TERRITORIAL ROW IMPACTING INTEGRATION IN ASIA

The territorial disputes in the East and South China seas could potentially derail the economic integration in the region, an analyst from the Asian Development Bank said. Iwan Aziz, head of the Office of Regional Economic Integaration (OREI) of the Asian Development Bank, said on Tuesday that recent data show that economic interaction between China and Japan, for instance, has been declining in recent years. For example, tourists to China coming from Japan declined to 2.878 million in 2013 from 3.722 million in 2010. Meanwhile, tourists to Japan coming from China also declined from 1.413 million in 2010 to 1.314 million in 2013. Also trade between the two countries has been reduced. For instance, China's exports to Japan represented 2.3 percent of its gross domestic product (GDP) in 2010, higher than 2.1 percent in 2012. The same pattern is observed in Japan with its exports to China representing 3.0 percent of its GDP in 2010, which declined to 2.7 percent in 2012.

(ALSO) News Analysis: ASEAN economic integration in 2015 draws conflicting views in Phl

Two conflicting views have emerged in the Philippines on whether or not the country is ready for economic integration in the Association of Southeast Asian Nations (ASEAN) under the ASEAN Economic Community (AEC) which will start to take effect next year. As expected, the government of President Benigno Aquino III is confident that the Philippines has already put in place the necessary measures to cushion the effect of AEC on the local economy, now one of the fastest growing economies in the region. The AEC aims to create a single market economy with free movement of goods, services and investments throughout the 10- member nations of ASEAN. It would be the culmination of the regional grouping's economic efforts since the 1990s. The leaders of ASEAN adopted the AEC blueprint in 2007 as a guide for all member countries, including the Philippines, in establishing the AEC, which envisions a stable, prosperous, highly competitive economic region with "equitable economic development and reduced poverty and socioeconomic disparities." But Philippine businesses are saying a different thing. In a forum organized by the Management Association of the Philippines, BDO Unibank Inc. President Nestor Tan said that protecting the country's agricultural and financial services sectors, as well as the labor sector, would be necessary for the implementation of AEC by 2015. Tan, who heads the country's largest bank, said that while some businesses see the AEC as an opportunity, the integration would be more of a threat to local firms. "I think the Philippine industries are not ready yet," he said. Standard & Poor's also believed that banks in the Philippines were not yet prepared for the tougher competition that would result from the integration of Southeast Asian economies. In one of its latest publications, S&P said banks in the country, although profitable and stable, have a much smaller business scale compared with their counterparts in the region. The credit-rating firm said that Philippine banks might find it difficult to preserve market share with the free entry of foreign competition that would follow the regional integration. "We believe banks (in the Philippines) will have to walk a thin line to preserve market share while pursuing profitable expansion as ASEAN 2015 draws closer," S&P said in the report titled "The Philippines' Banking System: The Good, the Bad and the Ambivalent. " Even the Bangko Sentral ng Pilipinas (BSP), the country's central bank, has been cautious in reacting to the ASEAN integration scheme. READ MORE IN FULL...

ALSO: Debt relief

Debt condonation is something a government avoids because of its repercussions on a country’s financial and economic wellbeing. A country that expresses even the slightest hint of a request for debt condonation worries the international lending community. However, an appeal two weeks ago by an independent expert tasked by the United Nations to monitor the effects of foreign debt on the enjoyment of human rights is worth looking into. Cephas Lumina, the UN independent expert, had voiced concern that the Philippines’ post-typhoon reconstruction efforts could be undermined by its heavy debt load. Independent experts are not UN staff and are appointed by the UN Human Rights Council with an honorary title to examine and report back on a country’s situation. While noting the international support given the Philippines in the aftermath of Supertyphoon “Yolanda,” Lumina pointed out that the country needed about $22 million a day to service its foreign debts. “While around $3 billion has left the country to serve its debt since the typhoon struck [in November 2013], the country has received so far only $417 million [from] international and private donors, [or] about half of the total relief requested,” the expert added. To date, the World Bank has provided a $500-million support loan and a $480-million loan for rebuilding infrastructure and social services, and the Asian Development Bank has made available nearly $900 million in assistance. But these were mostly in the form of new loans, with only $23 million given in the form of grants. Loans for reconstruction cannot generate returns to allow the debt to be paid as these are spent only to rebuild damaged infrastructure.READ MORE...

ALSO: Remittances forecast to rise 7% this year

Remittances from overseas Filipinos are forecast to rise by as much as seven percent this year from year-ago levels, the research arm of Metropolitan Bank & Trust Co. said. “Remittances are likely to post solid growth this year, as improving economic data from the US and Europe is pointing to a slow but moving recovery among advanced countries,” said Mabellene Reynaldo, research analyst at Metrobank. “Remittances will continue to support domestic consumption, which is again expected to be the main driver of this year’s economic growth,” she added. Metrobank Research has forecast the annual growth of remittances this year to settle within six to seven percent, the analyst further said. This forecast is faster than the Bangko Sentral ng Pilipinas’ projection of a five-percent growth this year. In 2013, cash remittances surged 7.4 percent to $22.968 billion, the highest level ever recorded by the central bank. Personal remittances, meanwhile, grew 8.6 percent to $25.351 billion. The robust inflow of remittances was attributed to the steady distribution of Filipino workers abroad. Data from the Philippine Overseas Employment Administration showed 1.8 million Filipinos were sent abroad for work in 2013. Remittances made up 8.4 percent of the country’s gross domestic product last year, which hit a faster-than-expected 7.2 percent growth.READ MORE...


READ FULL MEDIA REPORTS:

Territorial row impacting integration in Asia


Workers install scaffolding on a construction site against the China Central Television building in Beijing, China Wednesday, April 2, 2014. Growth in the developing economies of Asia will edge higher as the recovery in rich countries helps the region weather the slowdown in China, the Asian Development Bank said Tuesday. AP

MANILA, APRIL 28, 2014 (PHILSTAR) By Cheryl M. Arcibal - The territorial disputes in the East and South China seas could potentially derail the economic integration in the region, an analyst from the Asian Development Bank said.

Iwan Aziz, head of the Office of Regional Economic Integaration (OREI) of the Asian Development Bank, said on Tuesday that recent data show that economic interaction between China and Japan, for instance, has been declining in recent years.

For example, tourists to China coming from Japan declined to 2.878 million in 2013 from 3.722 million in 2010.

Meanwhile, tourists to Japan coming from China also declined from 1.413 million in 2010 to 1.314 million in 2013.

Also trade between the two countries has been reduced. For instance, China's exports to Japan represented 2.3 percent of its gross domestic product (GDP) in 2010, higher than 2.1 percent in 2012.

The same pattern is observed in Japan with its exports to China representing 3.0 percent of its GDP in 2010, which declined to 2.7 percent in 2012.

"We can't pinpoint with 100-percent certainty [that these declining tourism and trade were] because of geopolitical, but we believe there is some impact of geopolitical issues on those," he said in a briefing following a seeminar on regional cooperation in Asia and the Pacific at the Asian Institute of Management in Makati.

Beijing and Tokyo have long been engaged in a territorial dispute over an island (called Senkaku in Japan and Diaoyu in China) in the East China Sea. Tensions, however, heightened in 2012 and have since worsened following China's assertiveness in the region.

China is also embroiled in a number of territorial rows with other countries in Asia, including South Korea, the Philippines, Malaysia, Vietnam, Taiwan and Brunei.

A Reuters report in 2012 said Japanese manufacturers were reconsidering their investment plans in China following the worsening tensions between them.

Owing to this development, Japanese firms were said to be looking at Southeast Asia as an investment alternative.

"Japanese FDIs (foreign direct investments) are going to ASEAN (Association of Southeast Asian Nations). The decision could have been influenced by a number of things such as business consideration and geopolitics," Aziz said.

News Analysis: ASEAN economic integration in 2015 draws conflicting views in Phl (philstar.com) | Updated April 24, 2014 - 9:00pm 0 1 googleplus0 0

MANILA, Philippines (Xinhua) - Two conflicting views have emerged in the Philippines on whether or not the country is ready for economic integration in the Association of Southeast Asian Nations (ASEAN) under the ASEAN Economic Community (AEC) which will start to take effect next year.

As expected, the government of President Benigno Aquino III is confident that the Philippines has already put in place the necessary measures to cushion the effect of AEC on the local economy, now one of the fastest growing economies in the region.

The AEC aims to create a single market economy with free movement of goods, services and investments throughout the 10- member nations of ASEAN. It would be the culmination of the regional grouping's economic efforts since the 1990s.

The leaders of ASEAN adopted the AEC blueprint in 2007 as a guide for all member countries, including the Philippines, in establishing the AEC, which envisions a stable, prosperous, highly competitive economic region with "equitable economic development and reduced poverty and socioeconomic disparities."

The Department of Trade and Industry (DTI) has said that the Philippines is "primed and ready" for the AEC, with DTI Undersecretary Adrian Cristobal Jr. saying that the integration scheme would mean vast opportunities for intra-ASEAN investments, dynamic competition as well as complementation.

"Since 2010, most ASEAN goods have been traded in the region at zero tariff, including products from the Philippines. A considerable number of our local companies have since established their presence within ASEAN, engaged in healthy competition with businesses located in the region," Cristobal said.

According to Cristobal, the private sector has been aggressive in gearing up for competition and complementation, "To better serve a bigger market outside the ASEAN and strengthen its market presence. The government, on the other hand, is addressing non- tariff barriers so we can benefit more from intra-ASEAN trade."

But Philippine businesses are saying a different thing.

In a forum organized by the Management Association of the Philippines, BDO Unibank Inc. President Nestor Tan said that protecting the country's agricultural and financial services sectors, as well as the labor sector, would be necessary for the implementation of AEC by 2015.

Tan, who heads the country's largest bank, said that while some businesses see the AEC as an opportunity, the integration would be more of a threat to local firms. "I think the Philippine industries are not ready yet," he said.

Standard & Poor's also believed that banks in the Philippines were not yet prepared for the tougher competition that would result from the integration of Southeast Asian economies.

In one of its latest publications, S&P said banks in the country, although profitable and stable, have a much smaller business scale compared with their counterparts in the region.

The credit-rating firm said that Philippine banks might find it difficult to preserve market share with the free entry of foreign competition that would follow the regional integration. "We believe banks (in the Philippines) will have to walk a thin line to preserve market share while pursuing profitable expansion as ASEAN 2015 draws closer," S&P said in the report titled "The Philippines' Banking System: The Good, the Bad and the Ambivalent. "

Even the Bangko Sentral ng Pilipinas (BSP), the country's central bank, has been cautious in reacting to the ASEAN integration scheme.

In a forum in Makati City in February, BSP Deputy Governor Diwa C. Guinigundo said that although ASEAN members have already made "achievements" toward the goal of financial markets integration, the country has specific challenges to address in order to enjoy the benefits and opportunities of a financially integrated region. "The ASEAN goal for 2020 is for a semi-integrated market and not full liberalization. We want a fully integrated market, but we realized that initial conditions and the readiness of ASEAN member- states will not be able to yield to that kind of desired outcome. We want to be more realistic and achieve what we can achieve," Guinigundo said.

Guinigundo, who also sits as one of the country's representatives to ASEAN banking and finance institutions, said the country's banking system pales in comparison in terms of the size and magnitude of the assets and capital base of other banks in the region.

He said that compared with its peers in the region, the country has the lowest provision for foreign investor exposures.

In particular, Guinigundo cited that the 40-percent foreign ownership cap in the country is low compared to the 99 percent in Indonesia. He also said there is "no hard limit" to foreign ownership in Malaysia and in Singapore, and while there is a 50- percent cap in Thailand, there is a "flexibility clause" that would allow foreign ownership beyond 50 percent on a "case-by- case" basis.

Guinigundo said that the total assets of all Philippines banks are only equivalent to one big bank in Malaysia and that the combined assets of the three largest banks in the country are only as big as one bank in Thailand.

He also said that the total capitalization of the entire Philippines banking system is only about the size of one Singaporean bank.

FROM THE INQUIRER

Debt relief Philippine Daily Inquirer 12:12 am | Tuesday, April 22nd, 2014

Debt condonation is something a government avoids because of its repercussions on a country’s financial and economic wellbeing. A country that expresses even the slightest hint of a request for debt condonation worries the international lending community.

However, an appeal two weeks ago by an independent expert tasked by the United Nations to monitor the effects of foreign debt on the enjoyment of human rights is worth looking into. Cephas Lumina, the UN independent expert, had voiced concern that the Philippines’ post-typhoon reconstruction efforts could be undermined by its heavy debt load. Independent experts are not UN staff and are appointed by the UN Human Rights Council with an honorary title to examine and report back on a country’s situation.

While noting the international support given the Philippines in the aftermath of Supertyphoon “Yolanda,” Lumina pointed out that the country needed about $22 million a day to service its foreign debts. “While around $3 billion has left the country to serve its debt since the typhoon struck [in November 2013], the country has received so far only $417 million [from] international and private donors, [or] about half of the total relief requested,” the expert added.

To date, the World Bank has provided a $500-million support loan and a $480-million loan for rebuilding infrastructure and social services, and the Asian Development Bank has made available nearly $900 million in assistance. But these were mostly in the form of new loans, with only $23 million given in the form of grants. Loans for reconstruction cannot generate returns to allow the debt to be paid as these are spent only to rebuild damaged infrastructure.

This led to Lumina’s appeal to international creditors to cancel part of the Philippines’ debt and provide aid instead of new loans. The expert highlighted the importance of canceling debt to ensure the Philippines’ recovery from the devastation caused by Yolanda. Believed to be the most powerful storm ever to hit land, it displaced more than four million people, destroyed half a million houses, and had a catastrophic impact on the region’s infrastructure, hospitals, schools and public services. The cost of damage was estimated at $12 billion.

A plea for a cancellation of part of the Philippines’ foreign debt was actually made in December 2013, when the Jubilee Debt Campaign, the local Freedom from Debt Coalition, the Jubilee South (Asia) and the Christian Aid launched a petition addressed to official lenders.

These nongovernment organizations had earlier launched the global jubilee movement to cancel developing-country debts, resulting in the condonation of $130 billion worth of obligations mainly of poor African countries.

The Philippines was excluded from the scheme because it was deemed “too rich” for debt relief by the International Monetary Fund and the World Bank.

In their petition, the NGOs noted that the impact of a burgeoning foreign debt burden had been devastating for the Filipino people, with public services such as health and education persistently getting inadequate funding.

They argued that while an estimated 16 million Filipinos were malnourished and living in poverty, more than 20 percent of government revenue, or almost as much as funding for health and education combined, was being spent annually for foreign debt service.

This was what Sarah-Jayne Clifton, director of the Jubilee Debt Campaign, had to say: “The Philippinesurgently needs funding for relief and reconstruction efforts, as well as to adapt to the unavoidable impacts of climate change and support communities who live in areas that are beyond adaptation. International lenders should put life before debt and cancel the Philippines’ foreign debt obligations as a matter of urgency.”

While the Philippines is classified as a lower-middle-income country and is disqualified from international debt relief programs, there should be exemptions such as when extreme disasters wreak havoc. Such was the case when Yolanda ravaged the Visayas late last year.

The fact that a fourth of the Philippine population lives in poverty—a figure enlarged by people displaced by Yolanda—is also worth considering. Add to this the fact that for 2014 alone, the Philippines has to pay $8.8 billion in debt service, money that could otherwise be spent on basic social services.

FROM PHILSTAR

Remittances forecast to rise 7% this year By Kathleen A. Martin (The Philippine Star) | Updated April 27, 2014 - 12:00am 1 1 googleplus0 0

MANILA, Philippines - Remittances from overseas Filipinos are forecast to rise by as much as seven percent this year from year-ago levels, the research arm of Metropolitan Bank & Trust Co. said.

“Remittances are likely to post solid growth this year, as improving economic data from the US and Europe is pointing to a slow but moving recovery among advanced countries,” said Mabellene Reynaldo, research analyst at Metrobank.

“Remittances will continue to support domestic consumption, which is again expected to be the main driver of this year’s economic growth,” she added.

Metrobank Research has forecast the annual growth of remittances this year to settle within six to seven percent, the analyst further said.

This forecast is faster than the Bangko Sentral ng Pilipinas’ projection of a five-percent growth this year.

In 2013, cash remittances surged 7.4 percent to $22.968 billion, the highest level ever recorded by the central bank. Personal remittances, meanwhile, grew 8.6 percent to $25.351 billion.

The robust inflow of remittances was attributed to the steady distribution of Filipino workers abroad. Data from the Philippine Overseas Employment Administration showed 1.8 million Filipinos were sent abroad for work in 2013.

Remittances made up 8.4 percent of the country’s gross domestic product last year, which hit a faster-than-expected 7.2 percent growth.

“Expect remittances to accelerate in the second half, although changes in the start of the school year for some private schools and universities may shift the timing of these flows,” Reynaldo said.

She also stressed “sustained remittance inflows are one of the factors that kept the peso from further depreciating, keeping the exchange rate within the P44-45 range for the first quarter.”

Latest BSP data showed remittances continued to increase in February due to the strong demand for Filipinos abroad.

Personal remittances--cash and non-cash--went up six percent to $1.994 billion in February, bringing the two-month figure to $3.996 billion.

Cash remittances, meanwhile, grew 5.6 percent to $1.796 billion in February, putting the two-month total to $3.595 billion.

These remittances were primarily sent from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, and Canada.

Aside from continuous deployment of Filipinos abroad, the central bank said expansion of bank and non-bank remittance service providers outside the country supported the growth in remittances.


Chief News Editor: Sol Jose Vanzi

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


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE