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

BANGLADESH BANK CHIEF READY TO QUIT AMID $100-M HACKING SCANDAL
[The money stolen from the Bangladesh central bank made its way to the other side of the world. Some $80 million are believed to have ended in the Philippines, and further diverted to casinos and then to Hong Kong, according to bank officials. One $20 million transaction was directed to a non-profit organization in Sri Lanka.]


MARCH 15 -Bangladesh Bank Governor Atiur Rahman told reporters he was ready to quit after spending seven years in the top bank post. Mirza Salman Hossain Beg/BYLC Office
NEW DELHI — The head of Bangladesh's central bank said Tuesday he would resign from his post, after hackers managed to divert $101 million from the country's account with the Federal Reserve Bank in New York. Bangladesh Bank Governor Atiur Rahman told reporters he was ready to quit after spending seven years in the top bank post. "If my resignation is better for the Bangladesh Bank, I have no hesitation," he said, and that he waiting for the prime minister's response. The finance minister was expected to make a public statement later Tuesday. Last week he said Bangladesh was considering suing the U.S. bank over the loss of the funds, which are thought to have been transferred to the Philippines and Sri Lanka. The New York Fed said it was working with Bangladesh Bank to resolve the case but saw no evidence its own systems were compromised. THE FULL REPORT...RELATED, Malware suspected in Bangladesh bank hacking... AND Hackers' typo botches $1bn cyber heist targeting Bangladesh bank and New York Federal Reserve...

ALSO: Amid links to stolen Bangladesh fund Phl banks safe from credit downgrade – Tetangco


MARCH 20 -Tetangco
The country’s banking system is far from being threatened with a credit rating downgrade, according to Bangko Sentral ng Pilipinas Governor Amando Tetangco.
Tetangco admitted there are risks associated with the unfolding money laundering issue involving an Asian central bank, the US Federal Reserve and a domestic universal bank. “If you look at the behavior of the financial markets for the last several days, there has been no indication that there is a negative impact,” Tetangco said during the national convention of the Chamber of Thrift Banks (CTB) yesterday. However, regulators concede the country’s banking system is faced with challenges associated with international money laundering. “That is why the AMLC (Anti-Money Laundering Council) has been working with Congress to expand the coverage of the law and include other covered institutions like casinos, real estate,” Tetangco told reporters. CTB president Rommel Latinazo said the group is discussing recommendations on lifting the bank secrecy law, and in the longer term implementing some amendments to the law. “Yes, maybe lifting some restrictions within the law could be done in relation to the ongoing Senate hearings,” Latinazo said. “But there are a lot of issues or parameters that must be agreed upon before starting serious law amendments.” READ MORE...

ALSO: By Babe Romualdez - Lorenzo’s ‘rep’
[For Lorenzo, “a good reputation is more important than money” – and he is not the type who would squander the good name he has built over the decades for a few million pesos that he could easily earn as a professional fund manager.]


MARCH 15 -RCBC president and chief executive officer Lorenzo Tan
The Senate is set to conduct a hearing on the $81 million that hackers reportedly stole from the Bangladesh central bank’s account at the Federal Reserve Bank of New York, then allegedly deposited in some accounts in local banks that include the Rizal Commercial Banking Corp. Being implicated in the money laundering scheme is RCBC’s Jupiter branch manager who tried to leave the country with her family but was prevented by authorities following a lookout order issued by the Department of Justice. From the information we received, remittances of such nature can happen without the express knowledge of the top management or even the major stockholders for that matter. As usual, speculations and innuendos even without proof, are starting to circulate. It is certainly not fair because it can seriously damage reputations that have been painstakingly built over the years, among them the reputation of RCBC president and CEO Lorenzo Tan. The bank executive had offered to go on leave while the investigation is ongoing to remove any hint of whitewash and give the bank a free hand in the investigation, but the RCBC board as well as the principal stockholders, the Yuchengco family, absolutely refused his offer, saying that their trust in him is “intact and unshaken.” Friends and associates of Lorenzo are aghast at those badmouthing him because they vouch for him as a totally trustworthy person who is professional in all his dealings – a reputation he has developed over the decades. Many of his friends told me the bank manager’s statements during an interview, saying that she “assumed” Tan knew about the $81 million transaction, is already proof the bank president did not have any knowledge about the shady activities involving the bank manager. READ MORE..ALSO, Watch your bank accounts -RCBC...,

ALSO: 2015 budget deficit widest in two years
["This is the direct result of good governance -- a marked break from the past that we ought to continue towards the next administration," Finance Secretary Cesar Purisima was quoted as saying in a statement.]


MARCH 17 -It was the widest deficit by the Aquino government since 2013's P164.062 billion. A deficit means the government spent more than it earned. Philstar.com/File
The Aquino administration posted its widest budget deficit in two years last year -- albeit still below target-- after spending caught up and revenues contracted in the last month of 2015.
The budget gap amounted to P121.7 billion, up from P73.1 billion a year ago, the Bureau of the Treasury reported on Thursday. It was the widest deficit by the Aquino government since 2013's P164.062 billion. A deficit means the government spent more than it earned. As a proportion of economic output, the deficit accounted for 0.9 percent of gross domestic product (GDP), higher than 0.6 percent the previous year but below the two-percent cap set last year. "This is the direct result of good governance -- a marked break from the past that we ought to continue towards the next administration," Finance Secretary Cesar Purisima was quoted as saying in a statement. Critics have hit the government for persistently falling behind its spending plans despite double-digit revenue growth, which they said partly caused the GDP growth slowdown last year to 5.8 percent. Broken down, last year's revenues grew 11 percent to P2.109 trillion, while expenditures expanded 13 percent to P2.231 trillion. Disbursements, in particular, recorded its fastest growth in three years last year, Treasury data showed. This was partly thanks to a spending uptick in December, which widened the deficit that month alone to P75.1 billion, a three-year high. Revenues went down six percent, while expenditures rose nine percent that month. "(I am) very happy about the improvements in spending," said Nicholas Antonio Mapa, research officer at Bank of the Philippine Islands, in an e-mail. "I would like to see where the increases came from. Hopefully, it's widespread and not centered on the government bonuses and salary increases," he added. As a proportion of GDP, revenues accounted for 15.9 percent, of which taxes cornered 13.7 percent. Expenditure effort, on the other hand, reached 16.8 percent. READ MORE..

ALSO: RP economy most attractive in SE, says property expert
[KMG: "
Within the past three decades, the Philippines has started its transformation from a highly agricultural economy to a service-based one, almost entirely disregarding industrialization that is common to most economies.” The Philippine economy has shown remarkable growth in the past few years, being one of the fastest-growing economies in Southeast Asia, property consultant KMC-Mag Group said.]


MARCH 17 -The Philippine economy has shown remarkable growth in the past few years, being one of the fastest-growing economies in Southeast Asia, property consultant KMC-Mag Group said. Aside from its gross domestic product (GDP) growth, the Philippine economy has also been labeled as one of the most attractive structural stories not only within the region, but also in the global scope. “Within the past three decades, the Philippines has started its transformation from a highly agricultural economy to a service-based one, almost entirely disregarding industrialization that is common to most economies,” Michael McCullough, co-founder and managing director of KMC-Mag Group, the Philippine associate of global property advisor Savills, told select business reporters at yesterday’s media briefing at the Shangri-La hotel. “Private services currently account for roughly half of the gross domestic production, which makes it the biggest sector in the economy. While primary production, which are agriculture, hunting, forestry and fishing, and the industrial sector have continuously decreased. Services have increased its share to 57 percent of GDP in 2015,” he added. This shift has contributed to the high economic performance of the country. Economic growth under the current administration, which started in 2010 and will end on June 30, averaged 6.2 perent, making it the best rate since the 1970s. The 6.3 percent economic growth in the fourth quarter of 2015 witnessed the growth of the services sector, which expanded by 7.4 percent following a 7.2 percent upsurge in the second quarter. With the increasing number of global companies transferring operations and production and manufacturing operations to the country, more Filipino micro, small, and medium enterprises enter the global value chain, creating more employment and demand for spaces. McCullough said the growth of outsourcing and offshoring companies in the country has resulted in a remarkable demand in Metro Manila’s office spaces. READ MORE...ALSO, DBS cuts inflation forecast for the Philippines for this year...  

ALSO:
By Rey Gamboa - Alarm bells for agri sector


MARCH 15 -By Rey Gamboa
We know how bad our agriculture sector has been performing lately. In terms of average growth, it lags significantly behind the country’s economic gross domestic product stats for some years now. Our farmers’ products poorly compete with the onslaught of cheap imports of many agricultural products, especially now that tariff barriers with ASEAN countries continue to be lowered or are being fully eliminated. Then too, in terms of competitiveness, compared to other Asian countries, the country’s agricultural production cost is much higher for almost all products, making the Philippines vulnerable to large-scale smuggling. All these have brought more misery to our farmers since they have to compete with the entry of lower-priced imports as well as slashed prices of those smuggled in. Even when their products are more expensive compared to others in Asia, Filipino farmers work their butts off, but earn almost nothing. This is the pathetic state of our farmers, comprising about a third of the country’s workforce. They are an endangered lot. It is not hard to understand why their children choose other means of livelihood other than farming – that is, if they don’t die of malnutrition and untreated illnesses first. Crippling effect of smuggling Rampant smuggling has risen over the years, and has been valued at close to P180 billion during the five-year period from 2010 to 2014. This is almost twice the estimated value during the previous five years, from 2005 to 2009. For the government, this represents lost revenues that otherwise could have been channeled to the current administration’s pet projects in health, education, and the military. Rice smuggling is the most prevalent, accounting for about half of the valued smuggling during the last five years in review. The next biggest smuggled are pork and sugar. Smuggling has clearly crippled the viability of rice farmers and hog raisers concerned. The sugar industry, on the other hand, has a different problem. Aside from suspicions of drug smuggling, the recent entry of significant amounts of sugar contraband are feared to drive sugar retail prices lower. READ MORE...ALSO,
Abaca exports down in the 10 months to October, remains on the growth track... AND BSP approves new agriculture financing...


READ FULL MEDIA REPORTS HERE:

Bangladesh bank chief to quit amid $100-M hacking scandal


Bangladesh Bank Governor Atiur Rahman told reporters he was ready to quit after spending seven years in the top bank post. Mirza Salman Hossain Beg/BYLC Office

NEW DELHI, MARCH 21, 2016 (PHILSTAR)  (Associated Press) | Updated March 15, 2016 - The head of Bangladesh's central bank said Tuesday he would resign from his post, after hackers managed to divert $101 million from the country's account with the Federal Reserve Bank in New York.

Bangladesh Bank Governor Atiur Rahman told reporters he was ready to quit after spending seven years in the top bank post.

"If my resignation is better for the Bangladesh Bank, I have no hesitation," he said, and that he waiting for the prime minister's response.

The finance minister was expected to make a public statement later Tuesday. Last week he said Bangladesh was considering suing the U.S. bank over the loss of the funds, which are thought to have been transferred to the Philippines and Sri Lanka.

The New York Fed said it was working with Bangladesh Bank to resolve the case but saw no evidence its own systems were compromised.

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RELATED FROM ABS-CBN (EARLY REPORT)

Malware suspected in Bangladesh bank hacking Serajul Quadir, Reuters Posted at 03/12/16 2:58 AM


Bank Governor Atiur Rahman

DHAKA - Investigators suspect unknown hackers managed to install malware in the Bangladesh central bank's computer systems and watched, probably for weeks, how to go about withdrawing money from its U.S. account, two bank officials briefed on the matter said on Friday.

More than a month after hackers breached Bangladesh Bank's systems and attempted to steal nearly $1 billion from its account at the Federal Reserve Bank of New York, cyber security experts are trying to find out how the hackers got in.

FireEye Inc's Mandiant forensics division is helping investigate the cyber heist, which netted hackers more than $80 million before it was uncovered.

Investigators now suspect that malware that allowed hackers to learn how to withdraw the money could have been installed several weeks before the incident, which took place between Feb. 4 and Feb. 5, the officials said.

Investigators suspect the attack was sophisticated, describing the use of a "zero day" and referring to an "advanced persistent threat", the officials said.

A zero day is a vulnerability in software that has yet to be identified or patched. Hackers leverage this hole to plant malware on the target computer.

Advanced persistent threat is a long-term attack on a system, where hackers remain inside the target, for months, and sometimes even years.

So far investigators have not found any proof of involvement of the central bank staff in Bangladesh, one of the officials said, but added that the probe was continuing.

Unravelling the mystery behind one of the largest cyber heists in history is crucial for security in a connected world.

Understanding how it happened could help banks shore up security of their computer systems and payment networks that form the backbone of global commerce.

Security experts say the perpetrators had deep knowledge of the Bangladeshi institution's internal workings, likely gained by spying on bank workers.

STOLEN CREDENTIALS

Bangladesh Bank officials have said hackers appeared to have stolen their credentials for the SWIFT messaging system, which banks around the world use for secure financial communication.

The Fed, which provides banking services to some 250 central banks and other institutions, has said its systems were not compromised.

The Bangladesh central bank had billions of dollars in its current account, which it used for international settlements, officials have said.

The money stolen from the Bangladesh central bank made its way to the other side of the world.

Some $80 million are believed to have ended in the Philippines, and further diverted to casinos and then to Hong Kong, according to bank officials.

One $20 million transaction was directed to a non-profit organization in Sri Lanka.

But the unusually large transaction for the island nation and a misspelling of the NGO's name raised red flags that helped bring the robbery to light. The transaction was blocked as was another huge payment instruction that was for between $850870 million.

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RELATED FROM THE IB TIMES ONLINE

Hackers' typo botches $1bn cyber heist targeting Bangladesh bank and New York Federal Reserve By William Watkinson March 11, 2016 02:09 GMT 311 Bangladesh Bank


The hackers targeted the Bangladesh central bank

Hackers would have stolen $1bn (£700m; €890m) in an online heist last month involving the Bangladesh central bank and the New York Federal Reserve if it had not been for a crucial spelling mistake.

The unknown thieves still managed to get away with $80m (£56m: €71m), making it one of the largest known bank thefts in history.

According to banking officials, the hackers misspelled the word "foundation" when trying to steal from the Shalika Foundation. They actually wrote "fandation" which then prompted a routing bank, Deutsche Bank, to seek clarification from Bangladesh central bank, which halted the transaction.

The hackers had initially breached Bangladesh Bank's online systems and stole credentials for payment transfers. The thieves then made over 30 requests for the Federal Reserve Bank of New York to transfer money from the Bangladesh Bank's account to entities in the Philippines and Sri Lanka.

Speaking to Reuters, two senior bank officials said that four requests to transfer a total of about $81 m (£57m; €72m) to the Philippines went through. But on the fifth attempt, to transfer $20m (£14m; €18m) to a Sri Lankan non-profit organisation, the hackers misspelled the name of the NGO.

The hacking had occurred at some point between 4 and 5 February this year when an investigation was launched to find the perpetrators. Bangladesh Bank says its has recovered some of the money and is trying to recover more from the Philippines.

The attempted transactions were coupled with an unusually high number of payment instructions to private entities which raised suspicions at the New York Fed, which also alerted the Bangladesh Bank. The source said that the bank has billions of dollars in an account with the Fed, supposed to be for international settlements.

According to the officials the total the transactions that were stopped by the banking institutions totalled $870m (£609m; €777m). According to the news organisation Bangladeshi Finance Minister Abul Maal Abdul Muhith said that the country may resort to suing the Fed to recover the money. "The Fed must take responsibility," he said.


PHILSTAR

Amid links to stolen Bangladesh fund Phl banks safe from credit downgrade – Tetangco By Ted Torres (The Philippine Star) | Updated March 19, 2016 - 12:00am 0 156 googleplus0 0


Tetangco

MANILA, Philippines - The country’s banking system is far from being threatened with a credit rating downgrade, according to Bangko Sentral ng Pilipinas Governor Amando Tetangco.

Tetangco admitted there are risks associated with the unfolding money laundering issue involving an Asian central bank, the US Federal Reserve and a domestic universal bank.

“If you look at the behavior of the financial markets for the last several days, there has been no indication that there is a negative impact,” Tetangco said during the national convention of the Chamber of Thrift Banks (CTB) yesterday.

However, regulators concede the country’s banking system is faced with challenges associated with international money laundering.

“That is why the AMLC (Anti-Money Laundering Council) has been working with Congress to expand the coverage of the law and include other covered institutions like casinos, real estate,” Tetangco told reporters.

CTB president Rommel Latinazo said the group is discussing recommendations on lifting the bank secrecy law, and in the longer term implementing some amendments to the law.

“Yes, maybe lifting some restrictions within the law could be done in relation to the ongoing Senate hearings,” Latinazo said. “But there are a lot of issues or parameters that must be agreed upon before starting serious law amendments.”

READ MORE...

Philippine Business Bank chairman emeritus and former CTB president Alfredo Yao was more cautious.

“We must be careful with the bank secrecy law, we might open a Pandora’s box,” Yao said. “It would be better to zero in on certain provisions in the law that may assist the ongoing money laundering hearings.”

Tetangco said it was a good time to revisit both the anti- money laundering and bank secrecy laws.

“We have to strengthen the anti-money laundering framework and make sure not to become a center for money laundering,” he said.

Tetangco refused to answer a number of specific questions related to the ongoing Senate hearings.

“I am constrained from discussing the specifics because of the confidentiality provisions under existing laws. But in principle, if there is liability discovered in the course of investigation, then the appropriate action should be taken,” he said.


PHILSTAR

Lorenzo’s ‘rep’ SPYBITS By Babe G. Romualdez (The Philippine Star) | Updated March 15, 2016 - 12:00am 2 52 googleplus0 0


RCBC president and chief executive officer Lorenzo Tan

The Senate is set to conduct a hearing on the $81 million that hackers reportedly stole from the Bangladesh central bank’s account at the Federal Reserve Bank of New York, then allegedly deposited in some accounts in local banks that include the Rizal Commercial Banking Corp.

Being implicated in the money laundering scheme is RCBC’s Jupiter branch manager who tried to leave the country with her family but was prevented by authorities following a lookout order issued by the Department of Justice.

From the information we received, remittances of such nature can happen without the express knowledge of the top management or even the major stockholders for that matter.

As usual, speculations and innuendos even without proof, are starting to circulate. It is certainly not fair because it can seriously damage reputations that have been painstakingly built over the years, among them the reputation of RCBC president and CEO Lorenzo Tan.

The bank executive had offered to go on leave while the investigation is ongoing to remove any hint of whitewash and give the bank a free hand in the investigation, but the RCBC board as well as the principal stockholders, the Yuchengco family, absolutely refused his offer, saying that their trust in him is “intact and unshaken.”

Friends and associates of Lorenzo are aghast at those badmouthing him because they vouch for him as a totally trustworthy person who is professional in all his dealings – a reputation he has developed over the decades.

Many of his friends told me the bank manager’s statements during an interview, saying that she “assumed” Tan knew about the $81 million transaction, is already proof the bank president did not have any knowledge about the shady activities involving the bank manager.

READ MORE...

Lorenzo is a self-made man and known in the banking industry as a “turnaround specialist” for his Midas-like quality of turning troubled financial institutions into profitable businesses. For Lorenzo, money has never been a personal obsession – after all, he is more than comfortably settled many times over, what with his successful career in the corporate world, to the point that he actually gets “harassed” by job offers even outside of the country. If one can also recall, Sarangani Rep. Manny Pacquiao bought Lorenzo’s Cambridge Circle mansion in Forbes for P388 million in 2012 only because Pacquiao was very insistent.

Lorenzo and his brothers Nestor (president of BDO) and Raul (a top executive in Silicon Valley) grew up in Nueva Ecija and were raised by their parents, lawyer Rufino and Erlinda Tan, not to be spoiled brats. Even as kids, they were taught by their mother to handle money in a responsible manner, inculcating in them the value of saving by gifting them with piggy banks – which perhaps partly explains why Lorenzo and Nestor are now successful bankers. Rufino, on the other hand made sure the boys learned to speak Filipino fluently, only hiring maids who were fluent in Tagalog because “it is our national language.”

For Lorenzo, “a good reputation is more important than money” – and he is not the type who would squander the good name he has built over the decades for a few million pesos that he could easily earn as a professional fund manager.

Al Gore warns of warming ocean waters around Phl


This photo taken on March 12, 2016 shows former US vice-president Al Gore (C) talking to Philippine Senator Loren Legarda (L) and Mayor Alfred Romualdez during a visit to the mass grave for victims of super typhoon Haiyan, in Tacloban City, central Philippines. AFP

Former US vice president and Nobel Peace Prize winner Al Gore reportedly became emotional during his visit to Tacloban, which bore the brunt of the devastation brought by Typhoon Yolanda in November 2013.

Accompanied by Senator Loren Legarda – who is the UN champion for disaster risk reduction and climate change adaptation – Gore met with Tacloban Mayor Alfred Romualdez and went to one of the barangays that was almost wiped out by the super typhoon.

Gore said his heart went out to the people of Tacloban which has been dubbed as “ground zero.” The former US vice president was visibly affected when he saw the mass cemetery where the typhoon victims were buried, according to our Spy Bits source.

Gore warned the Philippines is particularly vulnerable to climate change, especially with the ocean waters around the country warming at a faster rate compared to others, leading to a rise in sea levels and stronger typhoons with devastating effects.

While Gore’s warning is an inconvenient truth, it is something that we must all pay close attention to, lest the wrath of nature hits us with fatal consequences once again.

Boeing wins bigger deal in China

Philippine Airlines was choosing between Boeing and Airbus for additional planes that would serve nonstop flights from Manila to the US – and ended up placing a purchase order for six A350-900s worth $1.7 billion with an option to buy six more in the future.

Boeing, however, more than made up for its loss with the PAL deal because it sold a record number of 200 aircraft to China last year, with 28 of them wide-bodied 787 Dreamliners, according to reports. Not surprisingly, the soaring response from the Chinese market has encouraged Boeing to open a finishing facility in a still undisclosed location in China for single-aisle jets.


BABE ROMUALDEZ

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ALSO FROM THE INQUIRER

Watch your bank accounts SHARES: 114 VIEW COMMENTS By: Ma. Ceres P. Doyo @inquirerdotnet Philippine Daily Inquirer 04:22 AM March 17th, 2016

“I just read it in the Inquirer.” “When it was already in the papers.” “So nauna sa dyaryo (it came out first in the newspaper).”

I heard these at the Senate hearing two days ago where persons of interest gave their accounts on how they learned cyberhackers had siphoned $81 million from Bangladesh’s central bank account at the Federal Reserve Bank of New York and sent it to the Philippines for laundering.

When red flags popped up, the Anti-Money Laundering Council (AMLC) followed the trail, but not fast enough. Much of the money had already gone through suspicious bank accounts at RCBC Jupiter, to a money remittance firm, then to a person operating in a casino, and then to no one knows where.

To paraphrase an AMLC official’s words, given the magnitude of the amount, and the process it went through, this operation must have been planned a long way back.

Several bank accounts with a measly $500 in initial deposit were opened middle of last year and lay dormant until …

Every time I heard the Inquirer’s report mentioned at the hearing, I could not help thinking: Our business reporter knew about it earlier than most of you people did? Using street Pinoy journalese, I say to the outscooped (in this case, people who ought to have known): “Nakatulog kayo sa pansitan (You were caught dozing in the noodle house)?”

They should start watching the TV series “CSI: Cyber,” which is about the FBI’s Cyber Unit tracking down cybercriminals, starring Ted Danson et al. I do learn a lot from the different “CSI” (crime scene investigation) shows and how scientific methods are used to solve crimes. The dramatized plots may be fictitious but they are not far from reality.

I watched the Senate hearing with keen interest, and listened to the questions of the senators and the answers of the persons of interest. I could not help conjuring a movie script based on the cross-country scenario, specially where and how it began. Indeed, this one’s for “CSI: Cyber.”


Maia Santos-Deguito, Rizal Commercial Banking Corporation (RCBC) branch manager, testifies

That’s the cinematic part.

What I found alarming was businessman William So Go’s disclosure (if true) that he did not know a bank account had been opened in his name at RCBC Jupiter. He said bank manager Maia Deguito admitted it to him when she met with him to apologize and even offered him P10 million to ease his woes. Go said he got to know Deguito when she was the branch manager of an EastWest bank branch where he has an account. That was before Deguito transferred to RCBC. But Go said he was not an RCBC Jupiter account holder.

How in heaven’s name did Deguito open an RCBC account for him? Why did she pick him?

And where are the other four RCBC account holders through whose accounts hot money also passed? Are their names those of real persons?

What if one day you wake up to find that huge sums had passed through your bank account without your knowledge?

Or worse, that someone, a bank manager no less, opened an account in your name, for money laundering purposes?

And that you are now under investigation? Who will believe you that you had nothing to do with it? How do innocent bank account holders protect themselves? And will the truly guilty account holder simply feign innocence and ignorance and get away with it? If something like this could happen in a premier RCBC branch in Makati, it can happen anywhere!

Nongovernment organizations, too, can easily be conduits of hot money.

We have already learned in the case of the PDAF (Priority Development Assistance Fund) scam that fly-by-night NGOs were used by politicians in cahoots with alleged scam queen Janet Napoles (now in jail and on trial) to plunder government funds. They set up NGOs with fancy names that suggested the poor were top priority.

Even NGOs and Church agencies of good standing led by highly respected ecclesiastics can fall victim to sticky fingers in their ranks (I know a case right now!) but sometimes these timorous men in robes are inclined to “let it go” without thinking that the missing Church funds were raised with much effort in countries where they came from and that these were meant for human development purposes.

To use a pop acronym, WWJD (what would Jesus do)? He would ask these ecclesiastics why they were not good stewards and what they did to the talents he left them.

Today Deguito will disclose what she knows in a closed-door Senate executive session. Why did she do what she did?

Who made her do it? The cryptic statements she made at Tuesday’s hearing suggest that she is not likely to accept sole responsibility for the “suspicious transactions,” notwithstanding RCBC president Lorenzo Tan’s protestations of innocence.

Tan has denied recruiting Deguito into RCBC, as she claimed. He made it known that he does not deal with procedures at branch level, and stressed that “bank managers are five levels beneath me.” Deguito must have felt like a speck of dust.

Remittance firm Philrem’s head Salud Bautista seemed to suggest that delivering P600 million ($12.87 million converted into pesos) and $18 million in cash to a high-roller and junket operator for casinos, Chinese Weikang Xu, was all in a day’s work. Sen. Ralph Recto must have squirmed because Bautista stopped talking and made faces. (She was making faces all the time, making me wish Sen. Miriam Santiago were in the room to stare her down.) She continued to blithely say she did not know Weikang Xu but she had his ID.

How many IDs do we present in order to assert our identity when we make transactions? And yet for Bautista, to deliver that staggering amount of cash she only needed a text message from the RCBC branch manager and a photocopied ID of the recipient. No one asked what that huge amount looks like, and if it fits in a bag.
***

Ma Ceres Doyo
Send feedback to cerespd@gmail.com or www.ceresdoyo.com
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RELATED FROM THE INQUIRER

Deguito lawyer alleges AMLC, RCBC ‘cover-up’ SHARES: 1786 VIEW COMMENTS By: Doris Dumlao-Abadilla @inquirerdotnet Philippine Daily Inquirer 12:46 PM March 17th, 2016

THE LEGAL counsel for Rizal Commercial Banking Corp. branch manager Maia Santos-Deguito has accused the Anti-Money Laundering Council (AMLC) of being negligent or even part of “cover-up” when it singled out the RCBC Jupiter branch manager in money laundering charges.

It’s because of this money laundering case filed by the AMLC before the Department of Justice that has prevented Deguito from spilling the beans, lawyer Ferdinand Topacio said in a press statement on Thursday.

The case was filed on Friday, the day Deguito was barred from leaving the Philippines to go to an alleged vacation trip to Japan.

“There is a conspiracy here that boggles the mind involving extremely wealthy, powerful and well-connected individuals, but we are confident that the Senate will no spare anyone, no matter his or her status and stature in the banking community and in Philippine society, so that the incident under investigation will not be repeated,” Topacio said in a press statement.

Four other individuals charged by AMLC for alleged violation of the anti-money laundering law were RCBC bank account holders who authorities said may just be using aliases.

Bank accounts under the name of Michael Francisco Cruz, Jessie Christopher Lagrosas, Alfred Santos Vergara, Enrico Teodoro Vasquez received the $81 million dirty money wired from the bank account of Bank of Bangladesh with the Federal Reserve Bank of New York last Feb. 5. The money was consolidated under the bank account under the name of businessman William Go – who vehemently denied ownership of the account and accused Deguito of setting this up and being part of the scheme – moved out to other banks and found its way to local casinos and other entities.

The lawyer, however, alleged that RCBC head office was trying to cover up for “certain” bank officials.

“Our client invoked her right to remain silent and against self-incrimination during the last Senate hearing — although we were ready to tell all at that time – because the Anti-Money Laundering Counsel (AMLC) filed a case against her the previous day. We view as suspicious the timing, and the fact that aside from our client and alleged fictitious persons, AMLC did not file a case against other bank officers notwithstanding evidence of their possible complicity in money-laundering. AMLC either did not do its homework, or is trying to protect certain persons by engaging in selective prosecution,” Topacio said.

Topacio said Deguito had requested for an executive session because in the public session – with media and AMLC representatives present, among others – there may be statements made under oath that may be used against her in the pending criminal case.

“Since the penalty she faces is seven to fourteen years imprisonment, the Constitutional safeguards in her favor must be invoked to protect her rights, including the right to be presumed innocent. Therefore, we shall request the Senate Blue Ribbon Committee to exclude the AMLC representatives, since they are the accusers of our client,” Topacio said.

Topacio accused RCBC of trying to cover up for certain bank officials, alleging that the internal investigator had come from ACCRA Law Office, and the lawyers of Lorenzo Tan were also from ACCRA Law.

“We cannot thus be assured of an impartial inquiry within RCBC. Likewise, it was only Ms. Deguito who was suspended, although there are allegations against Mr. Tan, who remains bank president and hence in a position to delete emails, shred documents and influence or intimidate lower-ranking bank officials who may know matters regarding the alleged money-laundering transaction,” Topacio said.

The lawyer called on RCBC president Lorenzo Tan to immediately resign, citing the need to “emulate the sense of delicadeza of the president of the Bank of Bangladesh” and protect the reputation of the Philippine banking system. He claimed that the latter was “already under a very dark cloud of doubt.”

“For whatever it may be worth, we apologize to the people of Bangladesh for whatever harm this incident may have caused them,” Topacio said.

In questioning the integrity of RCBC’s internal probe, Topacio was referring to Francis Lim of Angara Abello Concepcion Regala & Cruz Law Offices (ACCRA) and Maria Cecilia Fernandez-Estavillo, head of legal and regulatory affairs at RCBC.

Based on a March 14 timeline submitted by RCBC to the AMLC, Deguito had expected the big inflow and facilitated the speedy withdrawal, apparently with some help from co-workers within the Jupiter branch of RCBC.

But Lim had said the board committee investigating the matter was composed of members representing the major stockholders. The committee is being assisted by SGV auditors and external lawyers from another law firm, the Poblador Bautista Reyes – not ACCRA, Lim said.

Last Friday, Lim said the RCBC president had offered to go on leave to give the bank a “free hand” in investigating the alleged money laundering issue involving its Jupiter branch in Makati and its branch manager. “The bank’s board thanked him for his gentlemanly and decent gesture but said their trust in him is intact and unshaken,” Lim said.


PHILSTAR

2015 budget deficit widest in two years By Prinz Magtulis (philstar.com) | Updated March 17, 2016 - 11:42am 1 60 googleplus0 0


It was the widest deficit by the Aquino government since 2013's P164.062 billion. A deficit means the government spent more than it earned. Philstar.com/File

The Aquino administration posted its widest budget deficit in two years last year -- albeit still below target-- after spending caught up and revenues contracted in the last month of 2015.

The budget gap amounted to P121.7 billion, up from P73.1 billion a year ago, the Bureau of the Treasury reported on Thursday.

It was the widest deficit by the Aquino government since 2013's P164.062 billion. A deficit means the government spent more than it earned.

As a proportion of economic output, the deficit accounted for 0.9 percent of gross domestic product (GDP), higher than 0.6 percent the previous year but below the two-percent cap set last year.

"This is the direct result of good governance -- a marked break from the past that we ought to continue towards the next administration," Finance Secretary Cesar Purisima was quoted as saying in a statement.

Critics have hit the government for persistently falling behind its spending plans despite double-digit revenue growth, which they said partly caused the GDP growth slowdown last year to 5.8 percent.

Broken down, last year's revenues grew 11 percent to P2.109 trillion, while expenditures expanded 13 percent to P2.231 trillion.

Disbursements, in particular, recorded its fastest growth in three years last year, Treasury data showed.

This was partly thanks to a spending uptick in December, which widened the deficit that month alone to P75.1 billion, a three-year high.

Revenues went down six percent, while expenditures rose nine percent that month.

"(I am) very happy about the improvements in spending," said Nicholas Antonio Mapa, research officer at Bank of the Philippine Islands, in an e-mail.

"I would like to see where the increases came from. Hopefully, it's widespread and not centered on the government bonuses and salary increases," he added.

As a proportion of GDP, revenues accounted for 15.9 percent, of which taxes cornered 13.7 percent. Expenditure effort, on the other hand, reached 16.8 percent.

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While all were up from year-ago levels, they missed their targets of 16.3 percent, 15.3 percent and 18.5 percent, respectively.

Theoretically, more revenues should be collected as the economy grows, while the government should spend more to support expansion.

On the revenue side, the Bureau of Internal Revenue collected P1.442 trillion, up seven percent from 2014 but below its P1.674-trillion target.

The picture turned worse for the Bureau of Customs. The agency's P367.5-billion collection not only fell 16 percent below target, but also inched down from P369.3 billion the previous year.

Treasury, meanwhile, raked in P110 billion, beating its target by 81 percent, data showed.

"We have almost doubled government revenues in five years through through tax administration and enforcement reforms to improve collections and passing a landmark sin tax reform law last 2013," Purisima said.

On spending, debt interest payments continued to decline last year by 14 percent to P309.4 billion. It was also four percent lower than the P321.2-billion allocation for the year.

"It was a nice finish for this administration," Mapa said.


TRIBUNE

RP economy most attractive in SE, says property expert Written by Ed Velasco Thursday, 17 March 2016 00:00



The Philippine economy has shown remarkable growth in the past few years, being one of the fastest-growing economies in Southeast Asia, property consultant KMC-Mag Group said.

Aside from its gross domestic product (GDP) growth, the Philippine economy has also been labeled as one of the most attractive structural stories not only within the region, but also in the global scope.

“Within the past three decades, the Philippines has started its transformation from a highly agricultural economy to a service-based one, almost entirely disregarding industrialization that is common to most economies,” Michael McCullough, co-founder and managing director of KMC-Mag Group, the Philippine associate of global property advisor Savills, told select business reporters at yesterday’s media briefing at the Shangri-La hotel.

“Private services currently account for roughly half of the gross domestic production, which makes it the biggest sector in the economy. While primary production, which are agriculture, hunting, forestry and fishing, and the industrial sector have continuously decreased. Services have increased its share to 57 percent of GDP in 2015,” he added.

This shift has contributed to the high economic performance of the country. Economic growth under the current administration, which started in 2010 and will end on June 30, averaged 6.2 perent, making it the best rate since the 1970s.

The 6.3 percent economic growth in the fourth quarter of 2015 witnessed the growth of the services sector, which expanded by 7.4 percent following a 7.2 percent upsurge in the second quarter.

With the increasing number of global companies transferring operations and production and manufacturing operations to the country, more Filipino micro, small, and medium enterprises enter the global value chain, creating more employment and demand for spaces.

McCullough said the growth of outsourcing and offshoring companies in the country has resulted in a remarkable demand in Metro Manila’s office spaces.

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“Makati’s Central Business District maintains its position as the most premium CBD in Metro Manila, while the Bay Area and Quezon City are expected to continue outperforming other Metro Manila sub-markets given the supply and demand dynamics within these markets,” the official added.

Due to the strong demand for office spaces in the area, Makati CBD results to an average rental rate of P980.8 per sq. m/month, the highest in Metro Manila.

Vacancies in the metro are likely to increase in the next three years even with strong pre-leasing activity due to the entry of some 1.8 million sq. m of office spaces, most of which are located in Makati CBD, Bonifacio Global City, Alabang, Quezon City and the Bay Area.

The entry of these supplies is expected to ease the rental growth in most sub-markets in the coming years.

“Looking at it from a global perspective, the Philippines and Asian real estate in general have enjoyed a strong run over recent years,” said McCullough. “In the fourth quarter of 2015, Asian markets were able to put US interest rate worries behind them as the US Federal Reserve increased the base rate by 25 basis points, with little immediate fall out.”

According to Savills’ World Office Yield Spectrum, Manila has the fourth highest Grade A Market Yield at eight percent in December 2015, with Hanoi being the highest followed by Ho Chi Minh and Adelaide.

The Market Yield is derived by capitalizing current market rents, which includes the rent payable by the tenant and the value of any incentive paid to the tenant, against current capital values for office buildings.

“Globally, much of what happens in 2016 will be dependent on the course the US Federal Reserve takes with regards to interest rates. The movement of US interest rates will determine how currencies behave, how trade flows, and how capital moves around the world,” said McCullough.

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ALSO FROM PHILSTAR

DBS cuts inflation forecast for the Philippines for this year By Lawrence Agcaoili (The Philippine Star) | Updated March 20, 2016 - 12:00am 0 0 googleplus0 0


Gundy Cahyadi, an economist at DBS Bank, said it has lowered its inflation forecast to 2.2 percent instead of 2.5 percent for 2016. Philstar.com/File

MANILA, Philippines – DBS Bank Ltd. of Singapore has slashed its inflation forecast for the Philippines this year amid the muted impact from the El Niño weather disturbance on food prices.

Gundy Cahyadi, an economist at DBS Bank, said it has lowered its inflation forecast to 2.2 percent instead of 2.5 percent for 2016.

“Food inflation remains soft, currently below two percent, as the impact from the El Niño turns out to be rather muted. Anticipation of higher food prices persists, but the oil price distortion is set to be the more important factor in determining the inflation trajectory ahead,” DBS said.

Inflation eased to a 20-year low of 1.4 percent last year from 4.1 percent in 2014 amid stable food prices and cheaper utility rates due to softening oil prices in the world market.

It further eased to 0.9 percent in February from 1.3 percent in January due to stable food prices, lower transport fares, and cheaper utility rates.

The Bangko Sentral ng Pilipinas (BSP) has set an inflation target of between two and four percent for this year and next year. Last month, it slashed its inflation forecast to 2.2 percent instead of 2.4 percent this year but retained next year’s projection at 3.2 percent.

On the other hand, economic managers see the country’s gross domestic product (GDP) growth ranging between 6.8 and 7.8 percent this year.

The country’s GDP growth eased to 5.8 percent last year from 6.1 percent due to weak global demand and lack of government spending. This was lower than the government’s target range of seven to eight percent.

The robust economic growth and benign inflation has allowed the BSP’s Monetary Board to keep interest rates unchanged for 11 straight policy-setting meetings since September in 2014.

The overnight borrowing rate is currently pegged at four percent while the overnight lending rate is at six percent. The interest rates on special deposit accounts remained at 2.5 percent while the reserve requirement ratios were likewise left unchanged.

Cahyadi said the BSP is likely to keep interest rates unchanged during its second policy-setting meeting scheduled on March 23 this year.

“We expect no change in rates. Looking further out, the strong GDP growth momentum still calls for further normalization of interest rates,” he added.

According to him, DBS sees the BSP raising interest rates by 25 basis points this year.

“We continue to factor in one more 25 basis point rate hike from the BSP this year. That the central bank kept rates steady throughout 2015 was due to its tolerance of a softer currency amid fear of the negative impact on export growth,” he added.


PHILSTAR

Alarm bells for agri sector BIZLINKS By Rey Gamboa (The Philippine Star) | Updated March 15, 2016 - 12:00am 0 24 googleplus0 2


By Rey Gamboa

We know how bad our agriculture sector has been performing lately. In terms of average growth, it lags significantly behind the country’s economic gross domestic product stats for some years now.

Our farmers’ products poorly compete with the onslaught of cheap imports of many agricultural products, especially now that tariff barriers with ASEAN countries continue to be lowered or are being fully eliminated.

Then too, in terms of competitiveness, compared to other Asian countries, the country’s agricultural production cost is much higher for almost all products, making the Philippines vulnerable to large-scale smuggling.

All these have brought more misery to our farmers since they have to compete with the entry of lower-priced imports as well as slashed prices of those smuggled in. Even when their products are more expensive compared to others in Asia, Filipino farmers work their butts off, but earn almost nothing.

This is the pathetic state of our farmers, comprising about a third of the country’s workforce. They are an endangered lot. It is not hard to understand why their children choose other means of livelihood other than farming – that is, if they don’t die of malnutrition and untreated illnesses first.

Crippling effect of smuggling

Rampant smuggling has risen over the years, and has been valued at close to P180 billion during the five-year period from 2010 to 2014. This is almost twice the estimated value during the previous five years, from 2005 to 2009.

For the government, this represents lost revenues that otherwise could have been channeled to the current administration’s pet projects in health, education, and the military.

Rice smuggling is the most prevalent, accounting for about half of the valued smuggling during the last five years in review.

The next biggest smuggled are pork and sugar. Smuggling has clearly crippled the viability of rice farmers and hog raisers concerned.

The sugar industry, on the other hand, has a different problem. Aside from suspicions of drug smuggling, the recent entry of significant amounts of sugar contraband are feared to drive sugar retail prices lower.

READ MORE...

Focus on root problems

Just before session ended, the House of Representatives had approved on third and final reading a bill that seeks to make large-scale agricultural smuggling an act of economic sabotage. The Senate had passed this late last year.

There is a strong consensus among legislators that smuggling of huge amounts of agricultural products endangers the country’s food security and stability of prices, and rightly so.

However, more than the smuggling problem, our newly elected legislators come June – and even the new elected officials in the executive – should focus on the root problems afflicting the agriculture sector.

Stronger anti-smuggling measures would help our affected agriculture stakeholders, but they do not solve the bigger problem of declining productivity and competitiveness.

Policy reforms ‘needed‘

Former Socio-Economic Planning Secretary and NEDA director general Arsenio Balisacan, before he moved on to head the newly formed Philippine Competition Commission, had voiced the need to introduce some key policy reforms that would give Philippine agriculture a fighting chance.

He starts with the need to promote agricultural trade domestically and internationally through increased competition and economic diversification. He mentions a “reduction of transaction costs” by introducing regulatory measures that lower the cost of doing business in the country’s agriculture sector.

Second, the former NEDA boss said there is a need to “use predictable, transparent and market friendly instruments to control prices” of commodities. In particular, he said, the existing quantitative restrictions (QR) should be replaced with tariffication measures.

Moving this forward, Balisacan recommended a change in the QR agreement between the Philippines and the World Trade Organization (WTO), which is valid only until 2017, to be able to support local farmers from future foreign competition.

The last fundamental policy reform proposed by the NEDA would be the allocation of 0.5 percent to one percent of the country’s GDP to boost research and development (R&D) in agriculture. Currently, such spending is only at 0.1 percent of GDP.

Such policy reforms, according to the former NEDA chief, would enable the Philippines’ agriculture sector to grow at three percent to 3.5 percent, which is about the same level for other ASEAN countries.

During the first half of the previous year, the agriculture sector ended with negative growth. And this year, we may as well expect the same dismal performance with the occurrence of both El Niño and La Niña, which will definitely affect the country’s agricultural production.

Alarm bells

There is no better time than now to sound the alarm bells for the agriculture sector, but unfortunately, the timing comes when the din of election campaigning mutes any effort to call attention to, or even to act on, this problem.

Work on introducing the proposed structural policy reforms for the agricultural sector will realistically start only later this year when the new members of Congress and the incoming administration will have adjusted to the new political landscape.

As legislators wade through the economic jargons that spell any policy changes to save our farmers, the real chance of seeing any fundamental reforms would be possible realistically only in 2016 – that is, if everyone of our newly elected officials will champion the fight to save our agriculture sector.

Quick stop-gap measures

Meanwhile, there seems to be some quick stop-gap measures that could be adopted to provide some temporary relief from the ravages of trade disadvantages, poor technology, high production cost, and low productivity that afflicts all stakeholders of the agriculture sector.

To be continued in succeeding columns. (At PHILSTAR Business Opinion section)

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RELATED FROM THE MANILA STANDARD

BSP approves new agriculture financing posted March 16, 2016 at 11:30 pm by Julito G. Rada

Bangko Sentral ng Pilipinas said Wednesday it approved the adoption of the value chain financing framework for agriculture and fisheries sectors.

Bangko Sentral said in a circular the new type of financing would facilitate and allow small farmers/fisherfolks to have access to credit.

This is also expected to further improve productivity in these sectors and raise the quality of living of these marginalized people, the regulator said.

“The new issuance by Bangko Sentral ng Pilipinas on agricultural value chain financing addresses the associated credit risks with the agriculture and fisheries sector by shifting the focus of lending from individual farmers and fisherfolks to the whole value chain,” Bangko Sentral said.

Value chain refers to a set of individuals, such as producers, traders, suppliers, processors, and aggregators, who conduct linked sequence of value-adding activities involved in bringing a product from its raw materials stage to the final consumers.

Value chain finance refers to the financial flows to those individuals from both within the value chain and financial flows to those people from outside as a result of their being linked within a value chain.

“The BSP hopes that the issuance will provide the necessary guidance for banks to be able to serve the needs of the agriculture and fisheries sector, specifically the smallholders, in a manner that is viable and sustainable,” the bank regulator said.

The agriculture and fisheries sectors have traditionally been significant contributors in the Philippine economy, accounting for 10 percent of the country’s gross domestic product and employing 11.2 million Filipinos in 2014.

Despite the important impact of these sectors, obtaining credit remains a challenge, according to the bank.

Lack of access to finance by smallholder farmers put them in a bigger disadvantage, making them unable to integrate to higher value markets.

The sector is considered a high risk market due to its inherent susceptibility to weather conditions, flooding, pest infestations and man-made calamities.

Bangko Sentral said participation in a value chain would allow farmers to leverage on effective farming technologies and methods, access to formal financing and sustainable market demand.

“By integrating into a value chain, they were able to access financing that allowed them to upgrade their products and processes, and to be assured of a steady market through a leading fast-food chain. The farmers are able to supply directly to institutional markets resulting to increased profit and greater opportunities for expansion,” it said.

The framework provides minimum prudential expectations including the need for adequate policies and procedures on the analysis of the value chain, availability of appropriate products, utilization of innovative disbursement schemes, and adoption of anchor-firm triggered loan release.

The issuance also allows financial institutions to put in place a disaster contingency mechanism requiring the adoption of risk mitigants to minimize losses and provide relief to a borrower to facilitate recovery.

“To encourage engagement in the lending scheme, incentives are also provided to financial institutions that comply with the regulatory expectations. The incentives include compliance with agri-agra requirement and an additional 25-percent increase in the single borrower’s limit for loans granted to actors in the agricultural value chains for a period of three years,” it said.

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ALSO FROM THE INQUIRER

Abaca exports down in the 10 months to October, remains on the growth track SHARES: New VIEW COMMENTS By: Ronnel W. Domingo @inquirerdotnet Philippine Daily Inquirer 04:48 AM March 17th, 2016

Philippine abaca exports decreased by 3 percent to $96.9 million in the 10 months to October 2015 despite production remaining on the growth track.

According to the Philippine Fiber Industry Development Authority (PhilFida), domestic output of abaca fibers increased by 1.6 percent year-on-year in 2015 totaling about 58.7 million kilos of abaca exports including pulp, cordage, fabrics, fibercraft and raw fiber. For raw fiber alone, the value of outbound 10-month shipments increased by 41 percent year-on-year to $16.5 million.

Most manufactured abaca exports, however, showed declining earnings except for top-earner pulp which increased by 2.6 percent to $66.3 million.

Receipts from cordage settled at $10 million from $10.4 million, a decrease of 4.2 percent.

Earnings from fibercrafts fell by 70 percent to $3.3 million while those from fabrics plunged 53 percent to about $822,000.

For the full year, the Bicol region remained the country’s top producer with 36 percent of the total output or 21.4 million kilos.

However, abaca production from Bicol suffered a 9-percent decline from 23.5 million kilos in 2014.

Double-digit increases in output from the regions of Davao, Northern Mindanao, Caraga and Autonomous Region in Muslim Mindanao helped shore up growth in total volume.

Production from Davao jumped 34 percent to 10.1 million kilos, Northern Mindanao by 31 percent to 3.8 million kilos, Caraga by 14 percent to 6.1 million kilos, and ARMM by 13 percent to 5.9 million kilos.

According to the Bureau of Agricultural Research, the country ships out abaca products valued at some $100 million yearly.

The government has observed increasing demand for abaca in the United States, Europe and Japan, where the fiber is used in making denim.


Chief News Editor: Sol Jose Vanzi

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