BUSINESS HEADLINES THIS PAST WEEK...

SUSTAINABILITY OF PHILIPPINE ECONOMIC GROWTH UNDER SCRUTINY 

OCT 20 --The Philippines is increasingly under scrutiny to determine if the economic growth it enjoyed in the last few years can be sustained beyond 2016, when a new President will be elected. This is what institutional investors are expected to do at the Philippines Investment Conference organized by the CFA (Chartered Financial Analyst) Institute and CFA Society of the Philippines at Fairmont Makati on Wednesday, CFA Society president April Lee-Tan said in an interview.
“For the attendees, it’s more for them to assess whether or not they will have conviction on the sustainability of economic growth in the Philippines in light of numerous risks,” Lee-Tan said. “Although we’ve been recovering for a long time, there continue to be a lot of skeptics.

The conference aims to bring a holistic view on whether or not it is sustainable because people are talking about domestic risks and aside from that you have other domestic risks. It’s good to see the whole picture for you to make an informed decision on whether growth will be sustainable, and also how do you capitalize on it?” she said. Whoever will lead the next administration, Lee-Tan said, would have to convince everyone that he or she could continue the thrust that “good governance is good economics.” “That’s everybody’s concern — whether the changes this administration has accomplished will continue on. Will the momentum continue or will it die in the next? Is there really institutionalization of reforms?” she said. Lee-Tan said the CFA Institute has lined up high-caliber speakers for Wednesday’s forum, including Timothy Moe, chief Asia-Pacific equity strategist for global investment research at Goldman Sachs; Simon Rudolph, executive vice president at Franklin Templeton Investments (Asia) Ltd; Jim Walker, chief economist at Asianomics Group; Martin Fridson, financial writer and author of “How to Be a Billionaire” and chief investment officer at Lehman, Livian, Fridson Advisors LL; Jack Gray, adjust professor and director at University of Technology (Sydney)’s Center for Capital Market Dysfunctionality. * READ MORE...

ALSO: BSP exec warns of more uncertainty  

OCT 27 --Markets should brace for more uncertainty if the US Federal Reserve decides to further hold up raising interest rates or put an end to its monthly asset purchases, a Bangko Sentral ng Pilipinas official said ahead of the Fed’s meeting this week. “Anything that will delay the normalization of the credit cycle in the US and the conclusion of the quantitative easing will force continuing uncertainty in the market,” BSP Deputy Governor Diwa C. Guinigundo said. The US Fed will meet again this week to decide whether to finally end its massive bond buying program as planned or to defer it for another time. All eyes are on the two-day meeting which starts on Oct. 28 as analysts and market players watch out for the language the Fed will use to convey when it would raise interest rates.

But any delay in the Fed’s expected actions will also give the BSP some policy space, Guinigundo said, especially amid concerns of a slowing global activity. “That can also provide on the other hand some space in terms of flexibility in maintaining our policy rates or our monetary policy stance at this point especially as growth has become a key issue for both emerging market and the advanced economies,” Guinigundo said. Monetary authorities last week decided to keep key policy rates steady as inflation is expected to be within the three-to five-percent target range for this year and the two to four percent band in 2015 and 2016. Overnight borrowing and overnight lending were maintained at four percent and six percent, respectively, in a move widely expected by the markets. BSP Governor Amando M. Tetangco Jr. last Thursday said latest forecasts showed a “lower inflation path” for 2014 until 2016 as pressures on commodity prices start to ease. * READ MORE...

ALSO: OFWs as milking cows 

OCT 21 --We came across an old blog post by Blas F. Ople Policy Center founder Susan Ople talking about the “Milking-cow syndrome,” and how overseas Filipino workers are compelled by government to shell out compulsory contributions to such institutions as PhilHealth and Pag-Ibig. In her blog, Ople recalled how our modern-day heroes are made to pay for mandatory PhilHealth coverage that does not give them the freedom to choose their dependents. For instance, single workers can only include their parents as dependents—provided of course if they are already 60 years old. Pag-Ibig, on the other hand, requires OFWs to become members and to pay in advance six months worth of contributions—otherwise, they will not be allowed to leave the country at all. As Miss Ople pointed out, can’t this government wait until after the OFWs start receiving their salaries first before requiring them to pay the half-year advance contributions?

Sure, the contribution amounts to “only” P600 a month or P3,600—already a lot of money for someone already saddled with debt for pre-departure expenses like passport application fees, medical checkups, not to mention transportation costs and meals while having their papers processed if they happen to come from the province. Toots Ople is right—our OFWs have become convenient milking cows for these institutions that could afford to spend millions to spend for marketing and TV ads that proclaim how great or how good their programs are. In the first place, they wouldn’t even need to spend for these ads to let people know they are doing a good job and that their programs work for the ordinary Filipinos. Unfortunately, the government only seems to pay lip service to our modern-day heroes because more often than not, they get the “deadma” treatment when they make an appeal or a petition for officials to scrutinize or repeal an onerous legislation or memorandum circular or department directive. Take for instance Manila International Airport Authority Memo Circular 08 that integrates the P550 terminal fee into the price for airline tickets, which takes effect this Nov. 1. * READ MORE...

(ALSO) Chiz on DSWD budget: P4.2B for monitoring of CCT program, too much 

OCT 23 --Senate Finance committee chairman Sen. Francis Escudero said the Senate will likely slash the budget of the Department of Social Welfare and Development (DSWD) on monitoring and cost of services under the conditional cash transfer (CCT) program for next year. Escudero expressed concern why the government is allocating too much funds for the “monitoring budgets and cost of service” when these multi-billion budget can be put to better use if diverted to disaster and preparedness operations. The senator cited for example the P4.2 billion budget of the DSWD meant to implement, monitor and evaluate the CCT program.

“This amount can be put to better use. We can reduce it and add the amount to major programs,” Escudero said. Based on the proposed 2015 budget, Escudero said the DSWD is seeking the approval of P108 billion spending package for 2015, of which P64.7 billion is for CCT. Of this amount, P57.1 billion will go to actual cash transfer, P3.3 billion to personnel services and P4.2 billion to implement and monitor the DSWD’s cash dole out program. “We need to monitor the implementation of our programs and projects to ensure accountability and judicious use of public funds, but it should not be that expensive,” Escudero said. Escudero said the funds can be used instead to finance disaster preparedness and relief operations, and to purchase relief goods with longer shelf life.
* READ MORE...

(ALSO) Tan's group in full control: Bautista back as PAL president, replacing Ang 

OCT 24 --PHOTO: Philippine Airlines' Jaime Bautista --Lucio Tan’s group took back full control of Philippine Airlines Inc. (PAL) as representatives of San Miguel Corp. (SMC) in the airline’s board of directors, including president and chief operating officer Ramon Ang, were replaced. Tan was re-elected chairman and chief executive officer by the PAL board of directors yesterday while current general manager Jaime Bautista was elected president and chief operating officer, replacing Ang. Other new officers of the PAL board include Joseph Chua as vice chairman, Florentino Herrera III as corporate secretary and Marianne Raymundo as chief financial officer. Also appointed members of the PAL board are Carmen Tan, Heinrich Khoo, Manuel Laza-ro, Johnip Cua, Lucio Tan Jr., Michael Tan, Washington SyCip, Alberto Lina, Estelito Mendoza, Antonino Alindogan Jr., and Gregorio Yu.

The 10 new officers and directors replaced the SMC representatives led by Ang whose resignations were accepted effective Oct. 23. The Tan group, through Buona Sorte Holdings and Horizon Global Investments, bought back the 49 percent interest of San Miguel Equity Investments Inc. of SMC last Sept. 15 for a total consideration of $1.3 billion. The SMC bought the 49 percent stake in Trustmark Holdings Corp. in April 2012 for a total consideration of $500 million. It embarked on an ambitious massive fleet renewal program involving the acquisition of 100 brand new airplanes. Trustmark owns and controls 89.78 percent of the issued and outstanding shares of PAL Holdings that owns 98.27 percent of PAL. Buona Sorte Holdings and Horizon Global Investments have offered to buy out the minority shareholders of PAL and its parent firm PAL Holdings Inc.*READ MORE...

ALSO Tribune Column: As the RP economy loses steam, sitting idly by is unacceptable  

OCT 20 --The Philippine economy is without doubt losing steam. The three major international institutions – the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB) – have cut downward their economic forecasts for the Philippines in 2014 and 2015. Significantly, their original forecasts were lower than the government’s official forecast.
While the major financial institutions have unanimously embraced a negative outlook for the Philippine economy, the country’s economic managers have stubbornly stuck to their original ‘rosy’ forecast.

But the economic numbers do not support such optimism. The strong agricultural output of 3.6 percent in the second quarter of 2014 is an outlier. It cannot be sustained in the second half of the year. In past years, agriculture grew by an average rate of 1.6 percent. Construction has screeched to a halt in the first half of 2014. Public construction plummeted by 12.9 percent in the second quarter of 2014, from an impressive 32.4 percent growth in 2012 and 14.9 percent growth in 2013. Construction growth was flat in the first quarter of 2014 and 1.4 percent in the second half of 2014. Manufacturing has been a bright spot, growing at 8.9 percent in the first half of 2014. But its strong expansion is not guaranteed. It would depend on strong global recovery and its ability to respond to the sputtering energy supply. * CONTINUE READING...

Teves: GMA reforms still benefiting economy

OCT 20 --PHOTO: Margarito "Gary" B. Teves (born August 1, 1943) was the secretary of the Department of Finance of the Philippines. He was appointed to the position in July 2005 by President Gloria Macapagal-Arroyo, following a mass resignation of her economic team. In January 2009 he was named "Best Finance Minister" in Asia, a title given by London-based international finance magazine, The Banker. FROM WIKIPEDIA. Former President and now Pampanga Rep. Gloria Macapagal Arroyo has instituted fiscal and economic reforms that are benefitting the country up to present. This was the pronouncement made yesterday by former Finance Secretary Margarito Teves during the Saturday Forum at Anabel’s restaurant in reaction to President Aquino’s statement that the Arroyo administration was a “lost decade” in Philippine history.

On the contrary, he pointed out, the Arroyo administration had laid the foundation which resulted in the Philippines’ credit rating upgrades which started during her term and shortly after she stepped down from office.
“Data show that contrary to Pres. Aquino’s reference to the Arroyo administration as a ‘lost decade,’ the Arroyo administration and Department of Finance had initiated several positive reforms that are benefitting the Philippine economy until today,” he said. He pointed out that her prudent management of the national government debt and the passage of legislation in support of financial market development like the reformed Value Added Tax have contributed to the strong fiscal performance of the country which resulted into credit outlook upgrades from negative to stable during the Arroyo administration and positive shortly after July 2010 when the former President stepped out of Malacanang.

In fact he pointed out, Fitch’s upgrade in March 2013 noted that it was former President Arroyo’s “improvements in fiscal management .. that made general government debt dynamics more resilient to shocks.” He also said the previous administration’s strong focus on tax reforms paved the way for increased tax revenue collection generating the highest revenues by any single measure adopted under any administration. “The full-year impact was P76.9 billion in 2007 or 1.1 percent of GDP,” he said. GMA’s “Strong Republic Nautical Highway” (SRNH) improved connectivity in the country by integrating land and sea modes of transportation, he further said saying Indonesia later followed SRNH model. He further said President Aquino should give credit to Mrs. Arroyo and members of the finance team by acknowledging their contributions to build a stronger economy. “I believe it would be fair to give credit to former President Arroyo and our colleagues at the Department of Finance for the hard work they have done from 2005 to 2010 and acknowledge the contributions of the previous administration in building the foundations of a stronger economy,” he said. * READ MORE...

(ALSO Related News earlier) At the Bali Forum: Aquino calls Arroyo years PHL’s ‘lost decade’ 

OCT 10 --PHOTO: PNoy, airline execs welcome Emirates Airbus A380. President Benigno Aquino III chats with Emirates Airline executives Barry Brown (2nd right), Salem Obaidalla (right), and Filipino Airbus A380 pilot Capt. Franklyn Desiderio (left) during the arrival of Emirates flight 334 at the NAIA Terminal 3 on Tuesday evening, October 7. The A380 is the world's biggest passenger jetliner. --With less than two years left in his six-year term, President Benigno Aquino III appears to be making sure that the country's neighbors wouldn't forget the alleged "years of neglect and misgovernance" under his predecessor, former President and now Pampanga Representative Gloria Macapagal-Arroyo.

In a speech before the high-level Bali Democracy Forum that he co-chairs, Aquino said that his administration has since championed "what is right, fair and democratic towards the benefit of all." Aquino said the Arroyo administration allowed "the very select few" to ignore the will of the vast majority."Under my predecessor, democratic institutions were compromised and weakened by a culture of transactionalism and impunity," Aquino said. "What we have done is to bring back government to its core: to be a provider of genuine service and by so doing, empower society and enterprise, and thus enable our people to participate in fulfilling the promise of our freedom," he added. * READ MORE, PLUS READERS' REACTIONS....


READ FULL REPORTS HERE:

Sustainability of PH economic growth under scrutiny

MANILA, OCTOBER 27, 2014 (INQUIRER) POSTED OCTOBER 20, 2014 - By Doris C. Dumlao — The Philippines is increasingly under scrutiny to determine if the economic growth it enjoyed in the last few years can be sustained beyond 2016, when a new President will be elected.

This is what institutional investors are expected to do at the Philippines Investment Conference organized by the CFA (Chartered Financial Analyst) Institute and CFA Society of the Philippines at Fairmont Makati on Wednesday, CFA Society president April Lee-Tan said in an interview.

“For the attendees, it’s more for them to assess whether or not they will have conviction on the sustainability of economic growth in the Philippines in light of numerous risks,” Lee-Tan said.

“Although we’ve been recovering for a long time, there continue to be a lot of skeptics. The conference aims to bring a holistic view on whether or not it is sustainable because people are talking about domestic risks and aside from that you have other domestic risks. It’s good to see the whole picture for you to make an informed decision on whether growth will be sustainable, and also how do you capitalize on it?” she said.

Whoever will lead the next administration, Lee-Tan said, would have to convince everyone that he or she could continue the thrust that “good governance is good economics.”

“That’s everybody’s concern — whether the changes this administration has accomplished will continue on. Will the momentum continue or will it die in the next? Is there really institutionalization of reforms?” she said.

Lee-Tan said the CFA Institute has lined up high-caliber speakers for Wednesday’s forum, including Timothy Moe, chief Asia-Pacific equity strategist for global investment research at Goldman Sachs; Simon Rudolph, executive vice president at Franklin Templeton Investments (Asia) Ltd; Jim Walker, chief economist at Asianomics Group; Martin Fridson, financial writer and author of “How to Be a Billionaire” and chief investment officer at Lehman, Livian, Fridson Advisors LL; Jack Gray, adjust professor and director at University of Technology (Sydney)’s Center for Capital Market Dysfunctionality.

* Since the forum’s main topic will be the sustainability of Philippine economic growth, representatives of the Philippine government such as National Treasurer Rosalia de Leon, Public Works and Highways Secretary Rogelio Singson and Bangko Sentral Deputy Governor Diwa Guinigundo, and the private sector have also been invited to share their views. Top fund managers will also be in attendance.

Lee-Tan, who is also head of research at leading online stock brokerage COL Financial, said that while the current administration has accomplished a lot, there has been some downside. For instance, she said, none of the rate hikes for utilities has been implemented.

But on the positive side, she said, reforms on revenue generation have been institutionalized, some of which were begun during the term of former President Gloria Macapagal-Arroyo.

She was referring primarily to the value added tax (VAT) reform of the previous regime which was deemed the single most important reform that stabilized the fiscal position of the government.

Lee-Tan also noted certain structural reforms undertaken by the Bangko Sentral to strengthen the financial system.

On the slower-than-expected rollout of infrastructure projects, Lee-Tan said the public-private partnership (PPP) program was part of the “growing pains” which the administration has found to be “easier said than done.”

Other challenges that the administration must address for the remainder of its term, the analyst said, would be to execute longer-term solutions to preempt a potential power crisis and address the issue of port congestion.

FROM PHILSTAR

BSP exec warns of more uncertainty By Kathleen A. Martin (The Philippine Star) | Updated October 27, 2014 - 12:00am 0 0 googleplus0 0

MANILA, Philippines - Markets should brace for more uncertainty if the US Federal Reserve decides to further hold up raising interest rates or put an end to its monthly asset purchases, a Bangko Sentral ng Pilipinas official said ahead of the Fed’s meeting this week.

“Anything that will delay the normalization of the credit cycle in the US and the conclusion of the quantitative easing will force continuing uncertainty in the market,” BSP Deputy Governor Diwa C. Guinigundo said.

The US Fed will meet again this week to decide whether to finally end its massive bond buying program as planned or to defer it for another time. All eyes are on the two-day meeting which starts on Oct. 28 as analysts and market players watch out for the language the Fed will use to convey when it would raise interest rates.

But any delay in the Fed’s expected actions will also give the BSP some policy space, Guinigundo said, especially amid concerns of a slowing global activity.

“That can also provide on the other hand some space in terms of flexibility in maintaining our policy rates or our monetary policy stance at this point especially as growth has become a key issue for both emerging market and the advanced economies,” Guinigundo said.

Monetary authorities last week decided to keep key policy rates steady as inflation is expected to be within the three-to five-percent target range for this year and the two to four percent band in 2015 and 2016. Overnight borrowing and overnight lending were maintained at four percent and six percent, respectively, in a move widely expected by the markets.

BSP Governor Amando M. Tetangco Jr. last Thursday said latest forecasts showed a “lower inflation path” for 2014 until 2016 as pressures on commodity prices start to ease.

* The BSP lowered its forecast for average inflation this year to 4.4 percent from 4.5 percent, while next year’s forecast was downgraded to 3.7 percent from 3.8 percent. The central bank also slashed its forecast for 2016 average inflation to 2.8 percent from three percent.

Inflation decelerated to 4.4 percent in September from 4.9 percent in August and in July due to lower increases in food prices and in housing and utility rates. This brought the nine-month average to 4.4 percent, still above the midpoint of the BSP’s target range for the year.

Tetangco said upside risks to the inflation outlook emanate from the pending petitions for power adjustments and the looming power shortages. However, the uneven prospects of the global economy should reduce pressures on commodity prices, he said.

The central bank will revisit policy settings on Dec. 11, its last rate-setting meeting for the year.

The BSP earlier this year already raised key policy rates by 50 basis points to ensure inflation will remain within target over the policy horizon. At the same time, the reserve requirement ratios and the special deposit account facility rate were hiked to rein in excess liquidity in the system.

FROM THE MANILA STANDARD

OFWs as milking cows By Boy P. | Oct. 21, 2014 at 11:15pm

We came across an old blog post by Blas F. Ople Policy Center founder Susan Ople talking about the “Milking-cow syndrome,” and how overseas Filipino workers are compelled by government to shell out compulsory contributions to such institutions as PhilHealth and Pag-Ibig.

In her blog, Ople recalled how our modern-day heroes are made to pay for mandatory PhilHealth coverage that does not give them the freedom to choose their dependents. For instance, single workers can only include their parents as dependents—provided of course if they are already 60 years old.

Pag-Ibig, on the other hand, requires OFWs to become members and to pay in advance six months worth of contributions—otherwise, they will not be allowed to leave the country at all.

As Miss Ople pointed out, can’t this government wait until after the OFWs start receiving their salaries first before requiring them to pay the half-year advance contributions? Sure, the contribution amounts to “only” P600 a month or P3,600—already a lot of money for someone already saddled with debt for pre-departure expenses like passport application fees, medical checkups, not to mention transportation costs and meals while having their papers processed if they happen to come from the province.

Toots Ople is right—our OFWs have become convenient milking cows for these institutions that could afford to spend millions to spend for marketing and TV ads that proclaim how great or how good their programs are. In the first place, they wouldn’t even need to spend for these ads to let people know they are doing a good job and that their programs work for the ordinary Filipinos.

Unfortunately, the government only seems to pay lip service to our modern-day heroes because more often than not, they get the “deadma” treatment when they make an appeal or a petition for officials to scrutinize or repeal an onerous legislation or memorandum circular or department directive.

Take for instance Manila International Airport Authority Memo Circular 08 that integrates the P550 terminal fee into the price for airline tickets, which takes effect this Nov. 1.

* OFW groups oppose the circular because it is in violation of an existing law that exempts OFWs from paying the terminal fee. Sure, the directive recognizes the exemption because the P550 will be refunded but the process is so tedious and the requirements too many (worse if the OFW himself can’t claim the refund and thus have to send a representative).

Allowing a refund is already proof that the specific benefit granted to OFWs via Section 35 of Republic Act 8042 as amended by RA 10022 which exempts them from paying the terminal fee—is already a violation of the said law as explained by OFW Family party list representative Roy Señeres. As some anti-MC 08 ask, what use is the law when a mere memo circular can supersede it?

Ople lamented that MC 08 is sure to confuse, if not dampen, the holiday spirit for many returning OFWs, many of whom are not even aware of the new order, since little if no consultation was made with the affected groups. Neither was any coordination made with Philippine embassies abroad, some stoolies informed us.

Imagine, OFWs have very limited time to spend with their families, with every minute so precious, yet they have to waste a lot of it filling out an IPSC (International Passenger Service Charge) Refund Declaration form, preparing all the other documentary requirements, then lining up at refund booths set up at immigration counters or at the MIAA administration building in Pasay.

To some people, P550 may be peanuts, but not to OFWs who earn every single peso with their own blood, sweat, tears and heartaches that go with being forced to work away from their loved ones. Besides, many distrust the creation of this so-called “Trust Fund” by MIAA where the non-refunded terminal fees will go.

Clearly, whoever cooked up this directive already calculated that a lot of OFWs will most likely be unable to get their refunds because they have little time or will be so pissed at the tedious process—which could easily earn this “trust fund” millions of pesos. And how will this trust fund be used?

That’s the P60-million question among cynics and jaded Filipinos, convinced that indeed, this government looks at OFWs as cash cows, who have no choice but to pay up.

FROM PHILSTAR

Chiz on DSWD budget: P4.2B for monitoring of CCT program, too much By Christina Mendez (philstar.com) | Updated October 23, 2014 - 5:00pm 0 1 googleplus1 0

MANILA, Philippines - Senate Finance committee chairman Sen. Francis Escudero said the Senate will likely slash the budget of the Department of Social Welfare and Development (DSWD) on monitoring and cost of services under the conditional cash transfer (CCT) program for next year.

Escudero expressed concern why the government is allocating too much funds for the “monitoring budgets and cost of service” when these multi-billion budget can be put to better use if diverted to disaster and preparedness operations.

The senator cited for example the P4.2 billion budget of the DSWD meant to implement, monitor and evaluate the CCT program.

“This amount can be put to better use. We can reduce it and add the amount to major programs,” Escudero said.

Based on the proposed 2015 budget, Escudero said the DSWD is seeking the approval of P108 billion spending package for 2015, of which P64.7 billion is for CCT. Of this amount, P57.1 billion will go to actual cash transfer, P3.3 billion to personnel services and P4.2 billion to implement and monitor the DSWD’s cash dole out program.

“We need to monitor the implementation of our programs and projects to ensure accountability and judicious use of public funds, but it should not be that expensive,” Escudero said.

Escudero said the funds can be used instead to finance disaster preparedness and relief operations, and to purchase relief goods with longer shelf life.

* During the budget hearings, Escudero also asked the Department of the Interior and Local Government (DILG) over the P840 million earmarked for monitoring and evaluation of its program under grassroots participatory budgeting process or the GPBP amounting to P5.7 billion.

The senator sought a detailed breakdown of its projects and programs in all 1,600 local government units across the country.

“The finance committee is seriously looking into these items in the budget and we are carefully studying initiatives to introduce sensible spending in all levels. We want to allocate our scarce resources and equitably and fairly utilize these for significant purposes,” Escudero added.

Tan's group in full control: Bautista back as PAL president, replacing Ang By Lawrence Agcaoili (The Philippine Star) | Updated October 24, 2014 - 12:00am 0 0 googleplus0 0


Jaime Bautista was elected president and chief operating officer, replacing Ang.

MANILA, Philippines - Lucio Tan’s group took back full control of Philippine Airlines Inc. (PAL) as representatives of San Miguel Corp. (SMC) in the airline’s board of directors, including president and chief operating officer Ramon Ang, were replaced.

Tan was re-elected chairman and chief executive officer by the PAL board of directors yesterday while current general manager Jaime Bautista was elected president and chief operating officer, replacing Ang.

Other new officers of the PAL board include Joseph Chua as vice chairman, Florentino Herrera III as corporate secretary and Marianne Raymundo as chief financial officer.

Also appointed members of the PAL board are Carmen Tan, Heinrich Khoo, Manuel Laza-ro, Johnip Cua, Lucio Tan Jr., Michael Tan, Washington SyCip, Alberto Lina, Estelito Mendoza, Antonino Alindogan Jr., and Gregorio Yu.

The 10 new officers and directors replaced the SMC representatives led by Ang whose resignations were accepted effective Oct. 23.

The Tan group, through Buona Sorte Holdings and Horizon Global Investments, bought back the 49 percent interest of San Miguel Equity Investments Inc. of SMC last Sept. 15 for a total consideration of $1.3 billion.

The SMC bought the 49 percent stake in Trustmark Holdings Corp. in April 2012 for a total consideration of $500 million. It embarked on an ambitious massive fleet renewal program involving the acquisition of 100 brand new airplanes.

Trustmark owns and controls 89.78 percent of the issued and outstanding shares of PAL Holdings that owns 98.27 percent of PAL.

Buona Sorte Holdings and Horizon Global Investments have offered to buy out the minority shareholders of PAL and its parent firm PAL Holdings Inc.

* The group has set the voluntary tender offer price for PAL Holdings at P1.19 per share and that of PAL at P0.31 per share. Minority shareholders have until Nov. 19 to sell their shares in PAL Holdings and PAL and the settlement date scheduled on Nov. 24.

“This voluntary tender offer is intended to provide the minority shareholders of PAL Holdings and PAL with the opportunity to monetize their investments and divest their shareholdings in these companies,” the firms said in the summary of terms of the voluntary tender offer.

The Tan group has committed to keep PAL Holdings listed at the PSE as it intends to comply with the 10 percent minimum public float requirement of the exchange once the voluntary tender offer is completed.

Bautista earlier said the voluntary tender offer is not for the purpose of delisting PAL Holdings.

He explained that based on the rules of the Securities and Exchange Commission, PAL is not mandated to conduct a mandatory tender offer as the transaction did not involve a change in control of the company.

TRIBUNE COMMENTARY

As the RP economy loses steam, sitting idly by is unacceptable by Benjamoin Diokno -Written by Tribune Wires Monday, 20 October 2014 00:00

The Philippine economy is without doubt losing steam. The three major international institutions – the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB) – have cut downward their economic forecasts for the Philippines in 2014 and 2015.

Significantly, their original forecasts were lower than the government’s official forecast.

While the major financial institutions have unanimously embraced a negative outlook for the Philippine economy, the country’s economic managers have stubbornly stuck to their original ‘rosy’ forecast.

But the economic numbers do not support such optimism. The strong agricultural output of 3.6 percent in the second quarter of 2014 is an outlier. It cannot be sustained in the second half of the year. In past years, agriculture grew by an average rate of 1.6 percent.

Construction has screeched to a halt in the first half of 2014. Public construction plummeted by 12.9 percent in the second quarter of 2014, from an impressive 32.4 percent growth in 2012 and 14.9 percent growth in 2013. Construction growth was flat in the first quarter of 2014 and 1.4 percent in the second half of 2014.

Manufacturing has been a bright spot, growing at 8.9 percent in the first half of 2014. But its strong expansion is not guaranteed. It would depend on strong global recovery and its ability to respond to the sputtering energy supply.

Growth is losing steam GDP growth, year-on-year

Institution OriginalForecast

RevisedForecast

    DateLastRevised
  2014 2015 2014 2015  
GOP 6.5-7.5 7.0-8.0 6.5-7.5 7.0-8.0 Unchanged
IMF 6.2 6.5 6.2 6.3 Oct 2014 
World Bank 6.4 6.7 6.2 6.4 Oct 2014 
ADB 6.4 6.7 6.2 6.4 Sep 2014

* The institutional organizations have identified exports as a strong source of Exports grew 14.2 percent in the first quarter and 10.3 percent in the second quarter of 2014. But much of such growth is base effects. On a full year basis, exports shrunk 1.1 percent in 2013.

The optimism that exports will continue to expand in the second half of the year is based on the expected strong rebound in advanced economies and China. But recent developments do not support such optimism: the world economic recovery remains fragile and the Chinese economy is slowing down.

A slowing economy has serious downside effects on overall economic welfare. Even with the recent short episodes of strong growth in 2012 and 2013, unemployment, poverty, and hunger continue to haunt policymakers.

One of three workers is either unemployed or underemployed.

Official government statistics show that one of four Filipinos is poor based on an incredulous poverty threshold. The 2012 annual poverty threshold is P18,935 or a daily income of P51.88 per person. A recent Social Weather Stations survey results show that more than one in two Filipinos are poor.

The ABD in its recent Asian Development Outlook update said that there remains a lot of “pressing national challenges.”

“The most pressing national challenges are to improve infrastructure, attract more investment to generate better jobs, and further reduce poverty, which is at 24.9 percent in the first half of last year, down three percentage points from the same period in 2012,” the ADO said.

The Philippines has the poorest public infrastructure among Asean-5 economies. In recent years, it has not spent more than 2.0 percent of GDP for hard public infrastructure. Realistically, its crumbling infrastructure is incompatible with an economy that is growing at higher than 5 percent. Traffic congestion is getting worse. The MRT, one of its urban transit systems, could break down anytime soon because of poor maintenance.

The Philippines has a lot of catching up do. If it wants to grow at 7.0 percent to 8.0 percent, it has to invest more than 5 percent of its GDP for hard public infrastructure.

The high cost of energy and its unreliability are binding constraints to faster, sustained, growth. The existing regulatory framework has to be revisited. The government has to streamline procedures in order to cut bureaucratic delays and the huge hidden costs in setting up power plants and in distributing power to firms and households. Such a move is good for investors and consumers alike.

The continuation of the present regulatory framework and bureaucratic delays will mean that Philippine firms will remain uncompetitive in the world market, and that Filipino consumers will continue to pay an exorbitant amount for their electricity consumption.

The world economic outlook is dimming.

The recent economic downgrades by the major international financial institutions have not taken into account the full impact of the Russia-Ukraine conflict, the ISIS strong military offensive in the Middle East and the specter of Ebola in Africa.

What appears as a positive sign — the sharp fall in oil prices — should be seen as yet another sign that the global economy is slowing. From a general equilibrium perspective, lower oil prices is bad for investment in alternative sources of energy, such as solar and wind energy.

In hindsight, the move of Philippine monetary authorities to raise interest rates aggressively during the first half of the year may have been premature. This is because of the weak fiscal response, that is, government spending slowed significantly at a time when monetary authorities were raising interest rates. This uncoordinated policy action should be blamed more on fiscal rather than monetary authorities.

The risk of an economic slowdown is real and rising. This is not the time for the Aquino III administration to sit idly by, relax, and assume that all’s well.

Keeping GDP growth targets unchanged in the light of recent gloomy signs suggests an economic team that is in denial. For Filipinos who have become increasingly skeptical of their leaders’ ability to run the government well, this is unacceptable behavior.

Teves: GMA reforms still benefiting economy Written by Tribune Wires Sunday, 19 October 2014 00:00


Margarito "Gary" B. Teves (born August 1, 1943) was the secretary of the Department of Finance of the Philippines. He was appointed to the position in July 2005 by President Gloria Macapagal-Arroyo, following a mass resignation of her economic team. In January 2009 he was named "Best Finance Minister" in Asia, a title given by London-based international finance magazine, The Banker. FROM WIKIPEDIA

Former President and now Pampanga Rep. Gloria Macapagal Arroyo has instituted fiscal and economic reforms that are benefitting the country up to present.

This was the pronouncement made yesterday by former Finance Secretary Margarito Teves during the Saturday Forum at Anabel’s restaurant in reaction to President Aquino’s statement that the Arroyo administration was a “lost decade” in Philippine history.

On the contrary, he pointed out, the Arroyo administration had laid the foundation which resulted in the Philippines’ credit rating upgrades which started during her term and shortly after she stepped down from office.

“Data show that contrary to Pres. Aquino’s reference to the Arroyo administration as a ‘lost decade,’ the Arroyo administration and Department of Finance had initiated several positive reforms that are benefitting the Philippine economy until today,” he said.

He pointed out that her prudent management of the national government debt and the passage of legislation in support of financial market development like the reformed Value Added Tax have contributed to the strong fiscal performance of the country which resulted into credit outlook upgrades from negative to stable during the Arroyo administration and positive shortly after July 2010 when the former President stepped out of Malacanang.

In fact he pointed out, Fitch’s upgrade in March 2013 noted that it was former President Arroyo’s “improvements in fiscal management .. that made general government debt dynamics more resilient to shocks.”

He also said the previous administration’s strong focus on tax reforms paved the way for increased tax revenue collection generating the highest revenues by any single measure adopted under any administration.

“The full-year impact was P76.9 billion in 2007 or 1.1 percent of GDP,” he said.

GMA’s “Strong Republic Nautical Highway” (SRNH) improved connectivity in the country by integrating land and sea modes of transportation, he further said saying Indonesia later followed SRNH model.

He further said President Aquino should give credit to Mrs. Arroyo and members of the finance team by acknowledging their contributions to build a stronger economy.

“I believe it would be fair to give credit to former President Arroyo and our colleagues at the Department of Finance for the hard work they have done from 2005 to 2010 and acknowledge the contributions of the previous administration in building the foundations of a stronger economy,” he said.

* When asked to assess the current administration, Teves said he is commending Aquino’s administration for sustaining the economic growth that was initiated during Arroyo’s term.

He, however, noted that the growth is still not inclusive.

“The challenge for President Aquino’ s administration is not only to make the economy grow faster, but more importantly, how to make economic growth more inclusive,” he said.

To do this, Teves said, the Aquino administration and the next administration must raise infrastructure spending to five percent of GDP from the present three percent and focus investments on infra bottlenecks that increase the cost of doing business, modernize the agricultural sector, simplify the application process to build and operate power plants, create a stable regulatory environment which honors contracts with investors, address inconsistencies between increased tax collection and distortionary tax regime and improve access to basic financial services such as credit, savings, remittances and insurance.

FROM GMA NEWS NETWORK

AT THE BALI FORUM, OCTOBER 10, 2014

Bali Forum: Aquino calls Arroyo years PHL’s ‘lost decade’
By ANDREO CALONZO, GMA NewsOctober 10, 2014 1:29pm


PNoy
, airline execs welcome Emirates Airbus A380. President Benigno Aquino III chats with Emirates Airline executives Barry Brown (2nd right), Salem Obaidalla (right), and Filipino Airbus A380 pilot Capt. Franklyn Desiderio (left) during the arrival of Emirates flight 334 at the NAIA Terminal 3 on Tuesday evening, October 7. The A380 is the world's biggest passenger jetliner. Ryan Lim

With less than two years left in his six-year term, President Benigno Aquino III appears to be making sure that the country's neighbors wouldn't forget the alleged "years of neglect and misgovernance" under his predecessor, former President and now Pampanga Representative Gloria Macapagal-Arroyo.

In a speech before the high-level Bali Democracy Forum that he co-chairs, Aquino said that his administration has since championed "what is right, fair and democratic towards the benefit of all."

Aquino said the Arroyo administration allowed "the very select few" to ignore the will of the vast majority.

"Under my predecessor, democratic institutions were compromised and weakened by a culture of transactionalism and impunity," Aquino said.

"What we have done is to bring back government to its core: to be a provider of genuine service and by so doing, empower society and enterprise, and thus enable our people to participate in fulfilling the promise of our freedom," he added.

* Aquino then presented how the supposed good governance resulted in a better economic climate for the country.

"The results speak for themselves; one only needs to look at our resurgent economy, a more empowered citizenry, and the growing confidence of the international community in the Philippines," Aquino said.

The popular Aquino during the course of his presidency has repeatedly pointed out the supposed shortcomings of Arroyo leadership before members of the international community.

During his working visit in the United States late last month, Aquino even compared Arroyo to the late dictator Ferdinand Marcos. The President said both former leaders "abused the democratic process."

Marcos placed the Philippines under Martial Law in 1972. The period was marked by human rights abuses and corruption in government. Marcos eventually lifted military rule on January 17, 1981.

Arroyo's nine-year presidency was meanwhile marred by corruption scandals and allegations of electoral fraud.

Arroyo, now a congresswoman representing Pampanga's second district, is currently on hospital arrest for a plunder rap in connection with the Philippine Charity Sweepstakes Office (PCSO) fund scam. —NB, GMA News

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