KUALA LUMPUR, MALAYSIA, December 13, 2005
 (STAR) By Aurea Calica (VIA PLDT) – President Arroyo pushed yesterday for an energy summit among members of the Association of Southeast Asian Nations (ASEAN) and called for more investments into this sector not only from ASEAN but from its Plus Three partners – China, Korea and Japan.

"I suggest we get the energy ministers to discuss measures to secure a reliable supply of energy to support our economic activities," the President said during the plenary session of the ASEAN leaders’ summit here.

"We need to pursue investments in energy infrastructure and seek wider collaboration in new and renewable energy and alternative fuels if we are to keep our economies humming, and our lights on, through the next three decades," the President noted.

The President enjoined China, Japan and Korea to pursue investments in the energy sector of ASEAN.

Last Sunday, the President personally asked Chinese Premier Wen Jiaobao to consider putting in energy investments in the Philippines.

Earlier, Foreign Affairs Secretary Alberto Romulo said the President would follow through with the proposals she made during the second ASEAN-United Nations Summit on the collective action of the ASEAN and the Plus Three countries – China, Japan, South Korea – to ease the effects of unstable oil prices.

"We have experienced some relief on this issue, but we must continue to ensure that all of us do not suffer from the future oil spikes," he said.

Romulo identified the following areas of the ASEAN Plan of Action for Energy Cooperation that could serve as the backdrop for wider East Asian energy security cooperation: ASEAN power grid by inter-connection, trans-ASEAN gas pipeline program, coal program, energy efficiency and conservation, renewable energy and regional energy planning.

"The problem of energy security is here to stay. For such a region as ours, highly dependent on external energy sources to fuel and sustain our growth, short-term relief is not the answer. We should be seized by a sense of urgency, the urgency of investing in our long-term energy security," he said.

Moody’s expected to upgrade RP credit rating By Des Ferriols The Philippine Star 12/13/2005

An outlook upgrade from Moody’s Investor Services is expected soon but the credit rating agency expressed concern over the impact of Constitutional change on the momentum of the government’s on-going economic reforms.

After a week-long visit, Moody’s analysts have been encouraged by the improvements in the country’s fiscal position and gave every indication of a possible upgrade in outlook from negative to stable.

Moody’s concluded its annual ratings review last week and according to monetary officials, the offshoot was an increased chance of a "favorable assessment."

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said Moody’s reviewed the National Government’s fiscal position during the evaluation and recognized that there have been improvements in the trajectory of revenue collections and its impact on the effort to balance the budget.

The country’s lowest credit rating was given by Moody’s when it downgraded the Philippines by two notches in February this year from Ba2 to B1. Its outlook rating on the country’s prospects has also been downgraded from "stable" to "negative".

Tetangco said an upgrade of the outlook back to "stable" could happen although the ratings agency was also expecting more definitive indications of how the rest of the expanded value added tax (EVAT) rate adjustment would be implemented.

"Our current fiscal position increases the chances of a favorable assessment," Tetangco said. "But that wouldn’t end there, they will also want to see the rest of the EVAT being implemented as scheduled in February."

Moody’s has been alarmed by the country’s worsening debt situation earlier this year but the adjustment in the VAT had signaled a commitment to improve the revenue base of the government to avoid future heavy borrowing.

According to the BSP’s Investor Relations Office, on the other hand, Moody’s analysts have given categorical indications that there would not be further downgrade.

"Their exact words were: there is no downward pressure on outlook and credit ratings," said IRO executive director Rene Pizarro. "I think this upgrade in outlook rating will happen mainly because the two main concerns they raised the last time have already been addressed."

Pizarro pointed out that when Moody’s downgraded the country’s ratings, its main concern has been the fiscal balance and the stalled implementation of the VAT reforms.

"Now we have implemented phase 1 of the VAT reform and by February there will be further adjustment in the rate from 10 percent to 12 percent," he said. "That will make the outlook upgrade feasible."

However, Pizarro said Moody’s is still particularly concerned about the government’s inability to complete the privatization of the National Power Corp. (Napocor) although the agency recognized the positive impact of the tariff adjustment on the company’s bottom line.

Pizarro said Moody’s was also apprehensive over the disruptive impact of the proposed charter change on the momentum of the economic reforms that have not been completed by the government.

"They are generally optimistic but their caveat there is that if there is charter change, it might disrupt the momentum of the economic reforms and distract Congress from the legislative measures that need to be passed," he said.

Pizarro said the completion of the EVAT reforms would also be critical, particularly the two-percentage point adjustment in the EVAT rate scheduled on February 1 next year.

"That will ensure a sustainable improvement in revenue inflows and with budget controls in place, the eventual balancing of the budget," he said. "My feedback from them is that barring any other major political upheaval, there will be no more economic crisis as long as we stay on this current path."

In its last credit rating action in February, Moody’s noted the recent fiscal reforms undertaken by the Arroyo administration but the credit rating agency said the country’s mounting debts and ever-expanding need for more borrowing have made it even more vulnerable to external shocks and shifting market sentiments.

Moody’s downgrade brought the country’s rating just two notches away from the Caa level which was considered "poor standing" and close to default.

Chief News Editor: Sol Jose Vanzi

All rights reserved