ARROYO WIN TO ATTRACT FRESH INVESTMENTS, SAYS U.S. BANK
MANILA, May 10 , 2004 (MANILA TIMES) By Maricel E. Burgonio & Armie Margaret Lee, Correspondents - INVESTMENT bank Bear Stearns said it is hopeful the likely victory of President Arroyo in the presidential election will encourage investors to again place new investments in electronics sector.
In this regard, Bear Stearns urged the Arroyo administration to improve its performance in the reliability and affordability of electricity supply.
From the present scarcity of new investments in the electronics sector, the industry hopes to perform better and regain its 2000 level, which was at $1.3 billion.
The Semiconductor and Electronics Industry of the Philippines Inc. (SEIPI) is targeting $1 billion in fresh investment this year.
The industry had aimed for the same amount last year, but managed to put in only $230 million.
Bear Stearns research analyst John Steurmer said the electronic sector will regain its level of investments if the government addresses the major concerns of the industry, particularly in terms of high electricity cost and the privatization of state-owned power plants .
The Philippines has among the highest electricity costs in Asia, which is the most favored region of investors lately.
“Her government will have to improve its performance in a number of areas, particularly in improving reliability and affordability of electricity supply,” Steurmer said.
The investment bank said the privatization of the assets of state-run National Power Corporation (Napocor) has to push through.
“Moving the privatization of publicly owned power companies through the new Senate will therefore be an early test for the new president.”
The National Statistics Office earlier reported that electronics exports rose by 9.8 percent in March, with the semiconductors sector recovering from a slump in the first two months of the year.
For the first quarter, electronics rose by 6.02 percent and semiconductors were essentially flat, growing by only 0.36 percent
Electronics shipments account for 67 percent of the country’s exports, while semiconductors represent some 47 percent of electronics.
Another important issue in the area of exports is the reliability of foreign trade data, Bear Stearns said.
The investment bank said the study of Philippine trade data underway will probably reveal that Philippine exports have been understated.
“The final result may not double the growth for Philippine exports, but the group expects that it could nevertheless increase it by a significant margin,” it said.
Meanwhile, the head of auditing firm SGV & Co. said the victory of Fernando Poe, Jr. might cause the peso to depreciate “a bit.”
“There might be a knee-jerk reaction,” David L. Balangue, chairman and managing partner of SGV & Co. told Business Times at the cocktail reception honoring the finalists of the Entrepreneur of the Year Philippines Awards Thursday night.
“The peso would probably depreciate a bit, then it will immediately recover,” he said. “Probably a one-peso drop.”
But even with a president favored by the business community, an economic turnaround in the near future is not imminent, Balangue said, adding the country has several structural problems that need to be addressed.
Reported by: Sol Jose Vanzi
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