Economic planners are optimistic that economic output, as measured by
the gross domestic product (GDP), in the first semester grew by a larger
margin this year than last year. Socioeconomic Planning Secretary Romulo
L. Neri, also director general of the National Economic Development
Authority (NEDA), told reporters yesterday GDP growth for January-June
likely surpassed the 4% growth rate for the same period last year. "The
second quarter seems to be very encouraging. The leading indicators seem
to be very good. [We already] registered a 6.4% growth for the first
quarter, so 4% [for the first half] is easy. We may even exceed 5%," he
said.
GDP growth will be achieved, he said, despite inflation in June
hitting 5.1%, its highest since November 2001. "Our biggest problem
really is the [June] inflation, but anyway, oil prices seem to have
moderated a bit," Mr. Neri said. The economy (GDP) grew by 6.4% in the
first quarter because of higher-than-expected output by all sectors,
including the farm sector, which grew by 7.7%. The Department of
Agriculture earlier attributed farm sector growth in the first quarter
to good weather and increased production of most agricultural subsectors.
Mr. Neri expressed confidence that despite typhoons Enteng, Dindo and
Igme, which damaged crops, the growth of the agriculture sector was not
adversely affected in the second quarter. "The
effect [of the typhoons] will be minimal and I don't think it will
have a significant impact on the growth of the sector for the second
quarter," he said. Mr. Neri, however, admitted that the growth of the
economy could have slowed last quarter because of fuel price increases.
"We estimated that there would be some dampening [in second quarter
growth] because of high oil prices," he said.
-- Jennifer A. Ng |
By JENNEE GRACE U. RUBRICO, Senior Reporter
The Securities and Exchange Commission (SEC) has approved the
petition of Semirara Mining Corp., the country's largest coal company,
to restructure its equity in a bid to erase
PhP1.625 billion in capital deficit. In particular, the SEC
approved Semirara's proposal to decrease its authorized capital stock to
PhP21.370 million and its subscribed and paid-in capital stock to
PhP5.342 million and the subsequent increase in the authorized
capital stock to
PhP100 million and subscribed and paid-in capital stock to
PhP25 million. But a provision to reduce the number of listed
shares was not approved as it has yet to be cleared by the bourse.
In a circular to brokers, the Philippine Stock Exchange (PSE) said
trading of the shares of the coal company will remain suspended until
the exchange approves the proposal to reduce the number of listed common
shares as well as the proposal to delist 15,000 preferred shares.
Further, the exchange said, proposal for the issuance of 19.657 million
common shares to DMCI Holdings, Inc. which owns 73% of the company, will
still be subject to the revised rules on additional listing of shares.
"We shall inform the trading participant and the investing public of
further developments on the aforementioned matters," the PSE said. Last
month, Semirara sought SEC and PSE approval for its capital
restructuring proposal.
With the application, the firm voluntarily asked for an indefinite
suspension of the trading of its shares. In 1992, the SEC issued rules
on equity restructuring, so companies in distress and in danger of
insolvency could get a fresh start without having to dissolve itself and
then reincorporating. Semirara petitioned the SEC for equity
restructuring so it could rid itself of
PhP1.625 billion in "accumulated deficit in retained earnings" as
of Dec. 31, 2002. An "accumulated deficit in retained earnings" is
indicative of financial distress, with a company failing to retain
earnings or income from previous years, if any, an analyst had said.
But to belie speculation that it was losing money or was operating at
a loss, Semirara had said that "there is an approved audited net income
of
PhP138,411,398 as of the approval of the restructuring." Semirara
had also said it wanted to retire and cancel some shares of stock so it
can raise new capital through the sale of new shares. It proposed to cut
its authorized capital stock to
PhP21.370 million, divided into 21,370,448 common shares with a
par value of PhP1 per share from
PhP1.812 billion, divided into 1.662 billion common shares with a
par value of PhP1 and 15,000 preferred shares with a par value of
PhP10,000 per share. It also proposed to reduce its issued and
outstanding capital stock to
PhP5.342 million worth of common shares from
PhP1.631 billion. After which, it proposed to raise its
authorized capital stock to
PhP100 million, divided into 100 million common shares with a par
value of PhP1 per share. DMCI Holdings, Inc. will subscribe to
19,657,338 common shares out of the new capital stock. The shares, which
will have a par value of PhP1 per share, will be subscribed at a
premium, or at PhP1.05 per share.
To date, the bourse has not yet approved the proposal for the
reduction in the number of the listed common shares, the delisting of
the 15,000 preferred shares, and the plan for DMCI to be issued
19,657,388 common shares. Semirara was incorporated on Feb. 26, 1980 to
explore, develop, and mine for coal on Semirara Island, Antique. Its
largest customer is state firm National Power Corp. But it recently
expanded its market to include privately run electric and cement plants.
|
The debate on whether or not the revived National Steel Corp. should
be given tariff protection to allow it to compete with cheap steel
imports is likely to be settled soon with contending parties scheduled
to sit down and strike a compromise before the government acting as
mediator. Trade and Industry Sec. Cesar A.V. Purisima said the dialogue
was needed "so we can finally move on." "I'm inviting the [new owner of
National Steel] and downstream steel industry players to sit down so we
can settle the tariff issue once and for all," he told reporters.
The Tin Can Manufacturers Association of the Philippines, Inc.
earlier warned that prices of canned food products and nonfood items
using tin cans as packaging would increase by at least 20% if Global
Steelworks International, Inc.'s request for up to 35% tariff on
tinplates from zero was granted. The tin can makers proposed instead to
buy all of Global Steelworks' tinplate output "provided price and
quality are competitive."
Aside from a 35% tariff on tinplates, Global Steelworks was said to
have petitioned the Cabinet-level Tariff and Related Matters committee
to hike tariffs on hot-rolled and cold-rolled coils to 30% from 3%. No
such request was made for steel billets, which the National Steel plant
in Iligan will not produce in the meantime. The tariff committee
deferred action on the request until after an assessment of its impact
on consumers. But Mr. Purisima said the government was working on a 15%
tariff, the original rate proposed by Global Steelworks.
The Cabinet official said he was organizing the dialogue with the
well-being of the national economy in mind. Any decision will "consider"
the position of all stakeholders, he assured. The sale of National Steel
to India's Global Infrastructure Holdings Ltd., holding company of
Global Steelworks, has yet to be closed due to lack of certain
documents, although tariff cover is not an issue according to creditor
banks. Global Chief Pramod Mittal was in the country recently, attending
the President's inauguration last June 30 and also paying her a courtesy
call. -- Felipe F. Salvosa II
|
The National Conciliation and Mediation Board (NCMB) has reported the
successful settlement of three labor disputes involving, food
conglomerate San Miguel Corp., Ayala-led Bank of Philippine Islands
(BPI) Family Bank, and St. Benedict College. Labor Sec. Patricia A. Sto.
Tomas said the prompt attention given to the settlement of these cases
is in line with the department's thrust to strengthen labor and
management relations in all firms and industries. The mediation with the
BPI employees and the BPI management resulted in
PhP95.7 million in total economic package covering 1,337 workers.
Salary increases amounting to
PhP1,050 per month for the fourth and fifth year of the
collective bargaining agreement (CBA) as well as a cost of living
allowance (COLA) of PhP50 a month were agreed upon. The amount of
employees' multipurpose loan was increased to
PhP40,000 from
PhP33,000 and a signing bonus of
PhP9,000 was also provided.
In the case of BPI Family Bank, since April there had been a deadlock
in CBA talks between the bank's management and the BPI Family Bank and
BPI Consumer Banking Group Employees Union-Federation of Free Workers.
The workers had initially demanded a
PhP2,500 salary increase. The settlement of the San Miguel
dispute benefited about 81 sales force personnel affected by the closure
of three warehouses. In this case, the management agreed to provide the
separated employees an additional
PhP25,000 financial assistance each on top of their separation
pay and benefits. The settlement package totaled
PhP39 million.
The mediation in the St. Benedict College case resulted in an
PhP8-million economic package for some 300 employees. The dispute
also involved a CBA deadlock. The owners of the school also agreed to
increase the wages of the employees to an amount equivalent to 70% of
the tuition fee hike on top of the general wage increase. The NCMB
recently reported a 56% decrease in the number of labor strikes in June
to only 12 strikes from the 27 reported in the same period last year.
"The DoLE (Department of Labor and Employment), through the NCMB is
doing its job and exerting all efforts to maintain peace and harmony in
the work place," said Labor Undersecretary Manuel G. Imson, in an
earlier interview. -- Beverly T. Natividad
|
By IRIS CECILIA C. GONZALES, Reporter and CARMELITO Q.
FRANCISO, Correspondent
The Philippines cannot afford another credit downgrade this year as
it would leave the country in a more difficult fiscal problem by making
it more expensive for the government to borrow, the Bangko Sentral ng
Pilipinas (BSP, or the central bank) said yesterday. "We cannot afford
another downgrade. It will make our life a bit more difficult to get out
of the hole," BSP governor Rafael B. Buenaventura told reporters
yesterday. He said another credit downgrade could raise by 1% to 2% the
government's borrowing cost as creditors demand higher returns for their
funds to compensate for higher risk. He said the government must show
that it has a credible economic program for the next six years or face
another downgrade.
Mr. Buenaventura's statements come just barely a week after
London-based Fitch Ratings hinted of another credit downgrade. Fitch
noted that unless the Arroyo administration can raise enough taxes to
pay for the
PhP522-billion debt of the state utility firm National Power
Corp. (Napocor), it may lower its rating for the country. Last year,
Fitch-a respected UK-based credit watcher, cut the country's sovereign
debt rating by one notch to "BB" due to the government's deteriorating
finances brought about by its failure to control its swelling budget
deficit. Meeting this year's fiscal targets, including a budget deficit
of
PhP197 billion is crucial for the government to achieve a balance
budget by 2009, Mr. Buenaventura noted. "The government must meet fiscal
targets this year. It will be the base for the budget reduction program
for next year," he said.
Among the measures that need to be put in place are additional tax
measures and legislative measures that would strengthen the regulatory
environment and the capital market. Mr. Buenaventura said that most
foreign and local businessmen expect slight improvement in the economy
in the third quarter without these new measures. If Fitch or any credit
rating agency gives the Philippines a downgrade, he said government
won't have much flexibility to borrow. "Businessmen will watch closely
steps taken by the National Government," he said, adding that the
administration should not allow discussions on charter change to
sideline the more important economic issues.
ARGENTINA
In Davao City where he spoke at a forum at the Waterfront Insular
Hotel, former finance secretary Jesus Estanislao said the government
should immediately start reforms that will address the economic crisis
the shortest time, otherwise it may turn into another Argentina which
defaulted on its debt payment last year. "Debt is really high. We are
really getting into the dangerous territory," Mr. Estanislao, who served
in the Cabinet of then President Corazon Aquino, said. He said
government must formulate credible financial programs to arrest the
impending financial crisis. He said the first thing government should do
is scrap the tax perks given to big businesses. He added that government
should remove or at least study the implications of these privileges
given to big businesses and concentrate on strengthening tax collection.
Mr. Estanislao also said government should cut its expenditures
although with consideration to the important sectors. "We might be
hurting ourselves [by imposing too much austerity measures]," he said,
pointing out that government should look at what possible budgets could
be realigned to maximize its delivery of basic services. Mr. Estanislao
added that increasing tax rates "is inevitable," but what the government
should do is increase taxes on sin products like cigarettes and alcohol.
And before it embarks on amending the Constitution, Mr. Estanislao said
the government "should first solve its fiscal deficit." |
The processing of tax exemption applications of cooperatives would
become easier as soon as the Cooperative Development Authority (CDA) and
the Bureau of Internal Revenue (BIR) sign a memorandum of agreement
detailing a uniform interpretation of applicable tax exemption
procedures for cooperatives. The agreement was a result of the
consultations held by the CDA with BIR to simplify and clarify the
necessary procedures to obtain tax exemption certificates. The
Cooperative Code extends tax exemptions to cooperatives transacting
business with their members. In particular, the Code states that all
cooperatives with accumulated reserves and individual savings of not
more than
PhP10-million shall be exempt from all national taxes of whatever
nature and name.
Revenue Regulation 20-2001, issued by BIR in 2001 also states that
"duly registered cooperatives dealing/transacting business with members
only shall be exempt from paying various taxes." It provides that
cooperatives are exempt from percentage tax, and tax on donations to
duly accredited charitable institutions, and research and educational
institutions. Cooperatives are also exempt from excise and documentary
stamp taxes, as well as value-added tax (VAT) on purchases of goods and
services.
The VAT exemption extends to the importation of machineries and
equipment not available locally by agricultural and electric
cooperatives. Also exempt from VAT are the importation by agricultural
cooperatives of direct farm inputs, machineries and equipment, including
spare parts to be used directly and exclusively in production; as well
as the importation by electric cooperatives of machineries and
equipment, including spare parts, which shall be directly used in the
generation and distribution of electricity. But cooperatives will still
be subject to a 20% tax on interest income from bank deposits and
deposit substitutes, as well as the 7.5% tax on interest income derived
from foreign currency deposits. Cooperatives will also be subject to
capital gains tax on the sale or exchanges of real property classified
as capital. -- Karen L. Lema
|
The Department of Transportation and Communication (DoTC) will come
out within the week with the exact rate for new toll fee charges for the
North Luzon Expressway (NLEX) and the South Luzon Expressway (SLEX). The
Toll Regulatory Board (TRB) and the Philippine National Construction
Corporation (PNCC) agreed to form a committee that would reconcile the
rates for toll fees, since PNCC imposed a rate higher than that approved
by TRB. Last Monday, PNCC started to collect a minimum of 52 centavos
for every kilometer along the NLEX and 72 centavos for the SLEX. But
Transportation undersecretary Arturo Valdez said TRB approved a toll fee
rate of only 47 centavos per kilometer for both NLEX and SLEX. "The TRB
has the final say as far as the rates are concerned. We'll resolve this
within the week," Mr. Valdez said. He added that TRB has asked PNCC to
explain how it arrived at a rate higher than that approved by the toll
board.
Mr. Valdez added that motorists would be refunded if it was found
that PNCC overcharged toll fees since Monday, citing Section 9 of
Presidential Decree 1894 that states if the "grantee is not entitled to
an adjustment, the grantee shall deposit in escrow account the excess
amount collected and such amount shall be refunded" to the users of toll
roads. PNCC has been asking for a rate adjustment since September 2003,
using asset appraisal for 1997. But the request was denied since TRB
wanted a more recent appraisal. TRB used the PNCC appraisal for 2002 to
arrive at the 47-centavo rate increase. "PNCC really needs some
adjustment since their 2001 petition [for rate increase] was implemented
only last year," Mr. Valdez said. --
Anna Barbara L. Lorenzo |
By RUBY ANNE M. RUBIO, Reporter
The Philippine Association of Retired Persons, along with other
groups, has filed with the court an opposition to Banco de Oro Universal
Bank's motion to dismiss a complaint earlier filed by the pensioners of
the Social Security System (SSS). "By filing a motion to dismiss, public
defendants must be deemed to have hypothetically admitted the facts
alleged in plaintiffs' complaint," the group said. The retired persons'
group, along with Audio Dyne Farm Production, Inc., United Social
Security System Members, Inc., has opposed the pension fund's plan to
sell its 25.8% stake in Equitable PCI Bank to Henry Sy-led Banco de Oro
for a downpayment of
PhP1 billion with the balance of PhP12.9 billion payable via
6-1/2 year, zero-coupon, non-amortizing notes. The pensioners moved to
block the deal by asking the court for a temporary restraining order and
writ of injunction before June 30, the scheduled date when the deal was
supposed to be finalized.
Meanwhile, the Commission on Audit said the long-term payment scheme
was "not to the best advantage" of the government and SSS. "Reliable
sources informed us that there was an entire cash offer to the block of
shareholdings you are offering for sale. From the information at our
knowledge, said cash offer appears to be more advantageous than the
long-term plan," Guillermo N. Carague, the commission's chairman, said
in a letter dated April 19, 2004. SSS had wanted payment through
zero-coupon notes but the Social Security Commission, which serves as
the SSS board, later changed the payment terms to cash instead of
zero-coupon notes. Banco de Oro agreed to buy the 187.8 million shares
for PhP8.169 billion or at PhP43.50 per share. This is approximately 30%
above the bank's market price of PhP33.50 as of the last stock trading
day of 2003. The deal was forged between SSS and Banco de Oro on Dec.
30, 2003.
In a 41-page motion filed with the Makati Regional Trial Court, Banco
de Oro said the pensioners' complaint should be dismissed "outright" as
the groups have no clear legal right to ask for a temporary restraining
order and writ of injunction. The bank said the plaintiffs "are
obviously mistaken" into believing that this case could be considered a
taxpayers' suit. The groups, however, argued that they do not assert
this case as a class suit. "Their [Banco de Oro] allegation relative to
the nature of the instant action as a class suit is belied by the
uncontroverted evidence already provided in Court... In fact, there is
no need to characterize this suit as a class suit inasmuch as the
plaintiffs are not claiming any compensation or damages from
defendants," they said. The groups also said they find the propositions
taken by Banco de Oro as "patently absurd." "It suggests that while the
SSS may sue and be sued, the Social Security Commission may not be
sued," they said in their court filing.
|
An inter-agency committee drafting the implementing rules and
regulations of the Securitization Act of 2004 is currently awaiting the
comments of the Insurance Commission (IC) and is expected to be finished
for submission to the Congressional Oversight Committee next month. A
ranking Securities and Exchange Commission (SEC) official said the
implementing rules is being drafted by the committee composed of
representatives from the SEC, the Finance department, the IC and the
Bangko Sentral ng Pilipinas. "The IC is included because their approval
is needed whether asset backed securities issued under the
Securitization Law can be eligible as an investment for insurance
companies," the official said. The official also said the implementing
rules and regulations will be strict in defining the "direct
relationships" between companies selling their assets for the purpose of
securitization.
Under the rules, special purpose entities (SPE) that have
interlocking directors or officers with a bank selling its assets will
have to get the approval of the Bangko Sentral. The official added that
SPEs should also remain independent, meaning that if a real estate
company selling its assets for securitization belongs to a conglomerate
that has a banking unit, the bank cannot sell the assets to the bank or
even engage a financial institution within the group to serve as its
underwriter. Congress last January approved the Securitization Act which
outlines the regulatory framework allowing companies to sell assets such
as loans, mortgages, receivables, and other debt instruments as new
securities to raise capital.
Under the measure, assets may be sold without recourse to a special
purpose corporation or in the case of banks, a special purpose trust.
SPEs can then issue securities backed up by a pool of similar assets, in
the process distributing risk. The bill was approved mainly to spur the
housing sector since under the law only securities backed by residential
mortgage and other housing-related financial instruments can be resold
in the secondary market, to be carried out through secondary mortgage
institutions. The setup will be similar to mortgage institutions in the
United States such as the Federal National Mortgage Association or
Fannie Mae and the Federal Home Loan Mortgage Corp. or Freddie Mac,
lawmakers said. -- Leilani M. Gallardo
|
Some groups yesterday criticized the appointment of an
officer-in-charge at the Philippine Stock Exchange (PSE). Reacting to a
disclosure by the PSE, they said it was illogical to appoint an
officer-in-charge, or OIC, at a time when a new president had already
been elected. The PSE board elected on Monday Francis Ed. Lim, a lawyer
and incumbent director, as the seventh president of the bourse to
replace Cayetano W. Paderanga, Jr. who resigned on June 9. Pending Mr.
Lim's acceptance which will be known in a month, the board appointed
director Peter Favila as OIC.
A source who requested anonymity said Mr. Favila's appointment did
not make sense. "The exchange survived without an OIC for almost a month
and it was running fine without one. Why do we need an OIC now?" The
source said there are suspicions the appointment could be a reward for
Mr. Favila in exchange for his support of Mr. Lim's presidency. He said
the chief operating officer or senior vice-president of the exchange
could act as OIC if Mr. Paderanga decided to leave before Mr. Lim
accepts the post. "The exchange could have at least saved between
PhP300,000 and
PhP400,000 if the board did not appoint an OIC," the source said.
Some sources said a PSE president's salary does not go below
PhP500,000 a month. However, there were no documents to support
this claim. Joey Roxas, president of Eagle Equities, said if there was
any truth to the accusation, the board has to take responsibility. "The
board should be fired for being remiss on their fiduciary duty to
protect the stockholders." BusinessWorld talked to Mr. Favila for his
reaction but the exchange's OIC simply laughed off the accusation. "Let
us put an end to this. It is not helping the country in any way," he
said. -- Roulee Jane F. Calayag
|
Philippine Stock Exchange (PSE) director Francis Ed. Lim
was elected yesterday as the bourse's seventh president, to
replace outgoing bourse chief Cayetano W. Paderanga, Jr.
Majority of the board of directors elected Mr. Lim, and PSE
chairman Alicia Rita M. Arroyo said the vote affirmed the
board's confidence in him when he chaired the PSE Governance
Committee. "Being elected as president is an honor with an
awesome responsibility," said Mr. Lim, who has 30 days to
either accept or turn down the post. He told reporters he
planned to withdraw as co-managing and senior partner of the
Angara Abello Concepcion Regala & Cruz Law Firm (ACCRA Law),
or take a leave without pay if he would accept the PSE
presidency.
The 49-year-old lawyer has been with ACCRA since his
graduation from law school in 1981. He was out of the
company only when he worked for four years in Washington,
D.C. "[The PSE presidency] is a major shift, but I will make
the decision myself at the end of the day," he added. Mr.
Lim was instrumental in the retention of the Philippines in
the California Public Employees Retirement System (CalPERS)
"Permissible Emerging Markets" list in April. As an
independent director of the PSE for two years, Mr. Lim is
familiar with the workings of the organization and its
constituents.
Prior to his election, he was chair of the PSE Governance
Committee, where he implemented steps to eradicate the
perception of the bourse as an old boys' network. He was
also involved in the technical work leading to the enactment
of the Secuurities Regulation Code (SRC), and a leading
expert in implementing this law. If Mr. Lim were to acccept
the presidency, he will revisit the rules of the exchange to
make them investor-friendly, work at asserting the bourse's
status as a self-regulatory organization (SRO), and educate
brokers and listed companies operating under a vastly
different legal system. "The revision of the rules has
started already. We will also clarify with the Securities
and Exchange Commission our SRO status by redoing and
implementing the rules," he said. "There has to be a closer
coordination. It is a two-way thing: granting us
independence and our proving that we are responsible."
Small and medium enterprises as well as the mining sector
will also be given a boost under Mr. Lim's leadership. The
exchange's sales volume will also be improved. "We will
improve both quantity and quality of the sales volume," Mr.
Lim said. The Ilocano lawyer from Cagayan also dismissed
reports that the PSE board was divided. "The board has
directors who have strong convictions and who are able to
articulate their beliefs, but it does not mean that we have
a fractious board," he said. "There is a common thread for
reforms among us and we will do that at the earliest time.
We will set out clear and fair rules for the brokers and the
investors," he added.
Nancy Gallego, secretary to Mr. Lim at ACCRA Law for
eight years, said he was a disciplinarian, fair, and a
thoughtful boss. "He is just, hardworking and intelligent.
He treats everyone -- even the rank-and-file -- fairly." A
husband to a fellow lawyer and a father to three boys and
one girl, Mr. Lim spends the weekend with his family and at
the golf course.
Lawyer Rio Manibog, Senior Partner at ACCRA Law and Mr.
Lim's golfing buddy, said his election as PSE president
would be beneficial to a fragmented institution. "As a team
player who is known to exercise independent judgment in
consonance with the dictate of fairness, Atty. Lim is
expected to unify and revitalize the PSE," said Mr. Manibog.
Mr. Lim vowed to "leave no stones unturned" when he accepts
the post. -- R. J. F.
Calayag |
By LARISSA JOSEPHINE C. VILA, Researcher
'...the good times have returned.' -- Ernesto
Santiago, executive director of Semiconductor and
Electronics Industries in the Philippines, Inc.
Export earnings rose for the sixth straight month in May
as the United States, Japan, and Europe bought more
Philippine goods, particularly electronic products. In fact,
exports that month enjoyed their biggest growth since
November 2002, on the back of rising demand from abroad. "We
could be experiencing the good times now, meaning the global
market is picking up," said Ernesto Santiago, executive
director of Semiconductor and Electronics Industries in the
Philippines, Inc., the umbrella organization of local
electronics companies. Export receipts in May surged by
15.3% year on year to $3.259 billion from $2.827 billion. It
grew 8.9% in April.
MERCHANDISE EXPORTS
(F.O.B. Value in Million U.S. Dollars) |
Top--10 Exports
Commodity |
Jan-May 04 |
Jan-May 03 |
Electronics
Components |
10278.52 |
9506.97 |
Articles of Apparel
and Clothing Accessories |
838.95 |
884.33 |
Other Products
Manufactured from Materials Imported |
251.14 |
205.25 |
Petroleum Products |
116.57 |
213.10 |
Ignition Wiring and
Other Wiring Sets used in V. A. S. |
237.67 |
195.66 |
Coconut Oil |
240.95 |
201.40 |
Cathodes & of Refined
Copper |
158.77 |
114.13 |
Woodcrafts and
Furniture |
163.05 |
168.68 |
Bananas (Fresh) |
132.22 |
131.05 |
Metal Components |
120.95 |
98.05 |
* V.A.S. - Vehicles,
Aircrafts and Ships
Source: NSO |
The electronics sector's export earnings growth was also
its biggest since December 2002, the National Statistics
Office reported yesterday. Some analysts said the country
benefited from strong industrial activity in the US and
other countries.
The US Institute for Supply Management's factory index, a
gauge of manufacturing, held close to a 20-year high in
June, according to a Bloomberg report. Likewise, "consumer
confidence in the US is the highest in two years, a
Conference Board Survey showed last week," said the report.
These numbers indicate "our exports are very much
influenced by the status of the US economy or the US
economic recovery," said Erico Claudio of Unicapital
Securities. Export earnings for January-May totaled $15.42
billion, up by 8.6% from $14.20 billion in the same period
last year. The Philippine Economic Zone Authority (PEZA)
also said its export earnings grew by 36% in five months to
May to $12.63 billion, from $9.31 billion in the same period
last year.
In May, the US, the world's largest economy, spent as
much as $630.57 million on Philippine merchandise exports, a
big 43.9% leap year on year from $438.1 million. The
country's electronic components was the growth driver of the
export industry in May. "The growth of the electronic
sector, which is bigger than the overall sector, pulled up
the industry," Mr. Claudio said.
After a series of single-digit export earnings growth
since the start of the year, receipts from electronic
products in May rose by 18.7% year on year to $2.164 billion
from $1.824 billion. "As we have said before, the good times
have returned," Mr. Santiago added. The electronics sector
accounted for 66.4% of total export earnings in May, with
semiconductors dominating other major groups of electronic
products at 44.7%. Semiconductor earnings in May also went
up by 11.9% year on year to $1.456 billion from $1.301
billion. The Philippines supplies 12% of global
semiconductor requirements. "The issue now is how to sustain
the growth," Mr. Santiago said.
As for other electronics exporters in Asia, sales have
been multiplying because of rising production and spending
in the biggest economies. South Korean exports soared to a
record last month, while shipments from Thailand and Taiwan
reached all-time highs in May. Meanwhile, higher sales of
branded products and stronger demand from Europe resulted in
an additional 2% increase in overseas earnings for articles
of apparel and clothing accessories in May. Aggregate
receipts that month hit $179.63 million, from last year's
$176.2 million. But year-to-date figures were lower.
Earnings from exports of articles of apparel and clothing
accessories for five months to May fell by 5.13% year on
year to $838.9 million from $884.3 million.
Coconut oil was also back on the list as the country's
third top export earner, with revenues of $67.08 million in
May, down by 0.4% year on year. Ignition wiring sets and
other wiring sets used in vehicles, aircraft and ships made
$54.33 million, up by a substantial 59.5% year on year in
May from $34.07 million. Receipts from the top 10 exports
alone hit $2.663 billion that month, or 81.7% of total
export income. These include cathodes and sections of
cathodes of refined copper, other products manufactured from
materials imported on consignment basis, woodcrafts and
furniture, metal components, fresh bananas, and pineapple
and pineapple products.
By commodity type, manufactured goods were the top export
earners. In May, their sales rose by 17.6% year on year to
$2.878 billion from $2.447 billion. Manufactured goods
accounted for 88.3% of total receipts. Agro-based products
earned $180.06 million, or 5.5% of total export revenue.
Earnings fell by 0.04% year on year from $180.12 million. An
expert recently said Philippine agricultural exports
particularly to Japan have been declining because of rising
production costs. Japan prefers to import from countries
that sell cheaper products. While sales of mineral products
went up by 40.2% year on year to $95.20 million, receipts
from exports of special transactions hardly changed at
$91.05 million. Petroleum products and forest products
earned $12.60 million and $2.72 million, respectively.
Meanwhile, trade reports showed the Philippines followed
the export growth trend in the Association of Southeast
Asian Nations. The second biggest market for Philippine
exports in May was Japan with an 18.3% share. Export
receipts totaled $596.25 million, up by 5.1% year on year
from $567.31 million. Hong Kong was the third biggest market
for the month with $317.27 million in export receipts, or
9.7% of the total. Earnings went up by as much as 45.6% year
on year from $217.98 million. Other top markets in May were
the Netherlands, $247.95 million; Malaysia, $233.13 million;
Singapore, $232.12 million; Taiwan, $205.16 million;
People's Republic of China, $157.41 million; Thailand,
$119.31 million; and Germany, $96.90 million.
Even with the good start in the second quarter, analysts
are still on a wait-and-see as the new administration
addresses the issue of sustaining industry competitiveness,
particularly the electronics sector. "We are expecting they
will move forward the concerns of the industry towards
achieving the industry's call of maintaining and sustaining
the competitiveness of the biggest export industry in the
country," Mr. Santiago said. He expects industry exports
earnings to grow by 10% this year. But for Mr. Claudio, even
as the trend was towards recovery, it would be safer to
assume that the export growth rate for the first six months
would be the same as the next six months. "I don't think the
15% [growth] could be sustained for the rest of the year. I
think we can see some minor disappointments in the next
couple of months," he said.
Meanwhile, Trade and Industry Secretary Cesar A.V.
Purisima said the double-digit export growth in May was a
"good omen" for President Gloria Macapagal-Arroyo's new
term, noting that industries were clearly stepping up
production for the international market. "If this
double-digit growth is sustained in the next seven months,
the 10% export target for this year will be met or even be
exceeded. Moreover, increased export would mean more job
opportunities as factories expand operations," he said. Mr.
Purisima credited increased consumer confidence in the US
for increased shipments of DVD players, mobile phones, and
laptops. He also highlighted the fact that garments exports,
the country's second biggest export earner next to
electronics, grew by 2% in May even as garments quotas
providing guaranteed access to the lucrative US and European
markets were scheduled to be phased out by the end of the
year. "This is the first positive growth since June 2003,
which reveals that the Garments Industrial Transformation
Plan [spearheaded] by the [Garments and Textile Export
Board] is on the right track," Mr. Purisima said.
The transformation plan aims to lower costs and increase
productivity in the garments sector to allow it to compete
globally under a quota-less regime. Mr. Purisima noted that
exports to the US jumped 44% while double-digit growths were
recorded for Asian destinations such as Thailand, Singapore,
Malaysia, and Hong Kong. He said economic ties with these
countries would be "strengthened" to ensure "steady and
reliable markets" for Philippine goods. "Our close
relationships with the US and our Asian neighbors are paying
dividends as we see more of our consumer goods being shipped
to these countries," he said. Mr. Purisima added that
exporters were sending "signals that the country is on the
road to economic recovery." Sergio R. Ortiz Luis, Jr., head
of the Philippine Exporters Confederation, shared the
optimism. "With this, I'm very hopeful export will reach 10%
[growth]," he said in a phone interview. Mr. Ortiz Luis said
it was even possible to exceed the target with only three
months of successive growth figures, which would "pull the
average." He added it was "obvious" the positive figures
pointed to an improvement in the economy. "Exports account
for more than 50% of gross domestic product [GDP]. Every 3%
growth in exports translates to 1% growth in GDP," Mr. Ortiz
Luis said.
Also yesterday, the National Economic and Development
Authority (NEDA) said the government was on track to meet
its 10% export target for 2004. "This [May increase] is the
first double-digit increase posted since December 2002. This
can be attributed to the robust growth in the country's top
three export products," said NEDA chief and Socioeconomic
Planning Secretary Romulo L. Neri. He said the expansion in
electronic equipment and parts and manufactured electronics
products was consistent with expectations that consumer
electronic products would continue to experience growth. But
Mr. Neri said the export increase was due to the launch of
the Garments and Textiles Executive Board's Garments
Industrial Transformation Plan, which he said helped
manufacturers cope with the phaseout of quotas by January
2005. "The plan recognizes the need for the domestic textile
sector to become more competitive at the same time that
tariffs on imported textiles are kept low," he said.
Mr. Neri pointed to the global surge in automobile and
transport demand as the main factor behind the 25.8%
increase in shipments of machinery and transport equipment
for May. University of the Philippines economist and former
NEDA chief Felipe Medalla said the growth in merchandise
exports for the month was "expected" given the recovery of
Western markets. "[The growth] is not surprising because you
have the recovering Western market [which include] the
United States," Mr. Medalla said. He also said the global
market would continue to expand in coming months given the
strength currently being displayed by major economies such
as China, Japan, US and Europe. "For the Philippines to
benefit from this expanding global market, the government
[should] create a more stable political and economic
enviroment," he said. --
with reports from Felipe F. Salvosa II and
Jennifer A. Ng |
By ERNESTO B. CALUCAG, Researcher
Prices of goods and services rose more than expected in
June, posting their biggest increase in more than two and a
half years, on the back of rising oil prices since the start
of the year. The country's headline inflation rate, or the
annual increase in the consumer price index (CPI), rose
sharply to 5.1% in the year through June, its highest since
November 2001, up by 0.6% from 4.5% in May. Last month's
rate exceeded the market's consensus forecast. Private
analysts widely expected inflation in June to hit 5%.
Government projected a lower rate.
Inflation rates were based on 1994 prices. But based on
the 2000 price series, headline inflation went up by 0.7% to
5.4% in June, from 4.7% in May. "It's [inflation] at the
higher end of the forecast range. Inflation in June is
already close to the higher end of the government's
full-year forecast, so that's going to pull up the average
for the year-to-date inflation and may point towards a
further uptrend in inflation in the coming months," said
Jose Vistan, economist at AB Capital Securities, Inc.
Inflation has risen steadily this year, hitting 4.5% in
May from 4.1% the previous month. Last March, inflation was
3.8% from 3.4% in January and February. Last month's figure
also pulled up inflation for January-June, which averaged
4.1% year-on-year, still within the 4%-5% full-year ceiling
of the government. Mr. Vistan said the higher price for oil
was the main factor behind the spike in consumer prices.
In early June, local oil companies raised fuel prices for
the seventh time this year, to as much as 25% higher than
year-ago prices. Diesel, gasoline, and kerosene prices went
up by
PhP0.90 to
PhP1.05 per liter, to reflect high regional acquisition
costs. Since January, gasoline prices have increased by
PhP4.20 to
PhP4.35 per liter, while diesel prices increased by
PhP3 to
PhP3.15. Consequently, the government allowed buses and
jeepneys to raise minimum fare by
PhP1.50 starting mid-June. "There are some more
inflationary pressures in the coming months. One is the
adjustment in minimum wage, which is a cost-push
inflationary factor. Higher wages would, of course, mean
higher cost for the business sector, which may decide to
pass on the higher cost to the prices of their goods and
services," Mr. Vistan added.
Starting July 10, minimum-wage workers in Metro Manila
will get an additional
PhP20 per day as emergency cost of living allowance.
This will bring Metro Manila's effective daily minimum wage
to
PhP300 from
PhP280. The National Statistics Office said the rise in
June inflation was traced to higher prices of services,
fuel, light and water (FLW), and housing and repairs (H&R).
Service costs, which include transport fares and fuel pump
prices, rose by 8.3% in June from a 5.3% annual increase in
May. In addition, inflation rate for H&R rose to 3.7% from
3.4%, miscellaneous items to 2.0% from 1.9%, and for FLW to
6.1%.
Meanwhile, inflation rates for food, beverages and
tobacco (FBT) as well as clothing both slowed to 5.0% and
2.1%, respectively. On a monthly basis, the consumer price
index rose by 1.5% in June from 0.5% in May. Among
commodities, services registered the biggest price increase
of 5.1%, mainly attributed to tuition fee and transport fare
hikes last month. Inflation of prices of FBT items climbed
to 0.9% from 0.7% in May; H&R to 0.5% from 0.2%; FLW items,
2.2% from 0.6%; and miscellaneous items, 0.4% from 0.2%.
Price increases in clothing items 0.3%.
Contrary to observations that June's inflation was just a
blip, Mr. Vistan said he expected a rising trend, also
because of the effect of a low base from 2002 and 2003.
Thus, he said, Bangko Sentral ng Pilipinas (Central Bank of
the Philippines, or BSP) was under pressure to tighten
monetary rates. "I think there are three things that are
putting pressure in the monetary policy. One is the recent
hike in the US interest rates, second is the recent strength
in the US dollar against the (Asian) regional currencies,
and the third is this recent spike-up in inflation," Mr.
Vistan said. "But BSP may try to wait out. If the July
inflation number confirms this is a blip, then it will not
do anything. But if we see another month above 5%, then that
may force the hand of the BSP to act," he added.
UNDER PRESSURE
Despite the higher-than-expected inflation rate for June,
BSP said it would keep its yearend target of 4%-5%. BSP
Governor Rafael B. Buenaventura said monetary authorities
expected the fast rise in consumer prices to be temporary.
"We do not expect this sharp spike in consumer prices to
endure for a long period. Such acceleration in the headline
inflation in June was driven mainly by the increase in food
items, particularly fish and meat, as well as in fuel,
rentals as well as services, including educational
services," Mr. Buenaventura said in a statement. He said the
upswing in food prices was due to adverse but temporary
weather conditions. "Once importation of feedgrains and
selected meat products is given due course in the second
half of 2004, the supply will ease and food prices are
expected to stabilize at lower prices," he said.
Similarly, he noted that the increase in tuition fees,
was seasonal as it merely coincided with the school opening
month of June. Rental increases, meanwhile, were driven by
the unregulated sector that took advantage of the increases
in oil prices, transport fare, and other basic commodities.
By nature, he said the direct impact on inflation of these
supply-side factors was outside the sphere of influence of
monetary policy. The central bank has kept policy rates
unchanged at 6.7% for overnight borrowing and 9% for
overnight lending. The BSP chief, however, conceded that the
PhP20 increase in the cost of living allowance in Metro
Manila and other pending wage hike petitions could fuel
inflationary expectations. "Going forward, the stance of
monetary policy will continue to emphasize caution to ensure
price stability yet with the flexibility of helping sustain
economic activity," he said.
The National Economic and Development Authority (NEDA)
also said it remained confident that the inflation target
for 2004 was attainable. Economists also said inflation was
still manageable and that the higher rate was "no cause for
alarm", provided the government will be able to manage its
finances effectively in the coming months. Socioeconomic
Planning Secretary and NEDA chief Romulo L. Neri said the
government could keep its 4%-5% inflation target for the
whole year as the average inflation for the first semester
was only 4.1%, using the 1994 basket. But he also said the
inflation rate could scale up in coming months as demand for
higher wages and the electricity price increase hits the
price system. "The
PhP20 increase in the National Capital Region's daily
minimum wage in July, wage petitions from six other regions,
and power rate hike due to the increase in Napocor
generation charges are expected to significantly influence
inflation," Mr. Neri said.
These factors, he said, can push the inflation rate to
reach the upper limit of the government's target for the
whole year. "Inflation for 2004 is most likely to approach
the upper limit of the target. Nevertheless, the BSP will
monitor developments and use monetary policy tools if
necessary," Mr. Neri said. He also said the National Price
Coordinating Council would monitor markets to make sure
there would be no price manipulation of basic commodities.
Mr. Neri said food and oil prices would stabilize in coming
months as oil supply constraints that pushed up prices in
the international market was expected to ease with the
decision of the Organization of Petroleum Exporting
Countries to expand its production in August. Food prices,
he said, will be stabilized by the government's importation
of chicken and corn to augment the harvest of crops for the
year.
The Department of Agriculture authorized the importation
of chicken in the late May to ease the tightness in supply
and stabilize the price of the produce, which shot up to as
much as
PhP115 per kilogram last April. Economists, for their
part, said that the inflation rate for June was no cause for
alarm. Former NEDA Director-General Felipe Medalla said the
inflation rate was manageable. "The [inflation rate] is to
be expected [although] I don't take it as a sign of
uncontrolled inflation," Mr. Medalla said. He said the
monetary policy of BSP should be more conservative, and that
the government should manage the deficit and refrain from
resorting to more borrowings. "Money creation should not be
excessive. BSP should curtail the creation of more credit.
The government should borrow less and spend less," Mr.
Medalla said. He also prescribed the need to improve the
productivity of Filipino firms and to improve the local
transport system. -- with
reports from Iris Cecilia C. Gonzales and
Jennifer A. Ng |
The Department of Justice has found "nothing legally
objectionable" with the draft of the share purchase
agreement and the letter of intent between Social Security
System (SSS) and Banco de Oro Universal Bank. In a letter
dated April 29, Acting Justice Secretary Ma. Merceditas N.
Gutierrez said the department agreed with the Commission on
Audit's (CoA) opinion that the controversial sale of SSS'
25.8% stake in Equitable PCI Bank to the Sy family's Banco
de Oro did not require public bidding. CoA, through its
chairman, Guillermo N. Carague, said CoA Circular No. 89-296
stated that the disposal of merchandise or inventory held
primarily for sale in the regular course of business was
exempt from the requirement of disposition primarily through
public auction or public bidding. It opined that the
transaction between SSS and Banco de Oro qualified as a
stock exchange transaction. "Nevertheless, since activities
in the stock exchange offers to the general public stocks
listed therein, the proposed sale, although denominated as
'negotiated sale' substantially complies with the general
policy of public auction as mode of divestment. This is so
for shares of stocks are actually being auctioned to the
general public every time that the stock exchange are openly
operating," Mr. Carague said.
The Justice department said it has "no reason to
disagree" with CoA's opinion since the issue whether the
subject transaction is covered by CoA Circular No. 89-296 is
"best left to its [CoA's] determination by reason of its
familiarity with the intent and purposes of the issuance and
the extent of the application thereof." "Moreover, the
resolution of the issue raised would necessarily involve a
review of the action taken or doen by the officials of the
CoA, an independent constitutional body, which is beyond the
revisory authority of the Secretary of Justice. By
established policy and precedents, this department has
desisted from passing upon the official actuations and/or
rulings of any government official over whom this department
has neigher supervisory nor revisory authority," Ms.
Gutierrez said.
The legal opinion and the CoA report are both part of the
regulatory requirements set in the letter of intent to sell
signed by SSS with Banco de Oro last December 30. The deal
was supposed to close last June 30, "unless extended by
mutual agreement of the parties." However, the Philippine
Association of Retired Persons (PARP) sought a temporary
restraining order from the Makati Regional Trial Court to
prevent SSS and Banco de Oro from consummating the agreement
selling 187.8 million Equitable PCI shares.
The purchase price, which would have been
PhP8.169 billion at
PhP43.50 per share, would be approximately 30% above the
bank's market price of
PhP33.50 as of the last stock trading day of 2003.
Furthermore, the Justice department did not see any legal
impediment to the approval of the letter of intent in
executive sessions, without prior consultations. The Social
Security Commission, which serves as the SSS board, validly
approved the letter of intent in executive session without
prior consultations with organizational units in the SSS "to
ensure confidentiality and to avoid insider trading."
"Considering the significance of the transaction involved,
the need to ensure that no material nonpublic information
might be disclosed far ourtweighs the appropriateness of
conducting prior consultations, which in our view, is merely
directory and not legally indispensable. Moreover, since the
general conduct of the operations and management functions
of the SSS is vested in its president, she has the
competence to agree, based upon her prudent judgment, on the
terms of the subject sale," the letter read.
SSS said the sale of its shareholdings in the bank should
stem further bleeding of the fund's stocks. Considering the
25.8% stake is equivalent to four board seats, Banco de Oro
will gain control over the Antonio Go-led bank if the sale
pushes through. Saying that no law was violated in the sale,
Banco de Oro has asked the court to dismiss the case,
arguing that the plaintiffs have no clear legal right to ask
for a temporary restraining order nor for writ of
injunction. PARP, along with Audio Dyne Farm Production,
Inc., and United Social Security System Members, Inc., filed
the case against SSS and Banco de Oro, arguing that the
transaction would provide bad precedent and would violate
public policy on the disposition of assets.
-- Ruby Anne M. Rubio |
Pilipino Telephone Company, or Piltel for short, currently
the darling of punters in the local stock market, presents a
conundrum to analysts. The conundrum it presents has certainly
not put off certain executives of Hong Kong-based First Pacific
Co. Ltd., the majority owner of Piltel's parent company, from
purchasing blocks of Piltel shares a few months ago. On the
other hand, equity analysts and professional fund managers have
been extremely wary of recommending or taking position in the
stock despite the news that Smart Communications, Inc., the
country's largest mobile phone operator, has purchased Piltel's
debt from its creditors. Smart also acquired, for
PhP2.07 billion , the Piltel equity holdings of Philippine
Long Distance Telephone Co. (PLDT), represented by PLDT 59.3
million Series K preferred shares, each of which may be swapped
for 170 common shares of Piltel. Upon conversion of these PLDT
preferred shares into Piltel shares, Smart will end up owning
92% of Piltel.
In essence, Smart's payment of
PhP2.07 billion for 92% of Piltel values the company at only
PhP2.25 billion. This is way below the market's current
valuation of
PhP3.31 billion. Said another way, the market is overvaluing
Piltel as against the equity valuation inherent in Smart's
purchase of the Piltel shares of PLDT. What would Piltel have to
do to justify the market's higher valuation? Or looking at it
from another point of view, what would Smart put into its recent
acquisition to rationalize the market's feeding frenzy on Piltel
shares?
Driven by earlier rumors that Smart would eventually purchase
and merge with its sister company (Piltel), the latter's stock
price has so far zoomed 127% to a recent high of
PhP2 per share, from last year's closing of
PhP0.88 per share. The Philippine Stock Exchange composite
index, a proxy measure for the general market's performance, has
risen at a more pedestrian pace of 12% over the same period. One
other way of looking at the valuation of Piltel would be to
compute its price-to-subscriber ratio -- a bit similar to the
famous price-to-earnings, or P/E, ratio, but using the
subscriber base rather than earnings as the divisor (the
technical term for this ratio is price-per-pop, wherein "pop"
stands for population).
At Piltel's current price of about
PhP2 per share, equivalent to a market capitalization of
PhP3.3 billion, an investor would be paying a little over
PhP1,100 for every subscriber to Piltel's mobile phone
service. In comparison, at their respective current stock
prices, an investor pays almost
PhP13,800 for every Smart subscriber and less than
PhP12,300 for every Globe Telecom subscriber. Using this
measure, Piltel certainly looks cheap, except for the caveat
that the revenue cash flows derived from each Piltel subscriber,
on average, would be much less than the cash flows from a Smart
and Globe subscriber. But the real thinking among speculators,
driving them to push Piltel's share price ever higher, is that
Smart would eventually consummate the corporate marriage with
Piltel, thus accomplishing a backdoor listing for the company.
Such possibility has been denied by both Smart and PLDT
executives. Piltel executives have no say on the matter
precisely because the company has no staff or managers -- it has
outsourced its fixed-line operations to PLDT and its mobile
phone service to Smart. It really does not make much sense at
this point for Smart to merge with Piltel. For one thing, a
public listing of Smart's shares, either through the back door
or the front door, would render PLDT into an unwanted orphan
stock -- leaving it high priced, with not much growth prospects
and with the unattractive fixed-line side of the business.
Furthermore, Smart's acquisition of 92% ownership and the
debt load of Piltel already raised its risks, as both the
biggest equity owner of Piltel as well as its largest creditor.
The palpable risks include the usual business risk (that Piltel
would go out of business) as well as credit and default risks
(that Piltel's cash flows won't be enough to service its
remaining debt load). But these risks are kept at arm's length
without a merger, thus limiting any potential damage to Smart's
financial books. A merger would allow all these risks to enter
Smart's books. So, what was the Smart-Piltel deal all about if
it wasn't about a merger?
It all goes back to the billions of pesos worth of net
operating loss carryover (NOLCO) in Piltel's books that Smart,
which has been making tons of hay under the bright sunlight
provided by ubiquitous Filipino SMS texters, uses to put a lot
of these profits out of reach of the Bureau of Internal Revenue.
Smart's need for a tax shelter became even more pressing
following news that the second coming of the Gloria Macapagal-Arroyo
administration intends to impose a new tax on mobile phone text
messaging. But in order for Smart to use Piltel's NOLCO without
benefit of a merger, it would have to pass through its own
revenues through the subsidiary. This can be done through an
existing sharing agreement or a new marketing agreement with the
subsidiary.
Thus, while Piltel's NOLCO is being depleted, Piltel will be
booking hefty profit growth. At the end of the year, however,
Piltel would need to declare all the profits as cash payouts to
shareholders, thus returning to Smart what ought to have been
theirs from the start. Notice that there would be a leakage of
around eight percent of the profits that would go to minority
shareholders of Piltel. The amount of the NOLCO, particularly
its tax effect on Smart's taxable income, ought to be viewed as
having been paid for by Smart when it acquired most of Piltel's
debt at a discount. Once the NOLCO is gone, however, Piltel
would have served its purpose. At that point, Piltel would be
back to square one: It must be able to earn its keep on the
merits of its own business. If not, then it may yet get the
sleep of the corporate dead that it barely escaped a few years
ago.
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