NEWS

Thailand power project to receive 140 mln usd in ADB loans

     MANILA (AFX-ASIA) - The Asian Development Bank said today it is extending loans worth 140 mln usd to a 1.37 bln usd power project in Thailand's Rayong province.
     In a statement from its Manila headquarters, the ADB said it will also extend a political risk guarantee of up to 70 mln usd for offshore co-financing in its first private power generation project in Thailand.
     The project, a 1,434-megawatt coal-fired power station in the Map Ta Phut industrial estate on the coast, 60 kilometers southeast of Bangkok, is intended to meet Thailand's long-term power needs, ADB said.
     The plant, expected to begin commercial operation in Feb 2007, is one of a series of projects intended to install additional power capacity to prevent a power shortfall in Thailand by 2008, the ADB said.
     The plant will be developed under a 25-year power purchase agreement between the Electricity Generation Authority of Thailand (EGAT) and BLCP Power Ltd, a private limited liability company incorporated in Thailand, it said.
     EGAT will purchase the plant's output during the term of the power purchase agreement. High-quality coal will be shipped to the plant from Australian Coal Holdings Pty Ltd under a 25-year supply agreement.

Philippines Dec M3 growth slows to 4.3 pct yr-on-yr from Nov's 4.9 pct

     MANILA (AFX-ASIA) - Domestic liquidity, or M3, grew 4.3 pct year-on-year to 1.74 trln pesos in December, slower than the previous month's 4.9 pct growth, the central bank said.
     Citing preliminary data, the central bank attributed the M3 growth to continued expansion in the net foreign assets (NFA) of the monetary system, which consists of the central and the banking system, and improvement in the level of domestic credits to both the public and private sectors.
     "The steady growth in the NFA can be attributed to the increase in the foreign assets of the monetary system, mainly in the form of investments in foreign currency-denominated securities by banks and the central bank," the central bank said in a statement.
     The seasonal inflow of dollars -- including from remittances of overseas Filipino workers, which were sold to the banking system -- also helped boost the NFA position of the monetary system, it said.
     Credits to the public sector, particularly to the national government, grew by 10.9 pct in December, supported by strong demand for government securities.
     Private sector credits grew at a modest pace of 0.8 percent.
     "In the months ahead, monetary authorities will continue to emphasize caution while ensuring an appropriate level of liquidity in the financial system in support of the economy's low-inflation growth path," the central bank said.
     The government targets an average inflation rate of 4-5 pct for all of 2004, compared with last year's average of 3.1 pct.
     (1 usd = 55.90 pesos)
     edelacruz@afxasia.com

OUTLOOK - Philippine Meralco 2003 net profit 800 mln-1.2 bln before provisions

     MANILA (AFX-ASIA) - Manila Electric Co is expected to have booked a net profit before provisions of 800 mln to 1.2 bln pesos for 2003 on the back of increased rates and higher electricity sales, analysts said.
     If the expectation proves true, it will be a turnaround from the 2 bln peso net loss the country's largest power distributor posted in 2002.
     Earlier, company officials said 2003 net profit may fall below its 1 bln target due to provisions for contingent liabilities.
     "Meralco is slowly weathering the storm of the refund order the Supreme Court issued last year," said AB Capital Securities research director Jose Vistan Jr, who is projecting a 2003 net profit of 1.2 bln pesos for the company.
     A regulatory overhang has been a major concern for Meralco, in which the government has a stake.
     Last year, the Supreme Court ordered the power firm to return to its 4 mln customers around 30.5 bln pesos in overcharges made since 1994.
     The order stemmed from the then Energy Regulatory Board's (ERB) ruling in 1998 that Meralco overcharged customers when it included income tax as part of operating expense, thereby letting consumers shoulder something the company and its shareholders should have handled.
     Meralco is set to implement the third phase of its four-level refund, which affects the company's cash flow rather than its bottom line since it is booked as a reduction to capital rather than on profit.
     Analysts said approvals for two rate increases Meralco obtained from the Energy Regulatory Commission (ERC) weeks after the High Court's refund order should beef up the company's net profit for full year 2003.
     Meralco obtained a 0.17 peso per kilowatthour rate rise in early June and a 0.22 peso per kwh tariff hike in March, translating to additional revenue of 200 mln pesos per month, company officials said earlier.
     Accord Capital Equities analyst Ron Rodrigo said the rate increases and higher electricity sales last year, which may have grown 4-5 pct over 2002, helped Meralco return to profit in 2003.
     Rodrigo is expecting a 2003 net profit of 878 mln pesos for Meralco and said this will rise to 1.103 bln this year.
     However, late last week, Meralco officials said it may slightly miss its 2003 net profit goal of 1.0 bln pesos.
     "Regulatory concerns, however, remain a big challenge for Meralco," Rodrigo said.
     The Supreme Court in mid-January prevented Meralco from imposing a tariff hike of 0.12 peso/kWh, which the ERC provisionally approved for implementation from Jan 1. The halt order is still in effect.
     The provisional rate hike would have given Meralco's revenues an annual boost of about 1.9 bln pesos.
     "The adjustment is crucial to the company if we consider its cash flow constraints. There is a need for cash for operations, expansions, servicing matu ring loans and implementing the refund," Vistan said.
     He added the rate hike will improve not only the company's bottom line, but also rescue it from a deteriorating financial condition. Meralco's credit ratings have been below investment grade.
     With the rate hike part of his calculation, Vistan expects Meralco's 2004 net profit to reach 4.6 bln pesos. Vistan said achieving this projection will largely hinge on whether the Supreme Court grants the recent rate hike and if it should be made retroactive.
     Meanwhile, Citiseconline.com analyst Mark Alan Canizares see an 800 mln to 1.0 bln 2003 net profit for Meralco on the back of a 4.5 pct economic growth last year, stable system loss and the twin rate hikes early last year.
     Meralco has maintained its system loss at 10.85 pct of total power delivered in 2003, same as in the previous year.
     The law allows the power distributor to pass on a maximum system loss of 9.5 pct to its customers. It shoulders any loss in excess of the 9.5 pct level.
     "It is unlikely the government will deny Meralco its much deserve rate rise. The government can ill afford a power crisis in the future. And, besides, the government holds 25 pct of the power firm and will definitely not allow Meralco to go under," Vistan said.
     (1 usd = 56.17 pesos)
     cecille.yap@afxasia.com

Philippine Vitarich creditors approve changes to restructuring deal

     MANILA (AFX-ASIA) - Vitarich Corp said a majority of its creditor banks has approved the revision of the terms of a restructuring agreement signed in 2001.
     "A majority of the creditor banks of Vitarich, representing 71.71 pct of the total debts, have approved the proposed restructuring amendments to the existing Omnibus Agreement," Vitarich told the stock exchange in a disclosure.
     It did not elaborate.
     Earlier, the company asked creditor-banks to reduce interest rates and lengthen repayment terms for some 2.5 bln pesos worth of debts.
     In a disclosure to the stock exchange last year, Vitarich said the company is essentially seeking a reduction in interest rates and a longer repayment term to give it time to make a successful business transition.
     If approved, Vitarich will have a lighter debt burden, which will allow it to grow its feeds business, it added.
     (1 usd = 56 pesos)
     cecille.yap@afxasia.com

BIRD FLU - Philippine leader forms crisis body to meet threat - UPDATE

     MANILA (AFX-ASIA) - President Gloria Arroyo said today she will form a high level crisis body to manage the Philippines' response should the bird flu epidemic wreaking havoc across Asia hit the country.
     She told a news conference she will set aside 250 mln pesos to finance the operations of the team, based on Manila's successful work in containing the SARS virus last year.
     Health Secretary Manuel Dayrit will head the crisis committee, Arroyo said.
     The president said the Philippines remains free of the virus, which has killed 16 in the neighboring Southeast Asian countries of Thailand and Vietnam and infected eight other Asian countries.
     She said her government will undertake "bold, preemptive and immediate steps", if the epidemic can no longer be prevented, to limit poultry and human infection.
     "One of the keys to containing SARS were the quarantine procedures," she said. "We will do the same here."
     Meanwhile, the Philippines' Bureau of Animal Industry said it will mobilize veterinarians and agriculturists as front-line workers in the event of a bird flu outbreak.
     Government coordinators during the Foot and Mouth Disease outbreak will also coordinate the bird flu preparedness program, it added.
     "Once the virus is detected, the farm where it occurs will be quarantined with a radius up to a 3-5 kilometer and poultry population culled," said BAI director Jose Molina.
     Of the 250 mln pesos to be allotted for the bird flu preparedness program, 100 mln will be used to indemnify owners of virus-stricken chicken farms.
     The mortality rate of the bird flu virus on a poultry population is as high as 80-90 pct within 24 hours, Molina said.
     Veterinarians have also also ordered to take necessary precautions when visiting bird farms.
     Arroyo, meanwhile, urged fellow Filipinos to continue consuming chicken meat, which she said remained safe to eat.
     Earlier this week, poultry raisers said wholesale figures in January were down about 12 pct month-on-month.
     "There is no bird flu in the Philippines. It is safe to eat chicken," Arroyo said.

Philippine peso recovery after reserve hike seen short-lived - MMS

     MANILA (AFX-ASIA) - The peso's recovery versus the US dollar following a surprise central bank move to raise banks' reserve requirement is likely to be temporary given political concerns in the run-up to the May elections, MMS International economist Patricia Liu.
     The central bank today raised banks' liquidity reserve requirement to 10 pct from 8 pct amid inflationary threats arising from the peso's weakness against the US dollar.
     "This is intended to address potential inflationary pressures due to foreign exchange volatility," central bank deputy governor Amando Tetangco Jr said, adding that the reserve hike will siphon off some 30 bln pesos from the banking system.
     He said increasing the reserve requirement will not weigh on the economy compared to raising interest rates.
     "The reserve hike has a psychological impact on the (currency) market, but I think the impact will be short-lived since people think the political risks ahead of the elections are still there," Liu said.
     She agrees raising the reserve requirement will not have an immediate adverse impact on the economy. In the long run, however, she said banks' lending capability may be adversely affected.
     The peso fell to a record low of 56.22 to the dollar on Jan 29 amid growing pre-election political uncertainties.
     At the Philippine Dealing System, the peso recovered to 55.880 to the dollar in mid-afternoon trade, recovering sharply after the central bank's announcement from the noon average of 56.177 pesos.
     Analysts largely expect the peso to weaken further to record lows ahead of the May polls, with one offshore currency strategist looking at a "conservative" 57 to the dollar level before May.
     edelacruz@afxasia.com

Philippine central bank raises banks' liquidity reserve

     MANILA (AFX-ASIA) - The central bank, in a surprise move, said it is raising the liquidity reserve requirement of banks to 10 pct from 8 amid inflationary threats arising from the peso's weakness against the US dollar.
     "This is intended to address potential inflationary pressures due to foreign exchange volatility," central bank deputy governor Amando Tetangco Jr said.
     He said the reserve hike will siphon off some 30 bln pesos from the banking system.
     He said increasing the reserve requirement will not weigh on the economy compared to raising interest rates.
     "It should not impact on growth at all," Tetangco said.
     "Members of the (central bank's) Monetary Board decided to take action because of the economic impact of the peso's weakness."
     He said the central bank's policy tightening measure is aimed at addressing the peso's trend of weakening against the US dollar.
     Following the liquidity reserve hike, the overall reserve requirement imposed on banks is now at 19 pct from 17 pct previously, with the statutory reserves still at 9 pct.
     This means that for every peso deposit placed in banks, 19 centavos is set aside for reserve requirements, while banks can use the balance for lending.
     The central bank's policy interest rates are to stay at 6.750 pct for overnight borrowing and 9.000 pct for overnight lending.
     Early today, the National Statistics Office (NSO) said the country's headline inflation rate rose 4.1 pct year-on-year in January based on 2000 prices and 3.4 pct based on 1994 prices, faster than the 1994-based 3.1 pct year-on-year rise in December.
     Following the release of January inflation data, economists saw the central bank tightening its monetary policy sooner than anticipated, citing the build-up in inflationary pressures.
     The central bank's move followed yesterday's warning from President Gloria Arroyo against foreign exchange speculators, hoarders and profiteers, although she also blamed continued excessive politicking and electioneering ahead of the May general elections for the peso's weakness.
     The peso fell to a record low of 56.22 to the dollar on Jan 29 amid growing pre-election political uncertainties.
     At the Philippine Dealing System, the peso averaged 55.880 to the dollar in mid-afternoon trade, recovering sharply after the central bank's announcement, from the noon average of 56.177 pesos.
     afxmanila@afxasia.com

Forex - Philippine peso rises vs dollar on banks' reserve requirement hike

     MANILA (AFX-ASIA) - The peso firmed up sharply versus the US dollar in mid-afternoon trade after the central bank - in a surprise move - raised banks' liquidity reserve requirement to 10 pct from 8.0 pct.
     Dealers said the "knee-jerk" reaction could be temporary as importers and other corporates are seen re-entering the foreign exchange market following the sudden improvement of the peso.
     At 2.50 am, the peso has averaged 56.086 to the US dollar on volume of 79. 50 mln usd.
     It traded weaker in the morning but shot up to 55.88 after the central bank's announcement.
     "It's just a knee-jerk reaction. Once everything settles, we're likely see renewed buying again," a local bank dealer said.
     "A lot of importers and others still short on the US dollar are waiting for this kind of move as an opportunity to accumulate more," another trader added.
     The peso is seen trading within a wide range of 55.85 to 56.20 to the US dollar, with bias on a stronger local currency at least today.
     The central bank said the monetary tightening measure is intended to address the inflationary impact of the peso's recent weakness, which fell to a historic low of 56.22 on Jan 29 due to political concerns.
     cecille.yap@afxasia.com

Philippine central bank raises banks' liquidity reserve to stem peso weakness

Philippines' MBf to list extra 313.35 mln common shares Feb 9 - PSE

     MANILA (AFX-ASIA) - Holding company MBf Inc will list an additional 313. 35 mln common shares on Feb 9, representing shares converted from advances from MBf International Ltd, MBf Asia Capital Corp Holdings Inc and Grogram Ltd, the Philippine Stock Exchange said.
     MBf is engaged in acquiring and disposing of properties and securities.
     MBf closed today untraded after closing at 1.98 pesos previously.
     (1 usd = 56.18 pesos)
     edelacruz@afxasia.com

BIRD FLU - Asian economies to feel minimal impact - UN official

     MANILA (AFX-ASIA) - Avian influenza is unlikely to have a major effect on the economies of Asia, unlike the SARS outbreak last year, a United Nations official said today.
     Kim Hak-Su, executive secretary of the UN's Economic and Social Commission for Asia and the Pacific, said economic progress in the region is widely expected to be better this year than in 2003, despite the bird flu outbreak that has claimed 17 human lives.
     The fallout from the outbreak had so far been limited to sectors like the poultry industries of certain countries and the human death toll is still relatively small, he said.
     Kim said this estimate does not take into account fears the bird flu may be spread directly among humans rather than being spread through contact with infected birds.
     Experts have warned a worldwide epidemic may result if the bird flu crisis escalates through human-to-human transmissions.
     However, Kim said he is optimistic a vaccine or treatment for bird flu could soon be developed since it is just a form of influenza.
     "It is not so serious in terms of economic impact," he told reporters in the Philippines.
     "SARS had an impact on travel-related industries, hotels, airlines and a substantial decline of tourists in the region. But, so far, there is no such sign of a decline in tourists" due to fears about bird flu, Kim said.
     The overall impact of bird flu is "not so serious" and will be limited to the poultry and livestock sectors, which are already suffering, Kim said.
     Tens of millions of chickens in 10 affected countries have been culled to keep the disease from spreading.
     The H5N1 bird flu virus has emerged in Cambodia, China, Indonesia, Japan, Laos and South Korea, Thailand and Vietnam, while Taiwan and Pakistan have reported weaker strains.
     In contrast, SARS, which first surfaced in China's Guangdong province in Nov 2002, spread to more than 30 countries. It killed nearly 800 people and spawned a panic that caused millions of people to curtail travel to and within Asia.

ROUNDUP - CPI rise, peso seen putting pressure on Philippine interest rates

     MANILA (AFX-ASIA) - The Philippine headline consumer price index (CPI) rose 4.1 pct year-on-year in January based on 2000 prices and 3.4 pct based on 1994 prices, faster than the 1994-based 3.1 pct year-on-year rise in December.
     Economists said it is possible the central bank may tighten monetary policy sooner than anticipated.
     Central bank governor Rafael Buenaventura said the monetary authorities will review the CPI data for January and "look at the outlook for the rest of the year."
     "Based on that, we will act accordingly," Buenaventura told AFX-Asia, when asked how the latest CPI data will affect the central bank's policy stance.
     Economic Planning Secretary Romulo Neri said 1994-based headline inflation accelerated in January due to prices increases for meat products, particularly poultry and fuel items.
     But he noted this is still lower than the 4.0-5.0 pct full-year target set by the inter-agency Development Budget Coordination Committee, which formulates the government's macroeconomic targets in coordination with the central bank.
     In a phone interview, Neri said there is no need to revise the government's full-year inflation target of 4.0-5.0 pct just yet.
     "Both the 1994 and the 2000 headline rates are still within the (full-year) target," Neri told AFX-Asia.
     Economists polled by AFX-Asia had seen CPI rising 2.8-3.5 pct year-on-year in January, reflecting increased fuel costs, potentially higher food prices due to the avian flu scare, and pressures from a weaker peso.
     Earlier, Neri saw January CPI up 3.0 pct while central bank governor Rafael Buenaventura expected CPI to come in at 3.2-3.6 pct, mainly due to higher fuel costs.
     Month-on-month, the National Statistics Office (NSO) said prices in January rose an average 0.9 pct using the 2000 base and 0.8 pct based on 1994 prices, higher compared with the 0.3 pct rise in the previous month.
     The NSO is re-basing the CPI data to reflect changes in the consumption pattern of Filipinos.
     For the first time, the NSO also released core inflation data, with the January year-on-year rate seen at 4.0 pct based on 2000 prices and 3.6 pct based on 1994 prices.
     Core inflation strips out the effects of temporary disturbances on headline CPI by excluding items such as food and energy.
     Neri said prices of meat increased 10.2 pct in January from a year ago, the biggest recorded monthly increase since 1992, as producers continued to pass on the rising cost of feeds for livestock and poultry to consumers.
     In metropolitan Manila, he said the average prices of dressed chicken rose 13.6 pct from the previous month as supply remained insufficient to cope with demand.
     He said the incidence of mad cow disease and avian flu abroad further exerted pressure on pork and beef, which registered price increases ranging from 5.7 pct to 13.2 pct from the previous month.
     Even prices of fish also increased month-on-month by about 1.0-4.6 pct partly due to the consumption switch from meat to fish, he said.
     For this year, Neri expects the main pressures for inflation to come from oil and meat prices and the peso's weakness.
     Economists, on the other hand, said increased election-related spending will also likely result in inflationary pressures.
     Except for the food, beverage and tobacco group, the NSO said year-on-year January inflation for other commodity groups declined. Rates for housing and repairs slid to 2.9 pct from 3.1 pct in December; fuel, light and water to 4.1 pct from 6.2 pct; services to 5.1 pct from 5.5.
     Inflation for clothing and miscellaneous items remained at 2.3 pct and 1. 9 pct, respectively.
     AB Capital Securities research director and economist Jose Vistan Jr believes the faster CPI rise in January will likely prompt the central bank to raise benchmark interest rates sooner than expected.
     He said the prevailing weakness of the peso against the US dollar is another excuse for the central bank to start tightening monetary policy early in the year.
     At the Philippine Dealing System, the peso averaged 56.177 to the US dollar at noon after trading between 56.120 and 56.200, close to its record intraday low of 56.220, seen on Jan 29 amid growing pre-election political uncertainties.
     "Local interest rates are becoming less competitive in real terms because of higher inflation," Vistan said.
     He cited the narrowing gap between the central bank's key borrowing rate of 6.75 pct and the 4.1 pct rise in January inflation, which effectively puts real interest rates at slightly more than 2 pct.
     While the January data remained within the target, Vistan said inflationary pressure set in early in the year as shortages in both chicken and meat supplies hit the Philippines. The price of rice and other selected food items also rose in January.
     Local oil prices have been edging up since late last year, reflecting global price movements, and the oil firms said more price increases are to be expected as the petroleum industry begins to recover higher costs of acquiring and producing environmentally friendly fuels.
     Vistan expects CPI to rise 3.5-5.5 pct this year.
     afxmanila@afxasia.com

Philippine RCBC's 2003 net profit at 1.4-1.5 bln pesos - vice chairman

     MANILA (AFX-ASIA) - Rizal Commercial Banking Corp (RCBC) said it expects to report a net profit of between 1.4 bln and 1.5 bln pesos for 2003, slightly higher than the previous year's 1.39 bln pesos and ahead of a 1.1 bln target, thanks to trading gains and interest income.
     "We expect last year's net profit to come in between 1.4 and 1.5 bln pesos, but this is still subject to audit," the Philippine bank's vice chairman Cesar Virata told reporters.
     (1 usd = 56.18 pesos)
     afxmanila@afxasia.com

Manila shares close near 6-week low on economic, political concerns

     MANILA (AFX-ASIA) - Share prices closed at their lowest level in nearly six weeks in sluggish trade, after yesterday's one-day technical bounce, as prospects of higher domestic interest rates and lingering pre-election political uncertainties undermined sentiment, dealers said.
     The faster inflation rate in January and the peso's weakness may prompt the central bank to raise key interest rates sooner than expected, economists said.
     Dealers said a lack of fresh news on the corporate front also kept investors on the sidelines, although sustained bargain-hunting interest in Philippine Long Distance Telephone Co (PLDT) limited the market's downside.
     The composite index closed down 9.33 points or 0.65 pct at 1,431.79, its weakest level in nearly six weeks, on volume of 165.5 mln shares worth 469.7 mln pesos. It traded between 1,428.44 and 1,443.13.
     In the broader market, losers led gainers 36 to nine while 41 stocks were unchanged.
     The peso's fall to historic lows recently has been a major disincentive to trade in the equities market, dealers said.
     In local dealing, the peso averaged 56.177 to the US dollar at noon after trading between 56.120 and 56.200.
     Headline January Consumer Price Index (CPI) rose 4.1 pct year-on-year based on 2000 prices, higher than the 3.1 pct year-on-year rise registered in December, the National Statistics Office reported this morning.
     Based on 1994 prices, January inflation rose 3.4 pct year-on-year.
     The NSO is re-basing the CPI data to reflect changes in the consumption pattern of Filipinos.
     "Our analysis is that market sentiment will remain bearish for the next couple of weeks given the volatility in the local currency market, the lack of exciting news on the corporate front, and an apparent liquidity tightening amid rising interest rates," Unicapital Securities research head Elena Ponceca said.
     She was referring to Monday's rise in Treasury bill rates, including the bellwether 91-day rate.
     But AB Capital Securities research director Jose Vistan Jr said the faster rise in January's CPI will likely prompt the central bank to raise benchmark interest rates sooner than expected. "Local interest rates are becoming less competitive in real terms because of higher inflation," he said.
     Top-traded PLDT was up 10 pesos at 850 on volume of 229,600 shares, extending gains on bargain-hunting, ahead of the release of its 2003 financial results.
     "Some investors are moving back in (to PLDT) in anticipation of improved full-year 2003 results, although that has been expected since last year," Unicapital's Ponceca said.
     PLDT expects to have met or even exceeded its 2003 net profit target of 10 bln pesos, three times higher than the previous year's figure of 3.1 bln pesos, on the back of the sustained robust performance of its wireless unit Smart Communications Inc.
     PLDT is scheduled to release its 2003 results later this month.
     Bank of the Philippine Islands was down 1.50 at 45.50.
     Ayala Corp was down 0.10 at 5.80.
     Filinvest Land was down 0.04 at 1.02.
     PLDT affiliate Pilipino Telephone was down 0.10 at 1.08.
     First Philippine Holdings was down 0.50 at 21.25.
     Both San Miguel B, available to foreign investors, and San Miguel A were unchanged at 69.50 and 56.00, respectively. It recovered following Standard & Poor's announcement it has assigned a BB foreign currency rating with a stable outlook to the food and beverage conglomerate.
     S&P said the rating on San Miguel reflects the company's "strong domestic position, favorable cost profile, low debt and adequate cash-generating ability."
     The all-shares index was down 2.27 points at 929.95.
     The commercial-industrial index fell 2.55 to 2,189.75.
     Property dropped 10.29 to 540.25 while mining rose 16.16 to 1,528.68.
     Oil was unchanged at 1.27.
     Banking and financial services shed 8.77 to 437.42.
     edelacruz@afxasia.com

STOCK ALERT - Philippines' PLDT extends gains on bargain-hunting

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) extended gains in late trade on bargain-hunting, ahead of the release of its 2003 financial results, dealers said.
     PLDT was up 10 pesos at 850 on 77,480 shares, helping to limit the market's downside. Its American Depositary Receipts (ADRs) rose 0.11 usd to 14.93, although in pesos, the local price is ahead of the ADR price.
     "Some investors are moving back in (to PLDT) in anticipation of improved full-year 2003 results, although that has been expected since last year," Unicapital Securities research head Elena Ponceca said.
     PLDT expects to have met or even exceeded its 2003 net profit target of 10 bln pesos, three times higher than the previous year's figure of 3.1 bln pesos, on the back of the sustained robust performance of its wireless unit Smart Communications Inc.
     PLDT is scheduled to release its 2003 results later this month.
     (1 usd = 56.18 pesos)
     edelacruz@afxasia.com

Philippines' San Miguel Corp assigned BB rating; outlook stable - S&P

     MANILA (AFX-ASIA) - Standard & Poor's Ratings Services said it has assigned a BB foreign currency rating to food and beverage conglomerate San Miguel Corp, with a stable outlook.
     "The rating on San Miguel reflects the company's strong domestic position, favorable cost profile, low debt, and adequate cash-generating ability," S&P said in a statement.
     This is the first rating given by the rating agency to San Miguel.
     San Miguel sells nine of every 10 beer bottles consumed in the Philippines and has embarked on a regional expansion program to penetrate the food and beverage industries in at least seven Asian markets on a wider scale, including China.
     Besides beer, it also sells hard liquor, non-alcoholic beverages, processed meats, bottled water, and soft drinks.
     The beer, hard liquor, and non-alcoholic beverage segments accounted for 65 pct of operating profit in 2003.
     San Miguel booked net profit of 7.37 bln pesos in 2003, up 7 pct from the previous year on strong revenue growth across all its businesses.
     S&P noted that the companys extensive distribution network also creates high barriers of entry in its core businesses.
     At 11.24 am, San Miguel B, available to foreign investors, was unchanged at 69.50 pesos after losses early in the session while San Miguel A fell 0.50 to 55.50.
     (1 usd = 56.18 pesos)
     edelacruz@afxasia.com

DATAWATCH - Faster Philippine CPI may see central bank raise rates -AB Capital

     MANILA (AFX-ASIA) - A faster rise in January's consumer price index will likely prompt the central bank to raise benchmark interest rates sooner than expected, AB Capital Securities research director Jose Vistan Jr said.
     Another excuse for the central bank to start tightening monetary policy early in the year is the prevailing weakness of the peso, which fell to a historic low of 56.22 to the US dollar recently, the analyst added.
     Headline CPI rose 4.1 pct year-on-year in January based on 2000 prices, higher than the 3.1 pct year-on-year rise registered in December, the National Statistics Office (NSO) reported.
     Based on 1994 prices, January inflation rose 3.4 pct year-on-year.
     "Local interest rates are becoming less competitive in real terms because of higher inflation," Vistan said.
     He cited the narrowing gap between the central bank's key borrowing rate of 6.75 pct and the 4.1 pct rise in January inflation, which effectively puts real interest rate at a little over 2 pct.
     Central bank governor Rafael Buenaventura said the monetary regulator will look into the January CPI and the outlook for the remainder of the year to determine if appropriate monetary action should be taken "accordingly."
     Ideally, the central bank either raises benchmark rates or increases banks' reserve requirements to stem a surge in inflation.
     While the January data remains within the target, Vistan said inflationary pressure set in early in the year as shortages in both chicken and meat supplies hit the Philippines. The price of rice and other selected food items also rose in January.
     The government had set a full-year CPI target of 4.0-5.0 pct, after a 3.1 pct rise in 2003.
     Other risks to the CPI goal include higher oil and food prices and possible increases in utility charges due to the peso's fall and higher crude oil costs. Tariff increases also pose another inflationary threat.
     Local oil prices have been edging up since late last year to reflect global price movements, and more price increases are to be expected as the petroleum industry begins to recover higher costs of acquiring and/or producing environmentally friendly fuels.
     Vistan expects this year's CPI to rise 3.5-5.5 pct.
     (1 usd = 56.166 pesos)
     cecille.yap@afxasia.com

BIRD FLU - Philippines leader forms crisis body to meet threat

Manila shares flat in early sluggish trade as market consolidates

     MANILA (AFX-ASIA) - Share prices were flat in early sluggish trade as the market consolidated after recent sharp losses, dealers said.
     Investors were said to be sidelined and cautious about aggressively accumulating stocks as political and economic uncertainties bubbled.
     At 10.12 am, the 30-company composite index was up 1.46 points or 0.10 pct at 1,442.58 on 28.08 mln shares worth 49.3 mln pesos. It has so far traded between a narrow range of 1,439.77 and 1,443.13.
     There were seven gainers and losers respectively while 29 stocks were unchanged.
     Top-traded Philippine Long Distance Telephone was up 15.00 pesos at 855 on 25,290 shares. Its American Depositary Receipt in New York was up 0.11 usd at 14.93 last night.
     A weaker peso, which has fallen to historic lows recently, has been a major disincentive to trade in the equities market, dealers said.
     The market is seen trading between 1,430-1,450 today.
     (1 usd = 56.15 pesos)
     cecille.yap@afxasia.com

Philippines January CPI up 4.1 pct yr-on-yr based on 2000 prices

     (Updating with breakdown of data)
     MANILA (AFX-ASIA) - The Philippine headline consumer price index (CPI)rose 4.1 pct year-on-year in January based on 2000 prices, higher than the 3.1 pct year-on-year rise registered in December, the National Statistics Office (NSO) said.
     Economists AFX-Asia polled had seen CPI rising 2.8-3.5 pct year-on-year in January, reflecting increased fuel costs, potentially higher food prices due to the avian flu scare, and pressures from a weaker peso.
     Using the previous 1994 price base, January inflation rose 3.4 pct year-on-year.
     Month-on-month, prices during the first month of the year rose an average 0.9 pct using the 2000 base and 0.8 pct based on 1994 prices, higher compared with the 0.3 pct rise in the previous month, the NSO said.
     The NSO started using 2000 as the base year in the January 2004 data to reflect the changes in the consumption patterns of Filipinos.
     Earlier, Economic Planning Secretary Romulo Neri saw January CPI up 3.0 pct while central bank governor Rafael Buenaventura expected CPI to come in at 3.2-3.6 pct, mainly due to higher fuel costs.
     The NSO said higher year-on-year headline inflation for January was largely due to a substantial increase in the rate for food, beverages and tobacco (FBT), which went up 3.3 pct last month from 2.4 pct in December.
     Inflation a year ago was 2.7 pct.
     Meanwhile, January core inflation rose 4.0 pct based on 2000 prices. Core inflation strips out the effects of temporary disturbances on headline CPI by excluding items such as food and energy.
     Except for FBT, year-on-year January inflation for other commodity groups declined. Rates for housing and repairs slid to 2.9 pct in January from 3.1 pct in December; fuel, light and water to 4.1 pct from 6.2 pct; services to 5. 1 pct from 5.5.
     Inflation for clothing and miscellaneous items remained at 2.3 pct and 1. 9, respectively.
     The NSO said month-on-month inflation picked up to 0.8 pct in January from December's 0.3 pct rise due to higher prices of selected food items such as rice, fish, meat and cooking oil.
     Prices of selected construction materials, kerosene, liquefied petroleum gas, charcoal, gasoline, diesel and medicines were also up during the month.
     (1 usd = 56.16 pesos)
     afxmanila@afxasia.com

Manila shares outlook - Mixed to higher on technical correction

     MANILA (AFX-ASIA) - Share prices are expected to open mixed to higher as investors hunt for bargains, while the market undergoes a technical rebound after its recent sharp fall, dealers said.
     However, the peso's weakness is likely to limit aggressive accumulation and may even encourage some to shift to the volatile foreign exchange market where trading gains could be heftier.
     Yesterday, the composite index closed up 3.45 points or 0.24 pct at 1,441. 12 on volume of 272.04 mln shares valued at 1.2 bln pesos.
     In the broader market, losers beat gainers 33 to 17, with 40 stocks unchanged.
     "A potential technical rebound could occur at home, given the bourse's sharp retreat recently. However, profit-takers could seize on intra-day rallies, until sentiment starts to ebb at the foreign exchange market," 2TradeAsia.com said in its daily note to investors.
     Market volatility is to be expected between now and the May elections, it added. "The market may still succumb to correction; key would be for the market to consolidate its gains above the 1,430 support. However, even if the this new positive momentum is sustained, buying support is expected to be more tentative owing to higher economic and political risks," BPI Securities said.
     Immediate support is at 1,420 and resistance at 1,450-1,470.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

Bank of the Philippine Islands in talks to sell idle assets - report

     MANILA (AFX-ASIA) - Bank of the Philippine Islands is again negotiating with two foreign investors a possible sale of its non-performing loans (NPL), BusinessWorld newspaper reported, quoting BPI president Xavier Loinaz said.
     "We are optimistic. We hope the elections will not derail this and that in the long run we will have a deal," Loinaz was quoted as saying.
     The bank has long planned to sell 5.0-10.0 bln pesos worth of NPLs.
     Earlier negotiations with interested investors failed reportedly due to pricing issues.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

Philippines' PNB Capital 2003 net profit 45.5 mln pesos, up 94 pct yr-on-yr

     MANILA (AFX-ASIA) - PNB Capital and Investment Corp, the investment house unit of Philippine National Bank, reported that its 2003 net profit rose 94 pct year-on-year to 45.5 mln pesos, exceeding the company's 37.2 mln pesos target.
     "Net increase in the value of trading account securities and higher interest income derived from other investments" contributed to the firm's gains, PNB Capital chair Florencia Tarriela said.
      PNB Capital, a 100 pct owned unit of PNB, provides investment banking services such as loan syndication, underwriting of equity and debt issues, project finance, bond floats, asset securitization, debt paper-related transactions, mezzanine financing and financial advisory.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

Philippines Chinabank 2003 net profit 2.63 bln pesos vs 2.59 bln in 2002

     MANILA (AFX-ASIA) - China Banking Corp said it booked a net profit of 2. 63 bln pesos in 2003, higher than its target of 2.00 bln and the 2.59 bln pesos it earned a year before.
     In a statement, Chinabank said strong fee-based revenues from trading of government securities and contributions from its consumer banking and trust operations provided the earnings boost.
     Chinabank set aside 1.82 bln pesos in additional loan loss reserves last year to bring its loss loss provisions to 6.58 bln, representing a loan loss coverage ratio of 74.1 pct.
     Its non-performing loans ratio stood at 14.7 pct of its total loan portfolio.
     The bank reported total resources of 104.72 bln as of end-2003, lower than the previous year's 108.1 bln. Total deposits stood at 72.11 bln, while loans totaled 54.15 bln.
     Chinabank said it is one of the most highly-capitalized banks in the Philippines, with a capital of 17.74 bln pesos and a capital adequacy ratio of 26.17 pct, more than double the 10 pct minimum required by the central bank.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

Philippines, Japan begin free trade talks, say officials - UPDATE

     (Updating with joint news conference)
     MANILA (AFX-ASIA) - Japan today launched bilateral free trade talks with the Philippines in a bid to open up further Southeast Asian markets comprising half a billion people to its exports, as well as its capital.
     The talks, which are parallel to Tokyo's talks with Malaysia, as well as with Thailand, follows the signing of Japan's first free trade agreement (FTA) with a fourth Association of Southeast Asian Nations (ASEAN) member, Singapore, last year.
     "We will try to achieve comprehensive and substantial liberalization of bilateral trade and investment," Japan's Deputy Foreign Minister Ichiro Fujisaki told a joint news conference at the start of the two-day talks.
     He said the two sides have agreed in principle to discuss free trade in all areas "including agriculture", a sector Tokyo has traditionally shielded from foreign competition.
     Tokyo signed an economic partnership agreement last year with ASEAN -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- and pledged to negotiate individual FTAs with ASEAN countries between 2005 and 2012.
     ASEAN comprises a developing economy market of nearly half a billion people and already hosts substantial numbers of Japanese-owned factories, as well as eager consumers of Japanese manufactured goods.
     Japan is the Philippines' number-two trading partner after the US, with two-way trade of 12.52 bln usd in 2002.
     The talks were held a week before the start of campaigning for the Philippines presidential election in May. The Philippines' Trade Undersecretary Thomas Aquino admitted it is unlikely an accord will be signed before then.
     Filipino President Gloria Arroyo, who pledged at a Tokyo meeting with Japanese Prime Minister Junichiro Koizumi in December to sign an FTA accord within a reasonable period of time, is trailing in the national opinion polls to movie star and political newcomer Fernando Poe.
     "Any elections, especially national elections, will most certainly affect any investment decision regardless of the nationality," Aquino said.
     "The extent of negotiations is such that if you look at May, it is really not enough to be able to complete fully the range of issues in the talks."
     Both sides are "simply committed to do as much as we can during the months up to the election," Aquino added.
     Fujisaki said there has been "a lot of groundwork."
     The two sides expect to resume talks in mid-April, he added, but "we have not set the target date" for signing the accord.
     Aquino said Manila initially brought up the possibility of opening up the service sector of Japan, which has an ageing population, for Filipino health care professionals.
     Up to 7 mln Filipinos work abroad, sending home about 8 bln usd to the Philippines every year according to official statistics.
     Fujisaki said Japan wants to "prepare a better investment environment so that private business would have more inducements, or will get more interested in investing into each other's country."
     Japanese businessmen have been complaining about high crime in the Philippines, where kidnap gangs target businessmen, as well as the interventionist streak of Filipino courts that, at times, have revoked government contracts signed years earlier.
     Fujisaki said his negotiating team is "not trying to focus on any impediment right now."
     However, he said the Philippines is geographically very close to his country. "We're trying to set up, very frankly, an improved environment" to enhance foreign direct investment flows.

Filipino arrested in Northern Ireland over terrorist funding

     MANILA (AFX-ASIA) - A Filipino clerk suspected of providing funds to the Jemaah Islamiyah (JI) terrorist organization was arrested in Northern Ireland last week, sources at the foreign office here said.
     Northern Ireland authorities arrested the 30-year-old man last Friday and charged him with two counts of "making funds available to others for the purpose of terrorism," the sources said, citing an official report received by the Philippine embassy in London.
     His wife, a nurse at the Royal Victoria Hospital in Belfast, was also brought in for questioning but later released without charge.
     The Philippine government as well as anti-terror allies the United States and Australia provided intelligence information leading to the arrest.
     Legal assistance is expected to extended to the man, the sources said.
     The JI is believed to be the Southeast Asian arm of Osama bin Laden's al-Qaeda network, which is blamed for the Oct 2002 bombings in Bali, Indonesia that left over 200 dead.
     Intelligence authorities in the region say JI has linked up with other Islamic militants in the region, including Muslim separatist rebels in the southern Philippines.
     US authorities last year arrested JI leader Riduan Isamuddin, also known as Hambali, who they said have been providing information against their information under interrogation.

Philippines plans to pay 200 mln usd maturing loan using Marcos deposits

     MANILA (AFX-ASIA) - The Philippine government plans to pay some 200 mln usd in short-term obligations by tapping into the 640 mln usd Swiss bank deposits of former president Ferdinand Marcos, which a court recently awarded to the government.
     The government's 200 mln usd one-year private placement with HSBC is set to mature tomorrow.
     "I don't want to roll it over. We will pay it using the dollars from the Marcos wealth. In exchange, we will give (Treasury) the peso equivalent," Finance Secretary Juanita Amatong told reporters.
     The move is expected to ease the weakness of the peso, which has fallen to historic lows in recent days.
     The funds recovered from the ill-gotten Marcos wealth will be used to finance implementation of the government's Comprehensive Agrarian Reform Program.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

Philippines 2004 overseas workers' remittances seen up 3 pct - central bank

     MANILA (AFX-ASIA) - Remittances from overseas Filipino workers (OFWs) will likely grow at a conservative rate of 3 pct this year, central bank deputy governor Amando Tetangco Jr said.
     OFW remittances in January to November last year grew 4.8 pct to 6.9 bln usd compared with the year-earlier period. The central bank had targeted 6 pct year-on-year growth in remittances to 7.6 bln usd in 2003.
     Tetangco said remittances last year will likely settle between 7.5-7.6 bln pesos.
     "Deployment is going down and this may have an impact on remittances. Hopefully, this should be offset by the deployment of highly skilled workers, " Tetangco said.
     The latest statistics for the 11-month period show that the number of land-based workers employed overseas fell 6.7 pct year-on-year to 600,620, while that of sea-based employees rose 2.6 pct to 199,727.
     The US, Saudi Arabia, Japan, the UK, Hong Kong, Singapore and the United Arab Emirates remain the major sources of OFW remittances.
     (1 usd = 56.16 pesos)
     cecille.yap@afxasia.com

ROUNDUP - Philippine exports seen rebounding this year from weak 2003

     MANILA (AFX-ASIA) - After unexpected weakness in 2003, Philippine exports are bound to pick up this year on the back of a widely expected global economic rebound, economists and industry officials said.
     Merchandise exports rose 1.5 pct to 35.75 bln usd in 2003 from the previous year's 35.21 bln, below the government target of at least 5.0 pct growth, data released today by the National Statistics Office showed.
     However, December export receipts recovered strongly, rising 9.0 pct year-on-year to 3.176 bln usd, following a revised 0.6 pct year-on-year drop in the previous month to 3.086 bln.
     Receipts from electronics, which traditionally account for more than half of total exports, rose 6.9 pct year-on-year in December but were down 2.62 pct in full 2003.
     Economic Planning Secretary Romulo Neri said the growth in electronics, after a 4.3 pct decline the previous month, may be attributed to the 28 pct increase in world semiconductor sales in December, with sales in Asia-Pacific jumping by 62 pct, as reported by the US Semiconductor Industry Association.
     Julian Wee, a regional economist at IDEAglobal.com in Singapore, said the exports growth in December was better than expected.
     He projected a 3.5 pct year-on-year growth for December, saying he expected orders from United States to be weak.
     Exports to the US in December accounted for 18.9 pct of total receipts, valued at 600.49 mln usd. This represents a 12.5 pct drop year-on-year.
     Full-year 2003 exports to the US, the country's largest trading partner, dropped 18.53 pct to 7.074 bln usd from the previous year's 8.683 bln.
     Neri said an 18 pct increase in exports to Japan, 19.9 pct to Hong Kong, 21 pct to Singapore, 88.4 pct to China, and 23.4 pct to Malaysia cushioned the decline in exports to the US.
     "Philippine exports provide more evidence to the growing importance of regional trade," Neri said.
     Arthur Young, vice president of Semiconductor and Electronics Industries in the Philippines (SEIPI), said he expects the country's semiconductor exports to grow 10-30 pct in 2004 as global demand for electronics recovers.
     This growth will likely enable the country to meet the 10 pct total export growth projected for the year, he said.
     "Going forward, the industry is very bullish about 2004. We see a good recovery in our industry. We are looking at a 10-30 pct growth in terms of the semiconductor industry," Young said on ABS-CBN News Channel.
     The Philippines supplies approximately 12 pct of the world's demand for semiconductors, which represent roughly over 70 pct of electronics exports and 40 pct of the country's total exports.
     He admitted the Philippine exports performed poorly compared with its Asian counterparts, citing the absence of fresh foreign investments and increasing competition from China.
     "Compared to the rest (in the region), we did actually very poorly (in 2003). I guess there are various reasons for that. The lack of foreign investments is one of the reasons, and also the fact that we have lost a lot of business to China," he said.
     Chee Seng Wong, a regional economist at DBS Bank in Singapore, said growth of 6-7 pct in Philippine exports this year is possible, and the sector's strong showing in December supports this expectation.
     However, political uncertainties in the run-up to the May general elections will continue to undermine the country's competitiveness against its Asian neighbors, he said.
     "Improvement has begun to show in the exports number for December, but how will the Philippines fare compared with other Asian countries remains to be seen," Wong said.
     afxmanila@afxasia.com

Philippine Stock Exchange plans to issue 733 mln shares at 119.50 pesos each

     MANILA (AFX-ASIA) - The Philippine Stock Exchange said it plans to raise 733 mln pesos from the sale of additional shares at a proposed price of 119. 50 pesos each.
     The shares issue will enable the stock exchange to comply with the 20 pct limit for exchanges under the Securities Regulation Code.
     "Our underwriters have generated enough demand for the shares to underwrite, on a firm basis, up to 20 pct and on a best-effort basis of 20 pct at an indicative price of 119.50 pesos per share," PSE chairwoman Alicia Rita Morales-Arroyo said in a letter to the Securities and Exchange Commission.
     The proposed price is expected to increase return on equity and the book value of the shares. The price level represents a price-to-earnings ratio of 48.6x and a premium over book value of 10 pct.
     Arroyo said the offering can generate cash of as much as 733 mln pesos, which the exchange can use to acquire a new trading system and as working capital.
     The proposed transaction will add liquidity to the stock, Arroyo added.
     The SEC, meanwhile, has found the indicative price of 119.50 pesos per share "reasonable."
     It, nevertheless, reiterated that "the divestment is moving slowly because the asking price of the brokers willing to sell is not attractive enough to major players, particularly those interested in bulk purchases."
     PSE shares was not traded after closing previously at 190 pesos.
     (1 usd = 56.17 pesos)
     cecille.yap@afxasia.com

Philippines' Lepanto reports 145 pct net profit rise to 57 mln pesos H2 2003

     MANILA (AFX-ASIA) - Lepanto Consolidated Mining Co has reported a 145 pct rise in its net profit in the second half of 2003 to 57 mln pesos from the first half on improved gold output following labor unrest in February.
     The company did not disclose its full-year 2003 results in its statement to the stock exchange.
     Lepanto said it booked unaudited net profits, before extraordinary items, of 66 mln and 112 mln pesos in the third and fourth quarters of last year, respectively.
     However, foreign exchange losses due to the repayment and revaluation of dollar loans brought net profit for the period to 57 mln pesos, it said.
     Gold production improved 67 pct during the second half of 2003 to 56,640 ounces from 33,780 in the first half.
     The company expects its gold output to increase gradually as ore from its Victoria II mining site starts coming in during the first quarter of 2004.
     (1 usd = 56.17 pesos)
     edelacruz@afxasia.com

Philippines hopes for all-clear from foot and mouth disease in May - official

     MANILA (AFX-ASIA) - The Philippines hopes to be declared free of foot and mouth disease in May, the agriculture department said today.
     There have been no reports of foot and mouth outbreaks throughout the country in two years after an epidemic that broke out in 1995, Bureau of Animal Industry director Jose Molina said in a statement.
     He said the government plans to apply for a certification of foot and mouth free status in May from the Paris-based World Organization for Animal Health (OIE) to allow it to re-enter the global meat trade market.
     Molina said the virus strain that hit the country specifically affected pig farms. Foot and mouth is a highly communicable viral disease affecting hoofed animals.

Philippines' Metrobank says trust assets exceed 100 bln pesos at end-2003

     MANILA (AFX-ASIA) - Metropolitan Bank & Trust Co (Metrobank) said its assets under management (AUM), or trust assets, grew to 107 bln pesos as at end-2003 from 71 bln as at end-2002.
     Metrobank's trust assets have grown five fold from 18 bln pesos in 1999 and the country's largest bank now has a 16 pct market share.
     "The outstanding performance is due to the right product mix, investment expertise and the excellent services we always strive to give our clients," Metrobank executive vice president and trust officer Josefina Sulit said in a statement.
     She said among the best-selling funds are MetroFund and Metro Dollar Trust Fund.
     Metrofund is the flagship Philippine peso-denominated fixed-income fund that allows clients to reinvest interest income together with principal on a regular basis.
     Metro Dollar Trust Fund, on the other hand, is the flagship US dollar-denominated fund invested in high-yielding dollar bonds and other dollar-denominated securities not usually accessible to local investors.
     Metrobank's other common trust funds (CTFs) are the Metro Common Wealth Fund, Metrofund Extra, Metrofund Max-5, Metro Invest Plus, and Metro Capital.
     (1 usd = 56.17 pesos)
     edelacruz@afxasia.com

Philippines, Japan begin free trade talks - officials

     MANILA (AFX-ASIA) - Philippine and Japanese officials began two days of talks here today to pursue a bilateral free trade agreement (FTA), officials of both countries said.
     Japanese Deputy Foreign Minister Ichiro Fujisaki and his delegation are in closed door meetings with their Filipino counterparts, they said.
     Japanese Prime Minister Junichiro Koizumi and Filipino President Gloria Arroyo agreed to the talks in Dec 2003, when they met in Tokyo for a dialogue between Tokyo and the Association of Southeast Asian Nations (ASEAN).
     Arroyo had earlier expressed hope the talks will be completed quickly as there were "very few obstacles" to an FTA, despite Japan's highly protected farm and labor markets.
     The talks today are aimed at identifying procedures in negotiations and items that will be covered in the accord, diplomats said. Negotiations are set to continue tomorrow.
     Japan is the Philippines' second-largest trade partner behind the US. Two-way trade in 2002 amounted to 12.52 bln usd.
     Japan is also pursuing similar agreements with Malaysia and Thailand. Its first bilateral free trade agreement, with ASEAN member Singapore, took effect last year.

Philippine Senate passes bill abolishing DST on second trade deals - PSE

     MANILA (AFX-ASIA) - The Senate passed on Monday a pending legislative measure seeking to rationalize the documentary stamp tax (DST) on equity and debt instruments by abolishing the DST imposed on secondary trade transactions and increasing the same on debt instruments.
     The measure is expected to be signed into law by President Gloria Arroyo within the month, the Philippine Stock Exchange said in a statement.
     "The temporary abolition of DST in the purchase of securities at the secondary market, which the bill provides, is expected to boost liquidity in the local securities market and strengthen its competitiveness with its peers in the region," the PSE said.
     The Federation of Philippine Industries (FPI) is however opposing the measure, saying it will increase the DST on longer-term debt instruments and in effect raise the cost of doing business in the country.
     Once the measure is approved, the DST rate on the original issuance of stocks with or without par value will be reduced to 1.00 peso from 2.00 for transaction worth 200 pesos or less.
     The DST rate on sales, agreements to sells, deliveries or transfer of shares will be reduced to 0.75 pesos from 1.50 on every 200-peso transaction or a fraction thereof.
     Meanwhile, the rate on original issuance of debt instruments will be increased to 1.00 peso from 0.30 on each 200 pesos or a fraction.
     Several instruments and documents will no longer be subject to DST. These include fixed income and other securities traded in the secondary market and derivatives.
     (1 usd = 56.17 pesos)
     cecille.yap@afxasia.com

Philippine semiconductor exports seen growing 10-30 pct in 2004 - SEIPI

     MANILA (AFX-ASIA) - Philippine semiconductor exports are expected to grow 10-30 pct in 2004 as global demand for electronics recovers, and will likely enable the country to meet the 10 pct total export growth projected for the year, said Arthur Young, vice president of Semiconductor and Electronics Industries in the Philippines (SEIPI).
     However he admits the Philippines has so far faired poorly compared with its Asian counterparts, citing the absence of fresh foreign investments and China's increasing presence as a regional export player.
     The country's total merchandise exports rose 1.5 pct in 2003 to 35.75 bln usd from the previous year's 35.21 bln, below the government's growth target for the year of at least 5.0 pct.
     Electronics exports in 2003, accounting for over 60 pct of total exports, dropped 2.62 pct to 23.69 bln usd from 24.32 bln in 2002.
     "Going forward, the industry is very bullish about 2004. We see a good recovery in our industry. We are looking at a 10-30 pct growth in terms of the semiconductor industry," Young said in an interview on ABS-CBN News Channel.
     The Philippines supplies approximately 12 pct of the world's demand for semiconductors, which represent roughly over 70 pct of electronics exports and 40 pct of the country's total exports.
     "Compared to the rest (in the region), we did actually very poorly (in 2003). I guess there are various reasons for that. The lack of foreign investments is one of the reasons, and also the fact that we have lost a lot of business to China," Young said.
     The absence of fresh investments will hurt Philippines' manufacturing capability in a year or two, when manufacturing activity is expected to pick up, he said.
     Still, Young said the semiconductor industry is confident that the government's projected 10 pct growth in exports can be easily reached this year on the back of an expected robust performance by the semiconductor sector.
     "We believe that with the growth we are seeing in our sector, the 10 pct growth the (export) industry is projecting as a whole is a very conservative figure," Young said.
     For this year, the Philippine will do "just as good" as other countries in Southeast Asia, although "China is a different matter all together," he said.
     Asked how the May general elections and the related political rumblings will impact on the sector's growth prospects, Young said: "Our industry has gone through how many coups d'etat and changes in government and we continue to deliver results. We are not that concerned about the May election and its effect on revenues and exports.
     "Our concern more is in terms of the perception our shareholders abroad would have or new companies would have in terms of making investments in the country. It is a concern in terms of the future," Young concluded.
     (1 usd = 56.17 pesos)
     cecille.yap@afxasia.com

Philippines election front-runner says advisers working on economic program

     MANILA (AFX-ASIA) - Movie star Fernando Poe Jr, the front-runner in the May 10 Philippines presidential election, has assured skittish investors that experienced advisers are drafting his still unrevealed economic program, Agence France Presse reported.
     With a week to go before the start of formal campaigning, Poe, 64, a high-school dropout with no record of public service, has tried to allay concerns that he is not qualified to be president, the news agency said.
     Asked in an interview with GMA television channel late yesterday about accusations that he has no economic platform, Poe answered: "I have an economic team. All the hard questions, the tough problems, how to solve that, they are helping me."
     He did not identify the members of his economic team or discuss the outline of his economic program.
     Poe, a friend of deposed president Joseph Estrada, holds a lead of 9 percentage points over President Gloria Arroyo in national voter preference surveys.
     In the past week, the Philippines has suffered a credit rating downgrade, the local currency has dived to an all-time low against the US dollar and the stock markets suffered steep falls amid political uncertainty ahead of the balloting.
     In the interview, Poe again brushed aside allegations that he is a political puppet.
     "That is not true. Those who say that don't know who I am."
     Millions of movie fans, especially the poor, idolize Poe.
     However, concerns over his perceived lack of experience and his failure to expound on an economic agenda for his presidency have rattled the financial markets.
     In a stinging rebuke to Poe, he failed to get a single vote in a survey of presidential choices of the influential Makati Business Club, taken last month. Arroyo came out on top with 47 pct of the vote.
     Reacting to this, Poe said: "If their confidence in me is lacking (they should remember that), the people's confidence is lacking in our government."
     "My platform is not just for them, but for the people. That is what I will tell them," Poe added.
     He said he is standing for president in response to "the call of the people."
     "I cannot turn my back to them. Whenever I toured the provinces, I saw that they really needed help... they need a change in our government, so they will believe in it once more," he said.
     Asked about his qualifications, Poe cited "my experience in being an actor for more than 40 years."
     "I have gone to the squatters, the poor, the mountains, all the nooks and crannies (of the country.) I have seen what is really happening."
     In an apparent reference to his upper-class critics, Poe remarked that "some people do not really see what is happening. The problems (they cite), they are not what (Filipinos) are thinking of. They are thinking of what they will eat today and what they will eat tomorrow."
     Poe's image of unimpeachable integrity was dented with his admission on the same interview that he had fathered a child out of wedlock with a former sex starlet named Anna Marin.
     Poe is married to movie star Susan Roces, his co-star in several movies, but they have no children of their own.

Manila shares close slightly higher on bargain-hunting in blue chips

     MANILA (AFX-ASIA) - Share prices closed marginally higher in a mixed session on bargain-hunting in selected stocks led by Philippine Long Distance Telephone Co and Globe Telecom Inc, dealers said.
     However, they said market broadly remains negative with decliners leading advancers, amid lingering pre-election political uncertainties and the peso's weakness against the US dollar.
     The composite index closed up 3.45 points or 0.24 pct at 1,441.12 on volume of 272.04 mln shares valued at 1.2 bln pesos. It traded between 1,434. 63 and 1,445.94.
     In the broader market, losers beat gainers 33 to 17, with 40 stocks unchanged.
     At the Philippine Dealing System, the peso averaged 56.173 to the dollar at noon, after trading in a range of 56.130-56.200. It closed at 56.200 yesterday, close to the record intraday low of 56.220.
     "There was bottom-fishing particularly in PLDT and Globe Telecom as well as Ayala Corp," ATR Kim-Eng Securities research head Andrew Long said.
     "These stocks had been sold down recently so it's not surprising to see them bounce back, especially after the market's healthy pullback."
     Top-traded PLDT rose 15 pesos to 840 on volume of 612,070 shares.
     Globe was up 5.00 at 850.
     Manila Electric B, available to foreign investors, fell 3.00 to 28.50 on 4.2 mln shares on lingering earnings concerns following the suspension order by the Supreme Court against its 0.12 pesos per kilowatthour rate hike, dealers said.
     Meralco A dropped 0.75 to 18.25.
     Meralco parent First Philippine Holdings was down 0.50 at 21.75.
     PLDT affiliate Pilipino Telephone Corp was down 0.28 at 1.18 on 48.03 mln shares, due to profit-taking after a local newspaper reported that a merger between Piltel and Smart Communications Inc will not go through this year.
     PLDT's wireless unit Smart, Piltel, and PLDT itself have denied market rumors that a merger between Smart and Piltel is being considered to facilitate the backdoor listing of Smart.
     But the denials had not stopped speculative interest in Piltel.
     "The market was rattled by that report, which ended speculation about the Piltel-Smart merger," Westlink Global Equities chairman Rommel Macapagal said.
     According to the report, which cited two unnamed Piltel directors, legal and financial problems, particularly concerning Piltel's covenants with its creditors, are hindering Smart's backdoor-listing through Piltel.
     Smart is required, under its congressional franchise, to sell at least 30 pct of its common shares to the public before August this year.
     Conglomerate Ayala Corp was up 0.30 at 5.90 on 7.55 mln shares, extending gains ahead of the release of its 2003 financial results soon.
     Ayala Corp's major units, such as Globe Telecom Inc, Bank of the Philippine Islands (BPI) and Ayala Land Inc have already reported improved results for 2003.
     BPI was down 1.50 at 47.
     The all-shares index was up 4.55 points at 932.22.
     The commercial-industrial index was up 15.80 at 2,192.30.
     Property fell 1.89 to 550.54, while mining dropped 24.68 to 1,512.52.
     Oil was down 0.03 at 1.27.
     Banking and financial services shed 6.69 to 446.19.
     edelacruz@afxasia.com

DATAWATCH - Philippine exports to recover in 2004 after strong Dec - DBS

     MANILA (AFX-ASIA) - Philippine exports are expected to grow 6-7 pct this year, after a weak 2003, thanks to a global economic recovery, DBS Bank economist Chee Seng Wong said.
     He added that a strong showing in December supports such optimism.

     However, political uncertainties in the run-up to the May general elections will continue to undermine the country's competitiveness against its Asian neighbors, he said.
     The government is hoping for a 10 pct improvement in overseas sales of Philippine products this year.
     In 2003, merchandise exports rose 1.5 pct to 35.75 bln usd from 35.21 bln a year earlier, below the government growth target of at least 5.0 pct growth, data released by the National Statistics Office showed.
     However, December export receipts recovered strongly, rising 9.0 pct year-on-year to 3.176 bln usd, following a revised 0.6 pct year-on-year drop in the previous month to 3.086 bln.
     Electronics exports rose 6.9 pct year-on-year in December but were down 2. 62 pct in full 2003.
     "Improvement has begun to show in the exports number for December, but how will the Philippines fare compared with other Asian countries remains to be seen," Chee said.
     He added the Philippines have become less competitive after failing to move in line with its regional counterparts in undertaking reforms to encourage investors.
     Working in favor of Philippine exporters is the peso's weakness against the US dollar. The peso hit a new record closing low of 56.20 yesterday on political concerns.
     However, uncertainties about the May elections may pose a challenge to the projected growth as manufacturers tend to postpone production as they await developments in the political front, Chee said.
     (1 usd = 55.175 pesos)
     cecille.yap@afxasia.com

FOCUS - Philippines elite worries at prospect of second film star president

     MANILA (AFX-ASIA) - As Fernando Poe surges in the opinion polls ahead of presidential elections, the Philippines' intellectuals and businessmen are voicing concerns over the prospect of another film star president.
     The peso and stock prices have fallen, with some investors fearing Poe's performance would mirror that of his disgraced friend, former president Joseph Estrada, now in detention on corruption charges.
     Movie-goers idolize Poe, 64, a multi-millionaire high school dropout, but someone who has never held public office.
     Former president Fidel Ramos, who handed power to Estrada in 1998, said Filipinos must raise the bar for those seeking the highest elective office.
     When soldiers and policeman asked Ramos why they needed qualifications, but not presidential candidates, he said he told them: "I have no answer to that."
     A military-backed popular revolt toppled Estrada in Jan 2001, only 30 months after his election victory.
     The vice-president at the time, Gloria Arroyo, assumed the presidency of a divided nation, surviving an assault from Estrada supporters months later and a full-blown military rebellion last year.
     She lags 9 percentage points behind Poe in the opinion surveys ahead of formal campaigning from Tuesday. Her challenge is to break into Poe's stranglehold of the poorer class, also the core of Estrada's support.
     In contrast, a membership poll of the business group Makati Business Club had Arroyo on top of the six-candidate field with 47 pct. Poe polled zero.
     The influential business group said it polled 82 members on Jan 7-23, with more than 80 pct of respondents in top management positions.
     Felipe Miranda of research institute Pulse Asia said voters' "mis-education" and lack of institutional safeguards has "legitimized as presidential candidates people who do not have the foggiest idea that a program of governance" is a condition for those interested in the job.
     Arroyo, other politicians, and university dons have expressed concerns at the sight of Estrada's men lining up behind Poe.
     Poe has protested that he is his own man.
     However, he has done little to assure big business and the press, refusing so far to discuss his program for governance.
     At a recent reception, Poe snapped at reporters who questioned him about the economy. He was livid at suggestions that his failure to come up with a program of government had unnerved the local currency.
     University of the Philippines political science and international studies professor Natalia Morales wrote an open letter to the Philippine Daily Inquirer newspaper last week that despaired over "the lack of intelligent discourse from some major candidates."
     "The present electoral exercise is a case in point, with the candidates losing grip of cherished principles of governance and just bowing to the tyranny of numbers and name recall. Not even the most basic homework is done on the qualifications of candidates," Morales said.
     The constitution stipulates that the candidate be a natural-born citizen, a registered voter, able to read and write, aged at least 40, and a Philippine resident for 10 years prior to the election.
     Despite a shortage of qualifications, many poor Filipinos have come to trust Poe after watching him play heroic characters on screen for decades.
     Analysts also say the poor may feel closer to a celluloid hero like Poe rather than the veteran politicians who they feel have done nothing for them.

Philippines' Arroyo says economy 'sound and strong', warns speculators

     MANILA (AFX-ASIA) - President Gloria Arroyo said the Philippine economy remains "sound and strong", while renewing her warnings against currency speculators, as well as hoarders and profiteers.
     At the Philippine Dealing System, the peso averaged 56.175 to the US dollar as of 11.19 am after trading in 56.130-56.200 range on volume of 83.50 mln usd. It closed at 56.200 yesterday, just two centavos away from the record intraday low of 56.220.
     "Our economy is sound and strong, there is absolutely no sense in extreme scenarios," Arroyo said in a statement.
     She blamed the peso's weakness on "perceptions of instability fuelled by isolated military adventurism and excessive politicking."
     "I raise a renewed warning against speculators, as well as hoarders and profiteers," she said.
     A local newspaper has reported that the country may fall into a debt crisis over the next five years, if the new government "loses the faith of foreign investors through irresponsible policies."
     The report cited a study prepared by Standard Chartered Bank's Southeast Asian chief economist Steve Brice.
     Meanwhile, the central bank said it is prepared to adopt appropriate monetary policy measures in view of the peso's weakness.
     "We will continue to monitor impact of exchange rate movements on future inflation. If the inflation target is at risk, we will have to take appropriate measures," central bank deputy governor Amando Tetangco Jr.
     The central bank could either raise interest rates or increase banks' reserve requirements to mop up excess liquidity feared to be use in currency speculation.
     Yesterday, central bank deputy governor Alberto Reyes said the monetary regulator has intensified monitoring of banks' foreign exchange transactions, and will do so until the May elections.
     He warned banks face cancellation of their forex trading licenses after three major violations. But, so far, no banks have yet been found speculating on the local currency, Reyes said.
     edelacruz@afxasia.com

STOCK ALERT - Philippines' Ayala Corp firmer ahead of 2003 results

     MANILA (AFX-ASIA) - Ayala Corp was firmer in early trade, extending gains ahead of the release of its 2003 financial results soon, dealers said.
     Ayala Corp's major units, such as Globe Telecom Inc, Bank of the Philippine Islands (BPI) and Ayala Land Inc have already reported improved results for 2003.
     Ayala Corp was up 0.10 peso at 5.70 on volume of 677,000 shares.
     Globe posted an unaudited net profit of 10.3 bln pesos in 2003, 50 pct higher than the 6.9 bln booked in the previous year, on sustained gains in the wireless business.
     BPI booked a net profit of 1.5 bln pesos in the fourth quarter of last year, pushing its full-year unaudited 2003 net profit 10 pct higher to 5.7 bln pesos from the previous year, thanks to improved revenues and lower operating expenses.
     Ayala Land reported 8 pct growth in net profit to 2.71 bln pesos in 2003 from the previous year's 2.52 bln, boosted by higher revenues from rentals land sales, and residential unit sales.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

INTERVIEW - Singapore-listed Fastech Synergy likely to break even in FY2004

     SINGAPORE (AFX-ASIA) - Philippine-based semiconductor assembly and testing services provider Fastech Synergy is poised to break even in the year to Dec 2004 after two years of losses, thanks to an expected recovery in the semiconductor industry.
     "If we just track the industry growth this year, which is forecast at about 20 pct, we will probably break even. There's a good chance that we will do better than just track the industry average for the most of the year, " Fastech Synergy president Saturnino Belen told AFX-Asia in an interview.
     Belen added that he expects Fastech's sales for the first quarter to March 2004 to grow in the low double digits year-on-year, driven by growth in its assembly and test services.
     The Semiconductor Industry Association forecast that the global chip industry will grow by 20 pct in 2004, while Taiwanese semiconductor giant TSMC said it expects growth for the global chip industry to reach 26 pct in 2004.
     For full 2003, Fastech narrowed its net loss to 4.52 mln usd from a 6.39 mln usd a year ago. Its revenue grew 6 pct to 18.34 mln usd, the first year of revenue growth since the onset of the semiconductor industry downtrend in 2001.
     In the fourth quarter to December, Fastech posted a net loss of 1.71 mln usd compared with net loss of 3.05 mln usd in the year-earlier period.
     The company said it plans to venture into testing and assembly services for microwave products used in wireless applications.
     "We want to concentrate on certain market segments. We're not purely dependant on mass production, (and the) low cost type of business. We see that kind of business going to China...We're zeroing in on particular market segments and one of these segments is microwave products," Belen said.
     Fastech recently secured an order from Temex, a French company which manufactures and markets microwave components for telecom and industrial applications.
     "We already have one new customer (Temex) that will contribute about 15 pct additional business for the year...I think growing (overall sales) another 5-10 pct is not going to be very difficult for us," Belen said.
     In order to boost its bottomline, the company also plans to expand its testing services segment, whose margins can be 50-400 pct higher than those of assembly services, Balen said.
     "We're probably about 70-80 pct assembly and 20-30 pct test, but the test portion going forward, will probably grow somewhat," he said.
     He added that Fastech aims to boost the share of its testing services to about 40 pct of the total revenue in 2004.
     (1 usd = 1.69 sgd)
     denise.wee@afxasia.com

Philippines 2003 merchandise exports below target; Nov data revised

     MANILA (AFX-ASIA) - Merchandise exports rose 1.5 pct in all of 2003 to 35. 75 bln usd from the previous year's total receipts of 35.21 bln, below the government's growth target for the year of at least 5.0 pct, the National Statistics Office (NSO) reported.
     Merchandise exports in December recovered strongly, rising 9.0 pct year-on-year to 3.176 bln usd, following a revised 0.6 pct year-on-year drop in the previous month to 3.086 bln.
     The NSO earlier reported merchandise exports in November fell 4.9 pct year-on-year to 2.952 bln usd.
     Electronics exports, which accounted for 64.9 pct of total December receipts, rose 6.9 pct year-on-year to 2.060 bln usd, but down 2.62 pct in the whole of 2003 to 23.69 bln from 24.32 bln in 2002.
     The NSO also revised the November electronics exports drop to 4.3 pct year-on-year, with total receipts of 2.244 bln usd, from an earlier reported decline of 10.3 pct year-on-year to 2.012 bln.
     In a statement, NSO administrator Carmelita Ericta said revisions had been made to the November export figures after taking into account additional data from electronic files of the Automated Export Documentation System (AEDS), put up by the Bureau of Customs, Philippine Economic Zone Authority (PEZA), and the Semiconductor and Electronics Industries of the Philippines.
     The three groups had entered into a joint memorandum of agreement as early as April 20, 2002 to install the AEDS, which permits paperless recording of export transactions to streamline government processes at the ecozones under PEZA.
     Ericta said the NSO would also review export figures from Jan 2003 and any updates will be reflected in the 2003 Foreign Trade Statistics Annual Report targeted for release in April.
     Semiconductor exports, which accounted for 42.5 pct of total exports in December, rose 1.8 pct year-on-year to 1.35 bln usd, the NSO said.
     Articles of apparel and clothing accessories remained the country's second top foreign-exchange earner with a combined share of 6.4 pct and an aggregate receipt of 203.75 mln usd, 18.6 pct lower than the year-earlier 250. 34 mln.
     Coconut oil exports ranked third with total revenue of 63.77 mln usd, up 51.3 pct year-on-year.
     Accounting for 87.4 pct of total December receipts, exports of manufactured goods rose 6.8 pct year-on-year to 2.776 bln usd.
     Exports to the United States accounted for 18.9 pct of total December receipts, valued at 600.49 mln usd, down 12.5 pct year-on-year.
     Japan followed with a 17.2 pct share, as receipts from that country reached 545.18 mln usd, up 18 pct year-on-year.
     Receipts from Hong Kong totaled 286.08 mln usd or 9 pct of the total, up 19.9 pct year-on-year.
     afxmanila@afxasia.com

STOCK ALERT - Philippines' Piltel weaker on report Smart merger unlikely

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) was sharply weaker in early trade after a local newspaper reported that a merger between Piltel and Smart Communications Inc will not push through this year, dealers said.
     Piltel was down 0.16 peso or 10.96 pct at 1.30 on volume of 12.5 mln shares.
     Smart, the wireless unit of Philippine Long Distance Telephone Co (PLDT), PLDT affiliate Piltel, and PLDT itself had denied market rumors that a merger between Smart and Piltel was being considered to facilitate the backdoor listing of Smart.
     But the denials did not stop speculative interest in Piltel.
     "The market was rattled by that report, which ended speculation about the Piltel-Smart merger," Westlink Global Equities chairman Rommel Macapagal said.
     According to the report, which cited two unnamed Piltel directors, legal and financial problems, particularly concerning Piltel's covenants with its creditors, were the major hindrance to Smart's backdoor listing through Piltel.
     The report said one option was Smart's backdoor listing through PLDT itself.
     Smart is required, under its congressional franchise, to sell at least 30 pct of its common shares to the public before August this year.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Singapore's UOB ordered to pay 146.3 mln pesos by Manila court - report

     SINGAPORE (AFX-ASIA) - United Overseas Bank Ltd (UOB) has been ordered by a Manila court to pay 146.3 mln pesos to a group of minority shareholders of its Philippine unit to settle their claims of being left out of talks which led to a 2002 takeover bid, the Straits Times reported, citing court documents.
     The group of minority shareholders, known collectively as the Farmix group, comprises Farmix Fertilizer, Pearlbank Securities, and individuals Manuel Tankiansee and Juanita Uy Tan.
     The newspaper also reported that Judge Artemio Tipon has, in the court document, ordered UOB to pay legal fees of 5 mln pesos and a further unspecified amount covering costs of the suit to the Farmix group.
     (1 usd = 1.69 sgd; 56.16 pesos)
     daryl.loo@afxasia.com

Philippines' Petron, Caltex match rivals' fuel price hike

     MANILA (AFX-ASIA) - Listed Petron Corp and Caltex Philippines Inc said they have jacked up their fuel prices, matching the price increases announced yesterday by Pilipinas Shell Petroleum Corp and the industry's small players.
     Petron and Caltex announced a 0.60 peso per liter price increase for gasoline and 0.30 for diesel and kerosene, effective today.
     The oil firms said the latest round of price hikes is meant to recover additional costs arising from higher import prices of crude.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Philippines Jan customs collections 9.285 bln pesos vs target 8.500 bln

     MANILA (AFX-ASIA) - Customs collections for the month of January reached 9.285 bln pesos, exceeding the government's target of 8.500 bln, preliminary figures from the Bureau of Customs show.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Philippine 5-year bond reissue raises 2.74 bln pesos

     MANILA (AFX-ASIA) - The Bureau of Treasury said it raised 2.74 bln pesos from today's reissue of five-year Treasury bonds at an average rate of 10.870 pct.
     Tenders totaled 9.197 bln pesos against an offering of 4.50 bln.
     Bids ranged from 10.750 pct to 10.975 pct, with the coupon rate at 10.750 pct.
     The government previously offered the five-year bonds on Jan 15.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Philippines Ayala Land 2003 net profit up 8 pct on 20 pct revenue rise

     MANILA (AFX-ASIA) - Ayala Land Inc reported 8 pct growth in net profit to 2.71 bln pesos in 2003 from the previous year's 2.52 bln, boosted by a 20 pct rise in revenues to 14.62 bln.
     The unaudited results of Ayala Corp's property development unit show improvements in rental revenues, land sales, and residential unit sales.
     Ayala Land senior vice president and chief finance officer Jaime Ysmael said the company has set aside 5.6 bln pesos for project and capital expenditure this year.
     About 2.4 bln pesos or 43 pct of this budget is earmarked for projects, primarily residential buildings and high-end residential subdivisions.
     The balance of 3.2 bln pesos or 57 pct is allocated for capex, primarily investments in commercial centers and office buildings, as well as equity investments in various subsidiaries.
     Ayala Land spent 5.2 bln pesos or 66 pct of the 7.9 bln peso project and capex budget for 2003, including the 2.6 bln peso investment in the acquisition of a controlling stake in Bonifacio Land Corp in April.
     The company booked an 8 pct increase in rental revenues to 3.59 bln pesos, contributing 24 pct to total revenues. Rental revenues from commercial centers, primarily driven by the Ayala Center in the Makati central business district, contributed nearly 80 pct to total rentals.
     Land sales revenues reached 2.85 bln pesos, representing 19 pct of total revenues and up 35 pct year-on-year. The rise was primarily due to higher sales bookings at such projects as Ayala Westgrove Heights, Ayala Hillside Estates and Plantazionne Verdana Homes.
     Revenues from residential sales grew by 20 pct to 1.88 bln pesos, accounting for 13 pct of consolidated revenues.
     Ayala Land unit Laguna Properties Holdings Inc, meanwhile, intensified sales efforts and booked a 31 pct increase in sales revenue to 1.86 bln pesos.
     Its core middle-income residential segment, through unit Community Innovations Inc, contributed 658 mln pesos or 5 pct to total revenues.
     Revenues from hotel operations contributed 9 pct to total revenues or 1. 28 bln pesos, down 2 pct from the previous year, due to reduced occupancy and room rates.
     Construction arm Makati Development Corp contributed 759 mln pesos or 5 pct to consolidated revenues, down 18 pct year-on-year as opportunities in the construction sector were limited, Ayala Land said.
     Ayala Land's total assets stood at 67.01 bln pesos as of end-2003, up 8 pct from the previous year.
     Stockholders' equity was down 1 pct at 35.27 bln pesos, primarily due to a special cash dividend of 0.26 pesos per share paid to stockholders in the fourth quarter.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Philippine peso weak on too much politics/electioneering, says Arroyo

     MANILA (AFX-ASIA) - Too much politics and electioneering remain major drags on the peso, President Gloria Arroyo said.
     Arroyo, through deputy spokesman Ricardo Saludo, said the peso, which traded near its all-time low of 56.22 against the US dollar today, remains in an "artificial spiral" and is weighed down on "artificial forces."
     "The main problem is really too much politics and electioneering. And especially the kind of electioneering that would cast doubts on the credibility and the conduct of our elections," Saludo said, citing the president's comments on the peso's fall.
     Separately, central bank deputy governor Alberto Reyes said there have, so far, been no violations of foreign exchange rules or speculative activities against the peso in the market.
     In May, Filipinos will go to the polls to elect a president and a vice president, as well as senators, congressmen and local government officials.
     The peso closed at 56.20 to the dollar, the day's weakest level -- at which currency dealers saw support for the local unit from the central bank -- on volume of 131.30 mln usd.
     It was also the peso's weakest closing level ever. It closed at 56.045 yesterday.
     Deputy governor Reyes said the central bank's monitoring of banks' foreign exchange transactions will remain "tight" until the elections.
     Earlier, he said the Monetary Board has instructed the central bank to impose strictly fines and administrative sanctions against currency market players found repeatedly violating foreign exchange rules.
     He said financial institutions found to be frequently violating the rules will be stripped of their foreign exchange trading licenses and their officers suspended.
     Interviewed on the sidelines of an economic briefing that Arroyo's economic team have today, Reyes said the central bank will double the number of examiners on banks with big forex transactions and will closely review their reporting of trading activities, as well as forex positions.
     He said financial institutions that violate forex rules more than three times will have their licenses suspended.
     However, he said the central bank has, so far not, seen any evidence of violations nor currency speculation, adding that the peso's fall is purely due to "supply and demand factors."
     Arroyo, who is seeking a full six-year term in May, has urged "all parties to bring down the political temperature and pull up sobriety and stability, and focus on platforms rather than politicking."
     Having taken over the presidency in 2001 on the ouster of elected president Joseph Estrada for alleged corruption, Arroyo faces a strong rival in the May polls in movie actor Fernando Poe Jr.
     Poe, a close friend of Estrada, has been topping surveys, but the business community remains largely unimpressed because of his lack of experience in government service and politics.
     He has also yet to make public his government platform and economic agenda.
     edelacruz@afxasia.com

OUTLOOK - Philippine Jan CPI seen up 2.8-3.5 pct yr-on-yr on fuel costs, peso

     ---- by Enrico de la Cruz ----
     MANILA (AFX-ASIA) - The Philippines' Consumer Price Index (CPI) likely rose 2.8-3.5 pct year-on-year in January from 3.1 pct in December, reflecting increased fuel costs, potentially higher food prices due to the avian flu scare, and pressures from a weaker peso, economists said.
     Economic Planning Secretary Romulo Neri sees January CPI up 3.0 pct, while central bank governor Rafael Buenaventura expects CPI to come in at 3. 2-3.6 pct, mainly due to higher fuel costs.
     The National Statistics Office (NSO), which has re-based the CPI data to 2000 from the 1994 level to reflect the changes in the consumption patterns of Filipinos, will release the January data on Thursday (Feb 5).
     "I guess it (January CPI) will reflect (the) recent spike in oil prices, the peso's weakness and possibly even the effect of the bird flu scare," AB Capital Securities research director and economist Jose Vistan Jr said.
     Vistan forecasts an annualized inflation rate of 3.5 pct for January.
     Pre-election political uncertainties and worries about a possible further downgrade of the country's sovereign ratings are weighing heavily on the peso, which hit a record low of 56.220 to the US dollar on Jan 29.
     It is still trading above 56 levels at the Philippine Dealing System today.
     Filipinos are to elect a president, a vice president, senators, congressmen and local government officials in May.
     Central bank governor Rafael Buenaventura, however, said last week he expects the inflation rate to remain under control despite the peso's weakness, adding that the Monetary Board will allow an increase in policy interest rates only if it sees accelerating inflation.
     The government is targeting inflation of 4-5 pct for this year.
     The central bank expects inflation to inch higher in the coming months on increased election-related spending and higher fuel prices.

     Buenaventura said a weak peso is just one source of inflationary pressure.
     The spread of the deadly avian flu virus in the Asian region may have pushed prices of other meat products, fish and vegetables, economists said.
     Local authorities, however, have repeatedly assured the public the Philippines remains free from the virus.
     Julian Wee, a regional economist at Singapore-based IDEAglobal.com, sees a different picture, saying the Philippines' inflation rate may have actually slowed to 2.8 pct year-on-year in January due to "very weak food prices."
     "This may have something to do with year-end harvest (in the farm sector), " he said.
     Jonathan Ravelas sees the January year-on-year rate coming in also at 3.5 pct.
     Song Seng Wun, a regional economist at GK Goh Securities also in Singapore, sees an inflation rate of 3.1 pct year-on-year in January, as he notes that "food prices have remained generally stable."
     Unicapital Securities research head Elena Ponceca said prices likely rose 3.0 pct in January from a year ago.
     The NSO is to use the new base year of 2000 starting with the January CPI data.
     With the re-basing, the NSO has given the food, beverages and tobacco commodity group a 50.031-points weighting, lower than the current rating of 55.118 pts.
     The weighting on non-food items - such as clothing, housing repairs and rentals - has been increased to 49.969 from 44.882.
     The fuel, light and water index is given a 6.950 rating from the previous 5.737.
     edelacruz@afxasia.com