Monday, January 19, 2009

GDP

RP economy to grow by 3% in 2009: World Bank
gence France-Presse | 01/20/2009

The Philippine economy will likely grow by only three percent this year as the country feels the full effects of the global financial crisis, the World Bank said Monday.

"The economy suffered a steep decline in its growth rate in 2008 and further decline is already visible from the latest economic indicators," the World Bank said in its quarterly economic update.

It estimated expansion in 2008 of 4.3 with growth hitting only three percent in 2009 following a three-decade high figure of 7.2 percent in 2007.

"Economic growth has held up relatively well up to now but there are signs that the severe global slowdown will further and significantly impact the economy," the World Bank warned.

It said the services and agricultural sectors had both underperformed and that the banking system remained "exposed to risk of domestic and external shocks... through its large holding of sovereign paper."

Production costs had remained high, squeezing corporate profits and even the remittances of the eight million Filipinos working overseas, which have long supported the economy, had slowed down since October, the World Bank said.

It forecast that such remittances would grow by only four percent this year compared to 13 percent in 2008.

Exports would decline by one percent in 2009, especially since 60 percent of them were in the electronics components sector, which was extremely vulnerable to the downturn in developed countries, the World Bank said.

Philippine economic officials have previously said that the economy grew by at least 4.6 percent in 2008 and is forecast to grow by 3.7 and 4.7 percent this year.

The government hopes to sustain growth this year through increased spending on infrastructure and social services

world bank on poverty

World Bank: Integrate leading and lagging regions to cut poverty Print E-mail
Jesus F. Llanto /Newsbreak/1.12.2009

Economic integration of highly developed urban areas and poor far-flung areas will help reduce poverty and result in inclusive economic growth, economists from the World Bank said in their World Development Report 2009.

Contrary to the belief that distributing economic activities from the urban centers to remote areas will reduce poverty and spur growth, it is the economic integration of the urban centers and far-flung areas that will boost economic development and cut poverty, said World Bank economists during a presentation of the report, entitled Reshaping Economic Geography, at Makati City today.

“The reality is that interaction between leading and lagging places is the key to economic development,” said Indermit Gill, director of the WDR and WB chief economist for Europe and Central Asia.

Gill said that economic growth tends to favor some regions and this is the reason why economic activities tend to be concentrated on some areas. “Economic growth is seldom spatially-balanced.”

“The world is not flat. Markets favor some places over the others. To fight this concentration is tantamount to fighting prosperity,” Gill added.

Forget geographic targeting

Business activities in the Philippines, Gill noted, are concentrated in Metro Manila, its two neighboring regions—Central Luzon and CALABARZON—and in a few cities like Cebu, Davao and Cagayan de Oro.

The World Development Report 2009 noted that current policy debates on urbanization, area development, and globalization tend to emphasize geographic targeting, which focuses on what to do in rural areas or slums, what to do in remote areas, among others.

The report, according to Mr. Gill, reframes these debates in a way that better conforms to the reality of growth and development.

Experts said that the process of redistributing economic activities in other areas will not successfully induce growth and reduce poverty.

“It’s like building more mediocre libraries than building one effective library,” said Arturo Corpuz, vice president for Urban-Regional Planning of Ayala-Land Inc.

Instead of providing incentives to spur investments in these places, governments, economists said, should implement policies ensuring economic density and people’s access to economic opportunities in the growth centers.

Iloilo City mayor and League of Cities of the Philippines national chair Jerry Treňas, said national government should identify metro areas where there is a concentration of population and investments and should support them to sustain growth.

“Anemic growth”

Arsenio Balisacan, director of Southeast Asia Regional Center for Graduate Study and Research and Agriculture (SEARCA), noted that the Philippines has experienced anemic economic growth, has a disappointing poverty reduction performance and “persistently high spatial disparities” when it comes to living standards.

In a paper he co-wrote with Hal Hill of Australian National University and Sharon Faye Piza of the Asia-Pacific Policy Center, Spatial Disparities and Development Policy in the Philippines, Balisacan noted that economic activity in the country has been highly uneven and concentrated particularly in Metro Manila, which accounts for 55 percent of the country’s gross domestic product (GDP).

“The challenge is to allow unbalanced economic growth and inclusive development in a regime of weak governance,” Balisacan said.

High population growth rate

Balisacan added that the curbing high population growth rate in the country will also address the issue of slow economic growth.

As of August 2007, the Philippines has a population of 88.57 million and its projected population for 2009 is 92.23 million. From 2000-2007, average annual population growth rate in the Philippines reached 2.04 percent.

“Very high population growth puts too much strain in our fiscal and development resources,” Balisacan said, adding that the country’s population growth pattern failed to move from high dependency population to high working age population.

Balisacan added that the failure to move in transition makes the country lose 0.7 percentage points of economic growth and prevented 3-5 million Filipinos to move out of poverty in the last five years.

Focus on infrastructure

Balisacan noted that the Philippines has been under investing in infrastructure, particularly transport and electricity.

“This not only reduces overall growth, but also limits domestic mobility of factors, foods and people, hindering the full participation of lagging regions from the growth process in leading regions or urban centers,” Balisacan said.

The Philippines lags behind its neighbors when it comes to spending on infrastructure. While its neighbors spend around 5 percent of their GDP on infrastructure, the country spends only around 2.3 to 2.5 percent.

A 2007 study by the World Bank and the Turku School of Economics ranked the Philippines 86th out of 150 countries in terms of adequacy of infrastructure.

Bert Hofman, WB country director said that the poor in remote areas would benefit from the investments in infrastructure.

“The poor would benefit more by efficiently connecting the lagging regions and provinces to the growth centers through investments in infrastructure including transport, communication, and information technology and better education that allow them to engage in economic activity more productively,” Hofman said.

Basic services, too

Experts said that providing access to basic services like education, water and electricity to all regions should also be prioritized.

“Economic activities will remain concentrated in few cities but policymakers could ensure convergence of living standards across country through carefully designed policy and public investments in social services like health, education, housing, and social protection in both urban and rural areas,” Gill said.

Balisacan added that ensuring access to these services will also help prevent conflicts in the country since division in the access to basic services is also one of the causes of conflicts in areas like Mindanao.

Meanwhile, Chorching Goh, senior economist at the Poverty Reduction and Economic Management Unit in Europe and Central Asia, said that the government should spend more for and enhance the quality of education.

“Education will help them to overcome division to be able to access jobs in urban areas,” Goh said.

Land policy

Balisacan added that the country should also “relax land conversion policies” because these policies, particularly the “strict” regulation of land conversion”, have become constraint in attracting business.

“It’s extremely difficult to convert agricultural land to lands for housing and industrial use,” Balisacan said.

“The Comprehensive Agrarian Reform Program (CARP) is applied uniformly in urban areas and far-flung areas,” he added. (abs-cbnNEWS.com/Newsbreak)


e-news summary

DevNews

Tuesday; January 20, 2009

Peso-dollar rate: $1.00 = PhP47.130 (up 0.070 ctvs)

Key national news coverage of the

National Economic and Development Authority (NEDA)

and other related news

There are 16 articles of note (3 neutral, 13 “other”) in the national press that can shape perceptions regarding NEDA and the economy.

neutral coverage

Leadership by bad example

BusinessMirror editorial, p. A6

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4806:editorial-leadership-by-bad-example&catid=28:opinion&Itemid=64)

Sadly, often what passes for the nobility here far too often fritter their time in idle, if not criminal, pursuits—be it on the polo grounds, the golf links, the haute couture salons or the drug dens disguised as trendy clubs. These, while evading taxes.

The toiling masses and the equally hard-working middle class have no choice but to surrender a big chunk of their income to the state, thanks to the state’s efficient withholding-tax system.

The rich, however, live differently. “Rough calculations show that the top 10 percent may, in fact, be cheating grossly, paying less than one-seventh of what they should be paying,” Romulo Virola, secretary-general of the National Statistical Coordination Board (NSCB), was quoted saying in a report in this paper last week.

Virola cited the NSCB’s’s 2006 Family Income and Expenditure Survey, which showed that in 2003 only 0.66 percent of the total family income in the Philippines was paid as income tax.

PCCI may drop stimulus plan

BusinessWorld banner story, Jessica Anne D. Hermosa

(link: http://www.bworldonline.com/BW012009/content.php?id=001)

PRIVATE SECTOR PROPONENTS of a P100-billion stimulus may abandon the effort if they and the government cannot settle the matter of which agency will handle the funds and if projects do not begin within the first half of the year.

The plan will no longer effectively pump-prime the economy if implemented too late in the year, officials of the Philippine Chamber of Commerce and Industry (PCCI) yesterday said.

The PCCI, the country’s largest business group, proposed the fund late last year, in which government financial institutions will shoulder half of the P100 billion while private banks will lend the remainder.

…Meanwhile some of the projects which may be funded, such as the C-6 highway from Bicutan to Meycauyan, still have to undergo feasibility studies and National Economic and Development Authority (NEDA) screening, Public Works department director Bien Venida Firmalino said.

As a solution, the PCCI is considering projects that have already gained approval from the NEDA Investment Coordination Committee but have been earmarked for funding by overseas development aid (ODA).

NG to spend 60% of budget in H1 as part of pump-priming

Manila Bulletin, p. B2, Lee C. Chipongian

(link: http://www.mb.com.ph/BSNS20090120146100.html)

Finance Secretary Margarito B. Teves said the government will spend 60 percent of its total budget in the first six months to pump-prime the economy.

"We’re trying to front load as much as we can (expenditures) and monitoring the spending almost weekly with respect to our infrastructure operating agencies," he said over the weekend. The expenditure program for 2009 is P1.433 trillion while the emerging figure is about P1.467 trillion.

Last year, the government spent 30 percent of its total capital outlay budget in the first six months and National Economic Development Authority director-general Ralph Recto said they will try to double the share this year.

other news

WB: Crisis impact on RP harder

BusinessMirror banner story, Cai U. Ordinario

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4836:wb-crisis-impact-on-rp-harder&catid=23:topnews&Itemid=58)

EVEN though it faces the global economic crisis with relatively strong macroeconomic fundamentals, there are now signs the Philippines will still be significantly affected by the crisis, according to the World Bank.

With this, the bank now projects the country to post a 4.3-percent growth in gross domestic product (GDP) in 2008 from its initial range of 4.0 percent to 4.5 percent. The bank also scaled down its 2009 GDP projection to only 3 percent from a range of 3.0 percent to 3.5 percent. The Washington-based multilateral financing institution said Philippine GDP growth may only reach 4.1 percent in 2010, lower than the range of 4.0 percent to 4.5 percent.

Group urges bicam committee to speed up approval of budget

BusinessMirror, p. A3, Fernan Marasigan

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4817:group-urges-bicam-committee-to-speed-up-approval-of-budget&catid=33:economy&Itemid=60)

WITH the government operating on reenacted budget, the Bicameral Conference Committee should hasten the deliberation of the 2009 budget because it adversely affects the delivery of social services, a civil-society group said on Monday.

At the same time, the Alternative Budget Initiative (ABI), a consortium of 60 nongovernment organizations which pioneered civil society direct engagement in the national budget process, urged legislators to report now to the people, “what has happened and what is happening with the people’s money,” which it said is their moral obligation to the people.

LPG supply still tight; gasoline prices go up

BusinessMirror, p. A8, Paul Anthony A. Isla and Max V. de Leon

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4830:lpg-supply-still-tight-gasoline-prices-go-up&catid=23:topnews&Itemid=58)

IN spite of the statements from authorities and oil companies, the fact of a shortage in liquefied petroleum gas (LPG) remains for the ordinary household. On Monday, Pilipinas Shell Petroleum Corp. said it had advanced some of the LPG volumes for next month to the remaining days of January.

“In anticipation of future requirements, we have increased our level of LPG imports,” said Bernard Ong, Shell LPG general manager, at the LPG Stakeholders Meeting called by the Department of Energy.

Napocor seeks hike of basic rates—double for Luzon

Philippine Star, p. 3, Donnabelle Gatdula

(link: http://www.philstar.com/Article.aspx?ArticleId=433249&publicationSubCategoryId=63)

The National Power Corp. (Napocor) is seeking hikes in its basic rates, and for the Luzon grid it wants the figure doubled.

In its petition with the Energy Regulatory Commission (ERC), Napocor sought an increase in its basic generation rate of 83.32 centavos per kilowatt-hour (kWh) in the Luzon grid. For the Visayas and Mindanao, Napocor wants to increase its rates by P1.3815 per kWh and P1.0686 per kWh, respectively. In its 22-page petition, Napocor said the proposed rates would reflect the impact of the sale of some of its power plants.

Teves says ’09 budget target ‘not sacrosanct’

BusinessWorld, p. 1, Alexis Douglas B. Romero

(link: http://www.bworldonline.com/BW012009/content.php?id=002)

The 2009 target, Finance Secretary Margarito B. Teves yesterday said, is "not sacrosanct" given a changing environment which may require more spending on infrastructure and social services. "Because of the dynamic character of our environment, we cannot be sacrosanct on figures like P102 billion. We will monitor things as they develop," he said.

"With respect to the P102 billion, nothing is sacrosanct about that. We will review that mindful of the need to spend and recognizing that we should be sensitive to the effect of increased spending via increased deficit."

BPO industry short by 20,000 jobs of its target last year

BusinessMirror, p. A3, Dennis Estopace

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4819:bpo-industry-short-by-20000-jobs-of-its-target-last-year-&catid=33:economy&Itemid=60)

THE local business-process outsourcing (BPO) industry will miss by 20,000 the jobs it expects to have generated last year, an industry group official bared yesterday.

“It [number of workers absorbed by the BPO industry] should be 430,000; but we expect a shortfall. So the jobs generated for the whole year should be by 410,000,” Business Processing Association of the Philippines (BPAP) chief executive Oscar Sañez told reporters on Monday. However, Sañez said this is “not a cause for concern.”

Gov’t urged to borrow more amid low rates

BusinessMirror, p. 1

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4835:government-urged-to-borrow-more-amid-low-rates&catid=23:topnews&Itemid=58)

THE Bangko Sentral ng Pilipinas urged the government on Monday to take advantage of the low-interest environment, particularly in the United States and in Europe, where lending rates have deliberately been set at historic lows.

“I think it will be useful if the government sets its external borrowing higher so we [in the central bank] can put up higher international reserves or contingency buffer against possible difficulties in the external sector,” said Deputy Governor Diwa Guinigundo. But National Treasurer Roberto Tan, former undersecretary at the Department of Finance, only recently completed a $1.5-billion global bond sale that makes any more commercial borrowings impractical at this point.

Teves confident of getting Congress’s support for excies tax program

BusinessMirror, p. B8, Jun Vallecera

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4814:teves-confident-of-getting-congresss-support-for-excise-tax-program&catid=25:bankingandfinance&Itemid=61)

FINANCE Secretary Margarito Teves is confident of obtaining enough congressional support for the proposed excise-tax program to muster the legislative process within the next six months.

At a briefing held at the headquarters of the Land Bank of the Philippines on Monday, Teves said there is optimism the P100-billion-a-year excise-tax plan could help limit the year’s P102-billion budget deficit.

BIR smarting from P20-B Dec. shortfall, but Teves unfazed

BusinessMirror, p. 1, Jun Vallecera

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4834:bir-smarting-from-p20-b-dec-shortfall-but-teves-unfazed&catid=23:topnews&Itemid=58)

THE Bureau of Internal Revenue (BIR), which accounts for the bulk of target revenues of P845 billion in 2008, acknowledged on Monday having fallen behind its collection goal in December by more or less P20 billion.

The shortfall, BIR Deputy Commissioner Nelson Aspe said, further widened its collection shortfall that already totaled P40 billion in the first 11 months. But Aspe’s boss, Finance Secretary Margarito Teves, remained optimistic the full-year shortfall should prove lower than P60 billion when the full fiscal report becomes available next month.

Investor optimism fell 38%--ING poll

BusinessMirror, p. 1, Louise M.Francisco

(link: http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4833:investors-optimism-fell-38ing-poll&catid=23:topnews&Itemid=58)

PHILIPPINE investor sentiments for the fourth quarter of 2008 declined by 38 percent as the harsh impact of the global financial meltdown and economic slowdown began to be felt. This is according to the recent ING Investor Dashboard survey, which gauges and tracks investor sentiments every quarter for 13 Asia-Pacific markets.

Surveyed investors expect financial deceleration to continue this year not only in the economy, but in their personal financial situation, as well. At least 51 percent of respondents said they will keep their funds in cash and deposits in the first quarter of 2009 because of the economic slowdown.

Survey: Most Pinoys back RH bill

Philippine Star, p. 1, Helen Flores

(link: http://www.philstar.com/Article.aspx?ArticleId=433245&publicationSubCategoryId=63)

Six out of 10 Filipino adults are in favor of the controversial bill promoting family planning and the use of contraceptives despite opposition from the Church, according to a survey released yesterday.

Pulse Asia’s October 2008 Ulat ng Bayan Survey found 63 percent of Filipinos in favor of the reproductive health (RH) bill, eight percent not in favor and 29 percent ambivalent on the matter. The Catholic Church, which counts over 80 percent of Filipinos as followers, has said the bill, which has been pending in Congress for months, is headed for defeat after a high-profile campaign by bishops.

Ping bares P70-M bribe in World Bank project

Philippine Star banner story, Aurea Calica

(link: http://www.philstar.com/Article.aspx?ArticleId=433237&publicationSubCategoryId=63)

The Senate Blue Ribbon and public works committees are ready to investigate the World Bank’s exposé on a cartel of contractors in the Philippines as one of those blacklisted by the WB was also allegedly involved in a P70-million bribery of a person close to Malacañang to bag a P1.4-billion project for the rehabilitation of EDSA.

Senators say they see more than what the World Bank exposed, as Sen. Panfilo Lacson has disclosed that the P70 million prepared by a group of contractors for the EDSA project even fell out of its container and was strewn all over the floor when it was delivered to a Makati City building. Lacson said this information came “straight from the horse’s mouth.” He said bits of information have surfaced gradually since the World Bank exposé came out.

President Obama sworn in today

Manila Bulletin banner story

(link: http://www.mb.com.ph/MAIN20090120146125.html)

WASHINGTON, DC (AFP) — Barack Hussein D. Obama called Sunday for a new spirit of sacrifice to overcome war and economic crisis, as he stood in the shadow of the Lincoln Memorial to speak at the start of a three-day inauguration party for America’s first black president.

Obama will be sworn in as the 44th president of the United States by Chief Justice John G. Roberts at 12 noon today (midnight, Manila time) at the west front of the US Congress facing the National Mall before a crowd expected to reach 2 million people. His oath-taking will be preceded by that of Vice President Joseph Robinette F. Biden who will be sworn in by Associate Justice of the Supreme Court John Paul Stevens.

Sunday, January 18, 2009

basel, basil

BIS proposes new measures to tighten bank supervision/BWorld/1.19.09

GENEVA — The world’s biggest central banking body last Friday proposed new measures to tighten "Basel II" supervision of banks in a bid to close gaps exposed by the financial crisis.

"These enhancements are part of a broader effort... undertaken to strengthen the regulation and supervision of internationally active banks in light of weaknesses revealed by the financial markets crisis," said the Basel-based Bank for International Settlements (BIS).

Under the proposed measures, banks would be required to make more detailed disclosures of their exposure to complex products such as asset-backed securities, thereby giving more information on their risk profile.

In addition, they would have to adhere to requirements on capital that would cover exposures to complex financial products and illiquid assets.

"The proposed enhancements will help ensure that the risks inherent in banks’ portfolios related to trading activities, securitizations and exposures to off-balance sheet vehicles are better reflected in minimum capital requirements, risk management practices and accompanying disclosures to the public," said Nout Wellink, chairman of the Basel Committee.

Mr. Wellink recently blamed the financial crisis on insufficient regulation and weak risk management in financial institutions.

This lack of regulation, coupled with abundant credit and "fundamental shortcomings in financial institutions’ governance," led to the current crisis, which has seen the collapse of Wall Street giants such as Lehman Brothers and unprecedented state intervention in the financial markets, he told a conference in China.

Banks and interested parties have until April 17 to submit comments on the new proposals. — AFP

mer , merg, merge, merger

Bank merger moved to third quarter ’09/BWorld/1.19.09

THE DELAYED merger of Philippine National Bank (PNB) and Allied Banking Corp., both controlled by tobacco and airline magnate Lucio Tan, is expected to push through in the third quarter, giving rise to the country’s fourth biggest bank in terms of assets.

PNB President Omar Byron Mier told reporters Friday night the two banks are now "working towards integration," which should hopefully be completed by the first quarter.

"The merger was moved to July from January because Allied Bank has not been able to dispose of shares in Oceanic Bank. We hope to finish this by the first quarter," he said.

The $564-million merger has been stalled since 2007 when the Presidential Commission on Good Government (PCGG) ordered the sequestration of Mr. Tan’s shares in Allied Bank, as well as in Fortune Tobacco and Foremost Farms and Shareholdings, Inc.

Merger moves resumed after the Supreme Court nullified the PCGG order in December 2007 but again hit a snag after the government revived the sequestration case. A US regulation also required Allied Bank to divest its holdings in California-based Oceanic Bank.

Mr. Tan last week asked the Sandiganbayan to stop the government from interfering in the merger.

Under the merger plan, PNB, which will be the surviving entity, will issue 457 million new shares at P55 per share to purchase all of Allied Bank’s common and preferred shares.

Mr. Mier also said PNB is planning to tap the debt market next month to raise P5 billion aimed at beefing up liquidity, expanding its loan portfolio and refinancing P3 billion worth of Tier 2 debt maturing in February.

"We hope to do this sometime in February if we get approval from the government," he said.

He also said loan growth could be slower this year from around 8%-10% last year due to tough market conditions but stressed banks would continue to make money as companies continue to borrow.

"There are still some loans. The business community in the Philippines has been through several crises in the past so the companies existing now are the survivors. So far we haven’t seen any major problem in loans. We feel confident that banks and companies are stable," he said. — Bernardette S. Sto. Domingo

druggie

First of two parts

THE TRADE in crystal methamphetamine hydrochloride or "shabu" in the Philippines has grown into a P1-billion-per-day industry but the drug has now become more expensive, making it "the poor man’s cocaine no more," officials and international reports said.

The price has doubled to between P8,000 and P10,000 per gram since law enforcers dismantled several "mega-laboratories" in 2006 and 2007.

But government successes in curbing shabu production have been offset by another problem: Users are now turning to the amphetamine-type stimulant Ecstasy, which sells for P750-800/tablet, and cocaine, which sells for P2,500/gram, the kinds of drugs seized from the "Alabang Boys" by the Philippine Drug Enforcement Agency (PDEA) in a September sting.

The 2008 World Drug Report of the United Nations Office on Drugs and Crime (UNODC) said the Philippines "continues to have the world’s highest estimated annual methamphetamine prevalence rate" at 6% of the population. PDEA and Philippine National Police (PNP) officials said in separate interviews that nearly 200 kilos of shabu are sold every day at a wholesale price of P5 million/kilo or P1 billion a day.

The UNODC report said that methamphetamine use in the Philippines has actually declined. "Accomplished ang mission namin. Walang gumagalaw. May psychological warfare — active and passive (We have accomplished our mission. The syndicates are immobile. There is an ongoing psychological warfare, both active and passive)," PDEA Director General Dionisio Santiago said.

But with the antinarcotics crackdown over the past years making shabu more scarce and its price steeper, users are now turning to cheaper alternatives and producers shifting to other modes of production.

Antinarcotics officials from the PDEA and the PNP reported an increase in the use of Ecstasy or methylenedioxy-methamphetamine, a drug favored by the rich now trickling down to the middle class. The 2008 drug report has also noted a rising level of cocaine use in the Philippines.

Locally-grown marijuana, however, remains the "alternative drug of choice" for shabu users whenever prices of synthetic drugs escalate, says the PDEA. It is also known as the "starter drug" for teenagers.

Data for 2007 from drug rehabilitation centers indicate poly-drug use among patients, almost one-third of whom were high school students.

The PDEA reported confiscating a veritable spread of drugs from the "Alabang Boys": shabu, cocaine, Ecstasy, marijuana as well as Valium.

In 2006 and 2007, law enforcers raided and dismantled a dozen clandestine "mega-laboratories" that produced shabu in quantities of 1,000 kilos or more per cycle.

Also arrested were several big-time lab operators, among them Chinese nationals who did not speak a word of English or Filipino and who turned out to be the shabu chemists. They took care of "cooking" the shabu and were "embedded" in these labs.

These days, shabu is produced in "large-scale laboratories" that churn out just one-tenth or 100 kilos per production cycle, as well as smaller ones that are easier to dismantle. These labs have also moved to rural and "remote rural areas" in Luzon and Visayas. All six major raids on shabu labs last year were outside Metro Manila. They were in La Union, Pampanga, Masbate and Bicol.

The chemists, meanwhile, no longer stay in the labs but just come to the Philippines as tourists, staying only for a week to "cook" and leaving as soon as production ends and the syndicate has gotten its share — usually one-fourth of the output — in cash, a PNP official said.

Law enforcers said the chemists are essential to the operation since the Chinese refuse to "transfer" this skill. The Philippine labs also acquire the hydrogenator, equipment used in shabu manufacturing, from the Chinese.

What China leaves to the Philippines nowadays is the importation of the precursor materials, particularly ephedrine, a basic component in cold tablets that is sourced from India and China. India is said to produce better-quality ephedrine. A hundred kilos can yield 70 kilos of shabu.

The new arrangement makes it more difficult for antinarcotics operatives to detect the labs. "You need a deep penetration agent," the PNP official said

The drop in local shabu production has also caused a rise in importation from China, PDEA and PNP officials said. From Yunnan province, the shabu travels to Guangxi, Guangdong and Fujian, and Hong Kong before ending up in the Philippines.

Shabu arrives at different ports around the country, packed in a variety of containers less likely to be checked, including large giant ornamental jars or even inside imported cars.

One source said the new strategy is to shun the "traditional ports" in Cavite, Navotas, and Dinggalan in Aurora, preferring instead private ports in Zamboanga and Jolo. Using speed boats, the drugs are distributed to various destinations or abroad.

Part of the shabu shipped to and produced in the Philippines makes its way to South Korea, Malaysia, Brunei, Taiwan, Japan, Australia, New Zealand, the US and Canada, according to the 2008 UN World Drug Report.

Since the late 1980s, Ecstasy has been popular among showbiz denizens, the rich, and young expatriates in the Philippines. The UN report said Ecstasy users make up 0.2% of the population aged 15 to 64.

Officials have said drugs like Ecstasy are distributed to users at local high-end bars and restaurants, and during concerts. A source said they have identified international performers who "carry Ecstasy from Europe".

Ecstasy is imported, chiefly from the US and the Netherlands, said operatives. But they cited intelligence reports that the drug is now being locally produced in minute quantities on an experimental basis, but of poor quality.

Ecstasy from the Netherlands, meanwhile, is sourced from contacts in Thailand and Malaysia, said PDEA and PNP officials.

One law enforcer said some Ecstasy pills that come from the US are stuffed into DVD and VCD shipments, the cases lined with carbon paper to prevent detection by X-ray machines.

Ecstasy is also known by the following street names or slang: Adam, E, Roll, X, XTC, Dolphin, Cream Honda, Clover, Twin heart, Red hook, Pink dolphin, Blue mushroom, Playboy, Mickey mouse, Pink arrow.

It has been called the "hug drug" because users like being touched. Researchers have observed that users said they "experience feelings of closeness with others and a desire to touch others." A source said "Recently, we found out that different brands have different effects. Some brands heighten sexual desire while some have the effect of giving one a ’high’ for days."

Pharmacologically considered as a stimulant, Ecstasy and its variants enhance mood and increase energy level, "producing intensely pleasurable effects". Once its effects wane, users descend into depression and anxiety, and have sleep disorders.

"The stimulant effects of the drug enable users to dance for extended periods, which when combined with the hot crowded conditions usually found at raves, can lead to severe dehydration and hyperthermia or dramatic increases in body temperature. This can lead to muscle breakdown and kidney, liver and cardiovascular failure," one medical pamphlet said.

The anesthetic ketamine has also emerged as a "party drug". A horse tranquilizer, it is popularly known as "kets" or "ketabu" and induces psychedelic or hallucinogenic states. A number of Ecstasy pushers also deal in ketamine, said officials.

A US State Department report said ketamine is being converted from its legal liquid form to the illicit crystal form in the Philippines and exported.

Cocaine has not gained much following in the Philippines. More so with heroin, produced chiefly in Afghanistan and Myanmar.

But officials said the country has become a transshipment point for both as a growing number of Filipinas in their 20s and 30s have been turned into "drug mules" by international syndicates. Also last year, officials were alerted to cocaine smuggling through a port in northern Luzon.

Cocaine and heroin trafficking in Southeast Asia is handled chiefly by West Africans based in Thailand and Malaysia, in particular Nigerians, they said. Legitimate recruitment agencies hire Filipinas for "jobs" in these countries, with some ending up as girlfriends of the traffickers.

The powder-form drugs are concealed in false bottoms of carry-on luggage, packs of feminine sanitary towels or candy boxes. They are flown into the Philippines and turned over to another Filipina. The latter then flies to another country, including China, usually on a Philippine airline, and hands the shipment over to a member of the syndicate.

About one to 1.5 kilos is transported per voyage, for which the "mule" is paid $1,500 to $3,000. Filipino "drug mules" have been arrested in China and Hawaii airports for heroin possession.

A PDEA official said the canine squad has limitations. "A dog that is used to sniffing two grams of drugs may get confused when exposed to a kilo or a ton," he said.

The dog also becomes ineffective when it is tired, he said.

Mechanics manning X-ray machines fare no better than the dogs. Most are untrained in drug detection and admit they cannot tell an illegal drug even if they come across one, the official said.

The country’s ports also have a different priority. "They are more concerned with explosives than drugs," the official said.

mix-mix

Borrowing mix changes urged by central bank/BWorld/1.19.09

THE BANGKO SENTRAL ng Pilipinas (BSP) is proposing changes to the government’s borrowing mix, saying the country should build a buffer against the global economic downturn by taking advantage of lower interest rates abroad.

BSP Deputy Governor Diwa C. Guinigundo told reporters last Friday that a mix in favor of higher external borrowings would be useful as this could help beef up the country’s defenses against a global recession.

The government plans to borrow P509.9 billion from domestic and foreign creditors this year, which translates to a mix of 76%-24% in favor of local borrowings.

Asked if this should be revised, Mr. Guinigundo said "Yes ... we don’t have a number but I think a higher mix in favor of higher external borrowings will be useful so we can put up reserves or contingencies or buffers against possible difficulties in the external sector."

He stressed that the government should take advantage of lower interest rates in the United States and Europe.

"Lending rates have been brought down as well. We need to take advantage of that," Mr. Guinigundo said.

The BSP has cut its gross international reserves (GIR) forecast for this year to $37-37.5 billion from an earlier estimate of $39-40 billion as the financial crisis continues to take its toll on foreign exchange inflows.

Officials have said a GIR of $37-37.5 billion would cover 5.7 months worth of imports of goods and payments of services, a comfortable level since the international benchmark is three months.

A central bank official has said investors are likely to delay setting up in the country, which would stall foreign exchange inflows this year. Export earnings and remittances from overseas Filipinos are also expected to decelerate.

Mr. Guinigundo, however, expects remittances to continue supporting consumption.

"Remittances will remain respectable and will continue to support consumption expenditure which account for more than 70% of GDP," he said. "Inflation will be much more modest in 2009, that will also encourage more consumption." — Bernardette S. Sto. Domingo

stimulus, response

THE LACK OF RULES and right-of-way problems are holding up implementation of a P100-billion stimulus plan, business leaders said.

As such, members of the Philippine Chamber of Commerce and Industry (PCCI) — the private sector proponent of the fund — are meeting today to settle the mechanics of the fund, which is to be shouldered by both the public and private sectors. These rules will then be presented to the Cabinet for approval.

Business leaders will also be reviewing the status of right-of-way issues behind infrastructure projects the fund may finance, and will be choosing three blueprints at the meeting to recommend to the government, PCCI officials said.

The infrastructure stimulus, proposed by PCCI and approved in principle by President Gloria Macapagal-Arroyo last year, will be made up of contributions from government financial institutions and private banks.

"We’re now looking at the legal aspect. I need to get the legal framework cleared ... We need to create a depository vehicle from where guarantees can be issued by government," PCCI Chairman Emeritus Donald G. Dee told reporters at the sidelines of an economic managers’ meeting with business groups last Friday.

"It is within the charter of NDC (National Development Corp.) to manage the fund but they’re not comfortable with issuing guarantees," Mr. Dee told BusinessWorld in a telephone interview yesterday.

The pledge from the government will ideally back the loans private banks will extend to infrastructure contractors, he said.

Trade Secretary Peter B. Favila, to whom the NDC reports to, has said that sovereign guarantees would be issued only for select projects.

The meeting today will also settle "who are the people who will run the P100-billion fund and procedures and roles of the agencies", PCCI President Edgardo G. Lacson told BusinessWorld in a separate telephone interview yesterday.

"We will also review the infrastructure projects and we may choose three [to prioritize]," Mr. Lacson said.

Aside from the sticking point of sovereign guarantees, right-of-way issues attached to various proposed infrastructure projects remain unresolved.

The government will need to pay owners of land where infrastructure such as expressways will be built before construction can start. If the owners dispute the government’s assessment of the land’s value, the case will have to be settled in court.

"It’s always a major factor causing delays. It’s been our problem before and it is our problem today. You can bet almost all [of the proposed projects] have right of way issues," PCCI infrastructure committee Chairman Enrico L. Basilio yesterday said.

A right-of-way acquisition court may be set up to speed up the processing of disputes, he added.

Mr. Basilio previously cited four projects — the C-6 highway from Bicutan to Meycauyan, an expressway from Skyway 1 to the North Luzon Expressway, a "grand central station" on North Avenue and EDSA to serve various light railways, and the extension of LRT Line 1 southward — as among the ten projects the P100-billion stimulus fund will likely finance.

regular, regulations, rigorous

Monetary Board Approves Third Phase of Reforms, Issues “Manual of Regulations on Foreign Exchange Transactions” 01.15.2009/BSP media release

The Monetary Board approved today the third phase of reforms in the foreign exchange regulatory framework and the release of the new “Manual of Regulations on Foreign Exchange Transactions”, which replaces Circular No. 1389 dated 13 April 1993, as amended. Bangko Sentral Governor Amando M. Tetangco, Jr, said that, “The third phase of reforms includes the liberalization/streamlining of rules on foreign borrowings of private banks for relending purposes and registration of inward foreign portfolio investments; and reforms/provisions intended to improve monitoring of foreign exchange flows and formalize/clarify existing practices.” The approved reforms are already incorporated in the new “Manual” which shall be posted on the BSP website.

The third wave of reforms includes the lifting of the prior BSP approval requirement for foreign loans by private banks with maturities longer than one (1) year intended for relending and increasing the number of banking days within which borrowers of short-term loans shall apply for registration with the BSP from three (3) banking days to ten (10) banking days from drawdown date. This will give borrowers enough time to prepare the documents for registration. For medium- and long-term loans, the registration shall be made within three (3) months from utilization of loan proceeds. In support of the initiatives to improve the banking system’s balance sheet, the acquisition of non-performing assets/loans (NPAs/NPLs) of banks and other government financial institutions is added to the list of projects/costs eligible for financing with foreign borrowings. Also qualified for foreign financing are the acquisition of government assets approved for privatization and the refinancing of existing loans used for eligible projects/costs which are also eligible for servicing using foreign exchange sourced from banks and their subsidiary/affiliate foreign exchange corporations (forex corporations) under existing rules.

Investment-related reforms include: (1) delegating to custodian banks the registration of inward foreign investments in peso-denominated government securities and peso time deposits with tenor of at least 90 days; (2) discontinuing submission of report on sale of foreign exchange by banks for outward investments; and (3) reducing the number of days within which proceeds from outward investments funded with foreign exchange purchased from banks or their forex corporations are inwardly remitted and sold for pesos through banks from fifteen (15) to seven (7) banking days from receipt of the funds abroad. The reforms also allow reinvestment of dividends/profits and divestment proceeds without having to first inwardly remit such amounts within two (2) banking days from receipt of the funds abroad.

Other reforms/provisions intended to improve monitoring of foreign exchange flows and formalize/clarify existing practices include: (1) requiring prior BSP approval for prepayment of loans by private non-bank borrowers to be serviced using foreign exchange purchased from banks or their forex corporations, regardless of remaining days to maturity; (2) requiring submission of annual foreign borrowings plan for medium- and long-term loans while discontinuing submission of foreign borrowings plan for private sector entities’ short-term loans; (3) increasing penalties for late reporting to the BSP of transactions involving registered foreign investments; (4) clarifying that private sector loans requiring prior BSP approval shall be submitted prior to signing of loan documents and/or drawdown of loan proceeds; (5) requiring prior BSP approval for non-resident issuances of bonds/notes or similar instruments in the domestic market; and
(6) prohibiting offshore banking units (OBUs) to deposit in their peso deposit accounts with banks the peso equivalent of foreign exchange remittances related to inward foreign investments for payment to designated investee firms/beneficiaries in the Philippines.

With the adoption of the new “Manual”, the application of the rules on the sale of foreign exchange is now limited to banks and their forex corporations. Hence, the sale of foreign exchange by non-bank BSP-supervised entities and their subsidiary/affiliate forex corporations, including qualified entities operating as foreign exchange dealers/money changers and remittance agents that are not banks and their forex corporations, continues to be governed by other applicable BSP regulations (currently by Circular No. 471 dated 24 January 2005) and shall not be covered under the “Manual”.

The reforms in matrix form are attached for easy reference.

The new regulations will take effect fifteen (15) calendar days after publication of appropriate Circulars in the Official Gazette or a newspaper of general circulation in the Philippines.


e-news sum/1.19.09

Crisis can also cut economic growth in 2010–ADB

DevNews

Monday; January 19, 2009

Peso-dollar rate: $1.00 = P47.20

Key national news coverage of the

National Economic and Development Authority (NEDA)

and other related news

There are 11 articles of note (3 neutral, 8 other) in the national press that can shape perceptions regarding NEDA and the economy.

neutral news

Crisis can also cut economic growth in 2010–ADB

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&catid=33%3Aeconomy&id=4742%3Acrisis-can-also-cut-economic-growth-in-2010adb&Itemid=60

by Cai U. Ordinario

THE Asian Development Bank (ADB) has warned that the economic crisis gripping countries worldwide could also “hammer” growth prospects, particularly in Asian countries like the Philippines, until 2010.

An ADB Economics Working Paper Series titled, “The US Financial Crisis, Global Financial Turmoil and Developing Asia: Is the Era of High Growth at an End?” stated there is a possibility the crisis will stretch for 24 months, not 18 months as the ADB earlier predicted.

Under such a scenario, the Manila-based multilateral financing institution said prolonged slowdown in industrial countries that would stretch until the first half of 2010 will further “batter” regional export growth, reduce growth and slow down domestic demand.

Neda Director General Ralph Recto told reporters on Friday, after his speech at the Meeting of Major Business Organizations on the 2009 Economic Roadmap organized by the Philippine Chamber of Commerce and Industry, that growth in 2008 will likely hit 4.6 percent while GDP in 2009 will be at 4.7 percent.

Recto said the slowdown in the country’s GDP is attributable to the crisis.

SSS to contribute P12.5 billion to P300-billion stimulus fund
Phil. Star

http://www.philstar.com/Article.aspx?ArticleId=432831&publicationSubCategoryId=66

By Iris C. Gonzales


The Social Security System (SSS), the state-owned pension fund for private sector employees, is eyeing to contribute P12.5 billion to the government’s proposed P300-billion crisis fund, its top official said Friday night.

SSS president and chief executive officer Romulo Neri said the contribution that SSS is eyeing is through the provision of funds for lending to the private sector.

Neri said SSS is looking at joining other government financial institutions in pooling P100 billion which would form part of hte P300 billion stimulus package.

Socioeconomic Planning Secretary Ralph Recto earlier said the P300 billion-fund would be rolled out within the next two years to help the Philippines prepare for what happens after the crisis.

This way, the government would able to come up with an efficient mechanism on how to go about utilizing the fund. He said this mechanism should help ensure that there would be no room for corruption in the disbursement of the funds.

Concession extension plan splits water firms, puts regulators in a fix
http://www.abs-cbnnews.com/business/01/12/09/concession-extension-plan-splits-water-firms-puts-regulators-fix

by Roel Landingin, Newsbreak Posted on 01/12/2009 9:53 AM

It’s almost like having your cake and eating it too, except, in this case, it’s all about water. Still, that is probably why many members of President Gloria Arroyo’s Cabinet are backing what is being touted as a timely trade-off that could ease an imminent water rate increase in Metro Manila.

The idea is simple. In return for extending the 25-year concession granted to Manila Water Co. and Maynilad Water Service Inc. by another ten year from 2022 to 2032, the two water companies are to moderate planned water rate hikes early this year and boost capital expenditures.

“The proposal would avert a water rate increase and increase investments amid the downturn,” said
Economic Planning Secretary Ralph Recto, who pushed for the idea during a Cabinet meeting in mid-December. “It will work like a stimulus package, except it’s being done by the private sector rather than the government.”

other news

Excise tax key in filling deficit

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=category&id=23&layout=blog&Itemid=58

by Jun Vallecera

THE government has made it known the excise-tax reforms for alcohol and cigarettes are far from complete, and could stand further reforms.

Finance Secretary Margarito Teves said on Friday the Department of Finance (DOF) supports continuing moves to increase the tax on sin products and raise possibly more than P100 billion from the measure.

“We believe that there is scope for an increase in the excise tax on alcohol and tobacco,” Teves said at the joint meeting of members of the Philippine Chamber of Commerce and Industry, where he was guest speaker.

Taxing alcohol and tobacco has proven difficult and frustrating for the government in terms of delivery of revenue targets—which continues to disappoint—and in terms of efficient implementation.

Bankers remain optimistic in ’09 amid crisis

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&catid=23%3Atopnews&id=4758%3Abankers-remain-optimistic-in-09-amid-crisis&Itemid=58

by Erik de la Cruz

ECONOMIC growth this year will be slower than last year due to the global financial crisis, but executives of some of the Philippines’ biggest banks remain optimistic 2009 will see still-positive bottom lines for them.

“We are cautiously optimistic. We are still forecasting growth and we will review the figures every quarter to calibrate our targets,” said Tessie Sy-Coson, chairman of Banco de Oro Unibank (BDO), the country’s largest in terms of assets.

Philippine National Bank (PNB), which is expected to move to fourth place from being sixth-biggest in terms of assets should it merge with Allied Banking Corp. later this year, sees no major corporate failures this year.

Stimulus, poll automation in budget priority

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4743:stimulus-poll-automation-in-budget-priority&catid=33:economy&Itemid=60

HOUSE Speaker Prospero Nograles said they are determined to pass the 2009 national budget so it will be on top of the House agenda today, when they resume session, and called on his colleagues to focus on the money measure, the passage of which will trigger the legislation of the P30-billion economic-stimulus appropriation.

At a weekend forum in Manila, Nograles also acknowledged the need to address its “unfinished businesses,” like the controversial Charter change, the reproductive-health bill and the extension of the Comprehensive Agrarian Reform Program (CARP). “There is a need to act on these controversial bills because we only have 18 sessions. When our session ends in March 6, we will be taking another monthlong break.”

“The problem [with my colleagues] is, as long as the bill is controversial, they don’t want to tackle it on the floor. But how can we be public and transparent about it if that’s the case?”

The proposed P30-billion stimulus fund is intended to prime job-generating projects in agriculture, environment, health and education.

Jpepa implementation to cost BOC P12.5B in forgone revenues

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&catid=33%3Aeconomy&id=4741%3Ajpepa-implementation-to-cost-boc-p125b-in-forgone-revenues&Itemid=60

by VG Cabuag

THE Bureau of Customs (BOC), the national government’s second-largest revenue earner, said the implementation of Japan-Philippines Economic Partnership Agreement (Jpepa) will hurt its collection for the year as it stands to lose billions of pesos.

Based on its initial computation, the said bilateral agreement, which was ratified by the Senate late last year, will result in about P12.5 billion in forgone revenues from its collection from last year, BOC Commissioner Napoleon Morales said.

Imports from Japan make up 10 percent of the bureau’s revenue collections, which from last year’s target amounts to about P25.4 billion, he said. Morales said half of that amount would be forgone revenues.

“If we used to collect 10 percent on items A-Z imported from Japan, some will be reduced to 8 percent, others 5 percent; some will be 3 percent or 2 percent depending on the items…until everything will become zero. Definitely, it has an impact on our revenue generation,” Morales said.

Inflation seen to average even lower than 6 percent

Business Mirror

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=4747:inflation-seen-to-average-even-lower-than-6-percent&catid=26:nation&Itemid=63

by Jun Vallecera

INFLATION, seen to average around 6 percent to 8 percent this year, should moderate to a rate even lower than the 6-percent low end of the target, reported the Bangko Sentral ng Pilipinas on Friday.

According to Deputy Governor Diwa Guinigundo, it should be possible for inflation to average lower than 6 percent because downtrending inflation has started.

His optimism is not misplaced since the actual inflation in December, originally feared to remain in double digits, averaged only 8 percent. “Its inertial impact should help lower inflation in the future, particularly for the rest of this year.”

Concerns seen troubling P100-B stimulus tagged

Businessworld

http://www.bworldonline.com/BW011909/content.php?id=002

By Jessica Anne D. Hermosa

THE LACK OF RULES and right-of-way problems are holding up implementation of a P100-billion stimulus plan, business leaders said.

As such, members of the Philippine Chamber of Commerce and Industry (PCCI) — the private sector proponent of the fund — are meeting today to settle the mechanics of the fund, which is to be shouldered by both the public and private sectors. These rules will then be presented to the Cabinet for approval.

Business leaders will also be reviewing the status of right-of-way issues behind infrastructure projects the fund may finance, and will be choosing three blueprints at the meeting to recommend to the government, PCCI officials said.

Spoiled and supportive

Inquirer

http://business.inquirer.net/money/columns/view/20090118-184121/Spoiled-and-supportive

No Free Lunch by Cielito Habito

FILIPINOS, IT IS OFTEN SAID, are a spoiled lot. Many (most?) of us don’t do much walking in our daily lives because we are so used to having door-to-door transport. And I’m not talking about those of us with cars. I’m talking about the average Filipino who, to get anywhere, steps out of the house, walks several paces (if at all), hails a pedicab or motorized tricycle, gets a ride to the jeepney or bus stop, rides the jeepney or bus, gets off, hops on to another pedicab/tricycle, and gets transported right to the door of his/her final destination.

Sometimes we carry this “spoiledness” a bit too far. It never fails to both amuse and annoy me when I find myself driving behind a jeepney letting off a passenger in our town of Los Banos (and we all know they never pull over to the side when they do!), and then, just five meters ahead, stops again to pick up a new passenger. I marvel at how a driver could be so obliging as to stop exactly where the alighting passenger yells “para!” even as he knows he will very shortly stop again for another passenger waiting just a few meters away. Thank God (should I say thank MMDA?) we have designated jeepney stops in Metro Manila; otherwise traffic in the city would never move!

World Bank proposes 10 development projects for RP worth $1.336 billion
Philippine Star

http://www.philstar.com/Article.aspx?ArticleId=432827&publicationSubCategoryId=66

By Ted P. Torres

The World Bank has 10 proposed development projects for the Philippines with a combined project cost of $1.336 billion.

The global financial institution said it would be the primary source of the funds, with some contributions from “some non-bank sources.”

Biggest among the projects in the pipeline is the $682-million Light Railway Train (LRT) Line 1 South Extension project. The Light Rail Transit Authority (LRTA) will be the implementing government agency for the project.

The $180-million Cavite-Laguna North-South Highway project is the second largest project in the list with the Department of Public Works and Highways (DPWH) as implementing agency.