2013 INVESTMENTS PLEDGES HIT P754 BILLION

Investment commitments from foreign and local investors hit P754 billion in 2013, up by 8 percent from P698.3 billion in 2012, the Philippine Statistics Authority said Tuesday. The PSA said the figures were based on projects approved by seven investment promotion agencies, including the Board of Investments, Clark Development Corp., Philippine Economic Zone Authority, Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, BoI-Autonomous Region of Muslim Mindanao and Cagayan Economic Zone Authority. “The bulk or 63.7 percent of investments approved during the period came from Filipino investors valued at P480 billion,” the PSA said. It said while approved investments from Filipino nationals climbed 17.4 percent year-on-year, the amount of committed foreign investments decreased by 5.4 percent.

ALSO: Mactan Int'l airport suspense; MVP, Belmontes reach temporary deal

The winner of the contract to build and operate the Mactan Cebu International Airport is about to be known by the end of this month, so says Transportation Undersecretary Perpetuo Lotilla. Lotilla, the chairman of the Bids and Awards Committee that auctioned the airport job, made the promise after an intense grilling in a recent Senate hearing, where five senators took turns in questioning the Transportation official about the motive of the leading bidder. Senators Serge Osmeña, Antonio Trillanes, Chiz Escudero, Grace Poe and Bam Aquino reprimanded the Transportation Department for the delay in the awarding of the 25-year concession to operate the nation’s second-busiest airport. Megawide Construction Corp. and GMR Infrastructure Inc. of India offered an upfront payment of P14.404 billion, topping the P3.999 billion tendered by Filinvest Development Corp. and partner Changi Airports International Pte. Ltd. of Singapore. Megawide and its Indian partner would have won the auction, but Filinvest cited a conflict of interest committed by Megawide and questioned the credibility of GMR Infrastructure.

EARLIER REPORT: 7 groups bid for Mactan-Cebu airport project

All seven prequalified groups are bidding for the P17.5 billion Mactan-Cebu International Airport project, the Aquino administration's first airport public private partnership project. The seven groups on Thursday submitted their technical and financial bids for the project. "The high turnout is proof that investors are confident in our PPP program. We want to sustain the momentum from this project to the next ones in our pipeline," Department of Transportation and Communications (DOTC) spokesman Michael Sagcal said. The DOTC had pre-qualified 7 groups for the project, namely: Metro Pacific Investments Corp. - JG Summit airport consortium; AAA Airport Partners led by the Ayala and Aboitiz groups; Filinvest - CAI consortium which includes the operator of Singapore's Changi airport; San Miguel Corp. - Incheon Airport consortium; First Philippine Airports consortium led by First Philippine Holdings Corp. and Infratil Asia Ltd.; Premier Airport group led by SM Investments Corp., Citadel Holdings Inc. and the operator of Zurich (Switzerland) airport; and GMR Infrastructure (operator of airports in India, Turkey, Maldives) - Megawide consortium. The Mactan-Cebu airport project entails the construction of a new passenger terminal with an annual capacity of 8 million, the rehabilitation of the old terminal, and the operation of the whole airport facility.

TIMES COMMENTARY: An Ampaw economic legacy

I have gotten accustomed to hearing some fairly outlandish assertions from apologists for the Aquino Administration, but this one really took the cake. In response to one of the cottage industry of critics pointing out that rosy economic indicators were a contradiction to rising unemployment and poverty rates and that without addressing those issues, consumption-based gross domestic product (GDP) growth is unsustainable, this particular Aquino supporter had this to say: “I suggest you take a look at specific accounts in the GDP numbers, where you will see impressive growth in non-consumption factors.” Oh, really? It is rare to find anyone among observers of the Philippine economy who is not at least slightly uncomfortable with this country’s high proportion of consumption —specifically, the national account called Household Final Consumption Expenditure, or HFCE—in its GDP. While there is no objectively “correct” formula of how much consumption should account for GDP, the best range seems to be between 55 and 60 percent; according to World Bank data, economies classified as “emerging Asia” (which includes the Philippines) are closer to the lower figure on average, while the highly-developed economies of the Organization for Economic Cooperation and Development (OECD) nations are closer to the higher figure.

PHILSTAR OPINION: Market failure? It’s regulatory failure!

Come on, ERC… when you guys blame the unusually high Meralco rate increases last December on market failure, you really mean regulatory failure. If you ERC guys were more alert in defense of the public interest, you would have seen market failure about to happen and would have taken steps to stop it from happening. The thing is, you ERC guys even gave your blessings for Meralco to pass on the inflated generation costs. Without such a loud public howl of protest, you ERC guys would have done nothing more that remotely looks like doing your sworn duties. Better late than never, I guess. We, poor consumers, should count our blessings that at least the ERC schmucks belatedly did something to justify their existence. But these so called energy regulators should not get anything close to a free pass. There are many more things that ought to be done to make sure such “market failures” don’t happen again. Indeed, I find it strange that the ERC placed the blame solely on the power generators. I still think Meralco, as the distribution utility, must share the blame because they opted to have a significant exposure to the electricity spot market. Meralco made a wrong call by choosing to be at the mercy of WESM for the duration of the Malampaya maintenance shutdown when supply could be iffy. Meralco thru TMO compounded its mistake by setting the high price of P62/kwh 27 times. This is simply, “self inflicted” pain, since by avoiding to be dispatched – the cost of Meralco’s WESM purchases zoomed skywards to the disadvantage of the hapless captive market. ERC must still admonish Meralco to make sure the exposure of ordinary consumers to the risks of another “market failure” is drastically minimized if it cannot be totally eliminated.


READ FULL MEDIA REPORTS:

2013 investment pledges hit P754b


Philippine Statistics Authority

MANILA, MARCH 24, 2014 (MANILA TIMES) By Jennifer Ambanta - Investment commitments from foreign and local investors hit P754 billion in 2013, up by 8 percent from P698.3 billion in 2012, the Philippine Statistics Authority said Tuesday.

The PSA said the figures were based on projects approved by seven investment promotion agencies, including the Board of Investments, Clark Development Corp., Philippine Economic Zone Authority, Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, BoI-Autonomous Region of Muslim Mindanao and Cagayan Economic Zone Authority.

“The bulk or 63.7 percent of investments approved during the period came from Filipino investors valued at P480 billion,” the PSA said.

It said while approved investments from Filipino nationals climbed 17.4 percent year-on-year, the amount of committed foreign investments decreased by 5.4 percent.

Total foreign investments approved by the seven agencies in 2013 fell 5.4 percent to P274 billion from P289.5 billion in 2012, as commitments slowed in the fourth quarter.

The PSA said in the fourth quarter alone, foreign investment approvals plunged 42.7 percent to P132 billion from P230.2 billion year-on-year.

Total investments of foreign and Filipino nationals in the fourth quarter also dropped 28.6 percent to P235.7 billion from P330.1 billion a year ago. Pledges from Filipino nationals stood at P103.7 billion in the fourth quarter.

FROM MANILA STANDARD

Mactan airport suspense; MVP, Belmontes reach temporary deal By Ray S. Eñano | Mar. 13, 2014 at 12:01am

The winner of the contract to build and operate the Mactan Cebu International Airport is about to be known by the end of this month, so says Transportation Undersecretary Perpetuo Lotilla.

Lotilla, the chairman of the Bids and Awards Committee that auctioned the airport job, made the promise after an intense grilling in a recent Senate hearing, where five senators took turns in questioning the Transportation official about the motive of the leading bidder.

Senators Serge Osmeña, Antonio Trillanes, Chiz Escudero, Grace Poe and Bam Aquino reprimanded the Transportation Department for the delay in the awarding of the 25-year concession to operate the nation’s second-busiest airport.

Megawide Construction Corp. and GMR Infrastructure Inc. of India offered an upfront payment of P14.404 billion, topping the P3.999 billion tendered by Filinvest Development Corp. and partner Changi Airports International Pte. Ltd. of Singapore.

Megawide and its Indian partner would have won the auction, but Filinvest cited a conflict of interest committed by Megawide and questioned the credibility of GMR Infrastructure.

Lotilla, on the prodding of Sen. Trillanes, said his agency had not determined yet which party gave the best offer, adding that its financial evaluation went beyond the premium offered by Megawide.

Sen. Osmeña inquired about the real agenda of GMR Infrastructure and on reports that it was being pressured by Indian banks to sell assets to lighten up its debt. The lawmaker further questioned GMR’s business strategy of “Asset Light, Asset Right,” in which it invests, creates value and divests, as opposed to a long-term commitment. GMR recently sold its 40 percent investment in the Istanbul Sabiha Gokcen Airport after only six years.

Sen. Poe, meanwhile, raised an alarm on the long term commitment of GMR to the airport project.

“There are other factors to look at. We have to be firm with the numbers… but with the difference of a couple of hundred million, and this is for the long haul—25 years, we want to make sure that there’s a good track record of the people that we would award to,” said Poe.

On the allegations that Megawide and GMR violated the conflict-of-interest provision of the bidding after the Indian company was found to have a direct relation with another bidder, GMR said it disclosed its partnership with a Malaysian airport operator in the pre-qualification bid documents.

Sen. Bam Aquino pointedly asked, “Does disclosure of a conflict of interest remove the conflict?” Lotilla replied it does not.

The Mactan-Cebu International Airport project is about to follow the legal trail left by the controversial Ninoy Aquino International Airport Terminal 3, if authorities do not weigh carefully the merits and demerits of the bidding procedure.

Politics and Star

Politics, literally, is a consideration in the impending takeover of the Philippine Star by the group of telecom honcho Manuel V. Pangilinan, or MVP.

The grapevine said the family of House Speaker Feliciano “Sonny” Belmonte Jr. had agreed to sell majority of the broadsheet paper’s stocks to MediaQuest Holdings Inc. on the condition that the Belmontes would remain in control of the Star until 2016.

A source said MVP agreed to the condition despite MediaQuest’s 60 percent equity, after realizing that Sonny would play a pivotal role in the 2016 presidential elections as House leader. MVP’s management executives would continue to manage the finances of the paper and but full control of the paper would remain with the Belmontes, the source added. The editorial team will remain intact.

MVP, meanwhile, is sending his finance people to oversee the paper’s operation.

As stated earlier in this column, leading the Star takeover are Orlando “Doy” Vea, Ray Espinosa and Rene “Butch” Meiley.

Vea, along with Espinosa, the former president and CEO of MediaQuest, would have the task of keeping the Star profitable. Meiley, president of the PLDT Smart Foundation Inc. and Philippine American Chamber of Commerce, will serve as governance chief of the Star.

MVP has also ordered his finance team to review advertising collectibles from the Star’s big clients as part of the group’s due diligence.

EARLIER NEWS FROM ABS-CBN

7 groups bid for Mactan-Cebu airport project ABS-CBNnews.com Posted at 11/28/2013 1:39 PM | Updated as of 11/28/2013 11:50 PM

MANILA, Philippines - All seven prequalified groups are bidding for the P17.5 billion Mactan-Cebu International Airport project, the Aquino administration's first airport public private partnership project.

The seven groups on Thursday submitted their technical and financial bids for the project.

"The high turnout is proof that investors are confident in our PPP program. We want to sustain the momentum from this project to the next ones in our pipeline," Department of Transportation and Communications (DOTC) spokesman Michael Sagcal said.

The DOTC had pre-qualified 7 groups for the project, namely:

Metro Pacific Investments Corp. - JG Summit airport consortium; AAA Airport Partners led by the Ayala and Aboitiz groups; Filinvest - CAI consortium which includes the operator of Singapore's Changi airport; San Miguel Corp. - Incheon Airport consortium; First Philippine Airports consortium led by First Philippine Holdings Corp. and Infratil Asia Ltd.; Premier Airport group led by SM Investments Corp., Citadel Holdings Inc. and the operator of Zurich (Switzerland) airport; and GMR Infrastructure (operator of airports in India, Turkey, Maldives) - Megawide consortium. The Mactan-Cebu airport project entails the construction of a new passenger terminal with an annual capacity of 8 million, the rehabilitation of the old terminal, and the operation of the whole airport facility.

The DOTC will now evaluate the technical proposals for the Mactan-Cebu International Airport project. It is targeting to proceed to the opening and evaluation of financial proposals next month.

The DOTC had introduced changes in the concession agreement for the proposed airport project in response to questions raised by the prequalified groups.

MANILA TIMES COMMENTARY

An Ampaw economic legacy March 19, 2014 8:23 pm by Ben D. Kritz


By Ben D. Kritz

I have gotten accustomed to hearing some fairly outlandish assertions from apologists for the Aquino Administration, but this one really took the cake.

In response to one of the cottage industry of critics pointing out that rosy economic indicators were a contradiction to rising unemployment and poverty rates and that without addressing those issues, consumption-based gross domestic product (GDP) growth is unsustainable, this particular Aquino supporter had this to say: “I suggest you take a look at specific accounts in the GDP numbers, where you will see impressive growth in non-consumption factors.”

Oh, really?

It is rare to find anyone among observers of the Philippine economy who is not at least slightly uncomfortable with this country’s high proportion of consumption —specifically, the national account called Household Final Consumption Expenditure, or HFCE—in its GDP.

While there is no objectively “correct” formula of how much consumption should account for GDP, the best range seems to be between 55 and 60 percent; according to World Bank data, economies classified as “emerging Asia” (which includes the Philippines) are closer to the lower figure on average, while the highly-developed economies of the Organization for Economic Cooperation and Development (OECD) nations are closer to the higher figure.

In general, economic stability is associated with lower HFCE proportions in the GDP, because in order for that component to be smaller, one or more of the other components of the GDP—Government Final Consumption Expenditure (GFCE), Gross Capital Formation (GCF), and the Export-Import Balance—has to be larger.

There are a large number of variables, of course, but a cursory look at the six biggest economies in Southeast Asia tends to lend credence to the notion that better overall economic performance corresponds to narrower ratios of HFCE to GCF.

The Philippines with a ratio of 74/19 (HFCE/GCF, as a percentage of GDP) is more unbalanced than Vietnam (63/24), Indonesia (57/34), Thailand (56/29), Malaysia (49/26), and Singapore (41/24), and not surprisingly trails all those other countries in hard indicators such as foreign direct investment inflows, exports, industrial output, and even mundane but still important measures like tourist arrivals.

So has the Aquino Administration accomplished anything to improve this balance? Not at all, as a study of the government’s own National Accounts data reveals. As Ric Saludo explained in an interesting column last week (“The economy is strong–despite the President,” March 10), the Aquino economic program is essentially a continuation of the one built by former President Gloria Arroyo, characterized by a focus on keeping macroeconomic basics under control—the government’s revenue base (notwithstanding the apparent inability of the current managers of the Bureau of Customs or the Bureau of Internal Revenue to efficiently carry out procedures and collect it), its external debt burden, and exposure of the financial system to external shocks.

What the economic approach does not do, however, is address the consumption-non-consumption balance in a significant way.

High consumption and relatively low capital formation dogged the Arroyo Administration for all of its nine-plus years, and since the Aquino Administration is following more or less the same blueprint—wisely, to be fair, because as Saludo also pointed out, Aquino’s attempt to put his personal stamp on the economy in 2011 was basically a disaster—things have not appreciably changed.

Throughout Arroyo’s term, HFCE as a percentage of GDP increased from 73.9 percent to 75 percent between 2001 and 2005, retreated to 73.5 percent over the next two years before climbing back to 74.7 percent by 2009, whereupon it plummeted to 71.6 percent in 2010.

Gross Capital Formation as a percentage of GDP generally declined during the same period, from a high point of 24.5 percent in 2002 to 16.6 percent in 2009, before jumping sharply to 20.5 percent in 2010.

That particular figure represents the high point of the still-unfinished Aquino era as well; since then, despite an evident belief to the contrary among Aquino apologists, GCF has actually declined gradually, dipping to 18.5 percent in 2012 before recovering a bit to 19.4 percent last year.

HFCE, on the other hand, soared from 71.6 percent of GDP in 2010 to 74.2 percent in 2012 before receding to 73.2 percent in 2013.

Consumption-led—and by implication, non-job-creating and non-productive—growth is entirely possible; spending one’s way out of a stagnant economic situation is not a new idea. But when the economy is largely driven by consumption, what will happen over time is either the government or a gradually narrower segment of the population—or in all likelihood, a combination of the two—will have to continuously spend more in order to maintain economic momentum.

It is mathematically impossible for that not to reach a tipping point sooner or later if capital formation, which provides the resources that fuel spending, is insufficient.

For their part, the analysts at HSBC seem to think that point is approaching quickly; as reported last week, the banking giant revised its growth projections for the Philippines downward for the next three years, citing a lack of foreign investment and investment in infrastructure, characterized as “worse than Sri Lanka’s,” which would be insulting if it wasn’t true.

And guess which component of GDP comprises foreign investment (direct investment, not equity investment, which are two different things the government’s economic experts seem to frequently confuse) and infrastructure.

What President B.S. Aquino 3rd has done is given us another interpretation of the “ampaw” he’s lately been fond of talking about—an economic legacy of merely being present while the medium-term component of an economic approach initiated by someone a whole lot smarter runs its course and provides impressive indicators, with not much of anything actually supporting them.

PHILSTAR OPINION: BO CHANCO

Market failure? It’s regulatory failure! DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) | Updated March 17, 2014 - 12:00am 8 24 googleplus2 2


By Boo Chanco

Come on, ERC… when you guys blame the unusually high Meralco rate increases last December on market failure, you really mean regulatory failure. If you ERC guys were more alert in defense of the public interest, you would have seen market failure about to happen and would have taken steps to stop it from happening.

The thing is, you ERC guys even gave your blessings for Meralco to pass on the inflated generation costs. Without such a loud public howl of protest, you ERC guys would have done nothing more that remotely looks like doing your sworn duties.

Better late than never, I guess. We, poor consumers, should count our blessings that at least the ERC schmucks belatedly did something to justify their existence. But these so called energy regulators should not get anything close to a free pass. There are many more things that ought to be done to make sure such “market failures” don’t happen again.

Indeed, I find it strange that the ERC placed the blame solely on the power generators. I still think Meralco, as the distribution utility, must share the blame because they opted to have a significant exposure to the electricity spot market.

Meralco made a wrong call by choosing to be at the mercy of WESM for the duration of the Malampaya maintenance shutdown when supply could be iffy. Meralco thru TMO compounded its mistake by setting the high price of P62/kwh 27 times.

This is simply, “self inflicted” pain, since by avoiding to be dispatched – the cost of Meralco’s WESM purchases zoomed skywards to the disadvantage of the hapless captive market. ERC must still admonish Meralco to make sure the exposure of ordinary consumers to the risks of another “market failure” is drastically minimized if it cannot be totally eliminated.

I find it amusing to read the 35-page decision of the ERC that declared a “market failure”. Such wisdom expressed in hindsight after a public outcry!

The commission said the WESM rates during the contested period “could not qualify as reasonable, rational and competitive due to confluence of factors.”(So, why did ERC allow Meralco to pass that on to us in the first place?) As such, the ERC “voids these Luzon WESM prices and declares the imposition of regulated prices in lieu thereof.”

WESM prices for the period covering Oct. 26 to Dec. 25, 2013 must now be recalculated to reflect true price. “Government intervention is needed if there is a failure in the market to correct any inefficiency and prevent these from happening again,” the ERC added.

According to ERC, the regulated prices would result in at least a 70-percent reduction in the WESM prices, which averaged P22.13 per kilowatt-hour (kWh) for November 2013 and P25.67 for December of the same year.

Billions of pesos worth of windfall profits would be “given up” by some Gencos. The list includes San Miguel’s Limay plant, 1590 (Bauang) and Aboitiz. Psalm (Malaya) also seems to have made a lot of profit but this will be used to lower the universal charge to consumers anyway.

What else must we do as lessons learned? On top of the “things to do” list is the professionalization of the ERC. I agree with the observation of Sen. Serge Osmena that there should be no room for politicians in ERC. The ERC Chairman, who obviously got her position only because of her close ties to then President Gloria Macapagal Arroyo, ought to think of the country for the first time in her life and quit.

Having a lawyer at ERC can probably be justified but that lawyer must be literate in Utility Economics to be useful. Again, I share the observation of Senator Osmena: “We need computer experts, electrical engineers, power experts there. I don’t know why they put lawyers. That is an engineering problem.”

P-Noy must also appoint a really qualified person to fill up one vacancy in the ERC. As Sen. Osmena puts it, “why are they leaving one seat vacant? One of the members retired a few months ago. Get a computer guy there. Get an energy expert out there.”

Indeed, someone knowledgeable in Big Data Analytics ought to be appointed in the ERC. They managed to get the conclusion of “market failure” only after digging through a lot of computer data on what really happened. They should have a monitoring system in place that will sound the alarm if there are signs of impending “market failure”.

Regulation is not about signing orders that are practically drafted by the power generators and distribution utilities. Regulation means having an independent view of what is going on in a sector as complicated and so fraught with public interest as the power sector.

Hooray! Public interest won after a loud public outcry. If ERC did its job intelligently and honestly in the first place, none of the furor would have happened. We could have saved time and money that went into getting the Supreme Court involved on a case that should have been resolved at the ERC level.

Resign, Ms. Ducut, if you love your country!

Abolish NFA

This is a reaction of a respected economist expressed in one of my e-groups on the NFA issue.

There are at least two types of mistakes from a public policy point of view. One is to allow corruption and rent seeking. The other is to minimize expected loss using a very wrong loss function – and in the process increasing actual social welfare losses.

As far as both types of errors are concerned, delega-ting to DA and NFA decisions on rice imports (how much rice should be imported and who will import) is the worse way to do it. It’s almost like making Dracula in charge of the blood bank.

Corruption and rent seeking has and will happen if the president is part of it or tolerates it. (It seems that this was the case before P-Noy and possibly under him.) On the other hand, the second type will be large even under an honest president. DA, like all agencies, wants bigger budgets, and one way to get a larger budget is to promise very high rice production targets (self sufficiency in x years, sounds familiar?)

But the “incentive incompatibility” goes beyond the setting of official rice production targets. Since high production targets are inconsistent with high imports, the risk of under-importation is high.

Thus, unless the decision to import is made by private importers who will make a lot of money by making more accurate forecasts of domestic production than DA and NFA, price spikes are quite likely.

Unfortunately, from the point of DA and nationalists kuno, the high prices are not mistakes. They are seen as a good thing. Rice farmers are “constituents,” urban rice consumers are not.

Worse, the high prices will be used to justify even bigger budgets for DA! (And to people like Walden Bello, high prices paid by Filipinos to fellow Filipinos are better than lower prices paid by Filipinos to foreigners, otherwise known as Filipino first. Unfortunately, what it really means is existing Filipino producers first and past, present and future Filipino consumers last.)

Fortunately, the timing for ending this terrible policy set up is almost perfect. The DoJ secretary has already said that the NFA rice monopoly is not consistent with Philippine commitments to GATT-WTO. Moreover, I think Arsi is trying to finally end the DA-NFA import monopoly.

LTO

I renewed my driver’s license at SM Hypermart Pasig last week. It took less than 30 minutes. But they run out of the plastic card for the license. Supplier failed to deliver daw. Baka end of the month pa daw.

Ok na sana yung front line service, palpak naman yung back room support. Ever since DOTC centralized procurement, LTO can’t give us car plates, car stickers and now license cards.

Isn’t P-Noy aware how horrible DOTC and its agencies are being managed?

The President should realize their failure is also his failure.

Something ought to be done to efficiently deliver services to the people.

What are they doing there spending our tax money for?


Chief News Editor: Sol Jose Vanzi

© Copyright, 2014 by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE