BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

BULLETIN EDITORIAL: WORRIES FOR OFWs WORRIES FOR THE COUNTRY


JUNE 17 ---TWO pieces of economic news earlier this week have revealed, once again, just how vulnerable our Overseas Filipino Workers (OFWs) are to what economists dryly refer to as ‘external factors.’  On Monday, the Bangko Sentral ng Pilipinas (BSP) published data that showed the growth rate of OFW remittances slowed in April. The month’s total of $2.23 billion represented a year-on-year increase of 4.9 percent over the $2.12 billion sent to the country in April 2014. While still positive, this was a slower pace than the 5.4 percent expansion recorded for the same month a year earlier, and considerably less than the 11 percent posted in March. At the same time, the peso is being battered in the local currency market. In trade on Monday, the peso slipped to P45.20 to $1, the lowest the local unit has been in 15 months; the peso closed at P45.29 back on March 21 of last year. The two pieces of news are related, but in ways that are perhaps not obvious to the casual observer. Ordinarily, weakness in the peso with respect to the dollar is a positive development for remittance-receiving families, because they will receive more pesos for each dollar sent. However, a weakening peso for all practical purposes raises inflation by raising the peso-relative cost of all imports. Technically, this also includes the foreign money that is being “imported” by remittance-receiving families; these families, however, are unlikely to notice; the burden of the extra costs of money is instead borne directly by banks and other businesses (for instance, pawn shops) that convert the dollars to pesos for local use. Families feel the pinch later, when more expensive imports contribute to higher prices of goods and services.
Exchange effects’ Changes in exchange rates affect remittances in a hidden way as well.READ MORE...

ALSO: Number of Pinoy maids abroad goes down by 20%


JUNE 17 ------THE number of Filipinos who have gone abroad to work as domestic helpers has declined by 20 percent over a five-month period, indicating the many of the Filipino household workers now prefer to work here, according to the Department of Labor and Employment.
“I have received a report from Philippine Overseas Employment Administration chief Hans Leo J. Cacdac that the deployment of newly-hired OFWs who are working as household service workers have decreased by 20 percent from January to May 2015,” Labor Secretary Rosalinda Baldoz said. In his report, Cacdac said the number of newly-hired HSW went down from 70,034 to only 55,961 during the period. “Saudi Arabia leads the countries with decreased number of newly-hired HSWs, registering only 20,949 compared to 26,570 in 2014; followed by United Arab Emirates which hired only 215 HSW in 2015 compared to 13,440 in 2014; and Hong Kong, which received only 5,825 HSWs compared to 8,409 in 2014,” Cacdac said. Other countries which posted a decrease in the number of Filipino maids hired during the period are Singapore with only 3,798 in 2015 from 4,853 in 2014, Bahrain from 2,029 to 1,982, Malaysia from 4,179 to only 1,725, Cyprus from 424 to only 322, Brunei from 273 to only 147 and Macau from 143 to only 75. READ MORE...

ALSO FLASHBACK: Slow OFW remittance growth worries Philippines 


APRIL 27 ---MANILA: Sluggish growth of remittances by Overseas Filipino Workers (OFWs) to their home country have made economists sit up, and take notice, fearing that there might be a sustained weakness in these important cash transfers as long as low oil prices continue to impact employment prospects, and wage growth for migrant workers, especially in the Gulf states, a media report said. In the first two months of 2015, remittances were up by just 2.4 percent, which is one of the weakest growth rates for remittances in years, Gulf Times quoted the Philippine’s central bank as saying. The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth of 5.5 percent in 2015, after remittances in 2014 grew 8.5 percent over 2013 to an all-time high of $28bn, according to World Bank figures, the report said. Remittances contributed 8.5 percent to the country’s GDP last year, and were a whopping 38 percent of export revenue of goods and services, which could clearly be shrinking this year, it added. Around a third of the entire OFW population globally, or an estimated 2.6 million people, is working in the Gulf, and the main source countries there for remittances are Saudi Arabia, the United Arab Emirates, Qatar and Kuwait, the report pointed out. READ MORE...

ALSO Biz Buzz: Ayala Alabang dilemma


JUNE 17 ---By: the staff @inquirerdotnet Philippine Daily Inquirer 01:57 AM June 17th, 2015 THE WORSENING traffic situation in the metropolis has put residents of the plush Ayala Alabang village in a quandary. There’s a long-standing proposal to open a new village gate at the end of San Jose St. to the adjacent Filinvest Corporate City, hatched at the barangay (village) level in 2001 and eventually backed by the Ayala Alabang Village Association (AAVA). However, the plan does not sit well with the families who live in “district 5,” close to the proposed gate, which was not part of the master plan committed by the property developer, Ayala Land Inc. ALI—which still owns the open space and the roads in the village and is, as expected, protective of its legacy projects—is itself lukewarm to the proposal, especially amid concerns aired by home buyers who do not relish having a new gate closer to their homes. They did not factor in such a “security risk” when they first bought their properties, they say. In a letter to the AAVA dated May 4, a copy of which was obtained by Biz Buzz, Ayala Land Premier head Jose Juan Jugo suggested that residents await the forthcoming Muntinlupa Cavite Expressway, a project of the Ayala group which would be completed soon. “This new diversion road will connect Daang Reyna to South Luzon Expressway and is expected to decongest traffic along Commerce Avenue. It may therefore be unnecessary to open a new gate in AAV,” Jugo said. But in case this new diversion road won’t be of any help to the traffic situation, Jugo said ALI would consider the proposal but only if the requirements that it had long put on the table would be met. Of the requirements, one that’s likely hard to get is written concurrence from 75 percent of lot owners residing along the affected roads. READ MORE...

ALSO: RP banks need to catch up with Asean 5 counterparts


The Philippines’ financial services sector remains one of the lowest among other Asean member states, according to a study made by state-owned think tank Philippine Institute for Development Studies (PIDS). Data from PIDS indicated that the Philippines ranked seventh in terms of ratio of banking assets to gross domestic product and sixth in terms of banking assets per capita. The country also had the smallest life and non-life insurance markets both in terms of assets and premiums among the Asean-5 composed of the Philippines, Indonesia, Malaysia, Singapore and Thailand.  Both markets are dominated by Singapore. “Even our largest banks are small compared to the smallest banks of other Asean member states,” Mario Lamberte, team leader of Component 3 of the Advancing Philippine Competitiveness (COMPETE) project said in a forum recently. The study showed that Banco de Oro, the largest bank in the country, has a total assets and deposits of $68 billion in 2013. READ MORE...

ALSO: Moody’s cuts PH’s 2015 growth forecast


JUNE 20 ---Debt-watcher Moody’s Investors Services lowered the Philippines’ economic growth forecast for this year amid government’s difficulty in raising public spending.
In a credit opinion released yesterday, Moody’s now expects the country’s economy, as measured by its gross domestic product (GDP), to grow by 6.0 percent this year, slower compared with an earlier estimate of 6.5 percent. The rating agency, however, maintained its GDP forecast for next year at 6.5 percent. Moody’s noted the Philippines may not be able to attain its GDP growth target of 7 percent to 8 percent this year without “significantly” improving expenditure performance. “The government’s ambitious growth target may be difficult to achieve in the absence of more effective budget execution,” Moody’s said. In the first four months of 2015, public spending only grew 7 percent to P544.3 billion from 509.6 billion in the same period last year. READ MORE...

ALSO TIMES OPINION: Show us the money


JUNE 15 ---by ERNESTO F. HERRERA
THE six-year Aquino administration is almost over and it is still plagued by the very same problems it started with—it needs to spend more and speed up projects under the public private partnership (PPP) program to boost the economy. The government has failed to stimulate economic activity in the country as shown by the first-quarter economic numbers. Gross domestic product grew by only 5.2 percent, more than 20 percent below expectations. Economists blamed the slowdown in the growth to underspending by the national government. Does the Aquino administration not know how to spend without pork barrel or its Disbursement Acceleration Program (DAP), which the Supreme Court had declared unconstitutional? The drop in infrastructure spending brings down GDP and employment. Government spending must now be pursued aggressively for sustainable growth and job generation. The private sector is doing its part. The taxpayers are doing their part. What is the government doing?  I mean, how hard is it to spend our taxes? Apparently, with this administration, very hard. READ MORE...


READ FULL MEDIA REPORTS HERE:

Worries for OFWs are worries for the country

MANILA, JUNE 22, 2015 (MANILA BULLETIN EDITORIAL) June 17, 2015 11:09 pm - TWO pieces of economic news earlier this week have revealed, once again, just how vulnerable our Overseas Filipino Workers (OFWs) are to what economists dryly refer to as ‘external factors.’

On Monday, the Bangko Sentral ng Pilipinas (BSP) published data that showed the growth rate of OFW remittances slowed in April.

The month’s total of $2.23 billion represented a year-on-year increase of 4.9 percent over the $2.12 billion sent to the country in April 2014.

While still positive, this was a slower pace than the 5.4 percent expansion recorded for the same month a year earlier, and considerably less than the 11 percent posted in March.

At the same time, the peso is being battered in the local currency market.

In trade on Monday, the peso slipped to P45.20 to $1, the lowest the local unit has been in 15 months; the peso closed at P45.29 back on March 21 of last year.

The two pieces of news are related, but in ways that are perhaps not obvious to the casual observer.

Ordinarily, weakness in the peso with respect to the dollar is a positive development for remittance-receiving families, because they will receive more pesos for each dollar sent. However, a weakening peso for all practical purposes raises inflation by raising the peso-relative cost of all imports.

Technically, this also includes the foreign money that is being “imported” by remittance-receiving families; these families, however, are unlikely to notice; the burden of the extra costs of money is instead borne directly by banks and other businesses (for instance, pawn shops) that convert the dollars to pesos for local use.

Families feel the pinch later, when more expensive imports contribute to higher prices of goods and services.

‘Exchange effects’

Changes in exchange rates affect remittances in a hidden way as well.

READ MORE...

Remittances that start as amounts of foreign currency often undergo conversion two or more times before reaching their intended recipients.

For example, a remittance from a worker in Germany, paid in euros, generally is coursed through a US bank, where it is converted to dollars, and then transmitted to the Philippines, where it is converted to pesos.

A relative weakness of one or more of the three currencies involved will affect the final amount received, almost always negatively.

OFW remittances contribute more than 10 percent of the Philippines’ GDP, and when growth in remittances lags behind growth in the number of OFWs, it must be taken as a warning that the situation could have a broadly negative impact:

In simple terms, remittances have to grow at or above the rate of GDP growth in order to contribute positively to the wider economy; when they do not, as is the case after the April numbers, GDP growth will be reduced.

For five years, the Aquino Administration has treated OFWs as an afterthought, having no real policy other than to react – usually too late – to various crises.

The current indicators of remittance levels and peso exchange value are not a crisis yet, but because these factors potentially affect much more than just the OFW sector, the government should not waste a moment waiting for the situation to clear up on its own.

Taking the proactive approach and examining costs of remittance services, the impact of currency controls, as well as the exchange rate policy, all with a mind toward increasing where possible value for money for remittances would not just make the sacrifices of our ‘modern-day heroes’ more worthwhile, but would help to prevent or minimize significant shocks to the entire economy.


MANILA STANDARD

Number of Pinoy maids abroad goes down by 20% By Vito Barcelo, Julito Rada | Jun. 16, 2015 at 12:01am

THE number of Filipinos who have gone abroad to work as domestic helpers has declined by 20 percent over a five-month period, indicating the many of the Filipino household workers now prefer to work here, according to the Department of Labor and Employment.

“I have received a report from Philippine Overseas Employment Administration chief Hans Leo J. Cacdac that the deployment of newly-hired OFWs who are working as household service workers have decreased by 20 percent from January to May 2015,” Labor Secretary Rosalinda Baldoz said.

In his report, Cacdac said the number of newly-hired HSW went down from 70,034 to only 55,961 during the period.

“Saudi Arabia leads the countries with decreased number of newly-hired HSWs, registering only 20,949 compared to 26,570 in 2014; followed by United Arab Emirates which hired only 215 HSW in 2015 compared to 13,440 in 2014; and Hong Kong, which received only 5,825 HSWs compared to 8,409 in 2014,” Cacdac said.

Other countries which posted a decrease in the number of Filipino maids hired during the period are Singapore with only 3,798 in 2015 from 4,853 in 2014, Bahrain from 2,029 to 1,982, Malaysia from 4,179 to only 1,725, Cyprus from 424 to only 322, Brunei from 273 to only 147 and Macau from 143 to only 75.

READ MORE...

“While the data is preliminary, it is very encouraging,” Baldoz said, attributing the decrease to the reforms being implemented by the government to enhance the welfare and protection of OFWs.

Meanwhile, the Bangko Sentral ng Pilipinas reported on Monday that the money sent home by Filipinos working overseas in April grew by 5.1 percent to $2.015 billion from $1.918 billion in 2014.

This brought cash remittances in the first four months to $7.807 billion, 5.4 percent higher than the $7.409 billion in the same period last year.

“Cash remittances from land-based [$5.9 billion] and sea-based [$1.9 billion] workers increased by 5.3 and 5.6 percent, respectively. The major sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong, and Canada,” the Bangko Sentral said.

Personal remittances, which include non-cash items, grew by 4.9 percent to $2.233 billion from $2.128 billion on year. This brought personal remittances in the first four months to $8.647 billion, 5.1 percent higher than the $8.228 billion a year ago.

The bulk of these inflows, or 74 percent, consisted of remittances from land-based workers with work contracts of one year or more which amounted to $6.4 billion.

About one-fourth (24 percent) of personal remittances came from sea-based and land-based workers with work contracts of less than one year, while nearly 2 percent were other household-to-household transfers such as those from migrants sending money to their relatives in the Philippines.

Preliminary data from the POEA showed that of the total approved 310,727 job orders for January to April this year, 33.8 percent were intended mainly for service, production, and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan and the United Arab Emirates.

Last year, cash remittances posted a record-high $24.308 billion, 5.8 percent higher than the $22.968 billion in 2013.

The 2014 growth surpassed the Bangko Sentral’s 5.5 percent projection for the year. It also accounted for 8.5 percent of gross domestic product last year.

Personal remittances, on the other hand, grew by 6.2 percent in 2014 to a record $26.9 billion from $25.3 billion in 2013.

This year, the bank regulator is aiming for a conservative five-percent growth in remittances but BSP officials earlier said this target could still be reviewed and adjusted in the coming months alongside other economic data.


PHILIPPINE TIMES, SAUDI ARABIA (FLASHBACK APRIL 2015)

Slow OFW remittance growth worries Philippines  Staff Report Published: April 27, 2015


MANILA: Sluggish growth of remittances by Overseas Filipino Workers (OFWs) to their home country have made economists sit up, and take notice, fearing that there might be a sustained weakness in these important cash transfers as long as low oil prices continue to impact employment prospects, and wage growth for migrant workers, especially in the Gulf states, a media report said.

In the first two months of 2015, remittances were up by just 2.4 percent, which is one of the weakest growth rates for remittances in years, Gulf Times quoted the Philippine’s central bank as saying.

The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth of 5.5 percent in 2015, after remittances in 2014 grew 8.5 percent over 2013 to an all-time high of $28bn, according to World Bank figures, the report said.

Remittances contributed 8.5 percent to the country’s GDP last year, and were a whopping 38 percent of export revenue of goods and services, which could clearly be shrinking this year, it added.

Around a third of the entire OFW population globally, or an estimated 2.6 million people, is working in the Gulf, and the main source countries there for remittances are Saudi Arabia, the United Arab Emirates, Qatar and Kuwait, the report pointed out.

READ MORE...

Due to more cautious expenditures of Gulf governments in the wake of lower oil income and scaling down of some large projects, there has also been a decrease in hiring of new Filipino workers in the recent past, local recruitment agencies were quoted as saying by the news portal.

However, the low oil price is not the only problem for OFWs’ earnings. According to Standard Chartered, remittances to the Philippines from Asia, especially from Singapore, Hong Kong, Taiwan and Japan, where many of the other OFWs are working, slowed down for three consecutive months due to continued economic weaknesses in those countries, the report said.

Growth in remittances from Europe, where most OFWs are working in the United Kingdom, as well as in Italy and other Eurozone countries, declined for eight consecutive months, it added.

Those who are getting their salaries in Euros face the additional problem that the value of the European currency slumped significantly in the past few months compared to both the US dollar and the Philippine peso, the report said.

The Philippines is the third largest remittance recipient in the world, only behind India and China, which received remittances of $70bn and $64bn, respectively, in 2014, Gulf Times reported.


INQUIRER

Biz Buzz: Ayala Alabang dilemma By: the staff @inquirerdotnet Philippine Daily Inquirer 01:57 AM June 17th, 2015

THE WORSENING traffic situation in the metropolis has put residents of the plush Ayala Alabang village in a quandary.

There’s a long-standing proposal to open a new village gate at the end of San Jose St. to the adjacent Filinvest Corporate City, hatched at the barangay (village) level in 2001 and eventually backed by the Ayala Alabang Village Association (AAVA).

However, the plan does not sit well with the families who live in “district 5,” close to the proposed gate, which was not part of the master plan committed by the property developer, Ayala Land Inc.

ALI—which still owns the open space and the roads in the village and is, as expected, protective of its legacy projects—is itself lukewarm to the proposal, especially amid concerns aired by home buyers who do not relish having a new gate closer to their homes.

They did not factor in such a “security risk” when they first bought their properties, they say. In a letter to the AAVA dated May 4, a copy of which was obtained by Biz Buzz, Ayala Land Premier head Jose Juan Jugo suggested that residents await the forthcoming Muntinlupa Cavite Expressway, a project of the Ayala group which would be completed soon.

“This new diversion road will connect Daang Reyna to South Luzon Expressway and is expected to decongest traffic along Commerce Avenue. It may therefore be unnecessary to open a new gate in AAV,” Jugo said.

But in case this new diversion road won’t be of any help to the traffic situation, Jugo said ALI would consider the proposal but only if the requirements that it had long put on the table would be met.

Of the requirements, one that’s likely hard to get is written concurrence from 75 percent of lot owners residing along the affected roads.

READ MORE...

There are more than 50 families close to Ground Zero.

Another requirement is for AAVA to get the approval of 50 percent plus one of all registered lot owners in a general membership meeting, in which at least 55 percent of total members must have participated.

This is the approval that AAVA hopes to get during the referendum which it intends to conduct in the next few months.

One resident in district 5 said that a majority vote in the village would be easy to get, but he was hoping that people would be considerate of backyards that would be affected by the project and that ALI’s conditions would be honored. In the end, the issue is not only polarizing residents but is feared to trigger a legal battle between ALI and AAVA as well. Doris Dumlao-Abadilla

DBP complains, part 2 CONTINUING where we left off ...

Development Bank of the Philippines director Reynaldo Geronimo wrote the Inquirer to complain about a series of articles that was written recently regarding the ‘wash sales’ that happened at the bank last year.

According to the DBP director, “some of the articles quoted the statements of the bank (which) were unfairly taken out of context or misrepresented, if not outright false.”

He pointed to a “supposed rejoinder” quoted by the Inquirer from the bank’s financial resources sector head Susan Prado, adding “the truth is she was never interviewed for the article.” (Ms Prado’s explanation of the rationale behind the transactions in question was contained in the minutes of the meeting of the bank’s risk oversight committee which approved the transactions.

Mr. Geronimo was present during this meeting, according to the minutes.) Geronimo added that the Inquirer finally carried the bank’s rejoinder statement belatedly “a full three days after we issued it.

Making matter worse, he again misquoted it; he made it appear that the Commission on Audit already had findings on the ‘wash sale’.” (The very first story on the issue carried the bank’s side, courtesy of Ms Prado’s explanation to the board-level committee.)

He added that the article also branded the questioned transactions as “illegal bond trading activity… even before any judicial determination by the relevant competent authority as to the legality of the transactions.”

(Section 24 of the Securities Regulation Code says “it shall be unlawful for any person acting for himself or through a dealer or broker, directly or indirectly, to create a false or misleading appearance of active trading in any listed security traded in an exchange or any other trading market by effecting any transaction in such security which involves no change in the beneficial ownership thereof; by entering an order or orders for the purchase or sale of such security with the knowledge that a simultaneous order or orders of substantially the same size, time and price, for the sale or purchase of any such security, has or will be entered by or for the same or different parties; or by performing similar act where there is no change in beneficial ownership.” It speaks for itself.)

 Geronimo pointed out that nowhere in the COA report was the term “wash sale” used. (“Wash sale” is financial industry jargon referring precisely to the type of activity described and prohibited by the SRC above.)

The DBP director continued: “The news reports are, in our mind, clearly malicious. They insinuate ill motives when there were none.

Moreover, to focus on the trading losses on the said securities distorts the reality that the bank in fact reversed these trading losses and posted solid financial performance for 2014.”

“We, therefore, respectfully demand that in the spirit of journalism and fair reporting, appropriate actions be taken as well as necessary corrections/clarifications be made on the matter, such as a retraction of what we had indicated as false and the publication of this letter complaint with equal prominence and space as the falsities merited in your publication,” Geronimo concluded.

(All Inquirer stories on the issue from Day One were based on documents that detailed both sides of the issue, including the exchange of letters between DBP’s president, Gil Buenaventura, and COA. Both sides were presented. We sought the bank’s side on the matter but received no reply from its spokesperson.) Daxim L. Lucas

DBP versus BIR

A P3.1-BILLION tax assessment by the Bureau of Internal Revenue against Development Bank of the Philippines was apparently due to a BIR ruling which tried to clamp down on banks’ long-time practice involving the allocation of costs and expenses among its various business units.

The majority of the local banking community opposed this BIR ruling.

Twenty-four of them—19 local banks and five foreign ones—filed a suit against the BIR earlier this year in the Makati Regional Trial Court, which sided with the banks and issued and injunction against the tax authorities.

But here’s the thing: DBP (along with another government financial institution, Land Bank of the Philippines) declined to join the banking community’s lawsuit against the BIR.

Thus, when the court sided with the banks, only those involved benefited from the court-ordered injunction.

Other banks who passed up the chance to sue the BIR still have to pay the taxes in question. According to former DBP president Francisco del Rosario, it was for this reason that the bank was dunned the additional tax levy, and not because he tried to dodge taxes while he was at its helm. Daxim L. Lucas

Meta and cool

THOSE who know the words to the featured song of “Bituing Walang Ningning” (originally written by Nerissa Cabral as a serialized graphic novel) have a chance to hear the song live in —get this—a theater performance at Resorts World Manila.

Apparently it is the first time that a Filipino story has gone the long way from komiks to the stage after coming to life in a movie and in a TV series.

The gala is slated for tonight, June 17, and our source says some of the main actors who appeared in the earlier artistic versions were invited.

That means attendees just might witness Sharon Cuneta watching the story unfold from the audience side. How meta. Riza T. Olchondra


TRIBUNE

RP banks need to catch up with Asean 5 counterparts
Written by Tribune Wires Friday, 19 June 2015 00:00

The Philippines’ financial services sector remains one of the lowest among other Asean member states, according to a study made by state-owned think tank Philippine Institute for Development Studies (PIDS).

Data from PIDS indicated that the Philippines ranked seventh in terms of ratio of banking assets to gross domestic product and sixth in terms of banking assets per capita.

The country also had the smallest life and non-life insurance markets both in terms of assets and premiums among the Asean-5 composed of the Philippines, Indonesia, Malaysia, Singapore and Thailand.

Both markets are dominated by Singapore.

“Even our largest banks are small compared to the smallest banks of other Asean member states,” Mario Lamberte, team leader of Component 3 of the Advancing Philippine Competitiveness (COMPETE) project said in a forum recently.

The study showed that Banco de Oro, the largest bank in the country, has a total assets and deposits of $68 billion in 2013.
 

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However, the bank is still small compared to the third largest bank of Indonesia, Bank Central Asia, with a total of 75 billion dollars assets and deposits in the same year.

“There must be something wrong in our financial system because it doesn’t contribute much to our economy,” Lamberte said.

The study suggests to unlock the power of the banking system to perform in financial intermediation function, continue the liberalization of the financial system by encouraging more foreign players to enter the domestic financial market, combine liberalization policy with a strong merger and consolidation policy, and introduce measures to support small and medium enterprises to scale up their operations.

COMPETE is a USAID-Philippines project under the Partnership for Growth, a White House initiative.

The project aims to expand access to credit for small and medium enterprises particularly through an improved system of credit information for SME lending, wider utilization of credit guarantees, and overall stronger borrowing capacity for entrepreneurs. By Giannina Acuña


MANILA BULLETIN

Moody’s cuts PH’s 2015 growth forecast by Chino Leyco June 19, 2015 Share1 Tweet3 Share1 Email0 Share12

Debt-watcher Moody’s Investors Services lowered the Philippines’ economic growth forecast for this year amid government’s difficulty in raising public spending.

In a credit opinion released yesterday, Moody’s now expects the country’s economy, as measured by its gross domestic product (GDP), to grow by 6.0 percent this year, slower compared with an earlier estimate of 6.5 percent.

The rating agency, however, maintained its GDP forecast for next year at 6.5 percent.

Moody’s noted the Philippines may not be able to attain its GDP growth target of 7 percent to 8 percent this year without “significantly” improving expenditure performance.

“The government’s ambitious growth target may be difficult to achieve in the absence of more effective budget execution,” Moody’s said.

In the first four months of 2015, public spending only grew 7 percent to P544.3 billion from 509.6 billion in the same period last year.

READ MORE...

But despite the weak public spending, Moody’s said the country still reflects high economic strength, underpinned by resilience of private investment.

Likewise, Moody’s said the Philippines, as a net oil importer, stands to benefit from lower crude prices through lower inflation and a compression of the import bill.

“The ongoing recovery in the US, the largest source of remittances, is also supportive of household consumption. Lower global commodity prices are likely to boost growth through disinflation,” Moody’s said.

“The Philippines has demonstrated resilience to global shocks which limits the possibility that improvements in fiscal or economic performance would be significantly undermined,” the rating agency added

Moody’s also cited that ample onshore liquidity conditions provide a stable funding base for the government, which simultaneously faces lower borrowing requirements due to narrower deficits.

“The main challenge facing Philippine policymakers is sustaining the positive trajectory of institutional quality through the political cycle,” Moody’s said.

In the first-quarter of the year, the country’s GDP registered at 5.2 percent, the slowest growth pace since 2012 due to sluggish government spending.

The first three-month growth was down from the 6.6 percent expansion posted in the fourth quarter of last year, as well as from the 5.6-percent growth rate registered during January-March 2014.


MANILA TIMES OPINION

Show us the money June 15, 2015 9:39 pm ERNESTO F. HERRERA


THE six-year Aquino administration is almost over and it is still plagued by the very same problems it started with—it needs to spend more and speed up projects under the public private partnership (PPP) program to boost the economy.

The government has failed to stimulate economic activity in the country as shown by the first-quarter economic numbers.

Gross domestic product grew by only 5.2 percent, more than 20 percent below expectations. Economists blamed the slowdown in the growth to underspending by the national government.

Does the Aquino administration not know how to spend without pork barrel or its Disbursement Acceleration Program (DAP), which the Supreme Court had declared unconstitutional?

The drop in infrastructure spending brings down GDP and employment.

Government spending must now be pursued aggressively for sustainable growth and job generation.

The private sector is doing its part. The taxpayers are doing their part. What is the government doing?

I mean, how hard is it to spend our taxes? Apparently, with this administration, very hard.

READ MORE...

The Aquino administration has been quite diligent in collecting taxes. The country’s tax effort has been on an upward trend in the past four years from 12.2 percent in 2010 to 13.6 percent in 2014. It has set a goal of further raising the tax effort to 16.6 percent by 2016.

But like I said in previous columns we need to see concretely where our taxes go and how they are spent.

Taxes should be spent primarily on public infrastructure, education, and health services.

Taxpayers who need healthcare should be able to go to any public hospital and get quality treatment. They should be able to send their kids to public schools and get quality education. They need well-built roads that do not flood after short downpours and are not clogged with traffic.

They need well-lit, clean and safe streets, not dark, dirty and crime-infested ones. They need a government that can be relied upon to take care of them if they lose their jobs or once they are old and can no longer work.

If the government cannot guarantee these then it is better off reducing taxes so that the people can have more money to spend and the private sector can stimulate the economy.

Reducing income taxes would put more money in the pockets of workers to help them cope with the high cost of living. This money would be spent on goods and services thereby boosting the economy.

More money for workers to spend means increased demand for goods and services, which results in more jobs for more people to spend more money, which results in more people paying taxes and the government making more money.

If the government is inefficient it is better off taking a backseat.

Several investors during the trips of President Aquino abroad have signified interest in the infrastructure projects but despite its launching, PPP projects have been delayed as government agencies continued to review costs and procurement procedures. What PPP projects have been finished so far?

And after nearly five years on the job, Aquino and his people have not figured out public finance or proper budget planning. They don’t know how to plan and program projects in the pipeline.

Infrastructure construction is stagnant. Government infrastructure spending dropped by 24 percent in the first three months of 2015.

The Aquino administration implemented the K-to-12 curriculum change and yet the government’s budget allocation for education could not even address the severe lack of classrooms, teachers, textbooks and other basic needs.

The power sector is supplying one of the most expensive electricity rates in the world.

The government is helping the poor only through its multibillion conditional cash transfers.

Only tax collection improved. The government collected 18 percent more in taxes and revenues in the first quarter, or around P408 billion.

Again, where is our money? Show us the money.

4 Responses to Show us the money

Manny Alintana says:

June 16, 2015 at 3:08 pm

Despite the annual underspending of the Pnoy government, I cannot assume that the unspent money will remain in the Treasury. I have a gut feeling that these moneys will all be spent in the next election. Laki problema ng susunod na presidente, puro kabulukan na nga ang sasalubong sa kanya, bancrupt pa ang kaban ng bayan at wala syang pondo para mahabol ang backlogs. Obviously, we need a president who can be competent and seasoned enough to go against these possible odds. And definitely, hindi si Disgrace yon…

Reply

boying labro says:

June 16, 2015 at 1:30 pm

Mr. Jun Adan is absolutely right. Jail for these treasonous people of our nation. GOD BLESS PHILIPPINES AND NOT PNOY AND HIS ASSOCIATES ALLIES, CURSE THEM..INSTEAD..

Reply

juan says:

June 16, 2015 at 12:14 pm

Much better if we can opt-out paying our taxes, if we are not satisfied with the government’s performance.

It is like, if we are not satisfied with the product or service that we paid for, there’s a money back guarantee.

We are very unfortunate to pay huge taxes, only to receive nothing or crap. And yet we know that the money just go to the pockets of the “public servants” (yet, they live like kings) and we are too helpless and powerless to do something about that (because of too much priviledge and immunity in our “laws” for them).

And much painful reality is the weight of sanctions for those who failed to pay their taxes, against those who stole them. Justice does not exist.

Reply

Jun Adan says:

June 16, 2015 at 5:57 am

Pnoy is no expert at all in economic development and is not a good manager. Pnoy is a wizard only in political bribery and that’s the way he convince others to follow his personal agenda.

As a mediocre thinker Pnoy probably doesn’t know how the PPP works and stimulate the economy. Just like his mother, Cory, the funds are just parked and remain unused to fund government projects on public infrastructure, education, health services, energy shortage and expensive power, crime-fighting.

The PPP which is supposed to support sustainable economic growth and uplift job creations are not given critical attention by Pnoy.

Instead, he seem to be preoccupied with politics for the 2016 election and the BBL passage in Congress, which is a treasonous act of selling the region of Mindanao to the fanatic Moros.

Pnoy appear to be a very shallow leader to guide the nation to economic prosperity.

His brain-damaged thinking provides disastrous results to various needed Improvements in all aspects of governance.

His “tuwid na daan” policy is so one-sided, a double standard in implementation and a hypocritical approach to honest governance but serves only as a slogan for vindictively scathing his political opponents and protecting his friends and political allies.

He personally condone corruption of friends like Purisima, allies like Abad, ALCALA, Drilon and other members of Congress found by COA to have malversed their PDAF and DAP funds for their own enrichment.

Pnoy term is about to end with a loud flop.

Thank God it’s almost over for the nation will suffer more from his lack of sensitivity to people’s plight. I hope he gets to jail as his retirement place!


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