Wednesday, February 2, 2011

The Aquino Administration: Post-election Feedback

This article will mainly tackle what the Aquino administration have done for the Filipino people. It will mainly consist of positive and negative feedback to the actions done by the current regime, after completion of acquirement and provision of highly-regarded posts in the government.

This will be Spotlight Philippines' statement of or pertaining to the current status quo of the Republic of the Philippines. The lengthy page will be posted in a few days. Please wait shortly.

MVP offers to buy MRT

MANILA, Philippines—Local infrastructure giant Metro Pacific Investments Corp. (MPIC) has offered to buy the government’s stake in the Metro Rail Transit (MRT) 3 train line traversing Epifanio de los Santos Avenue for $1.1 billion.

The amount will be enough to settle the government’s outstanding debt to MRT Corp. bond holders, MPIC said.

The acquisition will give the group, chaired by businessman Manuel V. Pangilinan, 100-percent ownership of the company that holds the right to operate and manage the train line until 2025.

In a letter to Finance Secretary Cesar Purisima and Transportation Secretary Jose de Jesus, MPIC offered to buy shares in MRT Corp. currently held by state-owned lenders Land Bank of the Philippines and Development Bank of the Philippines.

MPIC was earlier given control over a 29-percent stake in MRT Corp. by the block’s owner, Fil-Estate Corp. of businessman Robert John Sobrepeña.

MPIC said it planned to spend $300 million to increase the MRT’s capacity to 700,000 passengers a day from the current 350,000 a day.

The capacity expansion would be completed in two to three years, according to the proposal letter, a copy of which was obtained by the Inquirer.

MPIC said it was willing to accept a lower rate of return on its investment if it would acquire the MRT stake from the government. It added that it would not seek any government guarantee for the project.

MPIC, however, urged the government to extend the build-operate-transfer contract by another 15 years to 2040 to make it financially viable.

The government stands to save $150 million in annual subsidies if it accepted the proposal, the letter said.

The proposal was offered as an alternative to the way the government wanted to privatize the MRT, which was to bundle it with the Light Rail Transit (LRT) line 1 that runs from Baclaran in Pasay City to Roosevelt, Quezon City.

The letter said any company that would be awarded the contract for the two train lines would have to assume responsibility of the lines’ debt obligations totaling about $2.6 billion.

Any company that wins the contract for both lines would have to spend a lot of money before even starting to improve the train line’s facilities. The letter said this expense would then be passed on to the riding public, raising train fares to as much as P100 a ticket.

In an interview, Transportation Undersecretary for rail transport Glicerio Sicat said the government was looking at two methods of privatizing the MRT line.

The first was for the government to take over the train system, improve its operations and facilities before finally bidding out a contract for the train’s operations to private parties.

“However, this method will take a long time and will be very expensive,” Sicat said.

The second method, Sicat said, was to look for a private company willing to acquire the government’s stake in MRT. The government would not have to spend a single peso and pass on the responsibility to the private investors.

MPIC controls Hong Kong-based First Pacific Co. Ltd.’s interest in the Philippines, including investments in telecommunications, infrastructure, healthcare and power generation and distribution.

Source: Paolo Luis G. Montecillo, Philippine Daily Inquirer

PH economy at its fastest pace in 24 years

MANILA, Philippines—The Philippine economy grew at its fastest pace last year since the 1986 Edsa People Power Revolution, expanding 7.3 percent due to strong domestic demand fueled by the billions of dollars overseas Filipino workers sent home.

Government data showed gross domestic product (GDP)—the total value of goods and services produced in the country—rose a seasonally adjusted 3.0 percent in the final quarter of 2010, more than double market expectations and a turnaround of a third-quarter contraction.

The National Statistical Coordination Board (NSCB) said the strong performance of the Philippine economy—coming off growth of just 0.9 percent in 2009—was achieved on the back of the world recovery from the global financial crisis.

“The global economic recovery which resulted in record growth rates of foreign trade … contributed to an economic performance in 2010 that well surpassed the government’s target of 5.0 percent to 6.0 percent,” the NSCB said.

Also boosting growth were higher remittances from the millions of Filipinos working abroad and the extra money that was pumped into the economy by politicians who campaigned in the national and local elections held in the middle of last year.

“Remittances have been pretty healthy and that has really helped to support private consumption in the Philippines,” said HSBC economist Sherman Chan. Remittances from overseas Filipino workers are expected to top $20 billion this year.

The NSCB said industry delivered its best seasonally adjusted quarterly growth in at least 15 years, rising 6.7 percent in October to December from the previous three months, with food manufacturers and mining leading the way.

“This shows the economy is not losing steam yet. That is in large part due to accommodative monetary policy, which has helped to sustain investments even though the government is pursuing fiscal consolidation,” Chan said.

Strong growth from industry and recovery by the farm sector more than offset falling government spending, which fell an annual 7.6 percent in the quarter.

NSCB Secretary General Romulo Virola said the 7.3-percent full-year GDP expansion was the highest since 1986 when the dictator Ferdinand Marcos was toppled in the Edsa Revolution.

Growth by sector

Private sector investment in construction, machinery and equipment resulted in a robust 17-percent growth in gross domestic capital formation. This supported the healthy pace of growth in manufacturing and services, according to the NSCB.

Industry contributed 3.9 percentage points to total GDP growth on the back of brisk manufacturing, particularly electrical machinery, petroleum and coal products, and food—thanks to a strong pick-up in domestic demand and the rebound in external trade.

The services sector contributed 3.5 percentage points to GDP growth, boosted by the strong performance of trade and private services. This was complemented by flourishing domestic investment, robust expansion in business process outsourcing, hotels and restaurants, wholesale and retail trade, and import and export trade.

Due to fewer typhoons, the agriculture sector managed to grow 5.4 percent in the fourth quarter. “Only two typhoons hit the country compared to seven in the last quarter of 2009,” Socioeconomic Planning Secretary Cayetano Paderanga noted.

Nonetheless, full-year growth in agriculture, fishery and forestry was subdued due to the lingering effects of the El Niño weather phenomenon in the first half of 2010.

Inflation, interest rates

Robust domestic demand, and rising global food and fuel prices, however, are adding to concerns about inflation.

“We were expecting the central bank to hike rates by the second quarter. But given these strong growth numbers, I think there’s scope for the central bank to normalize its monetary policy as early as the first quarter,” said Euben Paracuelles, an economist at Nomura in Singapore.

The Philippines is one of only two countries in Southeast Asia—the other is Indonesia—not to have raised interest rates since the end of the global financial crisis. The policy rate has been at a record low of 4 percent since July 2009.

The Bangko Sentral ng Pilipinas (BSP), however, said inflation was manageable.

“Not necessarily inflationary because the economy has expanded, its absorptive capacity has grown,” BSP Deputy Governor Diwa Guinigundo said in a text message to reporters.

Inflation is expected to rise up to the third quarter before stabilizing toward 2012, the BSP said on Friday. Annual inflation was 3.0 percent in November and December, after hitting a one-year low of 2.8 percent in October.

Exciting prospects

“We are looking toward exciting growth prospects,” Guinigundo said.

Likewise brimming with optimism, Paderanga said “the 2010 economic performance bolsters confidence that the economy is on a path of strong recovery.”

Arsenio M. Balisacan, dean of the University of the Philippines School of Economics, agreed that the rate of economic expansion in 2010 could provide momentum for future growth. But he added the challenges were many.

“Government has to raise revenue to sustain support for infrastructure development, investment in the social sector, particularly education and health, and institution building,” Balisacan said.

John Forbes, an investment adviser with the local American Chamber of Commerce, said the promise of further political stability during President Benigno Aquino III’s six-year term offered hope for a sustained period of strong growth.

He cited Mr. Aquino’s anticorruption campaign, social welfare spending and multibillion-dollar infrastructure upgrade plans as factors the Philippines could finally start to match its dynamic Asian neighbors.

“The Philippines is an economy in the world’s fastest-growing region and it is surrounded by economies that have grown at very high rates for a very long period of time,” Forbes said.

He said average GDP growth for the Philippines had been below 5.0 percent for the past decade.

“What this figure (2010 GDP growth) demonstrates is the potential of the Philippine economy to grow almost twice as fast (as 5.0 percent),” he said. With reports from Agence France-Presse and Reuters

Source: Riza T. Olchondra, Philippine Daily Inquirer