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

DEEPER COLOR: BSP RELEASES NEW P100 BILLS


FEBRUARY 1 -DEEPER COLOR Bangko Sentral ng Pilipinas authorities release the new P100 bank notes (right)with a stronger mauve or violet color than that of the old one (left) to markedly differentiate these from the P1,000 bank notes. CONTRIBUTED PHOTOS FOLLOWING complaints that the P100 and P1,000 bills seem to look alike, the Bangko Sentral ng Pilipinas (BSP) will release starting today 100-peso bank notes with a stronger mauve or violet color. In a statement, the BSP explained that the currency issuance was “in response to suggestions from the public to make it easier to distinguish from the 1,000-peso bank note.”
“Compared with the current color of the 100-peso bank note in circulation, the new 100-peso bank note will have stronger mauve or violet color on the obverse and reverse sides,” it said. All other features of the P100 bill will stay the same, it added. The BSP said it would henceforth print only the new 100-peso bank notes with stronger color, but the public could still use and businesses must continue accepting the New Generation Currency P100 bills with fainter color. “The current 100-peso bank notes can still be used for daily transactions for payment of goods and services and will commingle with the new 100-peso bank notes with stronger mauve or violet color until supplies of the first version last,” the BSP said. Taxi drivers Taxi drivers like Wilson Arcilla, 31, welcomed the BSP move to make the P100 bill more distinct from the P1,000, as they were having difficulty when giving their passengers’ change, especially at night. A cabdriver for four years now, Arcilla narrated in an interview on Sunday that one night, a customer whose fare reached P120 had told him to instead give back P300 as change for the P500 bill paid. READ MORE...RELATED, Philippine Coins and Banknotes: 100 Peso Bill - New Design Series and Philippine Coins and Banknotes: Banknote Error - "Arrovo" on 100 Peso Banknote...

ALSO: The Philippines's consumer economy and Singapore's crisis


FEBRUARY 3 -"It is an insane situation where an insane country will borrow money for the sake of inducing growth by way of investment spending, where in the long run, the country becomes a victim of its own indecisiveness." Xiquinho Silva photo/CC BY-NC
The Philippines’ 4th quarter GDP growth rate of 6.3 percent in 2015 should be a prelude to better and bigger things to come for the local economy in 2016. Despite the rather off target growth of 5.8 for the 2015, it does not fully speak of the performance of the economy in the previous year. The last two quarters of the previous year show a more than 6 percent growth (6 percent in 3rd quarter and 6.2 percent in the 4th quarter), despite a pathetic performance in the 1st quarter at measly 5.2 percent, thanks but no thanks to the under spending of the government, that literally dragged the economy down the mark. The economic recovery during the 3rd and 4th quarter at more than 6 percent was primarily induced by a robust consumer spending that has always been the trademark of a developing economy, proving to all and sundry that ours remains a consumer-driven economy. Was there something to be ecstatic about? Think again… Although other drivers of growth may have accelerated and fueled development just like the services sector that grew by 7.4 percent to complement government spending which grew by 17.4 percent (after waking up from a deep slumber), it was never consistent unlike consumer spending that constantly saves the day for our local economy. One thing going against a consumer-driven economy is the likelihood of the economy’s deficiency in savings. If we are going to examine the component of the local growth, 60 to 70 percent of our local growth is contributed by consumption spending; while the remainder is spent somewhere with a very small proportion going to savings, if there is anything left at all. READ MORE...

ALSO: Coca Cola Femsa pouring in $800 M for Philippine expansion


FEBRUARY 3 -COKE FEMSA CEO Ponce
 Newly installed Coca-Cola Femsa Philippines CEO Fabricio Ponce revealed yesterday the company intends to invest up to $800 million, or $200 million a year, to expand its Philippine operations.
In his first meeting with local media yesterday, Ponce said the company remains committed to reinvest all profits in the Philippines up to 2020 despite incurring a $100 million loss in 2014, and achieving a breakeven financial result in 2015. Coke Femsa Philippines is primarily involved in bottling operations. It operates only in the Philippines and does not export any of its products. Coca-Cola Atlanta is the beverage parent company. For 2016, Ponce said Coke Femsa Philippines is projecting a five percent growth, tracking the country’s economic growth. Last year, the company’s third and fourth quarter growth was at six percent after a dismal first semester. The new Coke CEO acknowledged this year would be “challenging” for the company as it faces headwinds from the Chinese devaluation and possible developments in Saudi Arabia, specifically involving possible job cuts for overseas Filipino workers. Ponce warned that a possible loss of jobs in Saudi Arabia or the Middle East would affect the remittances of OFWs to their families here in the Philippines. READ MORE...

ALSO: Gov't debt hits almost P6 trillion in 2015


FEBRUARY 4 -Government liabilities rose 3.8 percent from 2014.
Debt held by the national government rose last year to nearly P6 trillion, the Bureau of the Treasury reported on Thursday.
Liabilities rose 3.8 percent from 2014 to P5.954 trillion in 2015. Both domestic and foreign obligations increased. Domestic debts, which accounted for the bulk of the debt pile, went up 1.7 percent to P3.884 trillion. Their foreign counterparts rose by a faster 8.1 percent to P2.07 trillion. As a proportion of gross domestic product (GDP) however, debt accounted for 44.8 percent. This was lower than the 45.4 percent in 2014, Treasury said. Debt to GDP is a measure closely watched by credit raters. It indicates the capacity of the government to pay for its debts. While there is no ideal measure, governments usually try to limit debt-to-GDP at 50 percent or lower. "The Philippines is fully committed to a proactive liability management strategy to keep our debt structure resilient," Finance Secretary Cesar Purisima said in a statement. THE FULL REPORT, RELATED, DROPPING DOLLAR NOT MAKING SENSE FOR OFWS...

ALSO: Forex reserves dip to $80.16 B in January


FEBRUARY 6 -BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) went down to $80.16 billion in January from $80.67 billion in December. Philstar.com/File photo
The country’s foreign exchange reserves declined in January due to strong outflows arising from payments by the national government of its maturing foreign debt, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) went down to $80.16 billion in January from $80.67 billion in December.
Tetangco said the $508 million decline was due to the foreign exchange outflows arising from payments by the government of its maturing foreign exchange obligations, as well as the central bank’s foreign exchange operations. The outflows, Tetangco explained, were partially offset by inflows from the national government’s net foreign currency deposits and income from the central bank’s investments abroad as well as the revaluation of its gold holdings due to higher price in the international market. The GIR is the sum of all foreign exchange flowing into the country. The reserves serve as buffer to ensure the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks. If it deems necessary, the BSP buys dollars from the foreign exchange market to prevent sharp depreciation of the peso. It can also sell to avoid sharp appreciation of the local currency. READ MORE...

ALSO: Decline in RP’s Foreign Direct Investments (FDI) just a blip — DoF exec


FEBRUARY 4 -Foreign direct investments (FDIs) to the Philippines fell 4.9 percent year-on-year in October 2015 but an economist of the Department of Finance (DoF) does not consider this a big deal. “The small decline in 2015 may just be a blip considering that FDI has been rising 53.1 percent annually for the three years, 2012-14,” Finance Usec and DoF economist Gil Beltran said, based on the agency’s Economic Bulletin. Bangko Sentral ng Pilipinas (BSP) data show that FDIs posted net inflows of $4.98 billion in the first 10 months of 2015, down from the $5.24 billion same period in 2014. Of the total, 56.3 percent was accounted for by net investments in debt instruments, 30.9 percent by net equity placement and 12.8 percent by reinvested earnings.Placements in the manufacturing sector rose 155 percent year-on-year to $624 million followed by investments in financial and insurance activities, $531.83 million; and construction, wholesale and retail trade among others, each of which has total investments of over $100 million. Beltran said the big jump of investments in the manufacturing and financial sector is seen to be sustained in the coming quarters due to additional reforms.“Planning units in departments involved in other sectors may need to look for opportunities for reform to experience similar FDI resurgence,” he added. THE FULL REPORT -RELATED, FDI up to $451 M in October...


READ FULL MEDIA REPORTS HERE:

BSP releases new P100 bills


DEEPER COLOR Bangko Sentral ng Pilipinas authorities release the new P100 bank notes (right)with a stronger mauve or violet color than that of the old one (left) to markedly differentiate these from the P1,000 bank notes. CONTRIBUTED PHOTOS

MANILA, FEBRUARY 8, 2016 (INQUIRER) By: Ben O. de Vera @BenArnolddeVera February 1st, 2016 - FOLLOWING complaints that the P100 and P1,000 bills seem to look alike, the Bangko Sentral ng Pilipinas (BSP) will release starting today 100-peso bank notes with a stronger mauve or violet color.

In a statement, the BSP explained that the currency issuance was “in response to suggestions from the public to make it easier to distinguish from the 1,000-peso bank note.”

“Compared with the current color of the 100-peso bank note in circulation, the new 100-peso bank note will have stronger mauve or violet color on the obverse and reverse sides,” it said. All other features of the P100 bill will stay the same, it added.

The BSP said it would henceforth print only the new 100-peso bank notes with stronger color, but the public could still use and businesses must continue accepting the New Generation Currency P100 bills with fainter color.

“The current 100-peso bank notes can still be used for daily transactions for payment of goods and services and will commingle with the new 100-peso bank notes with stronger mauve or violet color until supplies of the first version last,” the BSP said.

Taxi drivers

Taxi drivers like Wilson Arcilla, 31, welcomed the BSP move to make the P100 bill more distinct from the P1,000, as they were having difficulty when giving their passengers’ change, especially at night.

A cabdriver for four years now, Arcilla narrated in an interview on Sunday that one night, a customer whose fare reached P120 had told him to instead give back P300 as change for the P500 bill paid.

READ MORE...

Arcilla thought he got lucky from the generous passenger, only to find out later when he gassed up that he seemed to have lost P1,000. “That’s when I realized that I may have given a P1,000 bill with two P100 bills as change,” he said.

The seemingly big tipper never contacted him to return the excess change.

Lost money

As a result, Arcilla said he had to work overtime that night to make up for the lost money. Instead of ending his shift at 9 p.m., he had to look for more passengers until 4 a.m. the next day.

Arcilla said he hoped the 100-peso bank notes with stronger violet color would no longer make it difficult for them when giving passengers’ change.

For Arcilla, the P100 and P1,000 bills of the old bank note series, which the BSP dubbed the New Design Series, were easier to distinguish. These bills, introduced in 1985, however, will be demonetized next year.

The BSP reminded the public that bank notes belonging to the New Design Series were no longer accepted in daily transactions since the end of last year.

Those with old bank notes can still exchange their money with New Generation Currency bank notes through authorized agent-banks or the BSP’s cash department, as well as regional branches and offices until Dec. 31.

In 2017, all old bank notes will no longer be accepted in transactions or traded with the BSP and banks, as they will have no monetary value.

Next year, only the New Generation Currency bank notes series being issued since 2010 will remain legal tender in the country.

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RELATED FROM PHILMONEY.BLOGSPOT.CA

Philippine Coins and Banknotes: 100 Peso Bill - New Design Series


One Hundred Piso Banknote-New Design Series

Obverse: Manuel A. Roxas, raising of the Philippine flag and lowering of the American flag during the declaration of Independence in July 4, 1946, Central Bank Seal

Reverse: Central Bank Complex along Roxas Boulevard with an inset image of the former Central Bank Building

Predominant color: Violet
Security thread: 0.75 mm embedded magnetic and metallic; for newer banknotes, 1.4 mm windowed colorshift (magenta-green) with cleartext “100”

Length: 160mm
Width: 66mm
Thickness: 100-118 microns
Material: 20% abaca, 80% cotton

Security Features: security thread, red & blue visible fibers, fluorescent printing, iridescent band, windowed security thread, and micro-printing

Text: "Republika ng Pilipinas", "Sandaang Piso", "Ang salaping ito ay bayarin ng Bangko Sentral at pananagutan ng Republika ng Pilipinas"

The 100-piso banknote became subject of controversy after banknotes printed in France in time for the Christmas season were printed with the President's name misspelled, the first in Philippine history. The banknotes, of which a small amount are in circulation and are still legal tender, spelled the President's name as "Gloria Macapagal-Arrovo" than the correct Gloria Macapagal-Arroyo

HERE IS THE STORY, READ ON...

Philippine Coins and Banknotes: Banknote Error - "Arrovo" on 100 Peso Banknote

The 100-Piso bill became subject of controversy after bills printed in France were printed with the President's name misspelled, the first in Philippine history.

The bills, which are still legal tender, spelled the President's name as "Gloria Macapagal-Arrovo" instead of the correct "Gloria Macapagal-Arroyo".

The error was realized only when the Bangko Sentral ng Pilipinas (BSP) emloyees started withdrawing their salaries from the bank's ATMs. The Central Bank claims that less than 1,000 pieces of this banknote have been released into circulation. The defective banknotes that were still in the vault of Bangko Sentral were shredded.

Opposition Congressman Rolex Suplico of Iloilo commented:
“My Spanish teacher told me ‘rovo’ sounded like ‘robo,’ which means robbery in Spanish. This is from ‘robar,’ which means to rob someone.”

President Arroyo was accused by the opposition of corruption and cheating in the 2004 elections.

The French printer Francois Charles Oberthur Fiduciare, the third-largest private banknote printer in the world, shouldered the cost of 19.477 million or 25% of the total 77.9 million misspelled banknotes. In addition, 58.43 million or 75% of the total were replaced by the printer.

The last time the BSP committed a misspelling in the currency was in the early 1980's. The scientific name of the Philippine Eagle on the 50 centavo coin, Pithecopaga jefferyi" was misspelled as "Pithecobaga jefferyi".


PHILSTAR

The Philippines's consumer economy and Singapore's crisis By Emmanuel J. Lopez (philstar.com) | Updated February 3, 2016 - 11:24am 0 958 googleplus0 0


"It is an insane situation where an insane country will borrow money for the sake of inducing growth by way of investment spending, where in the long run, the country becomes a victim of its own indecisiveness." Xiquinho Silva photo/CC BY-NC

The Philippines’ 4th quarter GDP growth rate of 6.3 percent in 2015 should be a prelude to better and bigger things to come for the local economy in 2016. Despite the rather off target growth of 5.8 for the 2015, it does not fully speak of the performance of the economy in the previous year.

The last two quarters of the previous year show a more than 6 percent growth (6 percent in 3rd quarter and 6.2 percent in the 4th quarter), despite a pathetic performance in the 1st quarter at measly 5.2 percent, thanks but no thanks to the under spending of the government, that literally dragged the economy down the mark.

The economic recovery during the 3rd and 4th quarter at more than 6 percent was primarily induced by a robust consumer spending that has always been the trademark of a developing economy, proving to all and sundry that ours remains a consumer-driven economy. Was there something to be ecstatic about? Think again…

Although other drivers of growth may have accelerated and fueled development just like the services sector that grew by 7.4 percent to complement government spending which grew by 17.4 percent (after waking up from a deep slumber), it was never consistent unlike consumer spending that constantly saves the day for our local economy.

One thing going against a consumer-driven economy is the likelihood of the economy’s deficiency in savings. If we are going to examine the component of the local growth, 60 to 70 percent of our local growth is contributed by consumption spending; while the remainder is spent somewhere with a very small proportion going to savings, if there is anything left at all.

READ MORE...

For an economy to make investment locally or otherwise, it must generate a considerable amount of savings. Remember that a big portion, if not the plurality of investment, generally comes from savings. It should be safe to assume that a country that lacks savings will borrow from other sources to fuel investment.

Imagine an individual without any savings who then borrows money to invest; or put it in another way, a person borrowing money in order to save! It is an insane situation where an insane country will borrow money for the sake of inducing growth by way of investment spending, where in the long run, the country becomes a victim of its own indecisiveness.

The more complicated scenario is that we have an inflation rate of less than 1.4 percent in 2015, which by any standard is an ideal situation where the prices should have maintained its level. This was supplemented by the incessant cut in the oil prices that could have increased the level of savings. But the expected increase is not happening because interest rates have remained depressed.

Is it a tell-tale sign of depression induced by outside forces that includes the China crisis plus the Middle East oil plunge where the threat of mass unemployment still persists? I hope not. Because the issue of depression is perhaps one of the most, if not the most dreadful, economic diseases this world has ever experienced in the past century.

The great depression of 1929 has persisted for almost a decade. It was preceded by the infamous stock market crash of 1929 where prices per share fell by as much as 23 percent in a span of few days.

However, such phenomenon although already experienced primarily in the US economy, is farfetched locally and internationally mainly because of common interests and objectives that each country protects.

Locally, it is not going to occur in the immediate future because ours is an economy highly influenced and dictated by the market forces outside our shores.

An economy that is hard-pressed to achieve a developed country status should have a GDP share in consumer spending less than 60 percent. As a consequence, more than enough is left in the pocket and households can translate to more productive activities like saving.

Considerable portion of the GDP component should come from investment spending, which up to now remains elusive. If the country remains pretty reliant on consumer spending and does not develop long-term income sources like investment spending and industrializing the agricultural sector, we can kiss our bid of becoming an economic tiger goodbye.

Singapore’s economic slump

Singapore, which is known to be the biggest tiger in the ASEAN, is experiencing its worst economic decline in decades forcing economists to restructure its growth forecast the past year. From a projected 2-percent GDP growth rate in the 4th quarter of 2015, economists downgraded it to 1.4 percent. It was also calculated that the economy’s full-year estimate is at 2 percent, down from 2.1 percent.

The culprit to the worst crisis Singapore is experiencing was the decline in demand for the manufacturing sector. According to sources, last year's slump was due to excess supply and overcapacity. It was a glut not supported by demand. Money was cheap, and businesses manufactured in anticipation of much stronger demand, but not much as expected.

What worsened the situation has been the continuous contraction of the economy that brought down the manufacturing sector coupled with the increase in interest rates that literally drove cheap money to savings, worsening the supply glut in the region.

Will this affect or influence regional economy? Find out next Wednesday.

Emmanuel J. Lopez is an associate professor at the University of Santo Tomas and the chair of its Department of Economics. Views reflected in this article are his own. For comments email: doc.ejlopez@gmail.com


PHILSTAR

Coke Femsa pouring in $800 M for Philippine expansion By Marianne Go (The Philippine Star) | Updated February 3, 2016 - 12:00am 0 37 googleplus0 1


COKE FEMSA CEO Ponce

MANILA, Philippines – Newly installed Coca-Cola Femsa Philippines CEO Fabricio Ponce revealed yesterday the company intends to invest up to $800 million, or $200 million a year, to expand its Philippine operations.

In his first meeting with local media yesterday, Ponce said the company remains committed to reinvest all profits in the Philippines up to 2020 despite incurring a $100 million loss in 2014, and achieving a breakeven financial result in 2015.

Coke Femsa Philippines is primarily involved in bottling operations. It operates only in the Philippines and does not export any of its products.

Coca-Cola Atlanta is the beverage parent company.

For 2016, Ponce said Coke Femsa Philippines is projecting a five percent growth, tracking the country’s economic growth.

Last year, the company’s third and fourth quarter growth was at six percent after a dismal first semester.

The new Coke CEO acknowledged this year would be “challenging” for the company as it faces headwinds from the Chinese devaluation and possible developments in Saudi Arabia, specifically involving possible job cuts for overseas Filipino workers.

Ponce warned that a possible loss of jobs in Saudi Arabia or the Middle East would affect the remittances of OFWs to their families here in the Philippines.

READ MORE...

The substantial drop in remittances, Ponce said, resulted in the dismal performance of Coke Femsa in the first half of 2015.

However, Ponce is more hopeful of an improvement this year due to the coming elections which has already resulted in a pick up in beverage sales.

At the same time, though, Ponce said a Chinese devaluation and its subsequent effect on import cost would adversely impact on the production of Coke Femsa as it imports a lot of its raw materials.

Ponce explained the Philippine market is very price sensitive and that Coke products compete not only with other beverage firms, Pepsi-Cola and RC Cola, but also with cellphone load.

Coke controls about 65 percent of the Philippine soda market.

Their best seller, he said, is the P7 Time Out Coke, and a previous attempt to adjust the price upward to P8 immediately resulted in a 50 percent drop in sales.

Fortunately, Ponce said Coke Femsa remains optimistic about the economic prospects of the Philippines, thus the commitment to reinvest its revenues.

Sometime in July this year, the company is proceeding with the installation of two additional PT (plastic bottle) production lines as part of a previously announced $160 million investment program.

The $800 million investment of Coke Femsa, however, appears to be lower than the figure cited by another Coke executive.

In a previous interview with The STAR, Coca-Cola group president for Asia Pacific Atul Singh said Coca-Cola Atlanta, together with its bottling partner for the Philippines Fomento Economico Mexicano S.A.B. de C.V. (Femsa), would invest $1.2 billion until 2020 to expand its facilities and beef up distribution and operations in the country.

“The money would be invested in more manufacturing lines, in trucks, in equipment, in distribution infrastructure, in marketing, in developing people, and training. So it’s a broad spectrum of investments across the board,” Singh said.

“We have high hopes of our business moving forward in the Philippines. The Philippines is a very important market to us and we have strong plans for it,” he added.

Singh said Coca-Cola has already invested $1.5 billion in the Philippines from 2010 to 2014.

He said the investment enhanced its distribution network and created over 2,000 new jobs for Filipinos.

According to Ponce, Coke Femsa currently employs 14,000 Filipinos and has 19 plants spread all over the country.

The Philippines is among the top three markets of Coca-Cola in Asia, with China as the biggest market.


PHILSTAR

Gov't debt hits P5.954 trillion in 2015 By Prinz Magtulis (philstar.com) | Updated February 4, 2016 - 1:31pm 1 116 googleplus0 0


Government liabilities rose 3.8 percent from 2014.

MANILA, Philippines - Debt held by the national government rose last year to nearly P6 trillion, the Bureau of the Treasury reported on Thursday.

Liabilities rose 3.8 percent from 2014 to P5.954 trillion in 2015. Both domestic and foreign obligations increased.

Domestic debts, which accounted for the bulk of the debt pile, went up 1.7 percent to P3.884 trillion.

Their foreign counterparts rose by a faster 8.1 percent to P2.07 trillion.

As a proportion of gross domestic product (GDP) however, debt accounted for 44.8 percent.

This was lower than the 45.4 percent in 2014, Treasury said.

Debt to GDP is a measure closely watched by credit raters. It indicates the capacity of the government to pay for its debts.

While there is no ideal measure, governments usually try to limit debt-to-GDP at 50 percent or lower.

"The Philippines is fully committed to a proactive liability management strategy to keep our debt structure resilient," Finance Secretary Cesar Purisima said in a statement.

---------------------------------

RELATED FROM FILIPINO POST ONLINE

DROPPING DOLLAR NOT MAKING SENSE FOR OFWS
published by asingh on Tue, 01/26/2016 - 19:43

The falling Canadian dollar and global economic slowdown in cash remittances from overseas Filipinos could leave the Philippines more exposed to global cyclical currents warn bankers.

Cash remittances from land-based Filipino workers amounted to $17.6 billion, while that of sea-based Filipino workers reached $5.2 billion from January to November last year.

About 79 percent of the cash remittances came from the US, Saudi Arabia, the United Arab Emirates, Singapore, the United Kingdom, Japan, Canada, and Hong Kong.

Manila depends heavily on the remittances by more than 10 million Filipinos overseas.

HSBC economist Joseph Incalcaterra said the share of remittances to both the gross domestic product (GDP) and the current account (CA) would decrease as the Philippine economy moves into a period of sustained higher growth compared to the past decades.

“This means the Philippines’ natural external buffer that has provided a back-stop for growth in times of challenges may erode, leaving the Philippines slightly more exposed to global cyclical currents,” he said.

HSBC said remittances not only drive private consumption, which accounts for almost 75 percent of Philippine GDP, but keep the country’s current account entrenched in surplus, offsetting the structural trade deficit.

“Remittance growth has been remarkably resilient over the years, shrugging off both financial crises and economic slowdowns alike … until 2015,” he added.

The Bangko Sentral ng Pilipinas has slashed the growth target for cash remittances to four percent instead of five percent for 2015 and 2016 due to the global economic slowdown and the depreciating currencies in host countries against the greenback.



Incalcaterra said a confluence of factors could explain the dramatic slowdown in the second half of 2015. “Geographically, the sharp decline in remittances from the US has been the main source of the deceleration, while remittance growth from Asia and the Middle East remains relatively strong,” he noted.

He also blamed stricter financial regulations, higher bank transaction costs, foreign exchange weakness in domicile currencies, for the sluggish growth of remittances.

“There are also some tail risks from tensions in the Middle East, such as further political instability or unlikely currency devaluations,” Incalcaterra added.

BSP deputy governor Diwa Guinigundo earlier downplayed the impact of the rising tension between Saudi Arabia and Iran on the growth of cash remittances.

“In the past we had the 1991 Gulf War and the 2003 second gulf war, but our overseas Filipino workers were able to move elsewhere and find alternative employment,” he said.

However, he said the flexibility of overseas Filipinos would be affected if the conflict spreads to other countries in the Middle East.

“My concern is that if the Saudi-Iran conflict extends beyond their respective borders and affect all the contiguous jurisdictions, then we will have some challenges,” Guinigundo warned.

Incalcaterra said services exports from the business process outsourcing (BPO) and related sectors would partly offset the relative decline of foreign currency earnings from remittances.

“While services exports, driven by BPO, will likely overtake remittances this year, from a net export perspective it will not offset the magnitude for several years according to our calculations,” he added.

He said the current account surplus could nonetheless weaken by 2017 unless the trade deficit sees a sustained improvement.

Many of those recent immigrants send about $500 per month back to family in the Philippines.



Mel Vincent Tejero, who came to Canada from the Philippines in 2004, said he sends $300 back to his wife and daughter every two weeks. The low Canadian dollar has forced him find another job to continue with the regular transfers, he said.
"I work two jobs at the moment to be able to keep up and support them," he told CBC in an interview..

Christine Straehle, a migration expert at the University of Ottawa, said the low dollar could also be difficult for temporary foreign workers.

"Most of these people work in low- to middle-income jobs. Most people will send $500, maybe $800 per month. And every exchange rate, every worsening of the Canadian dollar in relation to the American dollar will affect the rate of return for the people back home," she said.

Dilip Ratha, the World Bank's lead economist on remittances, says international migrants will send $601 billion to their families in their home countries this year, with developing countries receiving $441 billion.

More than $23 billion was sent from Canada to other countries in 2014, according to the World Bank. About $2 billion of that was transferred directly to the Philippines, the CBC said.

Ratha, said that while the impact of Canada's weakening dollar won't be felt right away, it has the potential to be significant.

"A fall of, let's say, 25 per cent in the currency could translate to maybe a 10-per-cent impact on the remittance flows from Canada to the Philippines. So, we're talking about an impact of about $200 million," Ratha said.


PHILSTAR

Forex reserves dip to $80.16 B in Jan By Lawrence Agcaoili (The Philippine Star) | Updated February 6, 2016 - 12:00am 0 0 googleplus0 0


BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) went down to $80.16 billion in January from $80.67 billion in December. Philstar.com/File photo

MANILA, Philippines – The country’s foreign exchange reserves declined in January due to strong outflows arising from payments by the national government of its maturing foreign debt, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) went down to $80.16 billion in January from $80.67 billion in December.

Tetangco said the $508 million decline was due to the foreign exchange outflows arising from payments by the government of its maturing foreign exchange obligations, as well as the central bank’s foreign exchange operations.

The outflows, Tetangco explained, were partially offset by inflows from the national government’s net foreign currency deposits and income from the central bank’s investments abroad as well as the revaluation of its gold holdings due to higher price in the international market.

The GIR is the sum of all foreign exchange flowing into the country. The reserves serve as buffer to ensure the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks.

If it deems necessary, the BSP buys dollars from the foreign exchange market to prevent sharp depreciation of the peso. It can also sell to avoid sharp appreciation of the local currency.

READ MORE...

Tetangco said the end-January GIR level remains ample as it can cover 10.2 months’ worth of imports of goods and payments of services and income. It was also equivalent to 5.5 times the country’s short-term external debt based on original maturity and four times based on residual maturity.

The central bank lowered its GIR level forecast for 2015 to $80.7 billion from the original target of $81.6 billion projected last May.

However, the country’s GIR level slightly missed the revised target as it reached $80.67 billion in 2015 from $79.54 billion in 2014.

For this year, the BSP sees the GIR hitting $82.7 billion, equivalent to nine months import cover.

The BSP now expects cash remittances from Filipinos abroad growing by four percent instead of the original projection of five percent for 2015 and 2016.

It also expects the current account surplus of $5.7 billion this year lower than the projected level of $8.9 billion in 2015 due mainly to the expected large increase in the imports of goods, notwithstanding improvements in the services and secondary income accounts.

The country’s strong macroeconomic fundamentals would help the Philippines survive external shocks brought about by uncertainties caused by the interest rate lift off in the US as well as the economic slowdown in China, Tetangco said.

Tetangco earlier said the country’s external current account remained in surplus and improvements in external payments dynamics also served to help shield the economy and the domestic financial markets from financial market volatility.

“In the presence of mounting external shocks, keeping one’s own house in order by sustaining strong macroeconomic fundamental serves as our first line of defense,” he said.


TRIBUNE

Decline in RP’s FDIs just a blip — DoF exec Written by Tribune Wires Thursday, 04 February 2016 00:00

Foreign direct investments (FDIs) to the Philippines fell 4.9 percent year-on-year in October 2015 but an economist of the Department of Finance (DoF) does not consider this a big deal.

“The small decline in 2015 may just be a blip considering that FDI has been rising 53.1 percent annually for the three years, 2012-14,” Finance Usec and DoF economist Gil Beltran said, based on the agency’s Economic Bulletin.

Bangko Sentral ng Pilipinas (BSP) data show that FDIs posted net inflows of $4.98 billion in the first 10 months of 2015, down from the $5.24 billion same period in 2014.

Of the total, 56.3 percent was accounted for by net investments in debt instruments, 30.9 percent by net equity placement and 12.8 percent by reinvested earnings.

Placements in the manufacturing sector rose 155 percent year-on-year to $624 million followed by investments in financial and insurance activities, $531.83 million; and construction, wholesale and retail trade among others, each of which has total investments of over $100 million.

Beltran said the big jump of investments in the manufacturing and financial sector is seen to be sustained in the coming quarters due to additional reforms.

“Planning units in departments involved in other sectors may need to look for opportunities for reform to experience similar FDI resurgence,” he added.

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RELATED FROM PHILSTAR

FDI up to $451 M in October By Lawrence Agcaoili (The Philippine Star) | Updated January 12, 2016 - 12:00am 0 0 googleplus0 0


Data released by the central bank showed net FDI inflows amounted to $451 million in October last year, $6 million higher than the $445 million in October 2014. Philstar.com/File

MANILA, Philippines - Net foreign direct investments (FDI) expanded in October, reflecting favorable investor sentiment, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the central bank showed net FDI inflows amounted to $451 million in October last year, $6 million higher than the $445 million in October 2014.

“Favorable investor sentiment on the back of the country’s strong macroeconomic fundamentals resulted in net inflows across all FDI components,” the BSP said.

Gross domestic product (GDP) growth accelerated to six percent in the third quarter of 2015 from the revised 5.8 percent in the second quarter amid robust domestic demand and improving government spending.

This brought the GDP expansion to 5.6 percent in the first nine months of last year, way below the seven to eight peercent target penned by economic managers for 2015.

On the other hand, inflation eased to 1.4 percent last year from 4.1 percent in 2014 amid stable food prices, lower oil prices, and cheaper utility rates. This was way below the BSP target of two to four percent.

Equity placements plunged almost 50 percent to $109 million in October last year from $217 million in October 2014, while withdrawals surged 92.2 percent to $8 million from $4 million.

Data showed the bulk of equity capital placements came from Korea, Japan, US, Thailand, and Taiwan.

By economic activity, equity capital investments were channeled mainly to financial and insurance; real estate activities; manufacturing; administrative and support service as well as electricity, gass, steam, and airocnditioning supply.

On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country declined 1.9 percent to $62 million in October last year from $63 million in the same month in 2014.

The BSP said intercompany borrowings from foreign direct investors by their subsidiaries or affiliates in the Philippines surged 71.1 percent to $287 million in October from $168 million and helped offset the sharp drop in equity placements and higher withdrawals.

For the first 10 months last year, net FDI reached $4.98 billion, 4.9 percent lower compared to $5.25 billion in the same period in 2014.

Equity capital investments increased 14 percent to $1.54 billion from January to October last year on account of the 27.7 percent increase in gross placements to $2.34 billion, while withdrawals jumped 66.6 percent to $797 million from $478 million.


Chief News Editor: Sol Jose Vanzi

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