JUNE 27, 2009
(STAR)  By Des Ferriols - The Arroyo administration could issue P25 billion worth of sovereign bonds to capitalize the central bank within this year.

Fiscal officials have ruled out the possibility of meeting it’s commitment to infuse cash into the central bank but it could still issue bonds to raise part of the P40 billion required under the law,

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said there were on-going talks to thresh out the details of the issue but it could still happen before the end of the year.

Guinigundo explained that the capitalization of the BSP had two components. One was a P15-billion direct cash infusion from the National Government and a bond issue that would raise P20 to P25 billion.

Guinigundo said the cash infusion would not happen this year but the bond issue was still alive and being discussed.

“We’re still ironing it out,” he said. “That should have been completed by now but there were issues with registration that’s now being sorted out.”

The plan was for the National Government to issue P20 to P25 billion worth of bonds and the proceeds would be infused into the BSP.

The bonds would then be paid out of the national budget in tranches, and the allocation would be guaranteed by multi-year budgetary allocation (MYBA) to be issued by the National Government.

Guinigundo said the BSP capitalization does not have to happen all at once and even just the bond issue could be done as soon as the mechanics have been sorted out.

If the National Government eventually decides on the cash infusion, it could happen later when fiscal conditions were more conducive.

The BSP has been pressing for the government to meet its commitment but the last three administrations have failed to do so.

After long discussions with the BSP, however, the Arroyo administration, in the end, decided to scrap the capitalization plan that the government was supposed to have completed as early as 1993.

If the bond issue pushes through, it would be a partial compliance with the central bank charter that requires the government to infuse P50 billion into the BSP.

When it was formed, the BSP received only P10 billion from the National Government and the plan was to complete the capitalization later.

“It now depends on the market,“ Guinigundo said.


What's the latest in some industry sectors? BUSINESS & LEISURE By Ray Butch Gamboa Updated June 27, 2009 12:00 AM

Ms. Cynthia Carreon of the Department of Foreign Affairs looks at the still-raging global crisis as a tremendous opportunity for us. According to the DFA, Canada is looking at the Philippines for possible accreditation of our local hospitals in their medical tourism thrust. Ms. Carreon is optimistic that by 2012, we will be generating $312 billion in this industry where our main competitors in the region, namely Thailand, India and Singapore continue to rake in the precious dollars. Like us, they also sent their representatives to the recent medical tourism convention in Zurich.

Just last year, Guam alone sent over to the Philippines some 5,000 patients, each of them spending a minimum of $15,000 per. Australia, on the other hand, is busily promoting their popular “Smiley Holidays”. As the name suggests, this promotion centers on the dental industry. It is a fact that we charge one of the lowest fees in dental services, such that it is worth it for patients to come over, spend that much in airfares, get the desired dental services done (and done well too) and still come out winning.

By their reckoning, our medical fees are about one-eighth of America’s charges, so this is one industry that we can really push. In Thailand, one beef that foreigners reportedly have is the disparity between the fees charged for locals versus those charged to foreign patients. To prevent this, the DFA is now working closely with the Dept. of Health so the fees and charges are closely monitored. I believe ours is the only country doing this, as of now.

Lastly, they cannot underscore the need for more world-class retirement communities in the Philippines. The German community has been singled out as most eager to set up camps here for citizens in their twilight years. Japan and the United States both see the growing senior population as a potential problem too in the next five to ten years. While we still have the land, the proficiency, and the culture and temperament to set this up as another thriving industry, let’s get the ball rolling on this one. Specifically singled out in their chat with the European Chamber were Tagaytay, Subic, Iloilo and the quaint island of Batanes in the North.

Construction slowdown

The Construction Industry Authority of the Philippines, through their officer-in-charge Engr. Sonia Valdeavilla, reports a drop in growth in construction of 8.2 percent in 2008, mainly due to a drop in public construction activities and a decline in public works capital outlays. Till tax revenues increase, they expect this to continue.

In 2007, the industry saw a drop of 23.1 percent even when private construction activities reached a robust P73.7 billion in residential and non-residential construction.

Looks like the finger is again pointing to the anemic performance of public construction throughout the country.

The depreciation of the peso tends to drive prices upwards, and the banks continue to be cautious about lending. We are now inching once again towards the P50 mark, a fact that particularly delights one other sector, the exporters. As for the banks, the continued credit squeeze, despite what we read in the papers, pervades. A generally heightened risk aversion is common among all the markets, particularly the Asian currency markets. Incidentally, though lending rates declined, banks passed on some of the reduction in policy rates to the borrowers. Anyway, with both strong factors going against them, the construction industry is certainly in a lull right now.

Curiously, in spite of the peso depreciation, construction materials have not really gone up significantly. This is perhaps due to the slackened demand which, in economics, tends to drag down the prices, just to move the inventory. Last year, cement prices were at an all-time high, with a bag costing around P216.95. Now a bag sells for P192.98. Most other materials are stable, with the exception of steel bars, the price of which continues to be prohibitive.

Our local contractors cry out that the market is shrinking badly. This is aggravated by the fact that foreign contractors have successfully penetrated the market, and since these foreign companies are generally better financed, they have a big edge over our locals. One Chinese contractor they cited is coming in with full backing, supported even by their own government, and our local contractors can only whine and whimper on the side.

There must be something that can be done to prevent this. This is tantamount to rape in our own land! If we can’t protect our own boys, who will?

Because the local market is shrinking, and with the big boys cornering the shrunken market, contractors are now looking for projects abroad. The Construction Industry Authority sent a mission to Guam last month to explore the construction market there amidst reports that the 3rd Military Naval Forces will be relocating to Guam. This contingent is the one currently stationed in Okinawa, and with the planned move to Guam, expect full-blown construction activities at the new military site. Housing facilities will be put up, along with schools for the dependents of the military staff, a large hospital, commissaries, etc. Maybe our local boys can have a piece of the pie, if the big boys have not gotten there ahead of us with their big bucks.

Reactions to cruise chronicles

Whew, the e-mails continue to pour in, and while some of them do not need to be specifically cited (mostly, how they found our series on the Mediterranean cruise informative and entertaining) there are a few that have to be acknowledged.

From Ronald Cang who says Barcelona is his favorite city, hands down, I stand corrected that H & M (Hennes & Mauritz) is a Swedish brand.

From ‘Everyman’ who was disturbed about our Pinoy-style ways of stretching the budget, bear with us. One of the reasons why the Pinoy continues to be resilient is his budget-stretching genius!

From Ronnie Mohnani, a Maltese national now residing in Makati for eight years already, we enjoyed your quaint fortified island, particularly the heritage city of Valetta and the old capital Mdina. The piece on Malta, our first stop, brought back fond memories for him.

Mabuhay!!! Be proud to be a Filipino.

Chief News Editor: Sol Jose Vanzi

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