NEWS

STOCKWATCH - Philippines' Piltel gains on renewed Smart merger speculation

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) was firmer in late morning trade on renewed speculation it will be merged with highly profitable Smart Communications Inc to facilitate the latter's backdoor listing, dealers said.
     At 11.58 am, Piltel was up 0.10 peso or 7.58 pct at 1.42 on volume of 34. 6 mln shares.
     The composite index was down 6.80 points or 0.46 pct at 1,481.22.
     Piltel reversed its weakness from early in the session following last Thursday's fresh official denial of a Piltel-Smart merger rumors, after the company disclosed that Smart has requested "certain documents" related to Piltel's indebtedness.
     Piltel's statement comes only days after Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan dismissed persistent market speculation that PLDT's cash cow, wireless unit Smart, will be merged with Piltel.
     At the same time, Piltel said it is not currently holding talks with its creditors to "rearrange" its debts.
     "The Piltel board of directors has approved, however, the request of Smart Communications Inc to be furnished with certain documents pertaining to the indebtedness of Piltel," the company said, without elaborating.
     "Some investors interpret the statement to mean that a Piltel-Smart merger is still possible, despite Pangilinan's denial," Regina Capital Development Corp analyst Gomer Tan said.
     Earlier reports said a merger between Piltel and Smart may not be possible given some obstacles related to Piltel's debt concerns.
     Piltel was reacting to a newspaper report that Pangilinan told analysts that Piltel and its creditors are in talks to "rearrange" Piltel's debts.
     Pangilinan said Smart's initial public offering (IPO), which is expected no later than August this year, may be delayed due to unfavorable market conditions and the uncertain political environment in the country.
     (1 usd = 56.30 pesos)
     edelacruz@afxasia.com

Philippines' Piltel says affiliate Smart asking for details of debts

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) said affiliate Smart Communications Inc has requested "certain documents" related to Piltel's indebtedness.
     The statement from Piltel comes only days after Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan dismissed persistent market speculation that PLDT's cash cow, wireless unit Smart, will be merged with Piltel to facilitate Smart's backdoor-listing.
     At the same time, Piltel said it is not currently holding talks with its creditors to "rearrange" its debts.
     "The Piltel board of directors has approved, however, the request of Smart Communications Inc to be furnished with certain documents pertaining to the indebtedness of Piltel," the company said, without elaborating.
     Earlier reports said a merger between Piltel and Smart may not be possible given some obstacles related to Piltel's debt concerns.
     Piltel was reacting to a newspaper report that Pangilinan supposedly told analysts that Piltel and its creditors are in talks to "rearrange" Piltel's debts.
     Pangilinan said Smart's initial public offering (IPO), which is supposed to take place no later than August this year, may be delayed due to unfavorable market conditions as well as the uncertain political environment in the country.
     At 11.24 am, Piltel was down 0.02 pesos, off lows at 1.30 on 20.6 mln shares.
     PLDT remained top-traded, unchanged at 965 on 97,800 shares after earlier gains.
     (1 usd = 56.30 pesos)
     edelacruz@afxasia.com

Manila shares down slightly on political concerns

     MANILA (AFX-ASIA) - Share prices were slightly lower mid-trade, reversing early gains, as investors stayed on the sidelines ahead of the Supreme Court's decision, expected within two weeks, on the disqualification petitions against presidential front-runner Fernando Poe Jr, dealers said.
     A weaker peso, which fell to a historic low of 56.35 on Friday, also serves as another disincentive to trade, they added.
     President Gloria Arroyo will meet central bank and finance officials today to discuss ways to stem the local currency's fall.
     At 10.54 am, the 30-company composite index was down 4.07 points, or 0.27 pct, at 1,483.95 on volume of 31.06 mln shares worth 148.18 mln pesos. It has, so far, traded between 1,482.60.95 and 1,490.56 points. Cross sales in PLDT boosted turnover.
     Losers outnumbered gainers 18 to nine, while 25 stocks were unchanged.
     Top-traded PLDT was up 5.00 pesos at 970.00 on 86,690 shares.
     On Thursday, the company reported a record high net profit of 11.2 bln pesos on the back of the robust gains of wireless unit Smart Communications Inc, which booked 2003 earnings of 16.2 bln pesos.
     Dealers said PLDT continues to attract buying interest thanks to its even better prospects this year. The company expects earnings of 17-18 bln pesos this year, with Smart continuing to drive the group's earnings.
     The market is expected to trade within a narrow range as it continues to consolidate with resistance seen at 1,500 and support at 1,480, they added.
     "Investors are in a wait-and-see mood right now with the main focus still on politics," Accord Capital Equities analyst Ron Rodrigo said.
     The Philippines Supreme Court will rule on presidential candidate Fernando Poe's eligibility to stand for elections in the next two weeks.
     In particular, the High Court will have to decide if Poe, the 64-year-old son of a Filipino father and an American mother, is a "natural-born Filipino" and eligible to stand in the May 10 polls.
     Investors are wary of a possible Poe presidency, given the movie star's lack of experience in government service. However, it is feared Poe's backers will launch massive protests if their man is disqualified from the presidential race.
     BPI Securities said this political issue has overshadowed the 2003 earnings reports released last week.
     Second most active stock Pilipino Telephone Corp (Piltel) extended decline, slipping 0.08 to 1.24 on 15.3 mln shares after PLDT ruled out its merger with and highly profitable wireless unit Smart Communications Inc.
     On Thursday, PLDT chairman Manuel Pangilinan dismissed persistent market speculation that Smart will merge with Piltel to facilitate Smart's backdoor listing.
     The much-anticipated initial public offering of Smart will also be delayed due to unfavorable market conditions, Pangilinan had said.
     SM Prime shed 0.10 to 6.00 on 591,000 shares.
     Union Cement Corp gained 0.12 at 1.36 on 1.56 mln shares.
     The all-shares index was down 0.93 points at 944.86.
     The commercial-industrial index dropped 6.32 to 2,301.81.
     Property shed 3.30 to 537.33.
     Mining was down 37.49 at 1,514.08, while oil was unchanged at 1.27.
     Banking and financial services fell 0.22 to 439.07.
     (1 usd = 56.27 pesos)
     cecille.yap@afxasia.com

Chinatrust Philippines plans 1.0 bln pesos long-term time deposit instruments

     MANILA (AFX-ASIA) - Chinatrust (Philippines) Commercial Bank Corp said it will issue as much as 1.0 bln pesos worth of long-term time deposit instruments to raise funds for the expansion of its loan portfolio.
     It is considering to issue the instruments, which will be sold at the retail level, after the May 10 elections.
     The bank is looking at issuing between 500 mln pesos and 1.0 bln pesos worth of five-year deposit instruments, which will be sold in denominations of 50,000 pesos and 100,000 pesos.
     (1 usd = 56.30 pesos)
     edelacruz@afxasia.com

STOCK ALERT - Philippines' Piltel down early after merger with Smart denied

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) was weaker for the second day in early trade after Philippine Long Distance Telephone Co (PLDT) ruled out a merger between Piltel and PLDT's highly profitable wireless unit Smart Communications Inc, dealers said.
     Piltel was down 0.04 pesos or 3.03 pct at 1.28 on volume of 1.35 mln shares.
     PLDT chairman Manuel Pangilinan dismissed on Thursday persistent market speculation that Smart will merge with Piltel to facilitate Smart's backdoor-listing.
     The much-anticipated initial public offering of Smart will also be delayed due to unfavorable market conditions, Pangilinan said.
     A possible Smart-Piltel merger had been the subject of speculative play involving Piltel shares on the stock market since last year.
     (1 usd = 56.33 pesos)
     cecille.yap@afxasia.com

BIRD FLU - US chicken firm to make Philippines production hub

     MANILA (AFX-ASIA) - Leading US chicken producer Perdue Farms plans to make the Philippines its production hub for processed chicken to be exported to other countries in Asia, Trade and Industry Secretary Cesar Purisima said.
     Maryland-based Perdue Farms will enter into a joint venture with international freight and logistics service provider Royal Cargo Combined Logistics Inc, which has a refrigeration facility in Laguna province, south of Manila.
     "One of the things they want to do is to send chicken from the US to the Philippines for further processing then for export primarily to Japan," Purisima said.
     The Philippines has so far remained free of the bird flu virus, which had hit at least 10 countries in the Asian region.
     Perdue is looking at an initial quantity of 10,000 metric tons of chicken for further processing at the Laguna facility.
     "If the project materializes then we will be in the chicken supply map of Japan... This will be done quickly and within the next few weeks they will be operating already," Purisima said.
     Japan consumes an average of 1.7 mln metric tons of chicken annually, 500, 000 tons of which are imported, primarily from Thailand.
     Philippine government officials are negotiating between local chicken integrators and Japanese trading houses for possible shipments after Japan banned chicken imports from bird flu-afflicted countries.
     cecille.yap@afxasia.com

Philippine PLDT's subscribers to reach 14 mln by end-March

     MANILA (AFX-ASIA) - The total number of Philippine Long Distance Telephone Co's (PLDT) wireless subscribers is likely to hit 14 mln by the end of the first quarter to March, thanks to strong take-up in the first two months of the year, its chairman Manuel Pangilinan said.
     The projection takes into account subscribers of both Smart Communications Inc and Talk 'N Text, the wireless brand of PLDT affiliate Pilipino Telephone Corp.
     The PLDT group's total wireless subscribers have exceeded the 13 mln mark in early January, as Smart and Talk 'N Text set another new high for net additions with nearly 1.4 mln subscribers during the fourth quarter of 2003.
     "What I can say is that the January and February numbers are so far encouraging. It is achievable. We might have 14 mln subscribers for the first quarter of the year," Pangilinan said.
     cecille.yap@afxasia.com

Manila shares outlook - Mixed to lower on political concerns, weak peso

     MANILA (AFX-ASIA) - Share prices are set to open mixed to lower, with investors likely to stay on the sidelines ahead of the Supreme Court's decision on the disqualification case against presidential front-runner Fernando Poe Jr, dealers said.
     A weaker peso, which ended at a historic low of 56.35 to the US dollar due to prevailing political concerns, may also weigh on sentiment.
     Last Friday, the 30-company composite index closed up 14.88 points, or 1. 01 pct, at 1,488.02 on volume of 265.4 mln shares valued at 1.7 bln pesos.
     In the broader market, gainers edged out losers 26 to 24, while 39 stocks were unchanged.
     "The overhang of the Supreme court's deliberation on separate petitions on the disqualification of FPJ's candidacy overshadowed earnings reports released during the week," BPI Securities said.
     The Philippines supreme court will rule on embattled presidential candidate Fernando Poe's eligibility to stand for elections in the next two weeks, officials said Friday.
     Particularly, the High Court has to decide whether Poe, the 64 year-old son of a Filipino father and an American mother, was a "natural-born Filipino" and eligible to stand in the May 10 polls.
     Dealers expect the market to consolidate further within the 1,400-1,500 range.
     (1 usd = 56.35 pesos)
     cecille.yap@afxasia.com

Thai PTT Public's Philippine unit buys out US partner in Subic Bay firm

     MANILA (AFX-ASIA) - Thailand's PTT Public Co Ltd, through unit PTT Philippines Inc, has bought out US firm El Paso Corp, it joint venture partner in oil firm Subic Coastal/Subic Bay Distribution Inc.
     "We are processing the documents for the transfer. Probably, we can finish it within the month," PTT PCL president Prasert Bunsumpun said.
     The sale agreement was signed by the two parties on Dec 30.
     PTT earlier said it plans to invest 2-3 bln pesos to expand its oil retailing business in the Philippines in the next five years.
     PTT Philippines currently operates 14 gas service stations nationwide.
     The company plans to put up at least 100 service stations, or 20 gas refilling stations annually, in the next five years.

     (1 usd = 56.35 pesos)
     cecille.yap@afxasia.com

Philippines' PLDT still keen on television venture - report

     MANILA (AFX-ASIA) - The media business, particularly television, is still a target of Philippine Long Distance Telephone Co's (PLDT) acquisition program this year, the Philippine Daily Inquirer newspaper reported, quoting PLDT chairman Manuel Pangilinan.
     Pangilinan has admitted holding exploratory talks with owners of Zoe Broadcasting Corp, a broadcast firm controlled by evangelist and presidential aspirant Eddie Villanueva.
     "I am not over (investing in television). Content is an importatnt component. If you move from pure text to multi-media messaging, you need video, which is very important," Pangilinan was quoted as saying.
     The report said Zoe's Villanueva admitted there were discussion with the Pangilinan group, but he said it happened about two to three years ago.
     PLDT previously offered to acquire a majority stake in GMA Network, only to pull out of an initial agreement in 2001, purportedly due to concerns over its own finances.
     (1 usd = 56.35 pesos)
     cecille.yap@afxasia.com

Philippine elections-related violence kills 20 - police

     MANILA (AFX-ASIA) - At least 20 people have been killed and more than a hundred wounded in violence related to the upcoming national elections in May, a senior police official said Saturday. Police deputy director for operations, Director-General Wilfredo Garcia, said that this toll, from Dec 15 to Feb 19, would likely go even higher.
     "Based on past experience, as election day comes nearer, the probability is that more violence will occur," he said in a briefing to a private election watchdog body.
     At least 16 of the fatalities came from the bombing in early January of the southern town of Parang in what is believed to be an attempt on the life of town mayor, Vivencio Bataga who was wounded in the incident, Garcia said.
     The Parang bombing also accounted for most of the wounded so far.
     The other four fatalities are all politicians who were running in the May 10 elections including at least two vice-mayors.
     Garcia said most of these crimes were not yet solved and declined to go into details on suspects or motives.
     The congressional and local elections in 2001 resulted in 111 people killed and 253 wounded while the national elections in 1998 saw 50 killed and 44 wounded, Garcia said.
     The local and congressional elections in 1995 had a death toll of 79 with 11 wounded.
     Elections in the Philippines are frequently marred by violence particularly at local levels where some politicians maintain gangs of armed followers who threaten and intimidate political rivals and their supporters.
     To curb violence, the government has imposed a strict ban on the carrying of guns outside the home, even punishing policemen and soldiers who carry guns without authorization.
     Garcia said so far, they had caught 733 violators of the gun ban including 600 civilians while the rest were policemen, soldiers or government officials.
     President Gloria Arroyo is running for another term in the May 10 elections but recent surveys say she is been lagging behind the opposition candidate, popular movie star Fernando Poe.
     str/mm/rmj/mh AFN

Ex-Philippine leader Ramos backs Arroyo, assails movie-star rival

     MANILA (AFX-ASIA) - Former Philippine president Fidel Ramos strongly backed incumbent President Gloria Arroyo in the coming May presidential elections as he assailed her chief rival, movie star Fernando Poe.
     In a presidential palace statement, Ramos, who is credited with spurring economic growth during his term from 1992 to 1998, was quoted as saying that the election of Arroyo would ensure continuity in national planning and reforms in governance, while that of Poe would reverse the country's economic gains.
     He criticized Arroyo's rival candidates, saying that "the 'doom scenarios' and half-baked solutions of self-proclaimed messiahs and instant heroes will plunge the entire country back to square one".
     Ramos did not identify the rivals but he was apparently referring to Poe, who owes his fame to 50 years of playing heroic figures in Philippine movies.
     Poe's campaigners have been playing up his heroic image and depicting him as a potential saviour of the nation even while warning that civil unrest could break out if a legal petition to disqualify Poe from the race-- now pending before the Supreme Court-- succeeds.
     The latest surveys show that Poe has an eight percentage point advantage over Arroyo, but the business community is concerned about his lack of qualifications as he is a high school drop-out with no experience in public service.
     The movie star has also failed to reveal his economic platform, worsening the uncertainty, resulting in the local currency falling to record lows while the stock market has become more volatile.
     In a radio interview, Poe attempted to deflect criticism over his lack of qualifications, saying "we will work doubly hard (in office) instead of just making promises in this campaign".

Philippine officials to hold talks with Muslim rebels in April

     KUALA LUMPUR (AFX-ASIA) - Peace talks between the Philippine government and the separatist Moro Islamic Liberation Front (MILF) will begin in April, Malaysian Foreign Minister Syed Hamid Albar said Saturday.
     Syed Hamid said the decision was reaced after a meeting from Thursday between Philippines officials and the MILF in Kuala Lumpur.
     "The peace talks will begin in April. It is expected to be held in Malaysia," he told reporters.
     Malaysia has been hosting and mediating talks between Manila and the 11, 900-member MILF, which has been fighting for more than two decades to set up an Islamic state in the southern third of the largely-Christian Philippines.

Philippines' Buenaventura will 'not telegraph' move to forex market - UPDATE

     (Updating with more comments from central bank governor)
     MANILA (AFX-ASIA) - Central bank governor Rafael Buenaventura said the monetary authorities will keep local currency market players guessing on his next move following the peso's plunge to all-time lows versus the US dollar this morning.
     "I'm not about to telegraph any of my moves. It's too early," he told reporters.
     The peso averaged 56.317 to the dollar at noon after trading between 56. 260 and 56.350 on volume of 109 mln usd. It surpassed the Jan 29 record low of 56.220.
     Buenaventura said both "political noises and seasonal factors" had weighed on the peso.
     He noted that remittances from Filipinos working abroad are usually weak during the months of January and February.
     He said the peso's weakness "could have an impact on the inflation outlook but not of major consequences."
     The government aims for a full-year inflation rate of 4-5 pct this year.
     However, Buenaventura also expects the exchange rate to improve "once things settle (down)."
     "We're watching (the market) to make sure there are no speculative activities," he added.
     But the central bank did not unload dollars on the spot market this morning, he said.
     On Feb 5 the central bank's Monetary Board surprised the market with a 200-basis point hike in banks' liquidity reserve requirement, in a move to address inflationary pressures arising from the peso's weakness.
     The reserve hike was intended to siphon some 30 bln pesos in liquidity from banks, thereby limiting their capacity to accumulate more dollars.
     Yesterday, the Monetary Board left the central bank's policy interest rates steady at 6.750 pct for overnight borrowing and 9.000 pct for overnight lending.
     Currency dealers and economists believe it is best for the central bank to let the peso seek its own level at this stage, saying the use of monetary tools and dollar reserves to rescue the peso may prove a waste of ammunition.
     They said higher interest rates may limit economic activities.
     Buenaventura said the central bank is itself aware of the consequences of raising interest rates.
     "We also have to be sensitive to that," he said.
     afxmanila@afxasia.com

Manila shares close up on PLDT gains; weak peso seen dragging market

     MANILA (AFX-ASIA) - Share prices closed firmer on Philippine Long Distance Telephone Co's (PLDT) gain after the company declared it will be able to sustain its impressive 2003 earnings performance this year, dealers said.
     They added that the market may not, however, be able to maintain the upside in the coming sessions due to lingering pre-election political uncertainties and the peso's plunge to an all-time low this morning.
     Investors remain cautious ahead of the weekend as they await the Supreme Court ruling on whether to declare opposition presidential candidate Fernando Poe Jr as not being a natural-born Filipino citizen and so disqualify him from running in the May 10 polls.
     The composite index closed up 14.88 points, or 1.01 pct, at 1,488.02 on volume of 265.4 mln shares valued at 1.7 bln pesos. It traded between 1,479. 08 and 1,490.30.
     Cross and block sales worth over a billion pesos boosted the market's turnover.
     In the broader market, gainers edged out losers 26 to 24, while 39 stocks were unchanged.
     The peso, already battered amid pre-election political concerns, weakened to as low as 56.35 to the US dollar in early trade with the market seeing no sign that the central bank will use its monetary tools nor intervene to stem the currency's slide.
     "The market's upside is led by PLDT. PLDT is tracking its ADRs (American Depositary Receipts)," Westlink Global Equities chairman Rommel Macapagal said.
     "But this upside is still not convincing. The weak peso may eventually trigger some pull-back."
     In addition, he said investors are cautious after the Supreme Court yesterday heard oral arguments on petitions to disqualify Poe.
     The movie actor has been leading the pre-election polls, but his unimpressive educational background and inexperience in public service worry investors.
     Poe, whom political backers are portraying as the most sincere candidate, has also admitted to fathering a child out of wedlock.
     It is feared his disqualification will spark violent protests.
     Jose Vistan, research director at AB Capital Securities, said political concerns will possibly continue to undermine sentiment.
     "Investors will likely stay out and remain cautious about the possibilities in the political arena. The trading range remains at 1,430 to 1, 500," he said.
     PLDT was top-traded and up 30.00 pesos at 965.00 on volume of 562,130 shares.
     The company reported tat its 2003 net profit almost quadrupled from the year-ago level to 11.2 bln pesos on the back of robust gains of wholly-owned wireless unit Smart Communications Inc.
     The record-breaking earnings also pushed the company's ADRs in New York 0. 14 usd higher to 17.35 last night.
     Dealers said PLDT's buying-momentum was further boosted on the company's ann ouncement that Smart's initial public offering will be delayed until the parent's fixed-line business has substantially pared down its huge debts.
     PLDT chairman Manuel Pangilinan said 2006-2007 will be the ideal time to offer a portion of Smart to the public.
     The decision means Smart's profitability will continue to support PLDT moving forward, dealers said.
     PLDT is "comfortable" with a consensus net profit forecast of 17-18 bln pesos this year.
     Mall operator SM Prime Holdings also remained active on additional cross sales. It closed up 0.20 at 6.10 on 52.2 mln shares.
     "The stock has found support at 5.90 pesos," Westlink's Macapagal said.
     San Miguel B was up 0.50 at 69.50, while San Miguel A was unchanged at 56. 00.
     PLDT affiliate Piltel bucked the trend, closing 0.34 down at 1.32 on 44.6 mln shares, sold down after chairman Pangilinan ruled out its merger with Smart.
     The merger was supposed to facilitate Smart's backdoor-listing.
     A possible Smart-Piltel merger had been the subject of speculative play involving Piltel shares on the stock market since last year.
     Bank of the Philippine Islands was up 0.50 at 45.50.
     Globe Telecom was up 5.00 at 885.00.
     Manila Electric B was up 1.50 at 32.50, while Meralco A was unchanged at 19.25.
     The all-shares index was up 2.57 points at 945.79.
     The commercial-industrial index rose 24.31 to 2,308.13.
     Property gained 3.97 to 540.63.
     Mining and oil were unchanged at 1,551.57 and 1.27, respectively.
     Banking and financial services advanced 4.47 to 439.29.
     edelacruz@afxasia.com

Philippines' Buenaventura says will 'not telegraph' next move to forex market

     MANILA (AFX-ASIA) - Central bank governor Rafael Buenaventura said the monetary authorities will keep local currency market players guessing on his next move following the peso's plunge to all-time lows versus the US dollar this morning.
     "I'm not about to telegraph any of my moves. It's too early," he told reporters.
     The peso averaged 56.317 to the dollar at noon after trading between 56. 260 and 56.350 on volume of 109 mln usd. It surpassed the Jan 29 record low of 56.220.
     Buenaventura said both "political noises and seasonal factors" had weighed on the peso.
     He said the peso's weakness "could have an impact on the inflation outlook but not of major consequences."
     However, he also expects the exchange rate to improve "once things settle. "
     The central bank is also keeping an eye on the market for any speculative plays, he added.
     afxmanila@afxasia.com

Philippine 2004 economic growth to get lift on Dec imports surge - Neri

     MANILA (AFX-ASIA) - Economic Planning Secretary Romulo Neri said the 14.8 pct year-on-year rise in December's merchandise imports bodes well for economic growth this year, particularly the agriculture, construction and information technology sectors.
     The double-digit growth in December imports put the full-year rise at 5.7 pct, with a total value of 37.45 bln usd, the National Statistics Office reported yesterday.
     Electronics, which rose 24.7 pct year-on-year to 1.496 bln usd, led the December growth, accounting for 48.8 pct of the total for the month.
     In a statement, Neri said the December statistics show agriculture players augmenting their supply of feeds for animals, urea, and other fertilizers, although wheat and corn declined 31.4 pct and 91.5 pct, respectively.
     He noted that the government recently approved duty-free imports of corn to stabilize prices amid a shortage in domestic production.
     The construction industry is also set to expand as imports of iron and steel grew 20.5 pct, while those of electronics products expanded 24.7 pct on a boost from semiconductors, telecommunications, electronic data processing machines and office equipment, he said.
     "This indicates that semiconductor exports are gaining ground and following the worldwide recovery of the sector," Neri said.
     He disclosed plans of Intel and Texas Instruments to invest up to 100 mln usd each to upgrade their production facilities here.
     For 2004, the inter-agency Development Budget and Coordination Committee is projecting growth of 11 pct in imports and 10 pct in exports, which may yield a current account surplus of 1.1 bln usd.
     However, Neri sees a downside risk to meeting the exports target, arising from the abolition of the quota system under a Multi-Fiber Agreement.
     "In the absence of a quota market, the Philippines needs to keep up with the competition from the likes of NAFTA, the Caribbean, and low-wage countries, such as Vietnam and China," he said.
     As such, efforts should also be sustained in "(moving) the semiconductor industry up the value chain and beyond mere assembly and testing," he added.
     "This will require public-private sector collaboration to raise the quality of education at the tertiary level to produce a critical mass of engineers. The Department of Science and Technology and the IT and Electronic Commerce Council can take the lead in this effort," Neri said.
     edelacruz@afxasia.com

Australian farmers oppose plan to lift import bans on pork, Philippine bananas

     SYDNEY (AFX-ASIA) - Australian farmers have opposed a government plan to lift import bans on pork, Philippine bananas and New Zealand apples, arguing the move would bring exotic diseases into the country.
     Quarantine regulator, Biosecurity Australia, said in a draft report that it had reconsidered the bans using the best available scientific advice and found no reason to continue them.
     Farmers claimed the government was caving in to political pressure and said local industries were likely to be devastated by introduced diseases.
     Australian Banana Growers' Council president Les Collins said the review of the ban on banana imports was incredible.
     "The biggest issue is this, we don't believe the science has been done properly this time and we believe if bananas come in we will get these diseases," Collins said.
     He said there was no way Australian authorities could ensure plantations in the Philippines were following procedures to stop diseases such as moko, black sigatoka and freckle.
     "There is nobody checking them, these are Mickey Mouse measures with no credit in science," he said.
     Independent politician Bob Katter said the imports could destroy the 350 mln aud a year Australian banana industry, putting 7,000 jobs at risk.
     He said Australia would be unable to keep out diseases endemic in the Philippines.
     Australian Pork chairman Paul Higgins said the government's own scientific body, the CSIRO, found recently that there was a 94 to 99 pct of an exotic disease outbreak in the next decade if the new quarantine protocols were adopted.
     Prime Minister John Howard said the government has no option but to follow the recommendation of the regulator, otherwise it would be seen as protectionist.
     "I have no desire to disadvantage in any way the Australian industry, but we cannot in the one breath say we believe in a science based quarantine system and then when it might suit us ignore that criteria," Howard told reporters.

Philippine court calls for arguments on Poe's presidential bid

     MANILA, Feb 20 (AFP) - The Philippine Supreme Court today ordered all sides to submit arguments on whether or not movie star-turned presidential candidate Fernando Poe Jr in qualified to contest in the May elections.
     The court wrapped up its overnight hearings and asked petitioners against Poe, as well as his lawyers and a group of legal experts, to summarize their arguments on Monday, for a possible decision on Tuesday.
     The action will finally resolve whether Poe, 64, is a natural-born Filipino and, therefore, qualified to run in the May 10 elections.
     Cleo Guerra, the Supreme Court's senior chief staff officer, said, after the arguments are submitted, the court will decide within two weeks.
     Surveys show that Poe is the front-runner in the race for the presidency, enjoying a lead of at least 8 percentage points in opinion polls over incumbent President Gloria Arroyo.
     However, a group of petitioners charge that Poe, the son of a Filipino father and an American mother, was born out of wedlock and, therefore, not automatically recognized as following the nationality of his father.
     "There is no evidence or record that his parent acknowledged Poe. Thus, Poe continues to be an illegitimate child and an American citizen," argued Maria Jeanette Tesoro, lawyer for the petitioners.
     However, many prominent lawyers the court consulted said that, being born out of wedlock, did not mean Poe is not a natural-born citizen.
     Proof is needed that Poe's father recognized him as his son, the lawyers said.
     Poe's supporters attempted to march on the court yesterday to protest the challenges against their candidate, but riot police, firing water cannon, turned them back.
     His candidacy has alarmed the business elite as he has never held public office, but the high-school drop-out, who has played action hero roles in films for 50 years, enjoys mass support.
     Fears about Poe becoming president have driven the peso to an all-time low, government debt has suffered a rating downgrade and the stock market has become volatile.

Forex -Philippine peso at record low on central bank stance, politics

     MANILA (AFX-ASIA) - The peso, already battered amid pre-election political uncertainties, weakened to a record low in morning trade against the US dollar with the market seeing no sign that the central bank will use its policy tools to stem the currency's slide, dealers said.
     At 10.21 am, the peso averaged 56.317 against the dollar, after falling to as low as 56.350, on volume of 100 mln usd. It surpassed the previous all-time low of 56.220, hit on Jan 29.
     The central bank's monetary board kept its policy interests rates unchanged at its weekly meeting yesterday. The rates remain at 6.750 for overnight borrowing and 9.000 pct for overnight lending.
     A commercial bank dealer said the peso could weaken to as low as 56.50 today.
     "That's the next target level," he said.
     "I think what's really driving the peso down is not only political concern, but also the central bank's stance to let the peso find its own level."
     The dealer believes the stance is "good as you're not touching interest rates and supporting the country's economic growth objectives."
     The Supreme Court yesterday heard oral arguments on petitions to disqualify opposition presidential candidate Fernando Poe Jr as thousands of supporters staged rallies in Manila to convince the judiciary to rule in his favor.
     Petitions filed with the court say Poe is not a natural-born Filipino citizen and, therefore, is not qualified to run for president.
     The movie actor leads pre-election polls, but his unimpressive educational background and inexperience in public service worry investors.
     Poe, whom political backers are portraying as the most sincere candidate, has also admitted to fathering a child out of wedlock.
     His disqualification is feared to spark violent protests.
     Meanwhile, central bank governor Rafael Buenaventura believes the peso's volatility is "temporary and has nothing to do with fundamentals."
     He said, as such, the monetary authorities believe there need not be any change in policy rates at this time.
     Yesterday, he stressed that the monetary authorities were watching market developments closely to determine if any action needs to be taken.
     "We will do it (make policy moves). We can always do it if the exigency requires it," he said.
     A foreign bank analyst said the peso "will continue to weaken as the market awaits the decision of the Supreme Court" over the Poe disqualification case.
     A regional economist in Singapore said "the central bank is probably weighing options to see if the pressure will continue or if this is going to be something prolonged."
     The central bank's use of monetary tools, however, may be just "a waste of ammunition", given the growing political uncertainties, he said.
     The central bank recently raised by 2 percentage points its liquidity reserve requirement on banks so as to siphon off some 30 bln pesos, thereby limiting their capacity to accumulate more dollars.
     edelacruz@afxasia.com

STOCK ALERT - Philippines' Piltel sharply down as merger with Smart ruled out

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) was sharply weaker in early trade after Philippine Long Distance Telephone Co (PLDT) ruled out a merger between Piltel and PLDT's highly profitable wireless unit Smart Communications Inc, dealers said.
     Piltel was down 0.24 peso, or 14.46 pct, at 1.42 on volume of 23.65 mln shares.
     PLDT chairman Manuel Pangilinan announced yesterday that the much-awaited initial public offering of Smart, which is supposed to take place no later than August this year, will be delayed due to the country's unfavorable political environment.
     He also dismissed persistent market speculation that Smart will be merged with PLDT affiliate Piltel to facilitate Smart's backdoor-listing.
     A possible Smart-Piltel merger had been the subject of speculative play involving Piltel shares on the stock market since last year.
     Pangilinan said it would be "ideal" to defer Smart's IPO to 2006, when the debt of the company's fixed-line business will have gone down substantially.
     (1 usd = 56.35 pesos)
     edelacruz@afxasia.com

STOCK ALERT - Philippines' PLDT firmer early after hefty 2003 profit

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) was higher in early trade after the company reported its 2003 net profit almost quadrupled from year-ago level to 11.2 bln pesos on the back of robust gains of wholly-owned wireless unit Smart Communications Inc, dealers said.
     PLDT was up 35.00 pesos at 970 on 119,490 shares.
     The record-breaking earnings also pushed the company's American Depositary Receipts higher in New York, closing 0.14 usd firmer at 17.35 last night.
     Dealers said PLDT's buying momentum was further boosted by the company's pronouncement that Smart's initial public offering (IPO) would be delayed until PLDT's fixed-line business has substantially pared down its huge debts.
     From the mandated August 2004 listing, PLDT chairman Manuel Pangilinan said 2006-2007 would be the ideal time to offer a portion of Smart to the public.
     The decision means Smart's profitability will continue to support PLDT moving forward, dealers said.
     PLDT believes a net profit of 17-18 bln pesos this year is possible.
     Smart's earnings soared to 16.1 bln last year, almost 10 bln more than in 2002.
     (1 usd = 56.310 pesos)
     cecille.yap@afxasia.com

Philippines' SSS seeks 'all-cash' payment for Equitable shares - BDO

     (Updating with further BDO comments in statement to exchange)
     MANILA (AFX-ASIA) - Banco de Oro Universal Bank (BDO) said the Social Security System (SSS) is now considering seeking an "all-cash" payment for its Equitable PCI Bank shares that BDO has agreed to purchase.
     Under their original agreement, BDO was to pay SSS, the state-run pension fund for private sector workers, 43.50 pesos for each Equitable PCI share, or a 30 pct premium over the stock's end-2003 closing price.
     BDO was supposed to make a cash down-payment of 1 bln pesos and secure the balance of 13 bln through a 6.5-year zero-coupon non-amortizing promissory note.
     The transaction involves some 187.85 mln Equitable PCI shares.
     "We understand the SSS is presently considering possible modifications in the transaction, including an all cash payment. Consequently, the Banco de Oro Group may undertake a capital raising exercise in relation to this requirement," BDO told the stock exchange.
     BDO, however, said it has no firm capital-raising plans yet.
     "We request the public not to make investment decisions solely on the basis that BDO may consider raising capital in relation to the transaction. We will promptly disclose to the Philippine Stock Exchange any material changes in this regard," it said.
     At 9.44 am, Banco de Oro was unchanged at 17 pesos.
     Equitable PCI Bank was not yet traded, after closing at 39 pesos previously.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com