...the improved PH key debt ratio

Risk perception of financial community on PH improving

Moody’s expects key debt ratio to fall below 50%

By Michelle V. Remo
Philippine Daily Inquirer

Monday, November 19th, 2012

Moody’s Investors Services has projected that the Philippines’ key debt ratio this year will fall below the 50-percent threshold, from a peak of 74.4 percent eight years ago, due to efforts to shore up revenue collection and reduce liabilities.

The credit watchdog also took note of the improving risk perception of the international financial community on the Philippines as a result of improving credit indicators.

The debt-to-GDP ratio—the proportion of the national government’s outstanding debts to the country’s gross domestic product—is a closely watched indicator of a country’s creditworthiness.

Based on international standards, a ratio of a maximum of 50 percent is considered “manageable.”

“Prudent fiscal management has combined with the solid performance of the balance of payments and economic growth to result in the steady improvement in key debt ratios [including the debt-to-GDP ratio],” Christian de Guzman, vice president and senior analyst for the sovereign risk group at Moody’s, said in a statement issued by Moody’s Monday.

As the country’s debt burden declines, Moody’s said, the government enjoys warm reception of the international market for the bonds that it sells.

For instance, Moody’s said, the $750 million in global bonds sold by the Philippine government this month indicated the significant appetite that investors have for instruments from the country.

The proceeds of the sale were used to partly finance the buyback of nearly $1.5 billion in outstanding debt paper.

Moody’s recognized the prudence of the buyback program, saying it helped the government trim its interest liabilities (given that the interest rate on the freshly issued bonds is lower than the rates of bonds repurchased) and extended the average maturity of its total debt (given that the freshly issued bonds have a longer maturity).

“The Philippines is exploiting favorable financing conditions to accelerate its ongoing debt liability management program,” De Guzman said.

Just this month, Moody’s raised the credit rating for the Philippines from Ba2 to Ba1, or from two notches to just one notch below investment grade.

Government officials hope the country will be given an investment grade by next year.

Meantime, Moody’s Analytics, a research firm and a sister company of the credit watchdog, said in a separate statement that it expects the Philippines to post a GDP growth of 5.2 percent for 2012 from 3.7 percent last year.

The government’s official growth target for this year is between 5 and 6 percent.

A 5.2-percent growth for the full year, however, indicates a slowdown in the second half from the 6.1-percent growth registered in the first semester.

“The Philippines’ economy likely decelerated mildly in the third quarter from the second quarter’s 5.9-percent year-on-year growth pace. This will keep 2012 growth above potential at 5.2 percent,” Moody’s Analytics said.

The projected slowdown on a quarter-on-quarter basis is due to adverse effects of bad weather on agricultural output, it said.

Meantime, the projection of a faster GDP growth for this year compared with last year is attributed to higher government spending, sustained rise in household consumption, and increased investments by domestic firms.

...the property boom

Global Filipinos And Property Boom

Creba Speaks

By CHARLIE A.V, GORAYEB

June 20, 2012

MANILA, Philippines --- The property sector is enjoying its most prolific cycle in recent history.
 
The cityscape is enjoying a major facelift. Old districts are transforming into new buildings featuring state-of-the-art construction and even green designs. Vertical villages have emerged as the practical and value-for-money address for urban dwellers. Building means growth; investments convey progress; good business leads to an upsurge in economic activity; and domestic growth always spells good news for the country.

Fort Bonifacio Global City, Taguig

The Philippines’ diaspora of Global Filipinos continues to fuel a boom in the real estate market back home. Estimated at close to 12 million or a tenth of the total Philippine population, the magnitude of their contributions have long been a major force in the national economy in terms of remittances, property acquisition and creating businesses. It is estimated that Pinoy expatriate worker send back home about US$ 20.116 billion, as of 2011 in foreign remittances which is continuously growing every year. Reports from the banking sector even states that this figure is an understatement since an average of 30 percent is sent to their local beneficiaries through other means outside the banking system. The global community is likewise appreciating more the best in Filipinos on all fronts: From entertainment, business and architecture, to tourism and BPO.

Since five years ago, US$5 billion of OFW funds were spent in real estate, and this is expected to increase some more as remittances grow. It is also observed that their wants have changed too from low-cost housing units to mid-range homes, houseand- lot packages, townhouses, or condominium units with cost ranging from Php 3 to R7 million.

The Pinoy expatriates are now aware of the benefits these properties could give them, its higher resale or lease value − not to mention the location, which is almost always on prime sites.

More property developers are now enjoying a “booming market.” Most are claiming that more than 60 percent of their sales went to OFWs, and are opening more new projects eyeing OFW clienteles. The unprecedented growth has even sent big property developers abroad for sales stints targeting the Pinoy overseas worker.

With the revenue in the real estate industry growing by almost 50 percent annually since the last five years, there is no doubt that the property sector shall have the crown of having the fastest growth rate among various industries in the country.

With the increasing spending power of the middle-class, a strong and conservative banking sector, a stable homebuyers market that is free from speculators, plus billions in remittances from abroad, we see no end in sight for the industry’s flourishing growth.

This is the centerpiece of the upcoming 21st Annual National Convention of the Chamber of Real Estate & Builders’ Associations, Inc. or CREBA – the largest Philippine umbrella organization of the real estate and housing industry composed of property developers, builders, contractors, suppliers and manufacturers of construction materials, real estate service practitioners and other professionals and entities engaged in 68 allied fields.
 
The convention will be held from Oct. 18-20 at the Legend Hotel, Puerto Princesa City, Palawan with the theme “Global Filipino: Key to Conserving Growth Through Sustainable and Strategic Real Estate Development and Practices.”

The 21st Annual CREBA National Convention hopes to unlock and link together sustainable and strategic approaches to keep the impressive growth path, and in the process, reinforce the commitment of industry stakeholders to advance land and housing as a primary catalyst for economic and social progress.

Set on a tropical paradise such as Puerto Princesa, the “City in a Forest” that is home to the world wonder Subterranean River, the convention shall provide the needed perspectives on global concepts and tap into the unlimited opportunities on emerging and fast-expanding markets.

...the new investments

P16.5-B New Projects, P10-B Expansion, Ecozone Investments Reach P26.5 Billion

 

By BERNIE CAHILES-MAGKILAT

June 6, 2012

Manila Bulletin

 

 

Investors are flocking into the various economic zones (ecozone) in the country with total investments of P26.5 billion in new and expansion projects in the first five months of the year.

Of these investments, P16.5 billion are new projects while P10 billion are expansion programs of existing locators of the various PEZA zones. There are a total of 42 new electronics firms that are investing in the country and their investments are expected to employ 17,000 workers.

"Investors are on an expansion mode. The time is certainly positive," said Lilia B. De Lima, Director-General of the Philippine Economic Zone Authority (PEZA).

Of the expansion projects, De Lima reported that Toshiba Information Equipment Systems has expanded with P3.6 billion for the manufacturer of new advanced technology equivalent to 2.5 inch terabyte hard disk drive.

It will hire 2,240 workers once it starts commercial operations within the year.

The Toshiba expansion here is part of the relocation of some of its production from its Thailand operation, De Lima said.

Toshiba’s exports for this expansion project alone is estimated to reach $1.327 billion in a single year alone.
The other big investor is Maxim Philis Operating Corp. with P3.2 billion worth of investments for final testing facility of a semiconductor kits in Gateway Industrial Park in General Trias Cavite. This project is going to employ 272 new workers.

Pilipinas Kao Inc. is investing P1.6 billion for increased production capacity of its high purity fatty alcohol using coconut products. The company’s existing manufacturing plant is located in Hasaan, Misamis Oriental.

Wiring harness manufacturer Yazaki Torres has two expansions for each of its two plants in Calamba and Batangas for a for a total of P1.156 billion. The two expansion projects will employ 2,262 Filipinos.

Ernesto Santiago, president of the Semiconductor and Electronics Industry of the Philippines Inc., said they expect to hit its exports growth target of between 10 to 15 percent this year over last year.

The industry already posted a 5.6 percent exports growth in the first quarter this year.

"Prospects for this yearare a lot better," Santiago said.

..the positive indicators

Most indicators support PHL economic growth, says FMIC  

 

TINO PAMINTUAN,

GMA News

January 10, 2012

 

 

The economy will grow by 5 percent to 6 percent this year on government spending, consumer demand and overseas Filipino workers’ (OFW) remittances, First Metro Investment Corp. (FMIC) said in a briefing Tuesday on Philippine economic outlook.
 
FMIC, a unit of Metrobank Group, is “cautiously optimistic” about the Philippine economy, noting current indicators point to robust investment inflows, strong market appetite, lower borrowing cost, ample liquidity and faster capacity to pay debt.
 
“The outlook for 2012 is very positive,” said Francisco Sebastian, FMIC chair. “The country is in very good shape with its macro-economic fundamentals still intact.”
 
Public debt is lower, inflation has eased and government remains serious with its fiscal and reform measures, he said.
 
However, threats like economic slowdown in China, a protracted debt crisis in the European Union and a weakening of commodities market remain, FMIC noted.
 
Also, the country is facing the La Niña weather phenomenon until February and that may weaken agriculture output.
 
Roberto Juanchito Dispo, FMIC president, said the economy will level up this year in terms of macro-economic fundamentals and capital markets.

'De facto upgraded'
 
Despite the US and European crises, OFW remittances will grow by 5 percent to 7 percent and inflation will stay within 3.5 percent to 3.7 percent because of stable crude oil prices, Dispo noted.
 
Exports are will also recover from a negative 4.3 percent to 5.7 percent growth while imports will increase by 10 percent, according to the FMIC president.
 
FMIC sees the peso-dollar exchange rate slip in favor of the US currency at P43:$1 to P45:$1 as the US recovers and outperforms Japan and Europe.
 
The equities market is likely to perform better, with the Philippine Stock Exchange index hitting 5,000 by year's end because of low interest rates, slower inflation and a credit rating upgrade, according to the Metrobank Group unit.
 
Growth drivers will include consumer spending, investments in tourism sector, and infrastructure development under the Aquino administration’s public-private partnership program.
 
Monetary policy will relax the first quarter and stay relatively stable the rest of the year.
 
As such government securities will have relatively low rates, including 3 percent for 91-day Treasury bills, 4.75 percent for 5-year and 10-year notes and bonds, and 6 percent for 25-year notes.
 
With this outlook, the Philippines is “de facto upgraded” with both onshore and offshore markets already pricing the country's debt instruments at investment grade levels, said.
 
He cited the sale of $1.5-billion, 25-year global bonds last week at a yield of 5 percent.
 
Last year, Fitch Ratings raised the country's long-term foreign currency bond to BB+ from BB or a notch below investment grade. Moody's Investors Service also upgraded Philippine currency bonds to Ba2 from Ba3.
 
Higher credit ratings lower the price of a nation’s debt and allow governments to easily borrow for infrastructure projects, and an investment grade attracts global institutional investors. — VS, GMA News

...the 2012 economic forecast

PH seen to expand, withstand turbulent ’12

Government expects economy to grow 5.5% by year’s end

By: Doris C. Dumlao
Philippine Daily Inquirer

Sunday, January 1st, 2012

 

MANILA, Philippines–The Philippine economy this 2012 will likely grow at a faster pace than the previous year, supported by stable interest rate as well as consumer spending that derives strength from the billions of dollars sent home by millions of overseas Filiipino workers, according to Banco de Oro Unibank.

Also, the country’s economic condition will remain sound—able to withstand the effects of the lingering debt crisis in Europe and uncertainties in the United States, said Jonathan Ravelas, chief market strategist at the country’s largest bank.

In a research note, the economist projected that the country’s gross domestic product (GDP) would grow by 4.5 percent this year—higher than the 4-percent rate expected for 2011.

The government’s growth expectations appear to be rosier, settling at 5.5 percent for 2012, and 5 percent for 2011.

In 2010, the country’s GDP grew at a robust 7.6 percent due to the rebound in exports and steady growth in remittances.

Ravelas said resilient OFW inflows and other strong macroeconomic fundamentals were the Philippines’ “saving graces” that would enable it to ride a tough 2012.

He added that the sunshine industries, expansion of energy and mining investments, as well as construction of low- or medium-cost housing and office buildings, will contribute to the country’s economic growth in 2012.

Meanwhile, Ravelas listed agribusiness, consumer durables, information technology, health beauty and wellness, transport, telecommunications and tourism as among the sunshine industries, or those that are expected to become more important in the future.

Ravelas predicted that “2012 will be a tough one, with reduced global growth outlook due to global uncertainties.”

Financial market barometers, he added, would “experience near-term volatility but should stabilize in the medium term.”

Investors are expected to hold on to their cash as the global impact of the crisis in the euro zone continues to shake markets.

“We may experience near-term volatility … but once investors realize that we can withstand these so-called headwinds, they will start rolling their funds again in the financial markets,” Ravelas said.

Trouble abroad curbed the country’s economic growth last year and dampened the market. The debt crisis in the euro zone rattled investors and heightened demand for safe haven and assets such as US dollars and bonds.

In the United States, plans for economic stimulus in the near term and fiscal austerity in the medium term led to uncertainties that kept investors on the edge.

At the same time, the political tension in the Middle East caused crude prices to soar, while the earthquake, tsunami and nuclear accident in Japan stalled manufacturing.

As investors return to markets, stable interest rates and foreign exchange rates will ensue, leading to “a vibrant economy, which is reflected by a rising equity market,” Ravelas said.

The main-share Philippine Stock Exchange index will likely hit the 5,000-point mark in 2012, he said. The PSEi finished at 4,371.96 points in the last trading day of the year.

The BDO strategist forecasts the exchange rate to average 40.70 to a dollar this year, compared to the 43.80 to a dollar he projected for last year. The government believes that the peso-dollar rate will average 42.00 this year, the same as last year.

The three-month interest rates will likely average 3 percent this year, unchanged from last year, Ravelas said.
He also projected that inflation would average 4.5 percent this year, slightly lower than the 4.7 percent seen in 2011.

...the base

Subic: School for sustainable tourism and economic growth driver

Empowering the Filipino People

By Former Philippine President Fidel V. Ramos

April 2, 2011

“People empowerment leads to a culture of excellence and results in global competitiveness. Excellence simply means being ‘better than the others.’” — FVR

MANILA, Philippines – Last 23 March, FVR launched the International School of Sustainable Tourism (ISST) in Subic upon invitation of its President, Dr. Mina Gabor, former Tourism Secretary. Mina is one character who really knows how to get attention. Three weeks ago, when she came to our Ramos Peace and Development Foundation (RPDEV) in Makati to invite us for the inauguration of ISST (her latest “baby”), we had 83 things calendared on the chosen date. But, when she dropped the word “ECO-TOURISM,” right then and there, we cancelled everything and agreed to go.

UN World Tourism Organization ‘Musts’

Sustainable tourism is the acknowledged key to ensuring that there is an adequate supply of quality tourism products/services, while minimizing/ avoiding negative impacts of tourism on our natural environment and socio-cultural assets.

Many actions need to be done to prepare venues for the enjoyment of local and foreign tourists, the most essential listed by the UN World Tourism Organization (UNWTO) being:

Research: Engage leading industry experts and research institutions to generate cutting-edge knowledge on sustainable policies and tools.

Capacity Building: Conduct seminars and training camps using practical/hands-on methods.

Dissemination: Organize international conferences/forums for the exchange of “best practices.”

Networking: Collaborate with regional/national tourism administrations, UN agencies, and tourism operators regularly.

Pilot/Technical Applications: Carry out pilot projects to “test” new approaches and techniques.

Bringing stakeholders together

Late last year, the first Eco-Guiding Course ever done in the Philippines was held at ISST in partnership with the Department of Tourism.

Our country badly needs Eco-Guides since we have only a limited number of well-trained park rangers.
Taking care of at least 2,000 hectares of forest is the job of just one park ranger.

An Eco-Guide is someone who connects tourists with the natural and cultural values of the places visited.

Guides do this by interpreting each venue’s special features, sharing their passion for nature with visitors, while minimizing people’s impact on the environment. They are responsible not only for the safety and enlightenment of tourists – but equally, for environmental protection.

Ecotour Guides are employed on cruise ships, walking/bus tours, wildlife adventures, and at historic sites.

Maximizing opportunities in sustainable tourism

RPDEV completed last year a series of “EcoMismo” seminars where partners in government and the private sector discussed doable solutions to challenges, both in policy and operations.

These sharing workshops were held in MetroManila, Cebu, Bohol, Sarangani, South Cotabato, GenSan, and CamSur.

With the theme “Ecotourism and Eco-Productivity: Best Practices and Challenges,” EcoMismo aimed to highlight the Philippines as among the top Asia-Pacific clusters in eco-tourism, and a pioneer in eco-productivity.

FVR also keynoted the 4th Philippine Real Estate Festival (PREF) Excellence Awards last 31 July when achievers in both real estate and tourism development were properly recognized, and where retirement/healthcare communities for foreigners were identified.

Only the best is good enough

Emphasized to EcoMismo and PREF audiences was the importance of EXCELLENCE as the yardstick for successful tourism packages.

During FVR’s Presidency (and up to now) among the recurring themes in his speeches, writings and interactions with other stakeholders is the virtue of striving for excellence in everything we do – if Filipinos are to become globally competitive as a nation.

Among our tourism crown jewels, it is in Subic Bay (being an international gateway) where tourism development, environmental conservation, and human behavior synergistically converge, and where nothing less than excellence works.

Many talk about increasing global opportunities in our time. As modern technology brings far-flung or untapped markets closer to our doorsteps, we may think the chances for global business automatically increase. Well, not really – because excellence in the global marketplace is the principal yardstick.
Best practices in eco-tourism

In 1991, the DoT – in collaboration with the UN Development Programme (UNDP) and the UNWTO – prepared a Philippine Tourism Master Plan, the key objective of which was to position the Philippines as a world-class tourism destination under the guiding concept of sustainable development.

The Ramos Administration adopted that blueprint in 1992 as our basic roadmap, which includes real estate and property development. That official policy of sustainable tourism was further deepened and broadened thru regional seminars-workshops among stakeholders.

Sustainable tourism demands sustainable business practices. Clearly, the task of sustainable tourism has no universal solution -- it has only universal intent. Solutions are always location-specific. What works in Bohol may not work in Caramoan, CamSur. Practices in Cebu City may not apply in Lake Sebu.

The intent in sharing best practices is not the “who,” but the “why” and “how.” It is not to imitate but to learn from each other’s experiences -- and be inspired by them.

Nurturing a culture of excellence

In “winner” tourism models, decision-makers don’t settle for what is easy and convenient, or what is contrived or merely improvised. They study, analyze, plan and test until what they wish to achieve is clearly configured and understood in the minds of stakeholders who must help bring about the intended outcome.

Such is the “Culture of Excellence” that has enabled many nations, some smaller than ours, or whose natural resources are more limited than our own, to achieve much, much more than we have done – in terms of sustainable development and, consequently, their people’s quality of life.

If we persist in incorporating a “Culture of Excellence” in our lives, and encourage others in the community to aspire for nothing but the best, it is likely that the overall improvement of the Filipino future will become reality and not just an impossible dream.

Successful developers and operators forego small comforts and instant gratification because only the best is good enough. They keep track of what the competition does and are humble enough to accept where they fall short. They constantly search for ways to do better next time.

Tourism with a conscience

Many seem to forget that the Earth is humankind’s only home, and that millenniums of consistent abuse have pushed our Planet to the brink of no-return.

If our children – and all others after them – are to enjoy a decent future, we must change the way we treat food, water, air, vegetation, trees, energy, land, rivers and seas, and Earth’s other bounties.

We work hard every day so that our families may have three healthy meals and a roof over their heads. But, all that work will be for nothing if our Planet becomes uninhabitable.

Eco-tourism requires community participation in protecting and managing natural resources, traditional culture, and indigenous wisdom.

Eco-tourism fosters environmental ethics while promoting economic benefits for host communities and cultural enrichment for visitors.

Subic as growth engine

Subic Central News (February, 2011) reports: “The total exports in 2010 from Subic Freeport hit an all-time high with freight-on-board value of U$1.34 billion, surpassing the 2009 export value of U$1.08 billion by 24.6 percent year-on-year.”

The biggest exporters were led by Hanjin Heavy Industries Corp-Philippines, which exported a total of U$725.8 million in FOB value. In 2010, Hanjin completed two oil tankers – the M/T Leyla K and its twin M/T Eser K, for delivery to the Turkish Kaptanoglu Shipping Line.

The two vessels were the very first large tankers built in the Philippines, each valued at U$68 million, and measuring 114,000 deadweight tons, 241 meters long, 44 meters wide, and 21 meters deep.

Imports by Subic-registered firms also showed strong performance, jumping by 55.3 percent to $3.48 billion in 2010 from $2.24 billion in 2009.

Subic Administrator Armando Arreza (“Triple-A”) claims these export-import achievements indicate Subic’s economic power and increased competitiveness as a manufacturing/logistics hub.

Subic Bay is an ideal tourism gateway to what FVR in 1994 designated as the “Manila Bay Doughnut” in terms of economic growth and tourism potential that encompasses Bataan, Corregidor, Cavite, Tagaytay, Batangas, Quezon, Laguna, Rizal, Bulacan, Pampanga, Tarlac, Pangasinan, and Zambales.

Nobody describes Subic Bay better than Tourism Secretary Alberto Lim, citing it as a “perfect model of sustainable and quality tourism attractive to a diversity of foreign and local visitors.”

The fundamental principle

The tourism industry provides great opportunities for dealing with the persistent threat of climate change in a way that not only nurtures the environment, but boosts businesses as well.

In a word, eco-tourism is tourism with a conscience – because it advocates protection of natural resources and establishes mechanisms that are environmentally sustainable, economically rewarding, and socially equitable.

In his message at ISST (read by Secretary Bertie Lim), President Aquino III firmly committed: “Our policy is first and foremost anchored on the principle of sustainable tourism... that is environmentally and socio-culturally manageable.”

WE DON’T HAVE TO CHOOSE BETWEEN “GROWTH” AND “GREEN.” THE PHILIPPINES CAN BE BOTH GREEN AND GROWING.

...the PEZA

PEZA investments to reach P25 B in Q1

By BERNIE CAHILES-MAGKILAT

March 24, 2011

Manila Bulletin

MANILA, Philippines – New investments approved by the Philippine Economic Zone Authority (PEZA) in the first quarter this year are expected to reach between P20 billion to P25 billion.

Elmer San Pascual, group manager of the Promotion and Public Relations of the Philippine Economic Zone Authority (PEZA) , said the exact figures are still being finalized but they are on track with their growth target.

“We should be in the P20 billion to P25 billion mark investments in the first quarter of this year to be able to achieve our 10 percent growth target this year,” he said.

PEZA, which administers the registration of export-oriented enterprises in the country’s various economic zones, is targeting P224 billion investments this year from P204 billion in 2010. 

“We are on track and even more than that,” San Pascual said.

The new investments that came in the first two months this year are not the big companies but are mostly in the supporting industries that are part of the supply chain.

“Tourism investments are also making some headway in the first two months,” he said.

In terms of exports and employment, San Pascual said they have no problem meeting the growth targets also. The agency is targeting the same 10 percent growth in exports and employment this year over 2010.

“The indication is we are growing between 15 to 20 percent for our exports although our target is only 10 percent growth,” he said.

Exports in January this year was up 8.26 percent to $3.33 billion from $3.133 billion in January 2010.
Employment in PEZA zones was also up 21.97 percent or a total of 777,882 as against 637,759 in January 2010.

San Pascual said the biggest jump in exports was registered by the IT sector, which posted a 45 percent increase in January to $432 million form $297 million in the same month last year.

...the surf capital

Incoming investments seen to propel Surigao economy

MB – Thu, Mar 17, 2011

SURIGAO CITY, Philippines - The effort of the eight-month-old governance of the local officials to make this city develop its economy and ultimately make it more globally competitive has started to bear fruit following the expected opening of various businesses here.

City Mayor Ernesto T. Matugas said the opening of notable foreign and domestic businesses here will also generate more tax revenues and provide employment opportunities.

He cited the Koreans and Malaysians who will establish sustainable fishing and fish processing, fish marketing and distribution, and aquaculture operations with ecological limits here.

The Republic of Korea through KOICA will establish a 10-hectare "Integrated Fishery Resources and Facility Complex" here that will serve as a collection port for fish and marine products for the whole province of Surigao del Norte, and other provinces of the Caraga Region, said Matugas.

The cost of this big project is expected to reach P300 million, a huge portion of which will be a grant assistance from the Republic of Korea.

While the city government here will shoulder the land acquisition cost amounting to P5 million, he said.

The Malaysian Business Group who met with the city mayor and other local officials at the City Hall last weekend also expressed their desire to the local officials to help in the improvement of the city's economic development by establishing several businesses.