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Dollar remittances by overseas Filipino workers (OFWs) rose to a high
of $4 billion in the first semester, even as skilled workers continued
to leave the country due to lack of gainful employment opportunities at
home. The figure was 2.6% higher than the $3.8 billion in remittances in
the same period last year, the Bangko Sentral ng Pilipinas (Central Bank
of the Philippines, or BSP) reported yesterday. BSP data also showed
that OFW remittances recovered in June to $706 million, up by 19.41%
from $591 million in the same month last year. This pulled up total
remittances in six months to June, and reversed the year-on-year
declines reported in April and May. BSP officer-in-charge Amando M.
Tetangco, Jr. attributed the remittance growth in June to the increase
in the number of OFWs deployed in Kuwait, Saudi Arabia and the United
Arab Emirates. Labor has been the country's most important and single
most profitable export since the 1970s, accounting for a big part of the
gross national product. Data from the Philippine Overseas Employment
Administration (POEA) showed that the total number of deployed Filipino
workers grew by 9.2% year on year to 501,713 in the first semester. Mr.
Tetangco said local commercial banks' move to establish new remittance
centers abroad also helped improve dollar flows to the country.
With the rosy January-June figure, BSP is optimistic dollar
remittances by yearend can hit $8.1 billion, or 6% higher than last
year's $7.6 billion. "The favorable first semester performance provides
greater optimism that the projected 6% growth in remittances for 2004
can be met," Mr. Tetangco said. He also said increased fund transfers
from Hong Kong, Saudi Arabia, Singapore, United Arab Emirates, and the
United States compensated for the decline in remittances from Japan and
the United Kingdom. Still, dollar remittances for the January-June
period came mostly from the US, Saudi Arabia, Hong Kong and Japan.
Dollar remittances help spur economic growth in the country as their
beneficiaries invest the money, possibly in real estate, or use it to
set-up businesses. An increase in OFW remittances can also help pull up
the peso, which remains undervalued because of rising oil prices. "An
expected, increase in OFW remittances may contribute to the recovery of
the peso. However, a still problematic trade balance, which can be
further aggravated by the escalating price of oil, of which the
Philippines is a net importer, can hamper its upturn. Given this, expect
the peso to hover between PhP55.90:$1 to PhP56:$1," the University of
the Asia and the Pacific (UA&P) said in a report yesterday. Filipinos
abroad comprise of professionals and skilled workers including doctors,
nurses, information technology experts and engineers.
-- Iris Cecilia C. Gonzales
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The agriculture and fisheries sector grew by 6.61% in the first
semester on better production by its major segments, particularly: rice,
corn, sugarcane, and aquaculture, the Bureau of Agricultural Statistics
(BAS) said yesterday. "The crops and fisheries sub-sectors provided the
big push in the overall growth, which was faster from the 2.62% growth
experienced in the same period last year," BAS director Romeo S. Recide
said in his report. The agriculture and fisheries sector's six-month
gross value added in real terms reached
PhP144.537 billion, from
PhP135.573 billion in the same period last year. On a quarterly
basis, agriculture output grew by 4.68% in the second quarter, from
1.62% last year and from 7.7% in the first quarter. Among the
growth-contributing sub-sectors in six months to June, palay (paddy
rice) reversed its year-ago 5.13% contraction to expand by 12.21%; corn
recorded a faster 14.08% growth compared with 5.82% last year; sugarcane
value added improved by 18.3% or just about its year-ago level, and
aquaculture output improved by 28.74% from 1.75% last year.
Earlier BAS data showed that palay production went up by 11.5% to six
million metric tons as of June, from 5.38 million metric tons a year
ago, while national corn output grew by 13.8% to 2.33 million metric
tons from 2.05 million metric tons. These two commodities contributed as
much as a fifth of the agriculture sector's aggregated value-added in
six months to June. Onions, meanwhile, were the biggest loser during the
six-month period, with an 11% decline in gross value in real terms to
PhP468.1 million from
PhP525.97 million. This was after Nueva Ecija, the country's main
onion growing area, was hit by heavy rains. Onion farmers were likewise
discouraged from planting because of the entry of cheaper onion from
China and other countries.
On the sub-sectors, the output of:
Meanwhile, an agriculture economist said the latest agriculture
growth figure assured the growth of the second quarter gross domestic
product (GDP). GDP is the common measure of an economy's performance.
"Notwithstanding the 4.68% [in the second quarter] was slower than the
7.7% [in the first quarter], we are assured of at least a percentage
growth for the economy," said Rolando T. Dy of the University of Asia
and the Pacific's Center for Food and Agri-Business. The government
earlier reported that the economy was likely to have grown by 5% to 5.5%
in the second quarter on robust farm output, the improvement in
manufacturing, and stronger exports. "This is a positive sign,
considering the direct and indirect effects of agriculture on the
economy. We could reach the higher limit of our 4%-5% annual GDP
forecast if such performance continues," Mr. Dy said.
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The economy faces rougher roads ahead, given rising oil prices in the
world market, Energy Secretary Vincent S. Perez, Jr. said in a statement
yesterday. He said world oil prices having hit historic highs was a
cause for "serious concern," noting that Dubai crude's spot price was
already at $38.15 per barrel on August 11. "With oil prices continuing a
relentless climb, we are concerned that we are in for tougher times
ahead. As an oil importing country, we are not insulated from the price
spikes," he said in his statement. The Energy chief also urged consumers
to be more patient and to help in the government's energy conservation
drive. "Our concerted efforts to conserve energy now will somehow ease
the effects of rising fuel prices as we work towards our long term goal
of energy independence and stability," he said. Mr. Perez also called on
oil companies to implement smaller but frequent adjustments to soften
their impact on consumers.
Oil companies on Wednesday said that there were already indications
of increases in local pump prices in a few weeks, following the
continued upswing in world prices. Data showed that Dubai crude has so
far averaged $37.64 per barrel this month from $34.65 last month. The
Energy department said the record-high increases were attributed to
prolonged uncertainties surrounding the global oil market, including
threats of terrorist attacks, continued bombings in Iraq, unrest in
Nigeria, the political situation in Venezuela, financial problems of
Russian oil giant Yukos, Organization of Petroleum Exporting Countries'
spare capacity, and increased world oil demand. Based on the Mean of
Platts Singapore, the price benchmark used by oil importers, unleaded
gasoline soared to $50.84 per barrel in August from $46.52 in July,
while diesel surged to $50.42 from $46.25. President Gloria Macapagal-Arroyo
recently unveiled her energy independence and savings reform package
that aimed to achieve 60% self-sufficiency by 2010, and to shield the
country from the adverse effects of importing oil. The energy
independence and savings program involve developing renewable energy,
increasing the use of alternative fuels, and forging strategic alliances
with other countries. -- B. S. Sto.
Domingo
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WELLINGTON -- Reports that a trade deal between the Association of
Southeast Asian Nations (ASEAN) on the one hand and Australia and New
Zealand on the other are a "done deal" are encouraging but premature,
Trade Minister Jim Sutton said Thursday. An Australian newspaper quoted
officials within the 10 member ASEAN group as saying a trade proposal
was a "done deal." Sutton said it was good to see officials enthusiastic
about the prospects, but the real business would be done at the ASEAN
leaders' meeting in Laos in November to be attended by both the New
Zealand and Australian prime ministers. "The done deal comments are
encouraging, but there is a long way to go and it is important to keep
the matter in perspective," Sutton said. Singapore Trade Minister George
Yeo said on a visit here last month "there will be lots of obstacles
along the way" towards an ASEAN trade pact with Australia and New
Zealand. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
In Canberra, Australian Prime Minister John Howard reluctantly backed
opposition changes to an Australia-United States free trade deal
Thursday in order to save his government's trade policy centerpiece
ahead of national elections. Howard warned the agreement could still
fail if Washington refuses to accept Labor Party amendments which
guarantee Australians' ongoing access to cheap prescription medicines.
The prime minister had previously rejected the amendments as unnecessary
and said they would result in "bad law," while Labor threatened to
scuttle the deal without them. Announcing a backdown to end the
pre-election standoff, Howard maintained the amendments were against the
spirit of the agreement but said he did not want the issue to ruin a
once-in-a-generation chance to link up with the world's biggest economy.
The government has decided that the common sense thing to do is support
the amendments but warn that the enabling legislation could be construed
by the Americans as inconsistent with the free trade agreement," Howard
told reporters. "If that were to occur then it would be entirely the
fault of the Labor Party," he added. Howard said Washington had told his
government overnight that it reserved the right to reject the free trade
deal if the amendments were unacceptable. The prime minister's
concession means the free trade agreement can immediately clear its last
administrative hurdle in the opposition-dominated Senate. The agreement,
seen by some politicians in Washington as a pay-off for Canberra's
strong support for the US-led Iraq war, is scheduled to come into force
next year. -- AFP
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Independent power producers yesterday urged the Energy Regulatory
Commission (ERC) to allow state-owned National Power Corp. (Napocor) to
increase its rates by
PhP1.87 per kilowatt-hour. In a statement, the Philippine
Independent Power Producers Association (PIPPA), which is composed of 23
independent power producers (IPPs), backed up Napocor's pending rate
hike petition with the ERC. "Let Napocor charge its true cost, maintain
its financial viability by allowing reasonable RORB (return on rate
base) and implement the TOU (time of use) pricing. This will give a
positive signal to investors at the time when new power projects are
needed," the group said. It added the rate increase will enhance the
privatization efforts of the Power Sector Assets and Liabilities
Management Corp. or PSALM, the entity tasked to oversee the sale of
Napocor's assets. "We have to bite the bullet today if we are to avoid
the vicious power cycle of shortage and excess capacity," PIPPA
President Ernesto B. Pantangco said. PIPPA also urged the ERC to
seriously consider allowing Napocor to recover its true cost of
generation which consists of fuel, purchased power cost, salaries,
operation and maintenance, and foreign exchange, among others. Data
provided by PIPPA showed fuel accounts for 70% of the total generation
cost. Fuel prices in the world market have increased significantly from
$18 per barrel to $45 per barrel
Coal, meanwhile, procured by Napocor in the international market
increased from $30 per metric ton (MT) to a high of $80/MT.
At Napocor's ERC approved generation rate of PhP2.76/kWh, their true
cost of generating power in 2003 amounts to PhP5.93/kWh or a net
operating loss of PhP3.17/kWh. In absolute terms this translates to
approximately PhP108 billion net operating loss per year, PIPPA said. In
addition, the financial viability of Napocor should be maintained by
allowing it to charge rates in accordance with their respective mandates
or a 12% RORB. The power firm's current rate application with ERC only
results in an 8% RORB which international banks are asking, PIPPA said.
Napocor's current generation rate of PhP2.76/kWh has resulted in a
PhP108 billion net loss for 2003 and a projected net loss of 105 billion
in 2004 while its RORB in 2003 is a high negative rate of 14.82%. "The
delayed implementation of Napocor rate hike leads to financing shortfall
for Napocor in the range of PhP100 billion to about PhP165 billion,
thus, adding to government's budget deficit. If this situation persists
who will invest in power generation at a negative return," PIPPA said.
Implementation of the TOU pricing, for its part, will enable the
business sector to reschedule or shift their operating hours from peak
to off-peak period. This will reduce peak load usage and business
operating costs through lower power prices, the group said.
-- Bernardette S. Sto. Domingo
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President Gloria Macapagal-Arroyo is set to go to China on Sept. 2-4
for an official working visit, Malacaņang announced yesterday. In a
statement, Presidential Spokesman Ignacio R. Bunye said Mrs. Arroyo
would be in Beijing on Sept. 2-3 upon the invitation of the Chinese
government. This will be the President's first foreign trip after she
won a fresh-six-year mandate in the May 10 polls. "The President's
official working visit to China, the first during her new term as
President, signifies the increasing and deepening cooperation between
the Philippines and China, particularly in the economic, trade and
development areas," he said. Mrs. Arroyo is expected to meet with the
leaders of China to discuss further cooperation in the specific areas of
investments, infrastructure and transport, energy, and agriculture. The
President will also witness the signing of several agreements in these
critical areas. "These agreements were negotiated in implementation of
the President's 10-point agenda," he said.
After her official working visit, Mrs. Arroyo is scheduled to attend
the 3rd International Conference of Asian Political Parties (ICAPP) on
Sept. 3-4 to deliver the keynote address. Political leaders from Asia,
including several heads of states, will also attend the event. "The
President's participation in the 3rd ICAPP signifies the importance the
Philippines gives to the role political parties play in determining and
carrying out the will of the people," Mr. Bunye said. Mrs. Arroyo
previously went to China in 2001 for the Asia Pacific Economic
Cooperation meeting in Shanghai, and in 2002 for a state visit in
Beijing. -- Jeffrey O. Valisno
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Next to China and
India
By LEILANI M. GALLARDO, Senior
Reporter
The Philippines remains as one of the top three countries being eyed
by Japanese firms for information-technology (IT)-related outsourcing, a
survey conducted by the Japan External Trade Organization (Jetro)
showed. The survey was done during the Jetro Outsourcing Fair for IT
companies held in Tokyo last March 2-4, 2004. Of the 52 exhibitors that
participated in the event, six companies were based in the Philippines.
"(The) survey revealed that the Philippines is one of the nations
closely eyed by Japanese firms at the fair, next to China and India.
China is the top country of interest for the visitors with 35% ratio
while India is next with 25.9% preference rate and the Philippines is
the third with 12.5% ratio," Jetro's Manila office said.
Other countries that earned interest were Romania, 7.6%; Bangladesh,
4.6%; Sri Lanka, 4.6%; Pakistan, 3.4%; Nepal, 3%; Singapore, 1.5%;
Brazil, 1.1%; and Malaysia, 0.8%. A total of 11 countries joined the
exhibit. The foreign companies which exhibited at the IT outsourcing
fair are expecting to earn a total of $5.916 million worth of actual
contracts that were forged during the duration of the event as well as
expected contracts that will be finalized after the fair.
Of the total $6 million in expected earnings by all the foreign
exhibitors, the Philippines' six participating companies expect to earn
$180,000 after forging some 63 business deals with Japanese firms. With
nearly 800 visitors in the fair, 2,000 business talks were conducted and
a total of 380 initial agreements are expected to reach purchase deals.
Based on the visitor survey results, majority or 30% of those that went
to the fair were looking for outsourcing subcontractors while 27% wanted
to compare their technology with other nations. Some 23% came to gather
technology information and 14% wanted to conduct business talks. Of
those that were surveyed, 44% said they are considering outsourcing, 34%
are already outsourcing and 21% said they never considered it. Those who
wanted to go into sourcing cited the following reasons for doing so:
reduction in development cost, lack of efficient staff in the office,
introduction of new technology and focus on core competence. Companies
participating in the trade fair were limited to those that are able to
provide outsourcing to Japanese companies for business solutions or
customized software, embedded software, engineering service, network and
integration, package implementation, utilities software and business
process outsourcing.
Data provided by Jetro last year showed the Japanese information
services industry is $12-billion market, the second largest after the
United States. Philippine information technology companies face tough
competition from their Indian and Chinese counterparts but also have
advantages such as geographical proximity to Japan and the time
difference of only one hour. Indian companies, however, are gaining an
edge over their competitors following efforts to learn the Japanese
language as well as Japanese business practices.
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Portfolio investments or so-called "hot money" declined 10% as of the
end of July as foreigners stayed on the sidelines. The Bangko Sentral ng
Pilipinas (BSP, or the central bank) said net portfolio inflows as of
end-July fell to $283.4 million from the $316 million posted in the same
period last year. In July alone, investments stood at $28.7 million from
$58.9 million in June, but central bank officials said investments could
improve later this year if the local equities market also improves. BSP
officer-in-charge Amando M. Tetangco, Jr. said if the corporate
performance improves in the second half, particularly for the
telecommunication firms, the stock market may also improve. Hot money is
one of the indicators of investor confidence. The influx of portfolio
funds benefits the country indirectly by contributing to the
appreciation of asset prices in the stock, debt and real estate markets.
These funds are invested in shares of stocks listed in the Philippine
Stock Exchange, government securities or money market instruments and
peso deposits.
Despite the decline, BSP hopes to end the year with more portfolio
investments on expectations of an improved economic outlook. Before
leaving for the US on Tuesday, however, BSP Governor Rafael B.
Buenaventura stressed the need to have a developed capital market. "The
capital market remains weak and primitive that is why investments remain
puny," he told reporters. He urged Congress to pass measures such as the
Personal Equity Retirement Act, Corporate Recovery Act and the
amendments to the charters of the country's financial regulators. The
BSP's data come from Citibank N.A., Standard Chartered Bank, Deutsche
Bank, HSBC and ING Bank, which together account for over 95% of total
fund flows to the country. -- I. C. C. Gonzales
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The Asian Development Bank (ADB) has lifted the suspension of
disbursements from a $167-million loan allocated for a national road
network project. In a letter to the Department of Finance (DoF), ADB
director Patrick Giraud said the Department of Public Works and Highways
(DPWH) may start making withdrawals from the loan account for the Sixth
Road Project. "By letter [dated] 21 July 2004, ADB advised the
Department of Finance of its decision to lift the suspension of the
rights of the DPWH to make withdrawals from the loan account for [the]
first batch of six road improvement civil works contracts," Mr. Giraud
said in the letter. The multilateral funding institution also said it
will soon lift the suspension on nine civil works contracts as soon as
the DPWH complies with conditions laid down. These mainly concern the
substantial completion of compensation for structures and the submission
of an updated land parcel survey. But while the ADB has already lifted
the suspension of loan disbursements, a source from the National
Economic Development Authority (NEDA) said the DPWH has yet to indicate
whether it intends to continue tapping the ADB loan. The ADB loan for
the Sixth Road Project is set to expire this September.
The ADB suspended disbursements for the Sixth Road Project on June 1,
2003 following unresolved right of way and settlement policy issues
between the funding institution and the government. A source from the
NEDA earlier said the DPWH and the ADB could not agree on how to
operationalize their respective guidelines for resolving right of way
and resettlement issues. The ADB approved the loan in September 1996.
The project seeks to improve about 840 kilometers of national roads in
Luzon, Masbate, Mindanao, Palawan and Panay. It also includes the
rehabilitation and structural overlay of about 800 km. of national roads
in Cebu, Luzon, Masbate, Mindanao, Negros, and Panay; replacement,
repair, and retrofitting of bridges on national roads in Luzon,
Mindanao, and Panay; and capacity-building for bridge design, road
safety, highway planning, routine road maintenance, road resealing
training, technical pavement investigations, project coordination and
monitoring. The project is expected to make the movement of passengers
and freight more efficient since the scope of work will be done mostly
in less developed areas. -- Jennifer A. Ng
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Non-tax solutions as well reforms in tax administration must be
pursued along with instituting new taxes, former National Economic and
Development Authority director general Cielito F. Habito said. Mr.
Habito gave these prescriptions during a briefing for legislators in the
House of Representatives on Wednesday. Non-tax solutions include
plugging massive leakages due to graft and corruption, improving the
absorptive capacity of national government agencies, conforming
legislators' pork barrel to government's priority programs, and
addressing the fiscal problems of government-owned and -controlled
firms, especially the National Power Corp. (Napocor). Mr. Habito said
ingrained practices in government agencies such as "SOPs (standard
operating procedures)" and kickbacks must be eliminated while "ghost
employees" have to be weeded out.
In line with this, he suggested accrediting nongovernment
organizations to check on the books of government agencies, and approval
of the Right to Information Act which will ensure public access to
records of government agencies. He further suggested conducting regular
life-style checks on government officials and instituting a "truly
independent" graft body. The government must also institute a
performance-based budgeting system, he said, while devolving more
projects from agencies of the national government to local government
units. With regard to the pork barrel, he suggested conforming the funds
to government's investment program, essentially echoing the suggestion
of several legislators to earmark amounts for President Gloria Macapagal-Arroyo's
10-point program. Napocor has to be privatized, he said, while the rate
setting for Napocor, Metro Rail Transit, Light Rail Transit and the
Philippine National Construction Co. must be depoliticized. Government
must also "collect the collectible" and "implement the unimplemented",
he said.
Among the collectibles is the value added tax, which has become a big
source of tax leakage along with corporate and personal income taxes.
Among the "unimplemented," meanwhile, are elements specified in the
Comprehensive Tax Reform Package. These include the fringe benefits tax,
minimum corporate income tax and ceilings on deductions. Among the
government's
eight tax proposals, Mr. Habito urged the passage of a law that will
index the excise tax on tobacco and alcohol products and the excise tax
on petroleum products to inflation. Some of government's tax proposals
are regressive, he said. These include a franchise tax on
telecommunications firms. Tax measures that the government can look
into, Mr. Habito suggested, are presumptive income taxation for certain
income categories such as professionals, and taxes on visible wealth and
conspicuous consumption. -- Judy T. Gulane
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The Bureau of Internal Revenue's (BIR) July tax collections have
likely exceeded the month's
PhP38.02-billion target. Deputy Commissioner Kim J. Henares said
that based on initial figures, the tax agency has effectively reversed
its weak performance during the first half. The higher-than expected
collections for July may have come from an increase in revenue
collections by the BIR's large taxpayers unit. The BIR also noted an
increase in the revenue take of regional district offices (RDOs)
nationwide. The RDOs are responsible for tax collections from small and
medium-sized firms and individual taxpayers. If the initial assessment
is validated, it will be only the second time for the year that the BIR
has surpassed its monthly targets. The first was in March when it
collected
PhP33.6 billion, slightly higher than
PhP32.1-billion goal.
The revenue agency collected
PhP229.042 billion during the January to June period, missing its
first semester goal by
PhP5.43 billion. Ms. Henares also attributed the positive
performance in July to tax administration reforms such as a new auditing
system that uses third-party information in detecting tax leaks,
stricter monitoring of the tax compliance of local industries as well as
e-services. "Our efforts are beginning to bear fruit," Ms. Henares said.
The BIR has likewise beefed up its anti-tax cheat campaign as it
recently filed tax evasion and perjury charges against 23 business
establishments. The BIR expects to collect
PhP380 million once the cases have been resolved in favor of the
government. The BIR, which accounts for over 80% of government's
revenues, remains hopeful it will be able to meet its goal of
PhP477 billion for this year. The government aims to keep the 2003
budget deficit below
PhP197.8 billion.
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By RUBY ANNE M. RUBIO, Reporter
and ROULEE JANE F. CALAYAG
Midsize commercial bank International Exchange Bank (iBank) is
mulling to raise capital from a possible public offering of shares by
October, depending on regulatory approval, a top bank official said
yesterday. This will be the market's first initial public offering (IPO)
this year. "Hopefully we can do it in October. But again, we don't want
to pre-empt. It depends whether what we have submitted are complete. It
all now depends on the regulator, on how fast they evaluate all the IPO
application. Of course, if we could do it sooner, the better for
everybody," Antonio C. Moncupa, Jr., iBank executive vice-president and
chief financial officer, told BusinessWorld. iBank filed last
month a listing application with the stock exchange and a registration
statement with the securities regulator in its bid to sell its shares to
the public this year. The bank plans to offer 4.42 million to 8.35
million primary common shares with a current par value of PhP100 per
share. These will represent 15% to 25% of the bank's outstanding shares
after the IPO and will be offered within the price range of
PhP160 to PhP190 per share. "That is the price range normally. We
will always change that if the situation changes. That is just borne out
by the assessment of the underwriter of where the market is. It is also
based on how much the existing bank's tax is trading at. When the price
proposal by the underwriter was made, they based that also on the
existing price range of the existing bank's tax in the Philippine Stock
Exchange. It just reflects the realities of the times. If the realities
change, we have to amend," Mr. Moncupa said.
ATR-Kim Eng Capital Partners, Inc. is the issue manager and lead
underwriter for iBank's market debut. "Hopefully, it gets better by the
time we are listed. We are hoping the stock market will significantly
improve. Of course, that is always our wish so we can get a good price,"
he added. The bank will utilize the IPO proceeds to increase its earning
assets, particularly fixed-income investment securities and loans. The
additional capital will enable the bank to increase its risk assets
while meeting the required capital adequacy ratio. "We want to be known
as the best in customer service. We are still maintaining the original
credo by which this bank was founded, which is to have bank institution
with the clear sense of customer orientation. You do that by appropriate
service and expertise," he said. The additional capital will allow iBank
to expand its operations and leverage its existing organization and
infrastructure resulting in improved economies of scale, reduced unit
service delivery costs, and increased profitability. "There are benefits
when a bank is listed. You are more transparent and disciplined. It
gives you the opportunity and avenue for capital-raising activities in
the future if things improve. It opens the door for the bank to pursue
its plans," Mr. Moncupa said. As of end-2003, iBank has generated total
deposits of PhP35.8 billion representing an annual compounded growth of
21% from PhP9.4 billion after its first full calendar year of operations
in 1996. During its nine-year history, the bank has focused on the needs
of the middle market, successfully differentiating itself from
competition through its organization's unique customer service
orientation.
Meanwhile, equities analysts welcomed iBank's IPO, saying that it
will be a positive development in the stock market. However, they
expressed concerns that the share price of iBank may dampen the success
of the IPO. "The IPO's success depends on the share price. It has to be
compared with small issues. Also, its price to book value should be
[measured in comparison with the] Bank of the Philippine Islands [BPI],"
said Jose Vistan, Jr., research director of AB Capital Securities, Inc.
"The share price should be in line with the prices of other banking
issues; because if its price is higher than the other listed banks, it
may be difficult for iBank's IPO to succeed," he added. Ron Rodrigo,
senior analyst at Accord Securities, Inc., lauded iBank's plan to go
public. "It is about time that the PSE has a commercial bank that goes
for an IPO," said Mr. Rodrigo. He noted that it would be a good
indication for the market if the exchange receives IPO tenders every
week just as what is happening in Malaysia, Thailand and Singapore. "I
welcome the IPO but my worry is the price. From what I heard, it is
going to be PhP100 and above per share. Although this is not yet final,
this will cause some concern among investors," said Mr. Rodrigo. He
explained that if iBank goes by this price as against BPI's which is
lower, this may not encourage enough participation from investors. "It
depends on the price. The share price that it should offer must be
compared to other banks that are listed," Mr. Rodrigo said. He added
that the bank's "financial data seem to be all right as it stood high"
after experiencing heavy withdrawals. iBank's major shareholders are
JTKC Equities, iVantage Corp., Razon Industries, Greenhills Properties,
Inc., and Philippine Realty & Holdings Corp. Its board of directors is
composed of chairman Gerardo O. Lanuza, Jr., vice-chairman Ben C. Tiu,
president and CEO Ramon Y. Sy, Wilson L. Sy, Enrique K. Razon, Jr.,
Wilfrido C. Tecson, Ruben C. Tiu, Walter W. Brown, Dante G. Santos, and
Gregorio T. Yu.
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Regulators are stepping up measures to establish a more consolidated
supervision of the country's financial conglomerates to prevent collapse
and systemic failures in the financial system. The move is in line with
the objectives of the interagency Financial Sector Forum to establish a
common regulatory and supervisory framework for financial regulators. In
their first meeting on Monday, financial regulators -- the Bangko
Sentral ng Pilipinas (BSP), the Philippine Deposit Insurance Corp. (PDIC),
the Insurance Commission and the Securities and Exchange Commission
(SEC) -- agreed to focus their efforts on consolidating supervision of
financial conglomerates. Nestor A. Espenilla, Jr., central bank
assistant governor, said regulators would like to improve the management
of financial conglomerates or those huge banks and financial companies
that have subsidiaries and affiliates. He said regulators agreed to
consolidate their efforts more by sharing information on these entities
and avoid duplication of regulatory functions over these financial
giants. PDIC president Ricardo M. Tan, for his part, said information
sharing among the regulators will be key to establishing a more
consolidated supervision in the financial system.
SEC Chairman Lilia R. Bautista said there is a mismatch between the
existing regulatory structure and the structure of the financial
industry that is being supervised. "We are faced with financial
conglomerates whose separate supervision leaves too many gaps," he said.
The central bank regulates the banking industry and formulates monetary
policy while the SEC supervises the equities market, non-bank financial
institutions and corporations. Financial conglomerates in the country
include the Ayala's Bank of the Philippine Islands and Ty-led
Metropolitan Bank and Trust Co. Mr. Espenilla said the focus on
financial conglomerates is only one aspect that the interagency forum
would like to focus on. He said other areas are reforms in the banking
system, pushing amendments in the respective charters of the country's
financial regulators and improving corporate governance among banks and
financial institutions. The financial sector forum is essentially a
voluntary cooperative endeavor among concerned agencies. It aims to
provide an institutionalized framework for coordinating the supervision
and regulation of the financial system while preserving each agency's
mandate. Although the forum is not a regulatory superbody, member
agencies commit to implement the measures agreed upon by the forum in
the interest of enhancing the overall supervision process.
-- Iris Cecilia C. Gonzales
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After strengthening to PhP55.58 yesterday, the Philippine peso again
slipped back to its well-worn range after the money market bought back
US dollars ahead of speculations of heavy corporate demand. Traders said
the "flows-trading of the peso" was mostly speculative in nature as
"most economic risks have already been assumed." The peso closed weaker
by three centavos against the greenback at PhP55.67. Raul Victor de
Guzman, Union Bank of the Philippines' head of trading, said "the peso
can't seem to break it's usual range" given the presence of corporate
players. "The [intraday high] was only in line with the appreciating
yen," he said.
The Japanese yen rebounded yesterday to 110.60 from 111, pulling up
most regional units except the peso. The other day, most regional
currencies depreciated against the dollar as the US raised benchmark
interest rate. "The peso is falling off the track. It's heading off on
its own because of the domestic picture -- today it's good, today it's
not," another trader said. At the Philippine Dealing System, the peso
averaged stronger by more than four centavos to PhP55.641 from PhP55.682
previously. Opening at PhP55.60 against the greenback, the peso hit a
high of PhP55.58 and a low of PhP55.68. Hovering within a 10-centavo
range, the local unit closed at PhP55.67 per dollar. Total volume of
transacted dollars decreased to $151 million from $174.5 million the
other day. -- Ira P. Pedrasa
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Universal bank Allied Banking Corp. has acquired a secure internet
gateway solution to comply with the Bangko Sentral ng Pilipinas'
(central bank) requirement of providing security measures for its
internet facility.
In a disclosure to the Philippine Stock Exchange, Allied Bank
president Reynaldo A. Maclang said Net X Technology Solutions Inc. and
Fujitsu Philippines Inc. will provide the solutions and hardware for the
internet gateway. "This solution will enable a secured platform for the
bank's generating services such as internet banking, mobile banking,
internet browsing, internet mail and remittance system," Mr. Maclang
said.
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By ROULEE JANE F. CALAYAG
Allowing companies to list at the Philippine Stock Exchange (PSE) by
way of introduction may work against investors, analysts warned.
Referring to the recent listing by way of introduction of PetroEnergy
Resources Corp., Joey Roxas, president of Eagle Equities, Inc., said the
scheme may not be good for the stock market. The process allows
companies to go public if the securities sought for listing would be of
such an amount and would be so widely held that their marketability when
listed can be assumed. He said the Securities and Exchange Commission
(SEC) should look into the practice. But PSE independent director and
concurrent oversight director Peter Favila said the public had to
understand the rules of the exchange. "There are rules that allow for an
IPO [initial public offering] and there are those for listing by way of
introduction which the doard had drafted and approved by the Securities
and Exchange Commission [SEC]," Mr. Favila said.
Whether it is an IPO or listing by way of introduction, Mr. Favila
said, is up to the applicant which makes the final choice. He added
PetroEnergy qualified to list this way because it met the written
guidelines that were being implemented by the exchange. "We cannot tell
our issuers not to pursue this avenue if they met the requirements. The
PSE operates in a democratic way. In this case [allowing listing by way
of introduction], the best entity to ask is the regulator," Mr. Favila
added. PetroEnergy was the second to list by way of introduction after
the stock exchange. Mr. Roxas said the PSE's listing by way of
introduction was "forced by circumstances" which was not the case in
PetroEnergy. Earlier, PetroEnergy said it did not consider an IPO to
raise capital because its earnings of PhP160 million annually from its
oil exploration in Gabon, West Africa is expected to be enough to cover
operational expenses. "It is important for companies listing at the PSE,
especially those that go by the front door to have an IPO to ensure that
there is equal distribution of shares," Mr. Roxas said.
MANIPULATION
He said listing by way of introduction opens doors to manipulation.
"If there is no IPO, there is no distribution to the public. The shares
are only in the hands of a few," he added. There are different ways to
list. One of which is through a widely held mother company to its
subsidiaries, which should be the case for companies wanting to list at
the exchange. Jose Vistan, Jr., research director at AB Capital
Securities, Inc., said a company lists at the exchange to raise cash for
the future. "Why would a company list if it has enough money? With
[listing by way of introduction], the market does not have a share in
the company. This gives an unfair advantage to the shareholders," Mr.
Vistan said. He stressed the importance of sticking to the normal
procedure of going through an IPO, which offers an opportunity for gains
to other shareholders while raising capital. "If there are no sellers,
then the owners of the stock are obviously the ones who only make
money," Mr. Vistan said. But Ron Rodrigo, senior analyst at Accord
Securities, Inc., said the process of listing by way of introduction is
a good option to fast-track listing of several companies. He explained
that this makes for a good introduction to the market but in cases where
only one company is listed, it is not feasible. "There are pros and cons
to it, but a thorough study of the company being listed this way is
needed," Mr. Rodrigo said.
|
By JENNEE GRACE U. RUBRICO, Senior
Reporter
The international arm of media giant ABS-CBN Broadcasting Corp. is
planning to expand its operations to four countries in the region.
Randolph T. Estrellado, head for finance told, reporters ABS-CBN Global
is looking at expanding to Japan, Hong Kong, and Singapore. A statement
from the company also said there are plans to enter Taiwan. "The next
thing we will look at is Japan, because we are already there via a
third-party provider But the bigger challenge is how to penetrate
Singapore and Hong Kong," Mr. Estrellado said. He said ABS-CBN will have
to study if it "makes sense" for its international unit to operate in
Japan instead of just having third-party providers carry ABS-CBN shows.
"It's going to be difficult because Japan is a high-cost country. It may
not make sense for us to provide the service there, so we will see," he
said. He said ABS-CBN's contract with the third-party provider is not
due to expire yet. But he added the contract may be renegotiated. For
plans to penetrate Hong Kong and Singapore, Mr. Estrellado said ABS-CBN
still needs to determine if picking third-party providers is a better
option. "This is a challenge because majority of the Filipinos in these
areas really don't control the television set," he said. The move to
penetrate more countries in the region follows ABS-CBN Global's
penetration of Australia, which is the base of 150,000 Filipinos. Last
June, the company started operations in the country as its contract with
the third-party service provider that used to carry its shows had
expired.
In a statement, ABS-CBN said the move to Australia "translates to a
worldwide reach." "We have seen a growth in Philippine migration to the
Asia-Pacific region. Our migrants in this region are very successful in
their lives abroad, yet remain very interested about events and
developments in the Philippines. With ABS-CBN Global bringing [The
Filipino Channel] to Filipino homes all over the world, it is time for
us to open up the Asia-Pacific market," the statement said. ABS-CBN
Global operates in North America, Middle East and Europe. For the first
half of the year, the unit posted
PhP1.4 billion in revenues, up 24% from the same period last
year. Mr. Estrellado said the company is expected to end this year with
over
PhP3 billion in revenues. He added that over the next two years,
the company's performance is expected to improve.
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AboitizLand, Inc., the property arm of conglomerate Aboitiz and Co.,
is spending
PhP300 million to bankroll the initial development of a
32-hectare high-end, mixed-use residential project in Cebu City. In an
interview with BusinessWorld, President and Chief Executive
Officer Andoni F. Aboitiz said the company has allotted roughly PhP300
million for the paving and site works of the project. "We're spending
PhP300 million initially. We're still doing the site works and we plan
to turn over the project to owners by May 2006," he said. The
development, dubbed Pristina North, has a commercial retail and
entertainment area, an office park and mixed use area, a medium density
residential component made up of medium-rise townhouses, a clubhouse and
residential lots ranging from 300 to 700 square meters. The property is
in Talamban, just 8.5 kilometers or 20 minutes away from Cebu City's
central business district. The project was designed by Urbis a regional
consultant on urban design, environment and landscape. Its architecture
and landscaping was co-designed by Hong Kong-based Aurelio and ACL Asia.
Local firm TCGI also contributed in the project's design, together
with Rider Hunt Liacor, Inc. Mr. Aboitiz said Pristina North is by far
the boldest residential project undertaken by the company since it
started developing high-end and middle-market homes in Cebu. He said the
company spent roughly two years for the design and conceptualization.
"This will be our flagship project for a few years," he added. He said
even if the lots are a bit pricey at PhP7,000 per square meter, the
company remains bullish there will be a good market take-up for the
development. "We feel that there is a market for high-quality products
in Cebu and the market is willing to pay a higher price for something
that is unique and has a high quality," he said. Mr. Aboitiz said the
vertical structures in Pristina North will have a contemporary Filipino
feel and the company will encourage clients to adopt a similar theme for
their homes. Aside from its large size, the development boasts of
underground power cables, water tanks and utilities as well as wide
pavements to ensure walkability. -- Leilani M.
Gallardo
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Publicly listed SPI Technologies, Inc. is set to be absorbed by
parent, SPI Acquisitions Co., Inc., following the Securities and
Exchange Commission's (SEC) approval of the two companies' petition to
merge. In a resolution, the SEC said the merger would be allowed
provided the companies would provide within one year the details and the
effects of the merger on the financial condition of the surviving
company. SPI Technologies is 99.72% owned by SPI Acquisition, and owns
eTelecare International, Inc. It is the first Philippine company to
engage in the data business solely for export and the first IT firm to
be listed on the Philippine Stock Exchange. The firms had asked for a
merger to "realize economies in operation." SPI Acquisitions will be the
surviving firm. "The merger of SPI Acquisition Co., Inc. and SPI
Technologies, Inc. may be given due course provided that the mechanics,
purpose, and effects of the merger on the financial condition of the
Company shall be disclosed in its financial statements for at least one
year," the SEC said.
The commission said the merger plan provided for the transfer of the
assets and the assumption of the liabilities of SPI Technologies by SPI
Acquisitions. It said the merger "will not prejudice the rights" of
existing creditors since the surviving company will be solvent and will
remain in sound financial condition even after the merger. The
commission also said that "the articles and plan of merger are in
consonance with the Corporation Code of the Philippines."
-- J. G. U. Rubrico
|
By ANNA BARBARA L. LORENZO,
Reporter
Nokia Philippines, Inc. yesterday said growth potential in the
wireless market remains strong and projections of a 45%-50% cellular
penetration by next year is feasible. "There is already a 32%
penetration as of the first half. I agree that there is a phenomenal
potential in the market to go to that level," said Nokia Philippines
Country General Manager Parikshit Bhasin. The only question is when this
rate would be achieved, he said. Mr. Bhasin said Nokia Philippines is
also not threatened by projection the mobile phone market will
eventually be saturated. He said even if the volume of new subscribers
drop, old users will still support Nokia because people will need to buy
new phones or upgrade their handsets. Nokia Philippines yesterday
announced that it will launch eight new phones in the second half. Mr.
Bhasin said the new phones are expected to boost Nokia's revenues, and
help it maintain the firm's dominance in the market. "I am not
authorized to disclose the market share, or the revenues, but in the
Philippines, Nokia is still the dominant market leader," he said.
This month, Nokia is launching the N5410, the N2650, N3220 and the
N6260 in September, the N2600 in October, and the N6170, N6630, and
N9500 in November. Nokia is also launching two blue-tooth headsets and
two car kit accessories for hands-free mobile phone use while driving.
Nokia also introduced the Image Album, which can store up to 20 gigabits
of photos and videos taken with Nokia's camera-phones, and a wireless
keyboard which can be used with certain Nokia phone models. Most of the
products which will be introduced in the second-half are MMS
(multi-messaging system) capable, with cameras and other special
features, but Mr. Bhasin said most Filipinos still settle for the
so-called black and white phones since these are much cheaper. With the
introduction of new phones, Nokia would have 21 products available in
the local market. The firm also plans to open two Nokia stores in Makati,
and four Nokia Care Centers in Metro Manila, and the cities of Cagayan
de Oro and Lucena before the year ends.
|
By ROULEE JANE F. CALAYAG
The stock market barely moved yesterday although top tier companies
reported better-than-expected performance for the first half of the
year. The Philippine Stock Exchange composite index (Phisix) was up 2.08
points or 0.13% at 1,594.48.
CONSOLIDATION
Jose Vistan, Jr., research director at AB Capital Securities, Inc.,
said the market was in a consolidation mode. "Nothing was happening.
Although the Phisix moved a little, it was basically unchanged," said
Mr. Vistan. He expects the consolidation to persist until the end of the
month. However, if the market's situation still does not improve, the
consolidation may even extend until September, added Mr. Vistan. Some
corrections are in order, he said, especially as the market nears the
end of the earnings reporting season and the absence of news has become
more pronounced. Rotational trades were observed particularly on
second-liners. "From DMCI Holdings, Inc. last week, rotational trades
are now on stocks such as Belle Corp.," said Mr. Vistan. Like Mr. Vistan,
Ron Rodrigo, senior analyst at Accord Securities, Inc., said the market
was trading on a consolidation mode. "There were some bargain hunting on
second-liners but it remains to be seen if there will be a follow
through with the selling off in some stocks," added Mr. Rodrigo.
In spite of the market's limited range for the past days, Mr. Rodrigo
said the stock market's performance this month is stronger than in
August 2003. He expects the market to face difficulties next week as the
Chinese ghost month starts on Monday. "Corrections will be expected but
not that big. With new developments, the market may break the 1,600
psychological resistance level," said Mr. Rodrigo. A correction can be
expected, he said, if technical indicators show a selling signal. But
there may also be correction even with the strong volume because of some
movements in stocks. The past few days saw the stock market trading from
PhP600 million to almost PhP1 billion, far exceeding the average
trading value of around PhP500 million. At the stock market, most
counters were down yesterday.
INDICES
The all shares dropped 1.09 to 1,000.02. Banking and finance also
slid 0.14 to 459.09. Mining failed to make a strong showing, slipping
16.36 to 1,977.37. On the other hand, commercial-industrial leaped 9.13
to 2,539.04. Oil was steady at 1.62, up 0.01. More than 3,000 trades
were held for 1.3 billion shares valued at
PhP681.8 million. Decliners inched close to advancers. There were
38 gainers against 36 losers. Forty-eight issues were unchanged.
EARNINGS DATA IGNORED
Meanwhile, the positive first-half reports of some companies, such as
Ayala Corp. and SM Prime Holdings, failed to buoy the market because of
pressing concerns on oil price increases, planned tax measures, and
uncertainties in the overseas market. Small gains, resulting from the
strong first half earnings data, kept the stock market from completely
landing in negative territory. But corrections may be inevitable. Hence,
investors are advised to trade cautiously. The statement of Bangko
Sentral Governor Rafael Buenaventura the other day that interest rates
may be unchanged this year could give the needed boost to investors. His
assurance give hope to businesses that depend largely on loans to
support their operations.
ACTIVE STOCKS
SM Prime Holdings, Inc. blazed the way for the most actively traded
stocks after reporting a first-half net income of
PhP2.2 billion, up 9% from last year's PhP2 billion. The share
price of the Philippines' largest mall developer, which has 19 shopping
centers nationwide, leaped 1.72% or PhP0.10 to PhP5.90 on the back of
strong rental revenues. This was followed by telecoms leader Philippine
Long Distance Telepone Co. which was up at PhP1,280 on 25.3 million
shares worth PhP149.3 million, representing 16.47% of the market. Third
most actively traded stock was Ayala Corp., the fifth most valuable
company in the country. It rose 1.85% or PhP0.10 to PhP5.50. The biggest
business conglomerate in the country, which has a market capitalization
of $3.7 billion, beat market estimates after reporting a 90% increase in
its first-semester earnings. Its net income for the first six months hit
PhP2.64 billion, almost twice the PhP1.39 billion last year. It
attributed the increase to robust growth in its telecoms and banking
units -- Globe Telecom and Bank of the Philippine Islands. Property firm
Belle Corp. rose to fourth place as its price jumped 16.42% or PhP0.11
to PhP0.78. Investors apparently snapped up Belle shares due to positive
projections that its earnings would continue to recover. Income from its
real estate operations for the first semester was at PhP66.7 million. It
incurred an operating loss in the same period last year at PhP5.7
million. Globe Telecom slipped 1.09% or PhP10 to PhP910. It failed to
sustain a three-day rally boosted by a 29% increase in its
second-quarter profit. |
By D'LAARNI A. ORTIZ
Asst. Research Head
Metro Manila consumers snapped out of their gloom in July, lauding
the release of overseas Filipino worker Angelo dela Cruz from his
captors in Iraq. As a result, the
consumer confidence index (CCI) reversed its two-month downtrend and
gained 9.4 points that month, finally recovering from its lowest level
for the year last May. The CCI, a composite measure of how consumers
perceive their present circumstance and prospects six months down the
line, went up to 105.9 index points during the period from 96.5 points
in May, the latest perceptions poll conducted for BusinessWorld
by NOP World Asia Pacific (formerly RoperASW Asia Pacific) showed. The
CCI was on a descent in the last two months, dragged down by election
count delays and oil price increases. Last May, the CCI was 102.9
points, from 116.9 in April. "The release of Mr. Dela Cruz was probably
a factor because had he not been released, then we could just imagine
the scenarios that would have happened," said Luz L. Lorenzo, ATR-Kim
Eng Securities, Inc. vice-president and group economist. Mr. Dela Cruz
was released last July 20.
Another reason for consumer optimism was the proclamation of Ms.
Arroyo as the 14th president of the Republic. "The negative
factor was no longer there and confidence was starting to build up," Ms.
Lorenzo said. In agreement, Dianne Lorrina S. Sy, senior associate for
research at Unicapital Securities, Inc. said "the fear of the country
was somewhat released when Ms. Arroyo was proclaimed." As evidence of
consumers' delight over the proclamation of Ms. Arroyo as well as the
handling of Mr. Dela Cruz's case, 50% of those polled said that the
president was doing a good job against only a quarter that said she was
not.
In the same token, 45.2% said they believed that Ms. Arroyo was
sincere, against a third who doubted her sincerity. In the coming
months, Ms. Sy believes consumer optimism may be doused by a continued
uptrend in oil prices coupled by possible increases in interest rates
and taxes. "Rising oil prices has been putting pressure on consumer
prices and that could probably affect consumer confidence in the coming
months," Ms. Sy said. In July, prices of goods and services went up by
6%, the sharpest increase posted in nearly three years. Ms. Lorenzo was
less pessimistic, though, saying that confidence would continue in the
coming months despite the price increases. "The oil price increase is
not something we can control and I think there is a realization of that
fact, and that we just have to ride it out," she said.
In the July poll, consumers were also asked whether Ms. Arroyo, in
her last
State of the Nation Address (SONA),
tackled the issues that concerned them personally or their business. The
survey -- which randomly covered 300 Metro Manila residents at least 18
years of age -- was conducted from July 28 to August 3, a few days after
Ms. Arroyo delivered her
SONA. Many or 34.6% of the respondents said that the
SONA covered only a little of their concerns, while another 17.7%
said that the president did address much of their worries. Another 14.5%
said that some of their concerns were tackled, but almost the same
number said the president failed to discuss any of their cares. "The
SONA addressed the concerns of the country at the general level and
specifics were not really given," opined Ms. Sy on the response of
consumers to the
SONA. In her
SONA, Ms. Arroyo pledged to bring forth a reform package in five
areas deemed crucial to attaining her administration's 10-point agenda
for economic and political development. Specifically, the present
administration will focus on job creation through economic growth,
anti-corruption through good government, social justice and basic needs,
education and youth opportunity, and energy independence and savings.
Further, the president promised to curb, and eventually wipe out the
budget deficit by running after tax cheats and introducing new tax
measures.
PROSPER
With her promises, 37.2% of those polled said that the economy would
prosper under Ms. Arroyo's presidency, a slight improvement from the
36.7% a month ago. But, another third remained pessimistic during the
survey, saying the economy would not prosper, while 27.5% were unsure of
its direction. In July, both components of the CCI -- the present
situation index (PSI) and future expectations index (FEI) -- also
recovered from their lackluster performances. Specifically, consumers in
July were elated with the government, with 34.9% saying that it was now
doing a better job than a year ago. Only 21.1% said the government was
doing a worse job, allowing its performance rating to jump to 13.8
points from just 2.6 points a month ago. Still, many or 44% of those
polled remained noncommittal and said that the government was doing
neither a better nor worse job. And 37.9% of consumers polled said that
business was good. But an equal number also said it was bad. The
remaining 24.2% said current business conditions were neither good nor
bad. Nevertheless, the PSI gained ground during the period to 116.3
points from 106.3 points a month ago.
As to the future, while more consumers believed that the economy
would get better, a little over half still believed that it would stay
the same in the next six months. Another 31.7% said the economy would
improve six months down the line, while another 14.4% said it would
worsen. The same was true for job expectations, with 20.6% saying jobs
would be easier to find in the next six months, against only 13.8%
saying the same a month ago. Pessimism over job prospects somewhat waned
in July with only 37.9% saying that jobs would be hard to find in the
near future, against 47.7% in May. Optimism over family incomes barely
moved during the period, with 29.8% saying that income would increase.
The stock market and the local currency are generally seen to remain the
same in the next six months. The FEI climbed to 99.6 points in July from
90.6 points the previous month.
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With Dubai crude having hit a high of $38 per barrel, there are
indications that local oil companies will again raise their prices in
the coming weeks, Independent Philippine Petroleum Companies Association
(IPPCA) chairman Fernando L. Martinez yesterday said. Any increase in
the price of crude in the world market will have to be reflected in
local pump prices, he said, but the Philippines remains an "immature"
economy that refuses to accept this fact. "Whatever is the prevailing
price abroad at certain periods should be reflected [locally] at once.
The dilemma here is that our consumers are not as mature as those of
other economies, where consumers immediately accept that reality," Mr.
Martinez said. Data showed that from August 2 to 10, Dubai crude
averaged $37.55 per barrel, from the July average of $34.65. Last
Tuesday, Dubai crude hit a record high of $38.10. Dubai crude is the
price benchmark used by local oil refiners.
Meanwhile, diesel and unleaded gasoline -- based on the Mean of
Platts Singapore (MOPS), the price benchmark used by oil importers --
traded at $50.80 and $50.37 respectively, from $46.50 and $46.25 in
July. "Current prices today are $37 to $38. If the August average is
higher, then the effect will be higher than
PhP26 per liter for gas. It is expected that oil companies will
raise their prices to higher than
PhP26," one source said. In a deregulated industry, oil companies
have the prerogative when and by how much to increase their prices,
depending on movements in the world market. Mr. Martinez said that since
100% of the country's petroleum products were imported, whether crude or
finished products, whatever was the price abroad would have to be
reflected in local pump prices. An industry source said the high world
prices would certainly have a direct impact on local prices, but that
impact would be difficult to deduct this early because of several
factors. "We have different ways of pricing our products. What is
happening is cost recovery. The increase here is a reaction to or a
result of increase in world prices," he said. Cost or price is also
affected by the mode of producing and supplying the oil product. The
pricing behavior of finished products such as diesel, gasoline, and
kerosene, differ from crude oil pricing. The cost of finished products
are more sensitive to changes in the market, the source said.
Another factor that can affect local pricing is the discount ordered
by the government to be given to consumers, which will have to be
recovered. Mr. Martinez said Filipinos were still used to the time when
the government would subsidize the cost of fuel, to cushion the impact
of higher prices on the cost of commodities. "Because of 25 years of
regulation where the government came in to subsidize, they're still
looking at the same mechanism. Some of them do not realize that
subsidies and regulation are a thing of the past. It didn't work in
other economies, it won't work with ours," Mr. Martinez said. He also
said the government has no more money for subsidies. "Why will you
subsidize petroleum products when they are mostly used by people who can
pay? Why sacrifice budgets for health or education and all other
expenses that are more beneficial to the poor? Some militant groups do
not see it that way, as if they are barking at a government that has
money," he said. Instead of blaming the government and advocating
subsidy price controls that discourage investments, the challenge for
people is to conserve and to find more productive ways to deal with
rising prices, he said. -- Bernardette
S. Sto. Domingo
|
By IRIS CECILIA C. GONZALES,
Reporter
Banks parked more funds in the Bangko Sentral ng Pilipinas (BSP) in
the second quarter, indicating sluggish economic activity. The total
volume of bank placements under the BSP's reverse repurchase window
stood at
PhP77.8 billion as of end-June 2004,
PhP20.2 billion higher than the end-March 2004 level, BSP data
show. BSP officer-in-charge Amando M. Tetangco yesterday said this was
indicative of sluggish economic activity, in particular pointing to
modest bank lending to the private sector.
On the bright side, Mr. Tetangco said, is that the banks' excess
funds were placed in the BSP rather than causing inflationary pressures.
"The banks have excess funds which do not go to the economy. But it's a
mixed blessing. On the one hand, they were not able to lend it to the
private sector. On the other hand, the excess funds do not cause
inflationary pressures," he said. He conceded that it would have been
better if the excess funds had gone to the private sector through loans.
"But right now, there are not enough borrowers," he added.. Growth in
bank lending remained modest at only 1.7% in May. BSP data showed that
loans extended by commercial banks rose to
PhP1.5 trillion in the five months to May compared to the same
period last year. The BSP's reverse repurchase window is a facility by
which the central bank borrows funds from the market through the sale of
its domestic securities holdings with a commitment to repurchase the
same at a stipulated rate.
When the BSP sells such instruments, it absorbs money from the
system, contracting the level of aggregate demand. The BSP is being very
careful in resorting to any monetary tightening to avoid the further
absorption of money from the system. It has kept key policy rates
unchanged for 13 months straight, with overnight borrowing or reverse
repurchase rates at 6.7% and overnight lending rates at 9%. Monetary
authorities are keeping a tight watch on the inflation environment for
possible increase in policy rates. BSP Governor Rafael B. Buenaventura
has said that rising oil prices may push inflation -- the rise in prices
of consumer goods -- over the BSP's 4-5% target for next year. He
remains confident that this year's inflation will be contained within
the 4-5% target range. Inflation went up to 6% in July, its highest
level in almost three years and higher than the BSP's July inflation
forecast of 5.2%-5.9%. With the United States Federal Reserve's move to
increase rates by 25 basis points on Tuesday, the BSP said it has yet to
assess the situation. Monetary authorities usually match a move by the
Fed to prevent capital flight as investors may choose to park their
funds in the US or other economies that offer higher rates. In an
anticipated move, the US Fed raised the benchmark federal funds rate,
charged on overnight loans between banks, to 1.5%. The second adjustment
this year aimed to head off potential inflation, the Fed said, but added
that the US economy was poised for stronger expansion.
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... as need for IT
professionals is noted
By FELIPE F. SALVOSA II, Reporter
Investments in economic zones went up 131% to P28.431 billion from
P12.301 billion in the January to July period, the Philippine Economic
Zone Authority (PEZA) yesterday reported. For July, ecozone investments
totaled P1.186 billion, a 16% increase from last year's P1.024 billion,
PEZA Director-General Lilia B. de Lima said in a report to Trade and
Industry Secretary Cesar A.V. Purisima. This is expected to generate
$114.373 billion in average annual export sales and 2,248 new jobs, Ms.
de Lima added.
A total of 21 new and expansion projects were approved by the PEZA
board for July, bringing the 2004 total to 170. Twenty-eight projects
were in the information technology or IT sector, equivalent to some
11,000 new jobs, the Trade department said. Mr. Purisima noted that IT
investments almost doubled to P4.294 billion in January to July from
P2.152 billion registered in the same period last year. He credited the
increased capacity to attract investments to the Philippines'
"competitive advantage in the IT sector." Top ecozone investors for July
include Japanese-controlled First Sumiden Circuits, Inc., which will put
up a facility to manufacture flex printed circuits for hard disk drives
at the cost of P272.792 million; Japanese firm Dash Engineering
Philippines, Inc., which has committed to invest P66.615 million in
transferring operations to Asiatown IT Park; and French-owned Air
Liquide Pipeline Utilities Services, Inc., which will infuse P182.856
million for the installation of an air separation unit at the West Cebu
Industrial Park. Mr. Purisima said PEZA exports for June went up 20% to
$15.334 billion from last year's $12.838 billion. Direct employment
increased by 14% to 985,592 from 863,195 in June 2003.
Exports from Subic Bay Freeport, meanwhile, posted a 19% increase
from January to June, Subic Bay Metropolitan Authority (SBMA) Chairman
Felicito C. Payumo said in a statement. Subic exports reached $454
million against last year's $383 million, buoyed by May exports which
stood at $89 million -- the highest monthly figure recorded during the
period. Wistron Infocomm Phils., a Taiwanese computer maker, accounted
for 70% with $319.7 million in exports, although this has been dropping
due to a "global slump" in demand for electronics products, the SBMA
said. It was followed by micro-motor parts maker Sanyo Denki ($28
million), automated teller machine parts manufacturer Omron ($22
million), and wood processor Juken Sangyo ($18 million). All three are
Japanese firms. Mr. Payumo said that if the trend continued, Subic
exports would reach the $1 billion mark by yearend. "Export performance
of Subic Freeport-made products remain strong for the past seven months
and we are confident that manufacturing firms here would maintain this
upsurge for the rest of the year," he said.
PROFESSIONALS
As this developed, IT industry leaders yesterday called for more
certified professionals in the country, saying certification, despite
the high costs, is needed to ensure the industry's competitiveness. Gina
Rosal Duminy, vice-president of the www.itpros.ph website, a resource
for tech jobs, said the Philippines is second only to India in supplying
global information and communications technology or ICT and ICT-enabled
services. "Although cost is always an issue, it's only by laying down
the advantages, presenting case studies such as actual ROI (return on
investment) data on quality and certification initiatives in
organizations can we overcome this cost-centered belief," she said. The
government is coordinating the National ICT Certification Program, which
administers over 30 globally recognized certification exams with
partners such as Cisco, Microsoft, Oracle, and Sun Microsystems. Patti
de la Rama, executive director for planning for the Technical Education
and Skills Development Authority, said a target of 10,000 certified IT
professionals was set in 2002 but this never materialized. Microsoft has
so far certified only over 1,000, said Mark Yambot, Microsoft
Philippines director. In contrast, India has over 100,000 certified
professionals. Mr. Yambot noted the huge demand for certified IT
professionals in the country, pointing out that some 56,000 Intel-based
servers required a "critical mass of people".
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It is no longer in the Arroyo administration's tax menu but a bill
filed by Ilocos Sur Rep. Eric D. Singson at the House of Representatives
seeks to increase the value-added tax (VAT) rate to 12% from 10%. Mr.
Singson has also filed a bill to remove the corporate income tax
exemptions of the Philippine Charity Sweepstakes Office (PCSO) and the
Philippine Amusement and Gaming Corporation (Pagcor). In his explanatory
note to House Bill 1468, Mr. Singson said increasing the VAT rate will
bring in "sizeable revenues that will supplement the financial needs of
the government."
An increase in the VAT rate was suggested by the Arroyo
administration's economic managers but President Gloria Macapagal-Arroyo
has indicated preference for a return to the sales tax, which was
replaced by VAT when it was instituted in 1988 through Executive Order
No. 273. The suggestion of the economic managers was for a two-step
increase in the VAT, first by 2% in 2006 and another 2% in 2007. House
Bill 1590, meanwhile, seeks to remove the corporate income tax
exemptions of the PCSO and Pagcor. These two agencies have generated a
large amount of revenues for the government, Mr. Singson noted, but
their respective chapters limit the kind of projects that can be funded
out of these revenues. "By making them taxable, part of the agencies'
income will be effectively channeled to the general fund for
disbursement by the national government," he said. --
J. T. Gulane
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Standard Chartered Bank warned yesterday of a legal battle between
the government and the banking industry as the Bureau of Internal
Revenue (BIR) insists taxes on their foreign currency deposit unit (FCDU)
income and transactions from 1998 to 2003 have to be paid. "At the
moment, there is no common ground for settlement with the BIR. On that
basis, we have to individually resolve to defending our position to
legal action. One should not underestimate the issue. This is very
important to foreign banks in the Philippines," Standard Chartered chief
executive officer Simon Morris said in a media briefing. "We are talking
about a multi-billion peso issue which will have severe ramifications
for the participation of foreign banks in the Philippines if not
resolved in an appropriate manner. These are no small money," he added.
The Department of Finance and BIR hopes to collect at least
PhP30 billion worth of unpaid income taxes from FCDUs and
offshore banking units even after Congress corrected the controversial
provision of the law that imposed double taxation on banks. "The other
issue we have to consider carefully is foreign banks are very
competitive businesses. The Philippines is competing with other
countries for investment in dollars," Mr. Morris said. He added that if
the taxation and legal environment in the Philippines become so
difficult, foreign investors would be reluctant to come in. "Our
position on the situation is it is never the intention for the tax to be
positioned this way. You are talking about multi-billion. This is more
than the industry as a whole of PhP20 billion. This is not small money.
This is not insignificant amounts. For some banks, it could be a very
decisive and defining moment. There seems to be no basis for an amicable
solution," he said. London-based Standard Chartered Bank PLC derives a
bigger portion of its revenues in Asia-Pacific. Its Philippine unit aims
to accelerate consumer banking growth, strengthen wholesale bank
portfolios, and implement a $3.2-million operating platform. For its
operations in region, the bank recorded $143 million in pre-tax profit
during the first semester, more than three times higher than $40 million
a year ago. -- Ruby Anne M. Rubio
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HONG KONG -- Philippine dollar bond spreads tightened about 10 basis
points yesterday as buyers returned to the market after being sidelined
ahead of Tuesday's Federal Open Market Committee (FOMC) meet. Given that
the rate hike had been widely anticipated, the Fed's move had virtually
no impact on the market. The FOMC decided to raise the benchmark federal
funds rate by a quarter of a percentage point to 1.5%. The Fed also
reaffirmed its belief that the recent weakness in the US economy --
highlighted by the release of poor jobs data on Friday -- was likely to
be temporary. "It didn't upset the market because the Fed also delivered
an upbeat statement on the economy for the second half," said the head
of credit trading at a European bank in Hong Kong. "All in all, there
has been little impact on the market."
Philippine bonds were outperforming but traders said there was
nothing in particular driving the tightening, aside from the perception
that, with President Gloria Macapagal Arroyo's election victory in May,
the political outlook had improved. "It has been on a tightening trend,
so we're seeing a continuation of that," said the head of credit trading
at a US bank in Tokyo. "The thing about the Philippines is that if
there's no new supply or no new news, the Philippines always tend to
tighten in, and then when there's new supply it widens back out."
Philippine sovereign dollar bonds tightened around 10 basis points, with
the ROP '14s trading at 98.25/98.75 in price terms, while the ROP '25s
were quoted at 109.5/110. Five-year Philippine credit default swaps -- a
form of insurance contract for bondholders against an issuer default --
also tightened about 10 bps to trade at 445/455, traders said. "The
market is up on the back of the fact that nothing really unexpected
happened with the FOMC, so everybody's just trying to come in," said a
trader in Manila.
HUTCHISON
Hutchison Whampoa Ltd. bonds continued to drift wider as speculation
persisted that the Hong Kong conglomerate could be preparing to tap the
market with a new issue. Hutchison '14s widened about two bps to trade
at 203/200 bps over Treasuries. PCCW '13s, which usually trade in tandem
with Hutch paper, also widened a couple of basis points to trade at
154/148 bps over. "There was a bit of selling on Hutchison yesterday in
London time," said the head of credit trading in Hong Kong. "There have
been rumors of new issuance, but there has been selling of other issues
as well. We don't know whether the rumors have been started just because
someone wants to sell something," he added. Market sources said India's
second largest private bank, ICICI Bank, has mandated ABN AMRO, Bank of
America and Deutsche Bank for a five-year, US$300 million bond. Last
month, an ICICI Bank spokesman said the bank planned to issue US$1
billion in medium-term notes to fund its overseas branch expansion. The
spokesman said ICICI Bank was planning to file a shelf prospectus with
the Luxembourg Exchange to raise the funds through bond issuances in
tranches. ICICI Bank last sold a US$300 million, five-year bond in
October 2003 at a spread of 106 basis points over LIBOR (London
Interbank Offered Rate). -- Reuters
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The Philippine peso yesterday rose to a 10-week high, breaking away
from most regional units that depreciated following the US Federal
Reserve's decision to raise its benchmark interest rate. After hovering
within an 8.5-centavo range, the peso closed stronger by two centavos at
PhP5.64 per dollar from PhP55.66 previously. The Fed raised its
overnight lending rate to 1.5%, the second quarter-point boost since
June 30, as an inflationary measure and to boost the dollar's value. It
reiterated its plan to increase rates through a measured pace.
At the Philippine Dealing System, the country's electronic currencies
exchange, the peso averaged stronger by almost two centavos at PhP55.682
from PhP55.697. The peso opened at PhP55.71 and fell to PhP55.715 during
trading. It reached an intraday high of PhP55.63. Total volume of
transacted dollars increased to $174.5 million from $139 million the
other day. -- Ira P. Pedrasa
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At least four investors have submitted proposals to Equitable PCI
Bank, the country's third largest lender, for the possible sale of its
nonperforming loans and those classified as real and other properties
owned or acquired (ROPOA) to avail of the tax perks under the special
purpose vehicle law. "We are conscious of the deadline but there is no
final decision yet on the various proposals and offers. We are looking
into that. As to how much and who we will work with is not yet decided
at this point," said Rene J. Buenaventura, Equitable PCI president and
chief executive officer, on the sidelines of the bank's Equitable Gold
American Express Card launching Tuesday night.
The bank plans to dispose an estimated
PhP5 billion to PhP10 billion worth of foreclosed properties and
bad loans. "It depends on the structure we will agree to. There are
proposals for nonperforming loans and ROPOAs. Matagal iyan. [The
deal will take time]. They have to do due diligence on the portfolio. We
cannot mention the names. But there are four interested," he said. He
said that the firms have already submitted proposals and that the deal
would be closed depending on the final terms offered. Equitable PCI net
earnings inched up by 2.6% to PhP682.4 million in the first half of the
year from PhP665.1 million a year ago. This was after increasing
loan-loss provisions. -- Ruby Anne M. Rubio
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By ROULEE JANE F. CALAYAG
As if undeterred by economic and political uncertainties, Ayala Corp.
saw net income jump 90% to
PhP2.64 billion during the first half from the year-ago period's
PhP1.39 billion on robust growth of its telecoms and banking
units. In a statement, President and Chief Executive Jaime Augusto Zobel
de Ayala III said the company performed well despite the uncertainties
in the run-up to the May elections. "This underscores not only the
underlying strength of our core businesses." He expressed confidence the
conglomerate will sustain this momentum, "especially with a more
positive post-election business climate." Consolidated equity in net
earnings of associates, interest, rental and other investment income
rose 28% to
PhP4.81 billion on robust earnings from the company's telecom and
banking units. Internal development division AC Capital also emerged as
a significant source of profitability as companies under the portfolio
collectively contributed
PhP1.06 billion in equity in net earnings to Ayala, 2.6 times
higher than the same period in 2003. Mr. Zobel said this is reflective
of the "tremendous value that AC Capital is able to generate from its
portfolio." Robust earnings from Ayala Corp.'s key operating
subsidiaries and affiliates accounted for the strong performance in the
first semester.
Consolidated net income of property arm Ayala Land, Inc. grew 7% to
PhP1.18 billion with revenues up 25% to
PhP8.1 billion. Brisk sales across all product lines fueled
revenue growth. The opening of Greenbelt 4 in the first quarter and more
aggressive promotional efforts and continuous enhancements in merchant
mix buoyed rental revenues from retail operations. Same store sales at
Ayala Center alone grew 9% year on year, with occupancy rates
consistently high at an average of 94%. Office buildings also sustained
higher-than-industry average occupancy rates. Strong take-up in high-end
residential projects pushed residential unit and land sales up 92% and
15%, respectively. Similarly, strong demand was reflected in the middle
and mass housing market segments with a combined 45% growth in revenues.
Banking arm Bank of the Philippine Islands recorded a 32%
year-on-year increase in net income in the first half to
PhP3.5 billion due to higher revenues and improved margins. Net
interest income during the period increased 23% as net interest margins
averaged 4.4% during the first six months, compared with 3.7% for the
same period last year. Non-interest income grew 3% largely resulting
from gains from the insurance business, rentals, asset management and
miscellaneous income, which more than offset the decline in trading
gains, income from asset sales and service charges. The bank's total
resources as of end-June reached
PhP430 billion as both loans and deposits grew 4% year to date to
PhP337 billion and
PhP213 billion, respectively. The bank's nonperforming loan ratio
improved to 5.9%, from 6.8% at year-end, and compared very favorably
with the industry average of 13.6% as of end-May.
Mobile interest Globe Telecom, Inc. saw a 58% increase in
consolidated net income in the first half to
PhP6.9 billion on net operating revenues of
PhP27.6 billion, up 16% year on year. A more intensified
subscriber acquisition initiative, enhanced product offerings and
increased network coverage through more aggressive expansion projects
reinforced revenue growth. These marketing and distribution efforts
yielded record gross and net subscriber additions of 3.2 million and 1.4
million, respectively, for the second quarter. This brought Globe's
total wireless subscriber base to more than 10.5 million at end-June,
45% higher year-on-year. Globe's total operating costs and expenses
increased at a much slower rate of 7% to
PhP10.3 billion in the first half.
Manila Water Co. and Integrated Microelectronics, Inc. (IMI)
accounted for the bulk of AC Capital's earnings contribution. Manila
Water earned
PhP650 million in the first half, 5% higher year on year as
average billed volumes improved 3%. IMI continued with its strong
earnings growth as first-half net income reached
PhP531 million, nearly double last year's level and already 83%
of its 2003 full-year net income of
PhP638 million. The company continues to benefit from increased
outsourcing volumes from Japanese electronics companies, which account
for nearly two-thirds of IMI's production orders. AC Capital's
contribution was also boosted by the
PhP366 million in net income recorded by Ayala International Pte.
Ltd. for the first semester, following the profitable sale in April of
its joint venture investment in Grosvenor Place, a residential high-rise
development in Repulse Bay in Hong Kong.
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The National Power Corp. (Napocor) has inked a $350-million deferred
payment facility agreement with the consortium working on the Malampaya
natural gas project in Palawan, giving the state-owned firm elbow room
in settling its gas purchases from the group. The facility agreement
will be in effect until Dec. 31, 2009, the Department of Energy
yesterday said. "This has given Napocor the needed financial flexibility
to fulfill its gas sales agreement with Malampaya," Energy Secretary
Vincent S. Perez, Jr. said in a statement.
The Malampaya project is a joint venture of Shell Philippines
Exploration BV (Spex), Chevron Texaco and the government through
state-run Philippine National Oil Co. (PNOC), which has a 10% stake.
"The facility has been provided for under a previous agreement. Now it's
finalized. If Napocor needs it, they can call on it anytime. It's like a
big credit card," Ding S. Roco, SPEX government and external affairs
manager said.
The deferred payment scheme is an implementation of an existing agreement
among the parties under the Ilijan Gas Sales and Purchase Agreement
signed in 1997, the Energy department said. Signatories include Napocor
President Rogelio M. Murga, PSALM President Raphael M. Lotilla, SPEX
Managing Director and Chief Financial Officer Peter van Driel, SPEX
legal affairs manager Kiril Caral, Chevron Texaco Malampaya LLC
President Karl Cottrell and PNOC-EC President Rufino Bomasang.
The Energy department said the signing was the result of more than
two years of negotiations between the Malampaya consortium and the
government. Mr. Perez said the deal is an important development as it
provides a form of financial relief to Napocor. "We welcome the
implementation of the deferred payment facility agreement as this will
help provide much needed relief for Napocor in dealing with its
financial obligations," he said. The Malampaya consortium is undertaking
a $4.5-billion gas-to-power project involving natural gas discovered in
northwest Palawan. -- Bennet S. Sto. Domingo
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Driven largely by rental revenues from its malls, SM Prime Holdings,
Inc. posted a net income of
PhP2.2 billion for the first semester. This is up 9% from
PhP2 billion in the same period last year. The mall developer and
operator said gross revenues for the first half grew 14% to
PhP4.92 billion from
PhP4.30 billion in 2003. Rental revenues, which increased 15% to
PhP3.84 billion from
PhP3.34 billion previously, accounted for the largest bulk in SM
Prime's gross revenues. The opening of SM City Lucena, SM City Baguio
and SM City Marilao during the last quarter of 2003 and of SM City
Dasmariņas in May also lifted rentals. SM City Dasmariņas has a gross
floor area of 80,000 square meters. It caters to residents of central
and southern Cavite, considered the country's fastest growing
population. The mall currently holds an 80% occupancy level. Net income
for the second quarter was
PhP1.07 billion, up 11% from
PhP963 million last year.
Cinema and amusement revenues were also up. Cinema revenues enjoyed
an 11% growth with blockbuster films such as Harry Potter 3,
The Day After Tomorrow, Lord of the Rings, Troy and
The Passion of the Christ. With a growing number of malls to its
name, SM Prime is also finishing up on the preparation to open SM City
Batangas this year which has a gross floor area of 71,000 square meters.
SM Prime's total gross floor area will reach 2.5 million square meters
by end-2004, with 19 malls in operation. The company has set aside
PhP5 billion for capital expenditure next year. The construction
of the SM Mall of Asia, set to be the country's premier shopping
destination and tourist attraction, has begun. The mall is expected to
revitalize the Roxas Boulevard area. The mall's first phase will open in
the last quarter of 2005 with a gross floor area of 300,000 square
meters -- comprised of a Main Mall, Entertainment Mall, and parking
buildings. -- Roulee Jane F. Calayag
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As part of Nenaco
rehab plan
Listed holding firm Metro Pacific Corp. yesterday said it sold 10.33%
of its stake in flagship property unit Landco Pacific Corp. to AB
Holdings Corp. for
PhP60.5 million. In a disclosure to the stock exchange, Metro
Pacific corporate information officer David S. Nugent said proceeds from
the sale will be used to support the rehabilitation of its debt-saddled
interisland shipping unit Negros Navigation Co. (Nenaco). "Metro Pacific
management and its board of directors has determined this transaction to
be in the best interest of the company and its shareholders given
Nenaco's potentially positive prospects as its rehabilitation and
restructuring program is approved and executed," he said. Nenaco, 97%
owned by Metro Pacific, has a corporate rehabilitation case pending
before the Manila regional trial court. The company is proposing to
restructure P2.5 billion worth of debts and tax payables so it can pay
them over 10 years, inclusive of a one-year grace period on interest
payments and a three-year grace period on the principal.
In the same disclosure, Metro Pacific also named Sulficio O. Tagud
Jr. as Nenaco's new president and chief executive replacing Conrado
Carballo. It also appointed Mr. Tagud and Amado R. Santiago III to the
Metro Pacific board, replacing Meliton V. Salazar and Daniel L. Lacson,
Jr. Messrs. Tagud and Santiago lead the legal team advising the
rehabilitation and rehabilitation program of Nenaco. Prior to his
appointment as Nenaco president, Mr. Tagud was the shipping firm's
rehabilitation receiver but was replaced by the court due to his failure
to disclose that he had held a top position in one of Metro Pacific's
former subsidiaries. He was replaced by Monico Jacob as Nenaco receiver.
-- Leilani M. Gallardo
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Media company GMA Network, Inc. posted
PhP751 million in revenues for the first half, up 33% from last
year on strong revenues. The company said given a rosy outlook, it would
soon implement its plan to list at the Philippine Stock Exchange through
an initial public offering (IPO). "We are ready for an IPO and it will
not be long before we offer our shares to the public. We are just
waiting for the right timing," said Senior Vice-President for corporate
services Felipe Yalong. GMA said for the first six months, revenues
totaled
PhP3.62 billion, 20% higher than
PhP3.01 billion in the same period last year. Operating expenses
rose 20% to
PhP291 million due to increased production costs, advertising and
promotion, amortization of program rights and salaries and allowances.
"[These] were geared towards maintaining the network's lead in the
overall TV ratings game," GMA said. The company said earnings before
interest, taxes, depreciation, and amortization rose 25% to
PhP1.47 billion.
Given the company's performance for the period, Mr. Yalong said, the
network would likely hit its target for the year. "Our financial
performance during the first half could pave the way for another strong
finish by yearend," Mr. Yalong said. -- Jennee Grace
U. Rubrico
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The local arm of Korean Electric Co. (Kepco) is set to do due
diligence on Salcon Power Corp. as part of a plan to buy a 30%-40%
stake. In a disclosure, Salcon Power yesterday said its board had
approved a deal with Kepco Philippines Corp. for the stake. Kepco
Philippines is a wholly owned subsidiary of Kepco. Under the deal, Kepco
Philippines will immediately conduct technical, financial and legal due
diligence on Salcon. Salcon said Kepco Philippines will acquire a stake
in Salcon either through the purchase of stocks from current
shareholders, or through the acquisition of new shares or treasury
stocks, or a combination of both.
Kepco Philippines is an independent power producer operating
state-owned National Power Corp.'s (Napocor) 650-megawatt Malaya power
complex in Rizal province. Kepco earlier expressed interest to either
take over the Naga power complex in Cebu from Salcon Power or build a
200-300-megawatt coal-fired plant at the Cebu south reclamation project
site. Salcon operates the Naga power complex under a 15-year
rehabilitate-operate-maintain contract. Kepco Philippines' move is seen
to help the company establish its presence in Cebu. If the plan pushes
through, Kepco Philippines will pursue one of two options in expanding
in Cebu: it will either construct a new power plant in the island, or it
will operate jointly with Salcon the Naga power plant complex. "There
are two plans. The first plan is for Kepco to build a power plant with
Salcon the second plan is for Kepco to participate in operating the Naga
plant of Salcon," a source said.
If the first plan is pursued, the new plant will be 60% owned by
Kepco Philippines and 40% owned by Salcon. The ownership mix, however,
may still change if a third entity decides to join the two power
producers in building the new power plant. If the second plan is
pursued, Kepco Philippines is expected to help Salcon reduce the
inefficiencies of the Naga plant. "With Kepco's vast experience in coal,
it would be able to help reduce inefficient factors in Naga," the source
said. Kepco Philippines is looking for a financial adviser to buy the
Salcon stake. The company is expected to benchmark its offer for the
stake on the price of Salcon's shares in the stock market.
-- Bennett S. Sto. Domingo and Jennee Grace U. Rubico
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Tokyo-based Trend Micro, Inc., the world's third-biggest anti-virus
software maker, is willing to spend another $15 million to support the
expansion of its Philippine operations. In an interview with reporters
yesterday, Chief Financial Officer Mahendra Negi said the company is
willing to pump in additional investments as long as it can find enough
manpower to support its planned expansion. "We're willing to spend
another $15 million to $20 million in the Philippines as long as we can
find the people that we need. We want to invest in a place that we've
already started," he said.
Trend Micro has already spent as much as $15 million in investments
in the Philippines since it first set up shop in 1997. The company's
Philippine office, known as TrendLabs, serves as headquarters of the
company's global network of anti-virus research and support centers. It
has 350 computer anti-virus specialists and engineers which the company
plans to increase to 700 by the end of the year. "TrendLabs' expansion
will enable us to even more vigorously monitor potential security
threats worldwide and develop the means to help customers prevent the
spread of outbreaks, minimize the impact of new threats, and restore
their network," said Oscar Chang, executive vice-president for global
security response. Mr. Chang said Trend Micro spends as much as $1
million a year to train its computer specialists and engineers in the
Philippines although with the planned expansion it may have to shell out
more. Despite this, he said the company is still having a hard time
looking for qualified people to fill vacancies. Thus, it is aggressively
pushing its recruitment programs in key cities outside Metro Manila such
as Baguio, Cebu and Davao. So far, Filipinos comprise 25% of the
company's pool of specialists all over the world. --
Leilani M. Gallardo
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Ford Group Philippines will start exporting this month the newly
launched Mazda 3 to Thailand, Indonesia and Malaysia. Ford Philippines
yesterday unveiled the Mazda 3, which is manufactured at the firm's
plant in Sta. Rosa, Laguna. "This is part of the commitment of [Ford
Motor Co. Chairman and Chief Executive] Bill Ford to President [Gloria
Macapagal Arroyo] to invest $50 million for the expansion and export of
Ford in the Philippines," said David Macasadia, managing director of
Mazda. Mazda is 33.3% owned by Ford Motor Co. Mr. Macasadia said the
cars, which will be exported to the three Southeast Asian countries,
have been modified to fit the markets' requirements. The Philippines is
the second venue for the Asian launch of the Mazda 3 following its
release in Japan. It is also available in Europe and the US. Mr.
Macasadia said Mazda expects to sell 1,200 units in the Philippines in
the next four months.
Aside from the Mazda 3, the firm is also exporting the 2.3-liter and
3-liter variants of the sport utility vehicle, Mazda Tribute. During a
meeting with Mrs. Arroyo, Ford Philippines President Henry Co also
committed to make the Philippines its hub in Southeast Asia. Mrs. Arroyo
welcomed the announcement, saying Ford's decision would surely help the
government generate the needed jobs to boost the economy.
-- Anna Barbara L. Lorenzo and Jeffrey O. Valisno
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In line with its efforts to boost revenues, the Philippine Stock
Exchange (PSE) has increased by 22% its stake in the Securities Clearing
Corp. of the Philippines (SCCP). In a disclosure yesterday, the PSE said
the exchange offered to purchase SCCP's 110,000 common shares from
Equitable PCI Bank representing the 22% ownership in the clearing house.
This brings PSE's total stake in SCCP to 73% from 51%. In a separate
disclosure, Equitable PCI Bank said the bank's board of directors had
approved the sale of its stake in SCCP to the bourse. The bank, however,
did not give the shares' selling price.
SCCP is the settlement coordinator and risk manager for broker
transactions as well as administrator of the trade guaranty fund of the
PSE. It is also the clearing and settlement agency for depository
eligible trades in the exchange. "The acquisition or enhanced control of
the SCCP, together with the implementation of its own clearing and
settlement system will enable the inflow of revenues to the exchange for
settlement-related services such as stock lending and borrowing,
registry services and fund management in addition to clearing fees," the
PSE earlier said. -- Leilani M. Gallardo
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San Miguel Corp. yesterday said it had completed the purchase of a
50% stake in number one Australian juice company Berri Ltd. "Please be
informed that today the company has completed its acquisition of 50% of
Berri," the firm said in a disclosure to the stock exchange. San Miguel
earlier said that it wanted to buy into Berri to expand its reach in the
region. The firm did not divulge how much the stake in Berri cost, but
it earlier said the Australian firm is valued at A$335 million. Also
yesterday, the conglomerate's food group said it posted robust growth
for the first half.
In a statement, the San Miguel Food Group said it registered a net
operating income of PhP964 million against PhP294 million in the same
period last year. Sales revenues grew 21% to PhP28.7 billion. It did not
give net income figures. "The impressive growth for the first semester
was driven primarily by operational efficiencies," the group said. The
San Miguel Food Group is composed of Pure Foods-Hormel Co., Inc., San
Miguel Foods, Inc. and Magnolia, Inc., Sugarland Corp., PT San Miguel
Pure Foods Indonesia, TTC (Vietnam) Co., Ltd., Monterey Foods Corp. and
Agribusiness. The group said gains were registered by Monterey Foods.
The unit posted an operating income of PhP181 million, up 72% from the
same period last year. Revenues also increased 22% to PhP2.58 million,
while volume was 4% higher than last year, the firm said.
"Contributions from other businesses such as flour, processed meat and
new product introductions also bolstered the Food Group's overall
performance," it added. -- Jennee Grace U. Rubrico
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By ROULEE JANE F. CALAYAG
For the third straight day, the stock market sustained its gains as
intense bargain hunting pushed the main shares index closer to the 1,600
level. The Philippine Stock Exchange composite index (Phisix) was up
13.14 points at 1,592.40, with trading concentrated on second- and
third-liners, especially on mining. In spite of the Phisix's impressive
leap, Eagle Equities, Inc. president Joey Roxas said there was no
significant change in the trading pattern because the market was moving
in the same range. "There is still the problem of distribution with more
foreign selling now. The increase in the Phisix was due to shares moving
from strong hands to weaker ones, leading to much liquidity," said Mr.
Roxas.
MINING
"The activity is on the stocks that have not moved for a while. The
market is going back to second- and third-liners, particularly mining,
probably because these are commodities which enjoy high prices now," Mr.
Roxas added. While these stocks managed to draw investor interest, it
remains to be seen whether this would persist. He warned that mining
firms, whose stocks have risen recently, stand the risk of seeing their
share prices slump when they finally start working on their mining
claims. The mining index yesterday went down, losing 57.31 at 1,993.73.
Oil followed suit, shedding 0.03 at 1.61. The all shares index marched
on, advancing 2.35 to 1,001.11. Commercial- industrial jumped 20.7 to
2,529.91. Banking and finance recovered from a previous decline as it
rose 4.5 to 459.23. Over 1.3 billion shares, worth
PhP800 million, exchanged hands on 3,480 trades. Advancers
outranked decliners, 43-31 with 45 issues unchanged.
WALL STREET RALLY
Wall Street's overnight rally also spurred activity in the local
bourse. Stocks in the United States recorded their biggest gain in two
months, following the Federal Reserve's statement that the US economy is
gearing for stronger expansion. The statement apparently encouraged
consumers who were earlier disheartened by the unimpressive employment
data released last week. This positive sentiment spread to Asian
markets, including the Philippine bourse.
ACTIVE STOCKS
Telecom giant Philippine Long Distance Telephone Co. (PLDT) reclaimed
its position as the most actively traded stock, cornering 27.75% of the
market on 174,000 shares worth PhP222.2 million. It slid PhP10 to
PhP1,270. The other day's leader, rival Globe Telecom, gained PhP15 at
PhP920 on 160,000 valued at PhP147.8 million. Its market share was
18.46%. Mobile phone firm Pilipino Telephone Corp. (Piltel) rose PhP0.09
to PhP2.55 with 33.2 million shares worth PhP83.5 million. SM Prime
Holdings, Inc. ranked eighth. It kept to its previous price of PhP5.80
as it took 2.32% of the market on 3.1 million shares valued at PhP18.5
million. The country's leading shopping mall developer and operator
posted profits of PhP1.07 billion in the second quarter, up 11% from
last year's PhP963 million. It has set aside PhP5 billion for capital
expenditures next year. The construction of the SM Mall of Asia, set to
be the country's premier shopping destination and tourist attraction,
has already started.
International Container Terminal Services, Inc. (ICTSI) clinched the
10th place as it moved up to PhP3.65 on almost four million shares worth
PhP14.5 million. ICTSI yesterday said its consolidated gross revenues
for the second quarter grew by 28%. It refused to issue figures ahead of
its financial report filing with the stock exchange and the Securities
and Exchange Commission. The growth in ICTSI's revenues for the period
was attributed to improved cargo handling from foreign subsidiaries
Baltic Container Terminal in Gdynia, Poland and Tecon Suape S.A. in
Brazil.
Ayala Corp., which controls top notch property firm Ayala Land Inc.,
the country's second biggest lender Bank of the Philippine Islands and
Globe, was unchanged at PhP5.40 with 1.6 million shares traded for
PhP8.5 million. The conglomerate, which has turned 169 years old,
reported a consolidated net income of PhP2.64 billion for the first
half, nearly doubling the PhP1.39 billion in 2003. The B shares of San
Miguel Corp. rose to PhP70.50 on 62,000 shares worth PhP4.4 million,
representing a market share of 0.55%. San Miguel Corp., the largest food
and beverage conglomerate in Southeast Asia, said it completed yesterday
its acquisition of 50% of Berri Ltd., an Australian juice company. The
company's food group recorded an operating income of PhP964 million for
the first half. Equitable PCI Bank said yesterday its second-quarter
profit rose 2.8%, helped by higher lending and fee-based income. The
bank said growth in its consumer lending was sustained. These strong
data may be more than enough to keep investors busy in the coming days.
With concerns over oil price increases slowly fading, the stock market
should be continuing on its gains until the end of the week, analysts
said.
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