to deal with," the study notes.

Overall, while India has the advantages of skilled manpower, linguistic capabilities, low labour costs, favourable time zone, sound Internet and telecom connectivity, the Philippines in particular also has improved tremendously, the study said.

"The Philippines' advantage, besides skilled and English educated workforce and good telecom infrastructure, is familiarity with American work culture. Visible limitations currently are smaller talent pool, costlier than India, issue of scaling up and political instability," the report noted.

While listing the advantages of the competing countries, the study admits for the time being at least India continues to hold the sway.

"The limitations in these respective countries is that in China there is still a lack of English speaking capability, Mexico is good for low end jobs only, Ireland has a smaller talent pool, Canada and South Africa are costlier than India while Russia has poor infrastructure and poor linguistic capabilities."

China, Philippines pose threat to Indian BPO

2004-04-08T15:54:00.000+08:00

April 08, 2004 07:30 IST

Despite its BPO edge of skilled manpower and low labour cost, India's 'Advantage BPO' position may not be sustainable in the long run as nations like China, the Philippines and Mexico are fast catching up, an ASSOCHAM-IDC survey says.

"While in India the advantages are availability of skilled manpower, linguistic capabilities, low labour cost, favourable time zone, sound Internet and telecom connectivity, the Philippines has also tremendously improved," a study undertaken by the BPO committee of ASSOCHAM and International Data Corporation says.

It says that China offered the advantages of a low cost economy, Mexico was cheaper than the United States, and Ireland had a good brand equity.

Slide Show: Threats to Indian BPO
India and Outsourcing: Complete Coverage
Russia offered technological skills while South Africa, falling in the same time zone as Europe, could be a possible destination of BPO in the near future, the study said.

In a short span of time India's BPO segment, a virtually non-existent segment a few years back, has grown to US $2 billion.

However, the industry expected a steady growth in this segment, as India is still a favourable destination for back office jobs because of its well developed communications infrastructure, stable business environment and highly skilled technical talent pool.

As of now, certain limitations of these countries put them a shade behind India. China has limited English-speaking capability, Mexico is good for low-end jobs and Canada and South Africa are costlier than India and in order to overtake India in BPO they will have to overcome these disadvantages.

With the continuing slowdown in the global IT spending, declining revenues and depleting margins, the very business sustenance of the Indian IT players was under threat but BPO opportunity came as a blessing in disguise for IT providers, the study says.

It indicates that BPO brought in the much needed new revenue streams at an additional cost from the same clients, as these players could leverage on their global marketing infrastructure and establish client relationship.

Daksh (which has been acquired by IBM), EXL service, Vcustomers are third-party service providers who have successfully staged themselves in the global BPO market. Most of these units are either professionally promoted or are funded by venture capital firms.

"It has been really tough for the players in this segment," the study says, adding that upfront capital requirements, increasing competition, declining pricing and the much needed market reach in prominent markets like the US and Europe are business-critical issues that the players have to deal with.

Also international BPO service providers like Convergys, Sitel, efunds and Sutherland Technologies have shifted base to India to exploit the cost advantage factors that India offers to service their International clients. This is another segment which would be experiencing steady growth.

The study says that it is expected that there will be steady growth in this segment, as service providers move up to the value chain.

IHT: Commentary: Don't cry for the Philippines, yet

2004-04-07T22:08:00.000+08:00

Commentary: Don't cry for the Philippines, yet
William Pesek Jr. Bloomberg News Wednesday, April 7, 2004

MANILA It's hardly surprising that the former Philippine finance secretary, Jose Camacho, is packing hotel ballrooms four months after resigning. The 48-year-old did just that recently, and more than 200 finance-industry people gathered to hear the views of a man who exudes a Robert Rubin-like aura here.
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Camacho was careful not to disparage his former boss, President Gloria Arroyo. He even avoided criticizing Fernando Poe Jr., the actor-turned-politician trying to unseat her. That was, until an audience member stood up and advocated Poe's suggestion that the Philippines should restructure its debt.
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A stunned look came over the normally unflappable Camacho. "Anyone who'd say such a thing doesn't know what he's talking about and doesn't understand the seriousness of the issue," he retorted.
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The exchange summed up investors' worries about Poe, the man who soon may run the Philippines. It's an economy that some commentators see as the Argentina of Asia because of its worsening fiscal health. Yet, next month voters may entrust this fragile and geopolitically important economy to a man with zero governing experience. Poe is running neck-and-neck with Arroyo.
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The International Monetary Fund didn't mention Poe in its latest assessment of Asia's 12th-biggest economy. Perhaps that's because he has since backtracked on his statement that he might turn the nation into a debt balker. He now says the government must honor its commitments to lenders.
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Still, there's little doubt the fund was sending a shot across politicians' bows last week when it urged the Philippines to step up efforts to cut its budget deficit to raise its credibility among global lenders and investors.
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The Philippines is in far better shape than Argentina was in 2001, when it defaulted on debt. The Philippines is expected to grow a respectable 4.5 percent this year, the same rate as 2003. Officials here in Manila are skilled at shifting the nation's debt profile - replacing short-term debt with long-term debt - when things get dicey.
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This nation of 85 million people also has a remarkable track record of muddling through meltdowns. It avoided the worst of the 1997-98 Asian crisis. And even if it never seems to soar, like other economies in the region, the Philippines tends to steer around financial shocks with the best of them.
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The reason the Argentina comparison even comes up dates back 20 years, when the Philippines declared a moratorium on foreign debt payments. Today, about half of the government's 3.4 trillion pesos, or $60 billion, of debt is in foreign currencies.
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That doesn't mean an uncontrollable, Argentina-like debt spiral won't happen here, and the risk grows with each passing month. In February, a Standard Chartered Bank economist, Steve Brice, raised eyebrows with a report making exactly that argument.
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The worry is that the government continues to accumulate a huge debt, which eats up the budget and damages investor confidence. Interest on the national debt already accounts for about a third of government spending. If fears about debt take on a life of their own, the Philippines could be in big trouble.
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"There are some huge risks the next government will have to deal with - there's just no way to avoid it," said Luz Lorenzo, an economist at ATR-Kim Eng Capital Partners.
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The Philippines can avoid becoming the Argentina of Asia - so long as it acts fast. Today's growth is providing a window of opportunity to do the things that would restore confidence. They include cutting government spending, increasing tax-collection efforts and privatizing state-run companies like unprofitable utility National Power.
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It's much easier said than done in an animated democracy like this. The folks who understand the Philippines' problems - Camacho, included - meet their match with entrenched political interests in Manila.
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A reminder of that came last week, when the monetary fund once again urged the government to raise taxes on cigarettes, alcohol and petroleum, increase the value-added tax rate and reorganize and reduce tax breaks. These are the very steps that politicians have been resisting for years.
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Fiscal problems will dog this economy until the government has the courage to come down hard on members of the "middle class" who routinely evade taxes. Camacho hopes an election victory by Arroyo, who replaced the ousted Joseph Estrada in 2001, will empower her to tackle so-called third-rail issues like cheating on taxes.
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"In her first term, the president has always had to worry about the stability of her government," Camacho explained. "Winning a second term would put those questions aside, so she could focus on real change."
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The Philippines is one of Asia's most fascinating countries. It has a thriving democracy, a colorful history and an English-language proficiency that gives it a leg up in the age of globalization. Yet it can be shackled with incompetent, corrupt governments that do little for the masses.
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Breaking that pattern is crucial if the Philippines hopes to attract more foreign investment. It's possible, so long as today's politicians have the courage to head off tomorrow's problems. At the moment, they don't.

Asia, a Market Bubble or Still a Buy?

2004-04-06T15:00:00.000+08:00

J. Mark Mobius, managing director for Templeton Asset Management, has a reputation for scouring the farthest corners of the world in search of its hottest emerging markets. Late last month, Mr. Mobius was in India, looking for companies to add to the roughly $13 billion portfolio that he oversees.

India's benchmark stock index has risen 75 percent in the last year, part of a rally in Asian equities driven by global investors trying to cash in on the booming economies of China, India, Indonesia, Malaysia and Thailand. With political and economic uncertainty as well as terrorism rattling financial markets worldwide, some analysts say emerging markets in Asia have become the latest investment bubble.

Still, fund managers including Mr. Mobius say that bargains abound in Asia's emerging markets. They agree that stock prices are due for a breather: elections in several countries and fears of terrorism have already contributed to a rocky start for the year. But fund managers say they remain confident that stock prices in Asia are likely to rise as the countries benefit from the American recovery and as consumer classes emerge in the world's two most populous countries, China and India.

"Asia's where it's at in terms of growth," Mr. Mobius said. "We can continue to go up, but at a slower pace."

Concerns that Asian markets are overinflated stem from fears that they are too dependent on exports to the United States, and that their consumer markets would wither if demand flagged. Reinforcing this view are efforts by Asia's exporting nations to prevent their currencies from rising against the dollar, which can inflate the prices of assets like stocks and property.

Fund managers agree that this situation cannot last, and that a severe American downturn would have repercussions. But with the American economy expanding, with jobs being created and with interest rates low in much of the world, fund mangers say exports from Asian countries should continue to grow. More encouraging, they say, is that low interest rates, big trade surpluses and rising corporate profits are lifting personal incomes across Asia, stimulating consumer spending and intra-Asian trade, and gradually diminishing the region's dependence on exports to the United States.

Because of the drop, "Asia is looking as good as it has done in a long time," said William Pittman, director of Pacific investments at Henderson Global Investors in Singapore.

The strongest indication that Asia's emerging markets are not boiling over, experts say, is also the simplest: the price-to-earnings ratios. Stocks in the Jakarta Composite Index, the region's top-performing index over the last 12 months, are still trading at around 11 times earnings, compared with roughly 20 times for stocks in the Dow Jones industrial average.

"We wouldn't call it a bubble yet," said Nilesh Jasani, regional equities strategist at HSBC Securities Asia in Hong Kong, who advises fund managers.

Fund managers and other experts say the low price-to-earnings ratios in Asia reflect the higher risk of investing in the developing world. But they also represent a buying opportunity. "If it drives prices down, fine," said Hugh Young, managing director at Aberdeen Asset Management Asia in Singapore. "That gets people like us excited."

This does not mean fund managers are uniformly bullish on Asian stocks. Their views vary widely, and from country to country.

INDONESIA From Jakarta, the picture looks rosy. With interest rates and inflation falling and consumer spending rising, the economy is on track to beat last year's 4 percent growth. Concerns that parliamentary elections on Monday and Indonesia's first direct presidential elections in July might produce civil unrest have so far proved unfounded. So far this year, foreign investors have bought $571 million in Indonesian stocks, and the Jakarta composite index has risen 8.5 percent. The index was up almost 70 percent in 2003.

But regional fund managers remain cautious. "Indonesia is riddled with corruption and has real corporate governance problems," Mr. Mobius said.

Moreover, Indonesia's stock exchange is relatively small. Big foreign investments can drive the index higher, but efforts to sell can pull prices down just as fast. While most fund managers interviewed hold stocks in Indonesia's biggest companies, few are hurrying to buy more.

THAILAND Thailand is also experiencing strong growth. Fiscal and monetary incentives are stimulating corporate investment and domestic consumption, particularly in housing and cars.

The average price-to-earnings ratio on the benchmark index is about 16 times earnings. Thai stocks were up around 120 percent in 2003.

Even so, after Thailand's benchmark stock index doubled last year, foreign fund managers have been cashing in profits to keep their holdings in Thailand proportionate to the market's relative size globally.

Foreign investors have sold $550 million in Thai stocks so far this year, and the Thai Set 50 index is down 8 percent for the year. But fund managers say it may be time to start buying. "It's a market where we're looking for a new entry point," Mr. Jasani said.

MALAYSIA Once a pariah to international investors, Malaysia is enjoying new popularity. Analysts say much of the money that fund managers have pulled out of Thailand has gone to Malaysia.

Demand in the United States for electronics is spurring demand for Malaysian exports, including parts shipped to China for assembly. The commodities boom and rising tourism are also helping Malaysia's economy, which is expected to grow 5.5 percent this year.

The main index, which rose about 23 percent last year, is up 12 percent so far this year.

What encourages investors the most, however, is an anticorruption campaign by Malaysia's new prime minister, Abdullah Ahmad Badawi. The influential California Public Employees' Retirement System, or Calpers, recently reinstated Malaysia to its list of countries suitable for investment, something it has yet to extend to India, Indonesia or the Philippines.

CHINA The only market where shares are overvalued, fund managers say, is China's market for A shares, which are reserved for domestic investors and a handful of foreign institutions.

Foreign fund managers prefer to buy shares of Chinese companies listed in Hong Kong, which generally have lower price-to-earnings ratios. "We run a $400 million to $500 million China fund and don't have a single domestic-listed stock," Mr. Young said.

Still, vast pools of cheap labor continue to draw huge amounts of foreign direct investment, pushing up urban incomes and supporting demand for consumer products.

So far this year, the Shanghai A shares are up around 18 percent. In Shenzhen, the A shares are up 23 percent this year.

INDIA The same phenomenon is happening in India, fund managers say, with the flood of jobs being outsourced to the country fueling demand for consumer items.

"India offers the same economic potential as China, with a lot less of the uncertainty," Mr. Young said. "India has a vibrant shareholder democracy." Even as Mr. Mobius was scouring India for investments last month, Mr. Young was preparing to return to Britain to help sell investors on a new India fund that Aberdeen established.

Yet after nearly doubling last year, the Mumbai Sensex 30 index is essentially flat so far this year as fund managers hedge their bets before elections this spring. "We feel that in the pre-election period and after the election we are going to be hostage to many extraordinary factors," Mr. Jasani said

To some extent, he said, investors have become too optimistic about India's potential not to be disappointed. "Risk is only on the downside," he said.

Philippines PLDT Declines To Comment On 1Q Net Talk

2004-04-06T13:20:00.000+08:00

MANILA (Dow Jones)--Philippine Long Distance Telephone Co. (TEL.PH) Tuesday declined to confirm or deny a local newspaper report Monday that its first-quarter net profit is expected to exceed 4.5 billion pesos ($1=PHP56.371) from the year-ago level of PHP2.5 billion.

"Our first quarter results have not been finalized, therefore, we cannot comment on the aforestated news report at this time," said PLDT in a disclosure to the stock exchange. "We expect to make the appropriate filing and disclosure of our operating and financial results for the first quarter of 2004 by the first week of May."

Philippine Daily Inquirer newspaper, citing a ranking PLDT official, reported Monday that the country's dominant carrier surpassed the PHP4.5-billion net profit mark in the quarter based on preliminary numbers, buoyed by gains made by mobile phone unit Smart Communications Inc.

PLDT posted in February record net profit in 2003, nearly quadrupling its year earlier result, stoking optimism the strong growth of its mobile phone operations will continue to bolster profits for the next two years.

The Philippines' largest telecommunications company said net profit last year surged to PHP11.2 billion, from PHP3 billion in 2002, due primarily to the strong growth of Smart, which posted net profit of PHP16.1 billion in 2003, up from PHP6.2 billion in 2002.

Philippines Seeks Another Suspected Bomber

2004-04-05T22:48:00.001+08:00

By JIM GOMEZ
Associated Press Writer

MANILA, Philippines (AP)--Philippine police were looking for a seventh terror suspect, in addition to the six already in custody, in their investigation into a Manila bomb plot, a security official said Monday.

The six detained suspects, allegedly members of the al-Qaida-linked Abu Sayyaf group, are accused of plotting to bomb trains, shopping malls and unspecified Western embassies, as well as an oil depot, using 80 pounds of TNT, officials said.

The suspects also reportedly trained on the southern Philippine island of Mindanao with members of Southeast Asia's Jemaah Islamiyah terror network.

Among them is Muslim convert Redendo Cain Dellosa, who officials said confessed to bombing a ferry in late February that killed more than 100 people. Authorities still haven't determined what caused an explosion and fire on board the ferry.

Dellosa reportedly told investigators how he stashed TNT in a used TV set and timed it to explode after the ferry left Manila, Defense Secretary Eduardo Ermita said.

A top security official, who spoke on condition of anonymity, said police were looking for another Muslim convert who worked closely with Dellosa, and was reportedly seen in Manila after the arrest of the six alleged terror-cell members.

The suspected bomber, who wasn't identified, is believed to have a few pounds of TNT, part of the explosives cache the Abu Sayyaf cell in Manila intended to use for attacks, the official told The Associated Press.

The Abu Sayyaf--notorious for kidnappings and beheadings--is on the U.S. list of terrorist groups.

Five former hostages interviewed by The AP said Dellosa and two other arrested terror suspects--Alhamser Manatad Limbong, or ``Kosovo,'' and Abdulrasid Lim--were among their Abu Sayyaf captors.

Fe Rosadeno, 24, tearfully recalled how Limbong allegedly took away her fellow hostage, American Guillermo Sobero, who was beheaded by the rebels while in captivity.

Rosadeno expressed relief over the arrests, especially Limbong's. ``I hope they'll kill him immediately. He's a killer, he's merciless. If he regains his freedom he'll kill more people,'' she said.

Another hostage, Roland Ulah, claimed Dellosa was his guard and was trained in explosives by the Abu Sayyaf on the southern island of Jolo.

The arrested suspects were being held without bail on charges of multiple murder, including the beheading of Sobero of Corona, Calif., who was taken hostage three years ago. The charges also relate to a bombing that killed a U.S. soldier in the southern Philippines in 2002.

Muslim groups and relatives of some of the suspects have accused police of illegal arrest, torture and evidence planting, and said they plan to press charges. Muslim community leaders have also expressed concern that President Gloria Macapagal Arroyo, a staunch U.S. ally in the war on terror, was creating anti-terror ``hysteria'' and turning public opinion against the Philippines' minority Muslims.

An Abu Sayyaf spokesman, Abu Solaiman, refused to confirm or deny whether the six men were members of his group and plotted bombings in the capital.

``Let's give the government the headache of proving its allegations,'' Solaiman told AP in a telephone interview.

He claimed that only about a third of the hundreds of Muslim men detained as terror suspects in recent years were active Abu Sayyaf guerrillas.

Arroyo said the evidence against the suspects was ``strong and air tight.''

Washington has offered a $5 million reward for information leading to the arrest of Abu Sayyaf rebel leaders.

AP-NY-04-05-04 0930EDT

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