ecozone investments to reach p1 trillion - de lima
MANILA, SEPTEMBER 8, 2006 (STAR) By Marianne V. Go - Philippine Economic Zone Authority (PEZA) Director-General Lilia B. de Lima expressed optimism yesterday that the PEZA would soon breach the P1 trillion cumulative investment figure as investments continue to pour into special economic zones.
De Lima revealed that from January to August this year, approved PEZA investments have reached P41.803 billion, showing a 27.4 percent increase over the comparative eight month period last year which posted approved investments of P32.812 billion.
Cumulative PEZA investments since 1995 have reached P955 billion as of end 2005.
Thus, the PEZA is about P45 billion short of the P1 trillion mark.
The PEZA’s optimism in breaching the P1 trillion mark, De Lima explained, is based on the computation that with total approved PEZA investments from January to August this year already amounting to P41 billion, the PEZA is just P4 billion short of the trillion mark.
De Lima is hopeful that by September, the PEZA will be able to approve an additional P4 billion in investments.
According to De Lima, her confidence in hitting the trillion mark stems from the continued inflow of investments into special economic zones.
In fact, De Lima noted, about 70 percent of the increase in approved PEZA investments are due to expansion of already existing PEZA locators.
The increase, De Lima said, "speaks very well of the confidence of companies already here."
About half of the investments in the special economic zones, De Lima said, are in the electronics sector.
However, most of the investors or 88 percent engage in manufacturing while 12 percent of activity is in information technology.
In fact, De Lima said, investments in the IT sector show the fastest growth, doubling from the six per cent growth posted in 2005.
Japanese investors continue to lead investors in special economic zones, followed by Americans – most of whom are in the IT sector.
Forex reserves climb to record $21.43B By Des Ferriols The Philippine Star 09/08/2006
The country’s gross international reserves (GIR) hit a record high of $21.43 billion as of end-August, up by $153 million from July, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
The BSP said the reserves were boosted by a deposit made by the National Government from the proceeds of its global bond issue in July.
The BSP said there was also a steady inflow of dollar remittances from overseas Filipino workers, foreign portfolio investments and export receipts that contributed to the surge in the reserves which are expected to hit the $30 billion mark in the next five years.
According to the BSP, the amount is sufficient to cover about 4.3 months of imports of goods and payments of services as well as interest payment. This level was also equivalent to 3.6 times the country’s short-term debt based on original maturity and 1.9 times based on residual maturity.
Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
However, the BSP said part of the inflows was used to finance NG’s debt service payments on its foreign currency obligations.
The BSP has projected that the country’s forex reserves could go up to as high as $25 billin to $30 billion over the next five years, providing ample cushion against market volatility that threaten vulnerable emerging economies.
BSP Governor Amando M. Tetangco Jr. said that although the country’s reserves are not nearly as large as the major markets in the region, it was on a trajectory that would bring the total stock to as high as $30 billion over the medium term.
Tetangco said this projection was consistent with the expected expansion in foreign exchange requirements of an expanding economy with brisk exports and steady inflow from overseas Filipino workers.
"This is assuming that we would stay in the current trajectory of macro-economic fundamentals," Tetangco said. "It would not be difficult to see that our reserves would continue to expand in that case."
The BSP said earlier that although it is also costly to hold on to high reserve levels, higher foreign exchange stock would provide an even bigger safety net against market volatility.
BSP Deputy Governor Diwa Guinigundo told reporters that with the gross international reserves at a record high of over $21 billion and the balance of payment at close to $1 billion, the peso has shown marked resilience against volatility.
"One of the basic principles in reserve management is that no reserve is big enough," Guinigundo said. "It’s costly to hold so much reserve but there is also danger if you do not have enough. It’s a balancing act."
"The accumulation of reserves is a form of insurance against factors that are largely unexpected," Guinigundo said. "Since our fundamentals are good at this point, having ample reserves would give us enough cushion and we have tended to avoid further depreciation of our currency."
According to Guinigundo, remittances from overseas Filipino workers (OFWs) could hold up the GIR and provide a strong anchor that also had the effect of keeping investments in the country.
"In a way, strong OFW inflows also tell investors that our economy has this one fundamental strength that would soften the impact of events that would otherwise shake other similarly situated economies," he said. "OFW inflows also provide us time to continue strengthening our fundamentals."
Chief News Editor: Sol Jose Vanzi
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