BOI, PEZA INVESTMENTS SOAR 33% TO P220B IN FIRST 10 MONTHS
MANILA, NOVEMBER 13, 2006 (STAR) By Marianne V. Go - The Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) – the two biggest investment agencies in the country – registered a combined P219.88 billion worth of projects in the first 10 months of this year, a substantial 33-percent increase from the P165.67-billion level in the same period a year ago.
The BOI had the bulk of committed investments at P153.42 billion during the period, 29 percent higher than the P119-billion level in 2005, while PEZA, which oversees the economic zones, approved investments worth P66.46 billion from January to October this year, up 42 percent from P46.67 billion last year.
BOI managing head Elmer C. Hernandez said the increased project commitments can be attributed to government’s successful efforts in implementing fiscal reforms, thus increasing investor confidence in the Philippines.
He added that with the improved investment trend, the full year investment target of P254 billion could be attained by the two agencies. Last year, the BOI and PEZA approved total investments amounting to P231 billion.
The total number of approved BOI and PEZA projects likewise increased 17 percent to 568 projects, compared to the 486 projects approved during the same period last year.
The approved projects this year provided employment for 112,163 workers, also up 19 percent from the 94,721 employed in 2005.
Of the total approved investments, foreign investments amounted to P84.6 billon, higher by 28 percent compared to the P66.2 billion level approved for the first 10 months of 2005.
Local investments, on the other hand, amounted to P135.3 billion, a bigger 36 percent jump from P99.5 billion recorded from January to October 2005.
By nationality, the Americans overtook the Japanese as the country’s major investors with total investments amounting to P35.18 billion, while Japanese investments slowed down to P18.05 billion.
Majority of the investments, or P93.51 billion, went to infrastructure, while the manufacturing and industrial services sector got P100.35 billion in new investments.
The information technology sector got P12.91 billion with most of the investments going into value-added activities such as software development and business process outsourcing.
Among the top investors during the period include GN Power Ltd. which is investing P43.9 billion, and mobile telecommunication companies Smart (P33 billion), Globe (P5.48 billion) and Digitel (P6 billion) specifically for their respective third generation (3G) technology upgrade.
Peso rise prompts review of forex trading rules By Des Ferriols The Philippine Star 11/13/2006
The sustained strength of the peso has prompted a review of the country’s foreign exchange regulating framework with a possible policy easing under study, central bank officials said over the weekend.
The Bangko Sentral ng Pilipinas (BSP) said regulators are reviewing not just the overbought and oversold limits of banks but the entire regulatory framework that governs the trading of foreign exchange.
Aside from possibly raising the overbought limits on the dollar purchases of banks, banking industry leaders have been asking the BSP to consider easing its rules on forex companies.
According to BSP officials, however, the BSP intended to go even further than this and has put the entire forex regulatory approach under review instead of looking at individual aspects.
BSP Deputy Governor Diwa Guinigundo told reporters that market conditions have changed materially since forex regulations were gradually tightened years ago.
"A lot of things have changed, not just market movements but more long-term factors such as accounting standards, movements of capital – we have to make sure that we are aligned with the open market economy," Guinigundo said.
He added regulators want to determine if the market reforms already in place have made tight regulations unnecessary.
"We have speeded up payments and settlements," he said. "We’re asking if existing restrictions are still necessary."
Guinigundo said regulators have yet to draw any policy direction from the ongoing review but noted a momentum towards streamlining existing regulations.
"The direction, for the moment, is towards streamlining," he said. "We have to complete our study and evaluation to determine how far it would go and how much the entire framework should be adjusted."
The BSP’s policy review was set off by the sustained strength and apparent stability of the peso which the BSP said made it relevant to adjust its overbought limit in order to allow banks more flexibility with their dollar purchases.
The BSP is in the process of determining how far it could adjust the limit on the overbought and oversold position of banks but bankers said the economy had grown enough for foreign exchange trading to open up in general.
According to BSP Governor Amando M. Tetangco Jr., the central bank is still determining how far it could adjust these limits and how fast.
"We’re still trying to determine the magnitude and pace," he said.
At present, the BSP is imposing a limit on the dollar purchases of banks equivalent to 2.5 percent of their total unimpaired capital or $5 million, whichever is smaller.
This ceiling was itself adjusted in 2003 from the original ceiling of five percent of the total unimpaired capital or $10 million, whichever is smaller.
Also up for review are BSP’s rules on foreign exchange companies and their forex trading operations which were tightened years ago when the peso was under heavy speculative attacks and the country’s reserves were dangerously thin.
Chief News Editor: Sol Jose Vanzi
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