By RIZZARENE S. MANRIQUE, Researcher
The country's spending on foreign-made goods fell slightly in May,
the first time for the year, as local demand for imported capital goods,
raw materials, mineral fuels and lubricant, and consumer goods waned.
The National Statistics Office (NSO) reported yesterday that the May
import bill slid by 1.6% year on year to $3.277 billion from $3.332
billion. In a telephone interview, economist Bienvenido S. Oplas, Jr.
said many factories were still stuck with raw material inventory since
they imported more than usual in four months to April, in anticipation
of a possible crisis after the May 10 presidential election. "Prior to
the elections, there were a lot of political uncertainties. During
campaign periods, businessmen import more than their normal needs. The
levels of importation were higher than the usual, so if something
undesirable happens in May onwards, businesses have enough stock to
cover their requirements for May, June and July," he said. "Importation
will relatively decline during these months."
AB Capital and Investment Corp. vice-president Francisco M. Varela
added, "Timing-wise, there could have been some inventory adjustments
during that month. For instance, with regard to oil prices, it is
possible that oil companies tried to limit their purchases because of
surging costs. Hence, lesser inventory is being carried. The same goes
true for other manufacturing corporations." "However, it is important to
note that there is volatility in [import] growth rates. I believe this
does not signal any significant change in the trend," he said.
NSO reported that "payments for raw materials and intermediate goods
accounted for 38.8% as importation [in May] went down by 1.7% to $1.271
billion from last year's reported figure of $1.293 billion... Capital
goods comprising 37.7% of the total imports fell by 2% year-on-year to
$1.235 billion from $1.260 billion." NSO figures showed that payments
for imports of mineral fuels, lubricants and related materials dropped
by 9.1% year on year to $364.38 million from $400.77 million. Purchases
of imported consumer goods also fell by 11.8% to $236.99 million from
$268.75 million. Yet, special transactions, including articles
temporarily imported and exported, rose by 54.6% to $169.69 million from
$109.78 million. Electronics and components, which accounted for 43.1%
of total imports, were the top import items in May. But their purchase
declined by 7.5% year on year to $1.412 billion from $1.526 billion.
Mineral fuels, lubricants and related materials came in second, and
industrial machinery and equipment in third. Fourth top import category
was iron and steel, which climbed by 28.8% to $108.17 million from the
prior $84 million. Fifth top import category was transport equipment,
which fell by 15.4% to $92.4 million from $109.29 million.
Rounding up the list of top imports in May were textile yarn,
fabrics, made-up articles and related products ($89.84 million);
plastics in primary and non-primary forms ($80.80 million);
telecommunication equipment and electrical machinery ($69.74 million);
cereals and cereal preparations ($56.04 million); and organic and
inorganic chemicals ($53.84 million). Mr. Oplas said the imports decline
probably lasted until June. But contraction would be offset by the
expected surge in coming months.
'BACK IN BUSINESS'
"I believe it would go back to its normal level before the year ends.
The political 'wait and see' game has already ceased. We're now back to
business," Mr. Oplas said. "Importation is directly proportional to the
country's level of income growth. Full-year GDP forecast for the
Philippines is within the 4.2%-5.2% range, thus, there would be a
corresponding increase in importation soon," he added. Mr. Varela also
believed the underlying performance of the economy was still positive.
MERCHANDISE IMPORTS
F.O.B. Value in Million U.S. Dollars |
Top 10 Imports |
May-04 |
May-03 |
Electronics Products |
1,412.26 |
1,526.02 |
Mineral Fuels, Lubricants |
364.38 |
400.77 |
Industrial Machinery & Eqpmt |
150.95 |
129.87 |
Iron and Steel |
108.17 |
84.00 |
Transport Equipment |
92.40 |
109.29 |
Textile yarn,fabrics, Made-up
Articles & related Products |
89.84 |
97.50 |
Plastics & Non-primary forms |
80.80 |
63.16 |
Telecom. Eqpmt/Electr. Machine |
69.74 |
70.54 |
Cereals and Cereals preparation |
56.04 |
86.15 |
Organic and Inorganic
Chemical |
53.84 |
61.87 |
Source: National Statistics
Office |
"What needs to be monitored is the performance in the next few
months, to see if there has been a reversal in the trend. This may be
just a one-time dip," he added. Export earnings grew for the sixth
straight month in May. It went up by 15.3% that month to $3.259 billion.
As a result, the May trade deficit narrowed to $18 million year on year
from $504 million. "This has to do with the general economic recovery in
the United States and Japan. US GDP growth is projected at 4.6% while
[that of] Japan [is projected] at 4.4%. There is logic in the growth of
exports, considering our trade partners are advancing relatively faster
than their usual growths," Mr. Oplas said.
The US and Japan buy almost 40% of the total Philippine exports.
Total merchandise trade -- imports plus exports -- for May went up by
6.1% year on year to $6.536 billion. Japan was the country's top trading
partner that month with total transactions worth $1.18 billion.
Exports to Japan totaled $630.98 million, while imports reached
$549.17 million -- for a trade surplus of $81.82 million in favor of the
Philippines. Total trade with the US was $1.149 billion. It cornered
16.9% of the May import bill at $552.70 million. Exports totaled $596.29
million, for a trade surplus of $43.59 million again in favor of the
Philippines.
Trade transactions with Singapore, Taiwan and People's Republic of
China hit $501.61 million, $449.71 million, and $426.83 million,
respectively.
Socioeconomic Planning Secretary Romulo L. Neri said the increasing
cost of fuel and higher world commodity prices were the main factors
behind the import slowdown. He noted that the decline in imports was led
by fuel and consumer goods. "Despite higher fuel prices in the world
market, the value of the country's fuel imports such as crude and coal
declined as inventory normalized compared to last year's high inventory
levels during the US-Iraq war," Mr. Neri said in a statement.
University of Asia and the Pacific (UA&P) economist Erico Claudio
added that people were less aggressive in importing also because of
political uncertainty. "The elections may have prevented some people
from importing a lot. When you're uncertain of the political scenario,
you tend to be less agressive in investing in the future," he said in an
interview. But he also said he expected imports to pick up in the coming
months as the political climate improved. "We wouldn't be surprised if
the trade deficit expands in the coming months," he added.
Also yesterday, the Department of Trade and Industry said it was
"delighted" that export earnings were catching up with import expenses,
which meant fewer dollars were leaving the country. "However, we have
noted a slowdown in some major import components that are used for the
country's major export products, specifically electronics and textiles
and fabrics," it said in a statement. It noted a "softening in the
international market" for wireless products. Still, it said key
industrial players were optimistic export targets for the year would me
met. "[The department] will meet with stakeholders to determine how it
can help the industry increase its export capability," it added.
The garments industry adjusted purchases of textile yarns and fabrics
because it was rationalizing inventories for the seasonal change in
product lines and styles. "We expect the industry to increase its
exports in the coming months," the Trade department said. It also said
it expected more machinery purchases in the next few months as a result
of Executive Order No. 313, which reduced the import tax on capital
equipment to 1%. "With the introduction of new [machinery] in the
country, industries will gain greater efficiency and manufacturing
capabilities, thus, improving [their] production for the domestic and
export markets in the months to come," the Trade department said.
-- with reports from Jennifer A. Ng and Felipe
F. Salvosa II
|
By JEFFREY O. VALISNO, Reporter
A Filipino truck driver taken hostage in Iraq and threatened with
beheading was released yesterday a day after the Philippine government
bowed to the kidnappers' demands and pulled all its troops out of the
country. Angelo de la Cruz, a father of eight, was brought to the
Philippines embassy in Baghdad after being released near the United Arab
Emirates (UAE) mission, officials said. "He is in excellent health," an
embassy spokesman told AFP at the compound, which was swarming with
reporters and television cameras as the world waited for their first
glimpse of the freed man after his two-week ordeal.
After the news of his release was reported, Philippine government
emerged from its self-imposed news blackout and breathed a sigh of
relief. President Gloria Macapagal-Arroyo expressed jubilation after
talking to Mr. De la Cruz himself over the telephone just minutes after
the Philippine officials in Iraq confirmed the news. "I am happy to
announce to the nation that our long national vigil involving Angelo de
la Cruz is over. I thank the Lord Almighty for his blessings," Mrs.
Arroyo told reporters yesterday afternoon. Mr. De la Cruz was dropped
off on a street corner outside the UAE embassy at 10:30 a.m. (0630 GMT)
and told to walk towards the building, the embassy spokesman said. "We
were surprised this morning when the Philippine hostage Angelo de la
Cruz was set free in our embassy," UAE Charge d'Affaires Hamed al-Shamisi
said in a statement. He said legal custody of Mr. De la Cruz was handed
to Mr. Seguis, and Philippine Charge d'Affaires in Baghdad Ricardo
Andaya. Mr. Shamisi said the UAE had agreed to transport the 46-year-old
driver to Dubai where he would undergo medical checkups.
GRATEFUL WIFE
The wife of Mr. De la Cruz thanked her husband's kidnappers for not
harming him and said she had prayed constantly for his safe return. "I
am very, very happy. His health is okay. His family is waiting for him,"
a tearful Arsenia de la Cruz told reporters at her country's embassy in
the Jordanian capital, minutes after talking by telephone to her husband
in Baghdad. "I thank his captors for not harming him. I prayed for him,"
she said. The release of Mr. De la Cruz came a day after the last batch
of the 51-member Philippine humanitarian contingent left Iraq.
The pullout was done in three batches in a period of less than a week
-- eight police members of the Philippine humanitarian contingent left
Iraq Wednesday last week, 11 others, including contingent head Brig.
Gen. Jovito Palparan left Friday midnight, while the remaining 32
peacekeepers were flown to Kuwait Monday evening. Mr. Palparan arrived
in the country Monday morning while the rest of his men are expected to
come home too any time soon. The Philippine government gave into the
hostage takers' demand to pull out its troops ahead of the Aug. 20
deadline to the dismay of the United States and the Iraqi interim
government. The Philippine government has ignored the criticisms, saying
its actions were consistent with its national interest. The United
States Embassy in Manila released a statement later saying: "Our
thoughts and prayers have been with Angelo de la Cruz, his family, and
the Philippines throughout this ordeal. We condemn the targeting of
innocent civilians such as Angelo de la Cruz."
NO REGRETS
Yesterday, the President expressed satisfaction for the safe release
of Mr. De la Cruz. "I made a decision to bring our troops home a few
days early in order to spare the life of Angelo (Mr. De la Cruz). I do
not regret that decision. Every life is important. Angelo was spared,
and we rejoice. We are all rewarded for it," Mrs. Arroyo said. The
President expressed gratitude to those who worked silently for the safe
release of Mr. De la Cruz. Mrs. Arroyo also thanked the Filipino people
for their forbearance and prayers.
Amidst the euphoria, Mrs. Arroyo called for sobriety, saying that
innocents will always come into harms way, and circumstances may not
allow the same successful outcome like the case of Mr. De la Cruz. "We
must rejoice at the good news, but our happiness must be tempered by the
awareness that we live in dangerous times, and that we must work to
create a more peaceful world," she said. The President declined to
confirm reports that Mr. De la Cruz would be her special guest for her
State-of-the-Nation Address on Monday. She however said that she would
invite the truck driver to attend a mass to the Our Lady of Rosales
Shrine in Pangasinan. Mrs. Arroyo said she prayed to Our Lady of Rosales
for the safety of Mr. De la Cruz.
Before the President spoke to the members of the media, she talked to
Mr. De la Cruz himself over the telephone. During their conversation,
Mr. De la Cruz personally thanked the President for working for his
well-being. "Maraming pong salamat sa lahat ng tulong na ginawa ninyo
sa akin (Thank you very much for all the help that you did for me.)"
Mr. De la Cruz told the President. For her part, Mrs. Arroyo asked if
Mr. De la Cruz was fine and healthy, and if he was happy that he was now
free from his hostage-takers.
After talking to Mr. De la Cruz, the President congratulated the
government officials who negotiated for the safe release of the Filipino
truck driver including Ambassador Rafael Seguis, who fetched Mr. De la
Cruz from the UAE embassy in Iraq after the hostage-takers dropped him
there. Malacaņang has yet to announce the details on when would Mr. De
la Cruz would fly back to the Philippines. Even without the government's
tacit confirmation that Mr. De la Cruz was indeed expected to come home
in the next few days, sources said the government was already choosing
among options as to how his reception would be done. Sources said the
government committee tasked to oversee Mr. De la Cruz's arrival was
mulling on having Mrs. Arroyo herself welcoming him either in the
President's native town of Pampanga or in Malacaņang. The details,
however, were yet to be finalized.
In any case, Mr. De la Cruz would surely have his hands full upon his
return, Acting Labor Secretary Manuel G. Imson said in an earlier
interview. Since his abduction in Fallujah, Iraq last July 5, Mr. De la
Cruz has become the face of the thousands of overseas Filipino workers
who have flocked to the Middle East in search for work. His arrival has
become much anticipated not only by his family but also by many
Filipinos who have fervently prayed for his safe release.
Analysts say Mrs. Arroyo, who began a six-year term less than three
weeks ago after a bitterly-disputed May 10 election, feared massive
street protests which could topple her government if the hostage was
executed. The government has been under a virtual state of siege since
the hostage crisis broke with Mrs. Arroyo refusing to meet the press and
state agencies imposing a strict news blackout on efforts to free Mr. De
la Cruz. The kidnapped Filipino was employed by a Saudi company working
with US troops based in Iraq. He was taken by the militants and paraded
on the Arabic satellite television Al-Jazeera television on July 7.
HOUSE COMMITTEE
In a related development, Anakpawis Rep. Crispin B. Beltran yesterday
asked Speaker Jose C. de Venecia, Jr. to create a separate Congressional
Committee on Migrant Concerns at the House of Representatives. While
Congress has a subcommittee on migrant concerns under the Labor
Committee, "the concerns of OFWs (overseas Filipino workers) are serious
and numerous, and they deserve to be heard by a committee all their own,
our overseas workers as a special sector of the Philippine society
should be given direct participation in the policy-making process, said
Mr. Beltran. Mr. Beltran, former Bayan Muna party-list lawmaker and
labor leader, also expressed interest to head the committee. According
to him, Committee on Labor chairman Roseller L. Barinaga of the First
District of Zamboanga del Norte, supported his proposal. The Philippines
have been a leading source of workers for abroad, whose remittances
augment the government's income. Before the Iraq hostage crisis, the
government have been receiving numerous reports of Filipino workers in
distress and being maltreated by their foreign employers.
-- with AFP, Reuters, Ma. Eloisa I. Calderon and
Beverly T. Calderon
|
While rising inflation worries central banks in East Asia and the
Pacific, including the Philippines, Bangko Sentral ng Pilipinas (Central
Bank of the Philippines, or BSP) is still not inclined to raise interest
rates. Philippine inflation had already hit 5.1% in June, its highest in
32 months, but Bangko Sentral Governor Rafael B. Buenaventura said he
would probably leave key interest rates at 12-year lows until year-end,
since he expected inflation to keep below the bank's 5% ceiling.
However, his counterparts in East Asia and the Pacific are worried by
the faster rise in prices, and are more inclined to raise borrowing
costs through higher interest rates. "They all agreed that inflation is
on the rise, and they will be watching that," said Bangko Sentral Deputy
Governor Amando M. Tetangco, Jr. Mr. Tetangco attended a meeting last
week of central bank officials from 11 countries and territories in the
East Asia and the Pacific.
Inflation, or the increase in consumer prices, sometimes results from
having too much money in circulation. Higher interest rates help mop up
this execess liquidity. Last July 1, local monetary authorities kept the
central bank overnight lending rate at 9%, and borrowing rate at 6.75%.
These rates have been unchanged since July 23 last year. But Mr.
Tetangco said most East Asian central banks could hike their rates, as
they expected the US Federal Reserve to again raise its interest rates
to head off rising inflation in the United States. "We all agreed that
we need to monitor what the US will do," Mr. Tetangco said.
The US Fed recently raised US interest rates to 1.25% from 1% -- its
lowest since 1958 -- to curtail inflation as the US economy continued to
grow. It was the first rate hike in nearly four years. The move was
welcomed by analysts and investors in the US and the United Kingdom, but
worried Asian markets that feared an exodus of investors. Mr. Tetangco
said Asian central banks were also one in saying that a
higher-than-expected US rate hike could prompt a similar move in Asia.
At last week's meeting were central bank officials from the Philippines,
Malaysia, Singapore, Thailand, Indonesia, China, Japan, South Korea,
Australia, New Zealand, and Hong Kong. --
I. C. C. Gonzales
|
The government spent about
PhP80.1 billion more than it earned in six months to June, and
exceeded by
PhP544 million the period's budget deficit ceiling of
PhP79.6 billion set under its medium-term fiscal program.
Nonetheless, Budget Secretary Emilia T. Boncodin remained "confident"
the full-year budget deficit would fall below the
PhP197.8 billion cap for 2004. "Definitely, we will meet this year's
target. After the
PhP80.1-billion deficit in the first half, we still have a leeway of
PhP110 billion for the rest of the year," she told reporters during
a press conference at the Department of Finance.
Finance Secretary Juanita D. Amatong, meanwhile, said the six-month
deficit would have been higher had it not been for better tax collection
and spending controls. The government's fiscal position -- a reflection
of how much it earned and spent in a given period -- is a closely
watched indicator given its effect on interest rates or cost of
borrowing as well as inflation or the rise in prices of goods, among
others.
For June alone, the deficit was
PhP2.8 billion, down from
PhP12.7 billion in May. Ms. Boncodin said the May deficit was
substantially high because of election-related spending, interest
payments on sovereign loans, and retirement pay for uniformed personnel
of the Department of Interior and Local Government. The deficit in five
months to May was
PhP77.3 billion, just
PhP2.3 billion below the six-month ceiling.
POLL SPENDING IN CHECK
Government revenues totaled
PhP343.3 billion as of end-June, or just 3.1% above targetted
earnings of
PhP332.8 billion for the first semester. Expenditures totaled
PhP423.4 billion, above the six-month expense cap of
PhP412.4 billion. "We continue to keep a close tab on both our
revenues and expenditures. The first-half results puts to rest
speculations about misusing government funds for election-related
spending," Ms. Amatong told the press conference. "We made sure that
election spending did not go beyond what was mandated for election
paraphernalia, logistics, and services. I am, therefore, confident that
with the continued cooperation and increased coordination of our fiscal
agencies, we will be able to achieve our full-year fiscal [deficit]
target of 4.2% of GDP. This administration is serious in its commitment
to achieve a balanced budget in the medium term," she added.
Bureau of Customs revenues for June totaled
PhP10.4 billion, up by 11.9% year on year. The Bureau of Internal
Revenue collected
PhP35.9 billion, up by 12.2% year on year. Government spending hit
PhP57.3 billion, up by 8.1% year on year. Net borrowings in June
totaled
PhP22.9 billion as the government amortized foreign and local loans
worth
PhP34.6 billion. First-semester borrowings hit
PhP79.1 billion, below the
PhP126.1-billion ceiling.
The government aims for a balanced budget by 2009, but economists say
this looks difficult without big cuts in the deficit ceiling. President
Arroyo hopes to get the nod of Congress for new taxes expected to earn
the government some
PhP100 billion in additional revenues yearly. The country has run
budget deficits in 10 of the last 14 years, largely due to poor tax
collection and corruption. Meanwhile, Socioeconomic Planning Secretary
Romulo L. Neri also expressed confidence that the government was well
within its target of limiting the budget deficit to
PhP197.8 billion this year. "That [PhP80.1
billion] is not bad, we're projecting [a deficit of] lower than
PhP200 billion [for 2004], so we're within target. Even if we incur
the same deficit for the next half of the year, we're still within
range," Mr. Neri said in an interview.
PLUGGING THE LOOPHOLES
The government needs
PhP274 million a day, or
PhP100 billion a year, over the next five years to plug the budget
deficit and balance its budget by 2009, Camarines Sur (southern Luzon)
Rep. Rolando G. Andaya said yesterday. The lawmaker based his
computation on figures submitted last year by the national government to
the House of Representatives appropriations committee, which he chaired.
Mr. Andaya also said the tax system should first be reviewed before any
new tax was passed by Congress. "For as long as tax collection is
inefficient and loopholes in our tax system are unplugged, no amount of
new taxes will be enough," he said. To ensure new taxes would go
directly to public initiatives, Mr. Andaya proposed that specific tax
revenues should be earmarked for specific programs. "The people would
like to be assured that the new taxes the government will impose go to
services and programs that will benefit them. For example, if taxes on
SMS [short message service] will be collected, maybe the government can
earmark the money to build classrooms until we reach a zero backlog
status," he said. -- Karen L. Lema,
Jennifer A. Ng and K. L. Alave
|
By CECILLE S. VISTO, Sub-Editor
Mirant Philippines, one of the biggest power firms in the country, is
reportedly having its assets appraised, possibly in line with its plan
to get investors for its projects. A BusinessWorld source said
the company was quietly undergoing a business enterprise valuation,
possibly to get investors for Avon River Power Holdings Corp. Avon River
Power, a 100%-owned subsidiary, was put up recently to directly oversee
the construction, and later on the operation, of a 7.5-megawatt
diesel-fired power plant in Nabas, Aklan, and a five-megawatt plant in
New Washington town. The plants are expected to open this year. "Mirant
may not have the money to invest considering that its parent firm in
Atlanta is bankrupt. That is why it needs fresh capital from new
investors, and it has to have its assets appraised to get these
investors to come in," the source said.
Mirant Philippines is the local subsidiary of US-listed Mirant Corp.
arlier estimates placed the project cost for its Aklan plants at
PhP600 million. Both will also be built in joint venture with Global
Business Holdings, Inc., a unit of Metropolitan Bank and Trust Co.,
under a 20-year build-operate-own agreement with the Aklan Electric
Cooperative, Inc. The Nabas plant will supply electricity to Boracay,
while the New Washington plant will service Kalibo and other Aklan
towns. Last year, Georgia-based Mirant Corp. filed for bankruptcy
protection. It was the 10th largest bankruptcy by assets in
US history. Court papers filed in the US Bankruptcy Court of the
Northern District of Texas showed the company had $20.6 billion in
assets and $11.4 billion in debts.
In a business enterprise valuation, a company's fixed and intangible
assets are appraised. Intangible assets include the company's "good
will." Future earnings are also usually included. The examination of
Mirant Philippines and its books started not more than two months ago.
The source declined to name the company's appraiser. The source added
Mirant Corp. could use the appraisal to get investors for a coal power
plant it would put up in Puerto Princesa, Palawan with First Metro
Investment Corp., another Metrobank unit.
The Palawan plant will service areas not directly connected to the
power grid operated by state-run National Power Corp. Mirant Philippines
also recently announced that it would build two 75-megawatt coal-fired
power plants in Toledo City, Cebu. The province wants to attain full
power capacity before 2008. But Allan Paul M. Flake, Mirant Philippines
vice-president for external affairs, denied that his company has
commissioned an appraiser. "We have not engaged anybody, any entity to
do a business enterprise evaluation. We are not selling any of our
assets or shares either partially or wholly. We have no plans to sell
any of our projects," he said. "It's a market rumor, there is no such
thing." Mr. Flake noted that Mirant Philippines, as well as its
debt-saddled parent firm in Atlanta, were "very happy" with local
operations and that "there is no reason" to seek independent appraisal.
But another source confirmed that Mirant was undergoing audit. However,
the source clarified that the audit focused on process flows and
internal audit controls, for the Sarbanes-Oxley Act, as required by the
US Securities and Exchange Commission. Mirant Philippines is a wholly
owned subsidiary of Mirant Corp. It owns more than 2,000 megawatts of
installed generating capacity nationwide, including a stake in the
natural-gas fired 1,200-megawatt Ilijan power plant.
|
By BENNET S. STO. DOMINGO, Reporter
State-owned National Power Corp. (Napocor) yesterday said it is in
talks with the Energy Regulatory Commission (ERC) to lift the
40-centavos per kilowatt-hour ceiling on purchased power cost adjustment
(PPCA). If the ceiling was removed it could mean higher power rate hikes
as the cap limits to mere 40 centavos the costs Napocor could pass on to
distribution utilities and other customers. The cap resulted in
artificially low rates charged by Napocor to customers. Napocor
President Rogelio M. Murga said the board has come up with a resolution
to remove the 40-centavo cap imposed by President Gloria Macapagal
Arroyo in 2002. "[There was] a board resolution to remove the cap.
That's our position. But the ERC said no, so we are still discussing
with the ERC," Mr. Murga said. He said the removal of the ceiling will
require a presidential order. "[The president] is still busy [with her
duties] in Malacaņang," Mr. Murga said. Ms. Arroyo imposed the cap
almost two years ago during her Labor Day speech despite protests over
the high purchased power adjustment, a component of the cost of
electricity paid by consumers.
The controversial PPCA was collected by Napocor from distribution
utilities which, in turn, is passed on to consumers through the
purchased power adjustment. Since power rates have been unbundled,
however, the PPCA no longer appears as a component of the bill, but this
has been incorporated in the generation rates of Napocor. Power Sector
Assets and Liabilities Management Corp. (PSALM) President Raphael
Perpetuo M. Lotilla said the Napocor board resolution is undergoing
review by the ERC. "It [board resolution] gives the ERC an opportunity
to revisit that particular issue." PSALM, the holding firm of Napocor,
was created to sell all the assets of Napocor and to assume its debts.
The transfer of the assets and debts of Napocor to PSALM is mandated
under the Electric Power Industry Reform Act.
Reports earlier quoted Energy Secretary Vincent S. Perez, Jr., as
saying the lifting of the PPCA cap would help Napocor cut its losses,
which rose to
PhP73.1 billion last year. Mr. Lotilla said a rate hike petition
filed by Napocor and PSALM on June 22 was meant to make Napocor's rates
more competitive. In the joint petition, the ERC was asked to increase
the rates being charged to power distributors by an average of PhP1.87
per kilowatt-hour nationwide. Napocor said the proposed increase is
aimed at preventing a repeat of the power crisis in the 1990s and to
attract investors who will build new capacity to forestall an energy
crisis in 2008.
|
The National Power Corp. (Napocor) will continue to see losses in the
next four years unless it is allowed to recover its actual costs,
President Rogelio M. Murga yesterday said. In 2003, Napocor saw net
losses rise to
PhP113.23 billion from
PhP24.66 billion 2002. This year, the firm projects a net loss of
PhP114.60 billion, the biggest loss projected until 2007, Mr.
Murga said. "Napocor will continue to incur an operating loss unless
Napocor is allowed reasonable recovery of its actual costs," he said.
Napocor is counting on its proposed rate increase with the Energy
Regulatory Commission, among others, to recover its actual costs.
In 2005, the state-owned firm anticipates a net loss of
PhP85.92 billion. Officials, however, did not elaborate on the
sudden drop from
PhP114.60 billion in the previous year. In 2006, losses are
projected to surge to
PhP102.26 billion and to
PhP111.78 billion in 2007. Mr. Murga said until the end of 1997,
Napocor's operations and financial condition was viable. It started
incurring losses as interest expenses ballooned due to the Asian
financial crisis. -- B. S. Sto. Domingo
|
Call center company Epixtar Corp. is opening a call center facility
at the Clark Special Economic Zone in the first quarter of 2005. In a
statement, the company said the call center facility will have 800 seats
and will occupy 3,696 square meters in the BerthaPhil Business Park in
Clark. Harry Fozzard, chief marketing officer, told BusinessWorld
the facility will cost $2.8 million to $2.9 million, of which BerthaPhil
would put in $1.4 million and Epixtar between $1.3 million and $1.4
million. Epixtar, the statement said, had signed a five-year lease
contract for the property. Once completed, the call center facility will
be called Epixtar Plaza. "Epixtar Plaza represents our intelligent
approach to site selection. With Clark's modern infrastructure,
associated government incentives, and access to an ample talent pool we
have made a great choice locating in an area familiar to most US
executives," David Srour, president and chief executive, said.
The company, meanwhile, said in the statement that Epixtar Plaza will
be the largest voice-based contact center in the zone and will be a
"significant regional employer." It noted that Clark has "world-class
infrastructure" developed by the US Air Force, and supplemented by new
and upgraded communications and utilities. These include an
international airport, high-capacity fiber-optic communication and data
transfer systems, a newly constructed power plant, and modern water
treatment systems. The area, which has three Philippine universities and
sixteen institutions of higher learning, also has a "robust"
English-speaking work force, the company said.
It said other contact center facilities operate in the economic zone,
including America Online. It also noted that Clark provides "substantial
incentives" to locators such as tax and duty exclusions on certain
imports and exemption from all local and national Philippine taxes. In
lieu of the taxes, a fixed 5% tax on gross income earned is imposed.
Epixtar said it plans to expand in other areas and is "exploring" other
sites in the Philippines. The firm hopes to operate at least 5,000 seats
in the country by the end of 2005. "Epixtar's strategy of fast growth in
the Philippines is in response to global demand for quality outsourcing
solutions. Many US businesses, particularly in the telecommunications
and financial services sectors, are rapidly increasing the size of their
offshore outsourcing campaigns, Gerald Dunne, executive vice-president
and head of sales for Epixtar, said.
Epixtar Plaza will be the fifth contact center site of the company in
the country. The company has completed 350 seats of its 1,600 seat
flagship facility, Epixtar House, in the Eastwood City Cyber Park in
Libis, Quezon City. It also operates a 250-seat call center in Alabang,
Muntinlupa, and is finalizing plans for 200 seats in Dumaguete in the
Visayas. Last week, the firm said it is acquiring Innovative Marketing
Strategies, Inc. and its 150-seat call center in Makati. With the
acquisition, Epixtar will have 3,000 seats of capacity in the
Philippines, the firm said. Epixtar Corp. is the parent of Epixtar
International Contact Center Group, Ltd, Epixtar Communications Corp.
and the NOL Group, Inc. -- Jennee Grace U. Rubrico
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By IRIS CECILIA C. GONZALES, Reporter
The International Finance Corp. (IFC), the World Bank's private
sector investment arm, has increased its investment in the Philippines
to about $90 million for fiscal year 2004 from $67 million the previous
year. IFC expects to increase its investments in infrastructure and
development projects next year if private sector activities will
increase on expectations that President Gloria Macapagal Arroyo will
deliver on her economic program for the next six years.
Country Manager Vipul Bhagat said IFC will particularly closely watch
how the government addresses the budget deficit and the power sector.
"Everybody is watching the budget deficit and for important reasons," he
told BusinessWorld yesterday. He said investment companies like
IFC are satisfied with Mrs. Arroyo's 10-point agenda, which comprises of
tax measures and legislative reforms to create jobs and fight poverty in
the next six years. The final reckoning, however, will depend on the
program's implementation, he said. He said if the economic program is
implemented well, the investment climate is likely to improve, paving
the way for more investments from companies like IFC. IFC's $90-million
investment figure reflects a 35% increase from last year, bringing IFC's
committed portfolio to $530 million as of June 30 or the end of its 2004
fiscal year. "These investments are significant," Mr. Bhagat said.
The $90 million, however, is much lower than IFC's committed
investments in 2002 of some $230 million. But Mr. Bhagat explained the
$230 million included a $50-million loan to Philippine International Air
Terminals Co., Inc. for the construction of an airport terminal. IFC,
however, cancelled the loan because the proponents failed to use it
within the allowable time. IFC's investments this year went to three
private companies, two of which belong to the Ayala Group. The company
provided a total of $45 million in loan and equity investment to
Ayala-led Manila Water Co. for the company's general financing needs.
Another project is a $20-million financial assistance to Ayala-led Globe
Telecom, Inc. The loan allows Globe to avail of hedging instruments that
would convert its dollar liabilities into peso. "These companies need
access to capital. To do this, they need to be able to access
instruments in the market," Mr. Bhagat said.
Finally, IFC also provided a $22-million loan to the Land
Registration Systems, a private company that would computerize and
connect the 160 offices of the Land Registration Authority, an agency of
the Department of Justice. The agency is tasked to protect the sanctity
of land titles. Mr. Bhagat said IFC will continue its investments in
similar projects next year, particularly on the transportation, power
and telecommunication sectors.
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Bayan Telecommunications, Inc. (BayanTel) said its court-approved
rehabilitation plan would keep the telco on track and maintain its
position as one of the major telecommunications player in the industry.
"While the court-approved plan is not the plan BayanTel submitted,
BayanTel believes that it has a rehabilitation plan that allows it to
meet its long-term growth and profitability goal while continuing to
provide excellent service to all its customers," the Lopez-led firm said
in a statement. BayanTel said its fixed-line subscriber base now stands
at 270,000, almost 50% higher over the past two years.
In April, BayanTel said it expected its revenues to climb 8% to
PhP5.5 billion this year on growth from its landline and data
businesses. BayanTel's shift to data led to a 17% revenue growth in its
data unit in 2003 as against the previous year. The firm also rolled out
internet-based services such as virtual private network and other
internet products like the digital subscriber line, which contributed to
revenues. "With the rehabilitation plan now in place, BayanTel hopes to
sustain its momentum as a major player in the telecommunications
industry," the firm said.
Branch 158 of the Pasig regional trial court earlier approved
BayanTel's rehabilitation plan, and appointed Remigio A. Noval as
receiver. The plan covered payment terms for a $325-million debt which
was made payable over 19 years. The court said debts, which would not be
covered by the restructuring, should be converted into "an appropriate
instrument that shall not be a financial burden" to the company.
BayanTel's secured creditors hold 52.6% of the debt, and the balance by
unsecured creditors.
Secured creditors are Asian Finance and Investment Corp., Bayerische
Landesbank (Singapore Branch), Clearwater Capital Partners Singapore Pte.
Ltd., Deutsche Bank AG, Express Investments III Private Ltd., Export
Development Canada, J.P. Morgan Chase Bank, P.T. Bank Negara Indonesia
(Hong Kong Branch), Standard Chartered Bank, Metropolitan Bank and Trust
Co., Rizal Commercial Banking Corp., Chemical Bank Tokyo Branch,
Northern Telecom International Finance BV, Chase Manhattan Bank NA, and
Siemens, Inc. -- Anna Barbara L. Lorenzo
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By ROULEE JANE F. CALAYAG
There was nothing unusual in the transaction of First Resources
Management & Securities Corp. when it bought shares of Manila Electric
Co. (Meralco) for the Government Service Insurance System (GSIS),
analysts said. The analysts, who asked not to be identified, told
BusinessWorld that a closer look on the deals would show that
allegations of anomalies had no basis at all. They believe the text
message accusing Philippine Stock Exchange (PSE) director Vivian
Yuchengco, the owner of First Resources, of conspiracy with GSIS chief
Winston Garcia in cornering huge deals for the state insurer was
unfounded. The text message had prompted the Securities and Exchange
Commission (SEC) to investigate First Resources' deal on behalf of GSIS.
The probe came after GSIS informed the PSE last week of its intention to
return its 9.1% stake. "Several brokers may have been unhappy because
they were not getting enough volume from the deal," the first analyst
said.
Data culled from the SEC show that First Resources bought 5.74% of
the Meralco shares from Nov. 1 to 30 last year and 33.48% the following
month, bringing GSIS' ownership of Meralco shares to slightly over 5%.
First Resources bought the shares on a staggered basis instead of buying
them at one go. She said the staggered transaction was likely done in a
deliberate manner to protect the client. "As a trader, First Resources
is expected to act prudently and that means waiting for a while to check
on market sentiment," the source said. "It has to spot the best price
for its client, which in this case, is GSIS," she added.
The source said the fund managers of First Resources may have just
acted upon the orders of GSIS. The other source, however, said First
Resources may have resorted to a staggered transaction to prevent
slippage, an instance where market orders get filled at disadvantageous
higher or lower prices. "If First Resources did not stagger its
purchase, the price of the share may have risen or fallen
disadvantageously due to the volume, which was either too big or too
small for the transaction," added the second analyst. He explained that
this is also due to the handling of orders. "Small and big orders are
handled differently," the source said. Amid the allegation, GSIS
reiterated that it would return its stake and that it was waiting for
the approval of the PSE. The bourse, on the other hand, said it was not
possible for GSIS to return its stake to the PSE. It said the state
insurer should look for a third party to buy its stake.
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By IRA P. PEDRASA
Going against market expectations, long-term debt yields dropped
yesterday on news that the government's budget deficit target for the
year is still attainable. "It's still relatively a good news, we have
even projected an
PhP85 billion cap," a trader said. The government yesterday
released the latest figures on the country's fiscal position. it
reported that budget deficit was at PhP80.1 billion, which is only 0.6%
off the PhP79.58-billion target. The better-than-expected figure favored
the Treasury's auction yesterday of seven-year bonds. The new issuance
fetched a 12% coupon rate after a full award of bids reaching
PhP7.436 billion against a PhP4.5-billion offering.
Traders said the market was renewing its optimism on the government's
revenue enhancement measures, a reversal of their pessimistic view early
in the year following political and economic uncertainties. "And even if
they [government] have assumed the National Power Corp.'s debt, the
budget deficit is still a bit on track. Sumobra lang ng konti,
okay na [It was just a bit off-target -- it's okay]," a trader
said. The recent retail Treasury bond offer boosted government coffers.
It was the government's first issuance of such paper for the year where
it got a new value of PhP11 billion. The trader said the government
needs a strong cash position to cover its budget shortfall, which is
expected to hit PhP197.8 billion by the end of the year.
In the secondary market, the rate was also down at 12.223%, compared
to the yield-to-maturity rate of 12.422% on June 22, the paper's last
auction. The Treasury said the rate for the seven-year debt paper last
hit 12% on April 13. The rate had since gone up steadily. The other day,
the government also fully awarded bids for the 91- and 182-day Treasury
bills at lower rates. Traders assumed that the downtrend for interest
rates was only temporary. The 91-day T-bill rate went down to 7.443%
from 7.714%; the 182-day paper's rate dropped to 8.472% from 8.631%; and
for the 364-day T-bill, the yield dropped to 9.315% from 9.416%,
following a partial award of bids.
PESO
In the currency market, the Philippine peso tracked the overall
positive sentiment on the country's fiscal position. At the Philippine
Dealing System, the country's electronic currencies exchange, the peso
appreciated by almost four centavos against the US dollar despite a
range-bound performance. Opening at PhP55.91 against the dollar, the
local unit hovered within a sevem-centavo range to average stronger at
PhP55.911 from PhP55.918 previously. It capped its intraday high at
PhP55.87 and went to as low as PhP55.94. The peso finally settled at
PhP55.90 against the greenback. Regional currencies also traded within
their range. Traders polled by BusinessWorld said the money
market is now hopeful of a stable fiscal setup. They said the State of
the Nation Address (SONA) of President Gloria Macapagal Arroyo on July
26 is expected to present a clearer picture of the government's economic
agenda. "The SONA will further provide the roadmap to fiscal balance,"
said Jonathan Ravelas, Banco de Oro Universal Bank's market strategist,
adding that the President, being an economist, should first enhance
revenues. "[I am assuming] that she will have a moratorium on the
charter change and provide first the space necessary for economic
stability," he added.
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By IRIS CECILIA C. GONZALES, Reporter
The central bank will ask the 13th Congress to pass amendments to its
charter that would grant the bank regulator immunity from lawsuits and
effectively strengthen its charter. A partial immunity will do, said
Bangko Sentral ng Pilipinas Governor Rafael B. Buenaventura late Monday
as he conceded that lawmakers are wary of granting regulators full
protection from lawsuits. "We are not asking for full immunity. If
clearly a mistake was made, the institution must be held liable," Mr.
Buenaventura said in a briefing. He stressed the need to strengthen the
regulatory environment to help develop the country's "primitive" capital
market.
Bangko Sentral, along with the interagency Capital Markets
Development Council has drawn up a list of measures which it deemed
necessary to develop the local capital market. Mr. Buenaventura is
hoping government will include these proposed measures in the list of
priority bills it will endorse to Congress. He reiterated the need to
strengthen the different regulators -- central bank, the Securities and
Exchange Commission and the Insurance Commission.
The central bank has been pushing for amendments to its charter that
would grant the bank regulator immunity from lawsuits. But some
legislators have rejected the idea of full immunity. Mr. Buenaventura
said Bangko Sentral is not asking for full immunity but only enough
protection for its examiners and officers who are doing their job in
good faith. The central bank has faced a number of lawsuits in the past,
mostly from bankers, whose banks it either closed or placed under
receivership. He said aside from strengthening the country's regulatory
environment, Congress should also pass other measures that would improve
the capital markets.
Another bill the capital market sector will push in the next Congress
is the proposed Corporate Recovery Act, which aims to hasten the
recovery of ailing companies either through rehabilitation or
liquidation. Under the bill, rehabilitation or liquidation may be
voluntarily initiated by a debtor in court. Also to be revived is the
proposed Personal Equity Retirement Account Act, which will create a
savings and retirement fund for public and private sector employees. It
also aims to hasten capital market development by contributing to the
sale of government securities and stocks. Mr. Buenaventura said without
these measures, the Philippine capital market will continue to lag
behind its counterparts in other countries. "We must put our standards
consistent with the rest of the world. Otherwise, they will pass us by
in the process," he said. He added that the development of the capital
markets will help the Philippines attract investments locally. "It will
be another source of funding for the National Government," he said.
Meanwhile, the International Finance Corp. (IFC), the World Bank's
investment arm, said yesterday the Philippines needs to put some
infrastructure in place that would help develop the capital market. IFC
country manager Vipul Bhagat said IFC has been providing technical
assistance to the Philippine Stock Exchange to make it at par with other
bourses.
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HONG KONG -- Philippine sovereign dollar bonds traded firmer
yesterday after the country's first-semester budget deficit beat
expectations despite overshooting its target, while the broader regional
dollar bond market held steady. "They are actually firmer because the
first-half deficit was better than market consensus," a Manila-based
trader said. "The market was expecting it at
PhP85 billion but it came out at PhP80 billion." Finance
Secretary Juanita Amatong said yesterday the Philippines' first-half
budget deficit reached PhP80.1 billion (US$1.43 billion), overshooting a
target of PhP79.6 billion. But she said the government remained on track
to meet the full-year deficit goal of PhP197.8 billion. It will be the
10th year in 14 that the country, the most active sovereign debt issuer
in Asia, has run a deficit.
Philippine sovereign dollar bonds, due in 2014, tightened by two
basis points (bps) to 372 bps over comparable US Treasuries. "The market
was aware of the budget deficit number and that it would be larger than
the projected government target. It is not really something the market
was unprepared for," said Irene Cheung, sovereign debt analyst at ABN
AMRO. "I think the market is looking for what kind of measures the
President would introduce to trim the budget deficit. A number of
measures have been announced by the government but they need to be
passed in the Congress." Five-year Philippine credit default swaps --
insurance-like contracts that offer protection against debt default or
restructuring -- moved in by five bps to 450/470 bps.
The rest of the Asian dollar bond market was holding steady as
investors awaited testimony by US Federal Reserve Chairman Alan
Greenspan later this week that could set the tone for future interest
rate moves. Mr. Greenspan is scheduled to deliver his twice-yearly
testimony about monetary policy on Tuesday to the Senate banking,
housing and urban affairs committee. On Wednesday, he will address the
House financial services committee. Spreads on conglomerate Hutchison
Whampoa Ltd.'s bonds due in 2014 were stable at 200/197 bps over. Newly
issued Hong Kong sovereign dollar bonds due in 2014 moved out by one
basis point to 74/71 bps. The deal was launched at 74 bps over
Treasuries last week. The Export-Import Bank of China and South Korea's
LG-Caltex continued on the road to sell a combined US$1.3 billion worth
of fresh debt. It will be the Export-Import Bank of China's first issue
in five years. -- Reuters
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Biggest lender Metropolitan Bank and Trust Co. (Metrobank) posted a
10.9% increase in its first-half net income to
PhP1.73 billion from PhP1.56 billion in the same period in 2003.
In a statement, Metrobank president Antonio Abacan, Jr. said the bank's
net interest income grew by 26.6% growth to PhP5.81 billion from PhP4.59
billion as the reason for the bank's better performance. Mr. Abacan said
the bank's interest income for the first semester increased by 13.14% to
PhP12.76 billion year on year while interest expense rose by only 3.79%
to PhP6.94 billion. Additional revenues also came from commissions,
service charges, and fees amounting to PhP1.61 billion, up by 11.8% from
PhP1.44 billion. Other income from operations -- mainly from the
recovery and sale of assets -- increased to PhP566.65 million, nearly
three times yearago's PhP197.65 million. Operating expenses rose by
9.44%, the bank said, without providing comparative figures.
Citing its published statement of condition, Metrobank said its total
resources amounted to PhP463.88 billion as of June 23, higher by 5.13%
than its PhP441.23 billion level in the same period last year.
Metrobank's loan portfolio rose by 9.31% to PhP236.05 billion from
PhP215.94 billion a year ago. Bank deposits expanded by an additional
PhP2.05 billion to PhP344.78 billion. Capital stood at PhP51.96 billion
from PhP51.17 billion. In a separate statement, Metrobank said yesterday
it registered a 46.7% growth in trust assets for a total portfolio of
PhP125.76 billion during the first half from PhP85.70 billion in the
same period last year. Josefina E. Sulit, head of the Metrobank trust
group, cited newest product Abundance and the bank's common trust funds
(CTFs) for the strong showing. Designed for high net worth individuals,
Abundance combines the benefits of tax-exemption, estate planning and
asset management under a living trust arrangement. The product has an
added feature of loyalty travel benefit that allows clients to
accumulate points redeemable as travel rewards. Hitting the
PhP100-billion mark, Metrobank's assets under management increased by
50.7% to PhP107 billion last year from PhP71 billion previously.
-- Ruby Anne M. Rubio
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By RUBY ANNE M. RUBIO, Reporter
Though it has already announced plans of issuing
PhP1 billion worth of negotiable certificates of deposits (NCDs)
this year, Chinatrust (Philippines) Commercial Bank Corp. said yesterday
it was still evaluating the best funding option to cover its liability
position. "There is no specific plan yet although we have disclosed this
to the public. There are many ways we can do this either by traditional
deposits or we can issue other instruments," Chinatrust president Joey
A. Bermudez told BusinessWorld after the bank's annual
stockholders' meeting yesterday. Chinatrust Philippines was planning to
issue the negotiable deposit certificates after the May elections after
moving it from last year, citing unfavorable market conditions. NCDs are
instruments issued by a financial institution certifying that a deposit
has been made with that institution, which is payable on surrender of
the certificate at maturity. The issued NCD can be traded in the
secondary money market at a negotiated rate, which reflects the tenor of
the paper and the liquidity prevailing in the money market.
For the rest of the year, the bank expects earnings growth to be flat
in view of the prevailing political situation and global uncertainties.
Earnings for Chinatrust Philippines, a unit of Taiwan's fast-growing
private bank, soared 22% last year to
PhP503 million against the previous year's PhP410.9 million,
fuelled by interest and non-interest revenues, treasury gains and a
tight lid on operating expenses. "Your bank is looking at hostile
circumstances. We plan to continue to pursue niche-focused strategy. We
are a specialist in business that can create and provide real value.
Unlike other banks in the Philippines, we are not everything to
everyone. We concentrate on those businesses where we have a chance of
making a difference in this market and in the long-run, taking a
position of leadership and dominance in the various businesses. Despite
the fact that conditions have been less than ideal, we continue to make
investments today that will ensure sustainable growth in revenues," he
told the bank's stockholders.
Chinatrust aims to sustain marketing programs launched in 2002 in
support of its core businesses: consumer finance and bond trading. It
caters to Taiwanese businesses in the Philippines as well as the middle
market. Buoyed by higher net interest margins on loans and lower funding
costs, its first-quarter income reached
PhP201.5 million, up 2.22% over last year's PhP197.12 million.
"The intention of the plan is to optimally exploit every opportunity
there was in those occasion. There is still a lot of work to do as far
as getting ourselves known in the market. Getting the market to
appreciate us for what we offer and the resources we can possibly bring
in the market. The effort of enhancing and building the brand and
product array will continue. Last year, the personal loans business
emerged as a very good flagship business for the consumer finance
endeavors of the bank," he said. Its return on equity -- a measure of
profitability -- was at 20.61% while return on assets was at 4.25%. The
bank also benefited from recoveries from bad loans, gains from foreign
exchange trading, profits from the sale of foreclosed assets, prudent
spending and reversal of loan loss provisions due to continued
improvement in the quality of risk assets.
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By ROULEE JANE F. CALAYAG
Share prices declined further yesterday on the back of extended
profit-taking on big capital issues. The Philippine Stock Exchange
composite index (Phisix) slipped 11.26 points or 0.73% to 1,533 on
yesterday. Despite the continued decline in the Phisix, Grace Cerdeņa of
2tradeasia.com said the correction was healthy. "The 11.26 correction
was expected. It was good that the Phisix managed to hold above the
1,560 level," said Ms. Cerdeņa. The continued selling in large capital
stocks accounted for the huge decline.
TELECOMS
There was a selling spree on Philippine Long Distance Telephone Co. (PLDT)
and Globe Telecom shares due to the revival of a franchise tax for
telecommunication companies [instead of tax on text messaging], said Ms.
Cerdeņa. "How telcos will survive and what legislative proposals will
emanate have yet to be seen while the market is waiting for the selling
stigma to cease," she added. Oliver Plana, research head at AsiaSec
Equities, Inc., said the market declined as "big-cap issues like PLDT
and Globe are still correcting." The slightly weaker performance of the
Dow Jones Industrial Average and the continuing saga of the Filipino
hostage in Iraq also affected the market. "The descent in the market was
also due to Wall Street's mixed performance," said 2tradeasia.com's Ms.
Cerdeņa.
BUDGET DEFICIT
The government yesterday reported that its budget deficit for the
first six months was
PhP80.1 billion, exceeding the PhP79.58-billion target. But
Budget Secretary Emilia Boncodin said the full-year budget deficit would
fall below its target of PhP197.8 billion. The six-month budget deficit
still leaves the government a leeway of PhP110 billion for the rest of
the year. But Ms. Cerdeņa said the deficit, together with the uptrend in
crude oil prices, were already factored in by the market. The market's
sensitivity, she said, was on inflation, consumer spending and the
possibility of interest rate hikes in the near term.
IRAQ
Meanwhile, Angelo de la Cruz, the Filipino truck driver held hostage
by Iraqi militants, was reportedly freed by after the 51-member Filipino
humanitarian contingent moved out of Iraq as demanded by his captors.
The government's decision to pull out its troops may have troubled its
international allies but Mr. Plana said the move does not carry a
significant impact on the equities market. "Some say the pullout may
cause a withdrawal of funds from the Philippines. In terms of equities,
the exposure of foreign funds in the market is not significant. Its
impact may be felt only on the foreign direct investments," said Mr.
Plana.
INDICES
At the stock market, only the all-shares index was up. It advanced
8.06 points or 0.82% at 992.51. The rest of the indices were in negative
territory. The commercial-industrial slid 13.09 or 0.54% to 2,408.12.
The banks and financial services index also declined 6.07 or 1.30% to
459.61. Mining, which had a run-up last week, continued its decline on
Tuesday. It dropped 2.02 or 0.12% to 1,614.05. Oil was also down 0.01 or
0.69% at 1.44. Property retreated 4.20 or 0.80% to 519.03. There were 31
gainers against 40 losers while 39 issues were unchanged. Around 704.7
million shares, valued at PhP294.1 million, exchanged hands.
ACTIVE STOCKS
PLDT was still the leading actively traded stock. It was down to
PhP1,165 with 73,000 shares worth PhP86.2 million traded. It cornered a
share of 29.32% of total trade. The telecoms giant recently reported
that the illegal tapping of its lines cost the company PhP197 million in
income and the government some PhP19.7 million in tax revenues. PLDT
discovered the anomaly, following complaints from corporations about
unauthorized long-distance calls being charged to their lines. The
discovery led to the arrest of two Indians, a Bangladeshi and five
Filipinos who allegedly hacked into the systems of PLDT corporate
subscribers to make the calls.
SM Prime Holdings, Inc. was the second most actively traded stock. It
was unchanged at PhP5.80 on over 4 million shares valued at PhP23.9
million. CADP Group Corp., formerly Central Azucarera de la Carlota,
came in third. It was down to PhP1.50 on 12.7 million shares. The
company told the stock exchange yesterday that it was not aware of any
reason behind the 40% decline in its share price on Tuesday. But
AsiaSec's Mr. Plana said CADP shares were actively traded because of a
block sale.
Meanwhile, investors are advised to trade decisively. "The market
would do well to sit awhile at the present level until very good
incentives come up. That is the time for them to decide whether to buy
or sell," said Ms. Cerdeņa of 2tradeasia.com. The fast-tracking of tax
measures is also expected to increase participation of investors in the
market. Meanwhile, expectations that legislators will clear bills
expected to spur economic activity, such as the Electric Power Reform
Act, are likely to boost investors' stakes in telecom and energy, said
Ms. Cerdeņa. She added that since the descent in the market's
performance is expected, investors will be betting on energy and telecom
stocks.
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By CECILLE S. VISTO, Sub-Editor
State-run Government Service Insurance System (GSIS) yesterday said
it has no plans of selling to third parties its 1.39 million shares in
the Philippine Stock Exchange (PSE). In an interview, GSIS Senior
Executive Vice-President Reynaldo P. Palmiery said the pension fund will
press the PSE to take back its 9.1% stake as treasury shares in lieu of
the earlier recommendation of Chairman Alicia Rita M. Arroyo for GSIS to
sell them to interested market buyers. "There are no takers and I doubt
if there will be," Mr. Palmiery told BusinessWorld.
The Securities and Exchange Commission (SEC) also issued an earlier
statement supporting the PSE chief's proposal. Mr. Palmiery said since
the PSE is considered a regular corporation after its demutualization,
thus, it is legally permitted to buy back its shares as treasury shares.
Treasury shares are shares reacquired by the corporation, which could be
subsequently resold. Ms. Arroyo said the PSE will likely reject the
return offer as the sales transaction has been finalized. Still, the
proposal of GSIS has already been endorsed to the PSE board for review.
Moreover, since the sale was consummated only in February, it is
unlikely the PSE will take back this early GSIS' 9.1% as treasury
shares, which will not earn dividends. Mr. Palmiery clarified the GSIS'
proposal last week to return the PSE shares is "not irrevocable." He
said the agency is willing to keep the shares if the stock exchange
management could soon iron out the much publicized squabble among it
board members. The GSIS official said the agency could not afford to be
dragged into yet another controversy brought about by its purchase of
the shares at a premium price of PhP119.50 as against the PhP185 market
price at the time of the sale.
INTRAMURALS
"We don't want to be involved in another case," Mr. Palmiery said.
"We don't want the GSIS, as an institution, to get caught in the
intramurals at the PSE. The GSIS merely wants to help develop the local
equities market," he said in a separate statement. Aside from GSIS, four
other institutional investors -- namely the PLDT Beneficial Trust Fund,
San Miguel Corp. Retirement Fund, Kim Eng Investment Ltd., and KE
Strategic Pte. Ltd -- subscribed to a total of 5.265 million shares of
the exchange's 27.6 million unissued authorized stock. The shares were
worth PhP629 million and equivalent to 36.4% ownership. But the PSE and
the institutional investors are facing a suit from brokers for the sale
to be rescinded.
Meanwhile, there are rumors that PSE Director Ma. Vivian Yuchengco's
First Resources Group cornered huge GSIS stock market deals in the first
quarter allegedly in conspiracy with GSIS President and General Manager
Winston Garcia. Mr. Palmiery defended Mr. Garcia, noting the decision to
invest in PSE was duly approved by the board upon the recommendation of
its investment committee. He said the pension fund is not worried that
it might be cited for imprudently investing in PSE shares. "The purpose
of demutualization is good, that is, to make the PSE more transparent
and not be a Big Boys' Club. That was how it was presented to us and we
thought that investing was a good move because we wanted to be part of
the reform of the industry. But we're discouraged by the way PSE is
being run," Mr. Palmiery said.
Meanwhile, the move of the GSIS signifying its intention to return
its shares to the PSE only strengthened the argument of those who
opposed the sale of the shares, a source said. The source said GSIS'
move only lent more strength to the opposition of brokers against the
private placement, which is said to be "unfair to the stockholders." A
group of brokers earlier contested in court the sale of PSE shares,
claiming that the shares sold were undervalued. The hullabaloo on the
GSIS plan to return its shares sparked criticisms from various groups.
The source said apart from the state pension fund's plan being a bad
publicity to the bourse, it also forms the notion that questionable
deals are peddled at the PSE. "That should not be the case," he said.
The source said the statement made by GSIS that it wanted out because of
the disputes among PSE directors was just a line to get out. "GSIS did
not like being sued. Also, it has to do with a personal disagreement
between PSE Chairman Alicia Rita Arroyo and GSIS President and General
Manager Winston Garcia," the source added. The election of incumbent PSE
director Francis Lim as PSE President and Ms. Arroyo's support of his
candidacy also apparently irked some groups, including Mr. Garcia.
-- with Jennee Grace U. Rubrico and Roulee Jane F. Calayag
|
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) will keep its reserve requirement for banks at present level
because of rising inflation. BSP Deputy Governor Amando M. Tetangco, Jr.
said yesterday that commercial bank lending remained sluggish, and that
the state of the economy did not permit a cut in banks' reserve
requirement. "Right now, we don't need it. We have to look at the demand
of the private sector," Mr. Tetangco said. At present, the BSP's reserve
requirement -- the percentage of deposits that banks have to set aside
in their vaults and invest in government securities -- is pegged at 19%.
Last February, BSP raised the reserve requirement of banks,
comprising of liquidity and statutory reserves, by two percentage points
from 17% to siphon excess liquidity that could be used by banks to
speculate on the peso. Mr. Tetangco said there was still no significant
growth in domestic liquidity because of low demand for loans. He also
said that while bank lending to the private sector has slightly
increased, the growth was still relatively moderate and not enough to
warrant a cut in reserves. Bangko Sentral reported yesterday that loans
of commercial banks rose by 1.7% year on year to almost
PhP1.5 trillion as of end-May. This was a slight improvement over
the 0.9% year-on-year increase registered in April.
Loans to the agriculture, fisheries and forestry sectors continued
its strong growth from the previous month, rising by 12.5% year-on-year
in May. Lending to the manufacturing sector, meanwhile, posted a
moderate 2% growth. In terms of borrower profile, community, social and
personal services accounted for the bulk. The wholesale and retail trade
sectors followed closely. Bangko Sentral admitted that bank lending to
other sectors declined, limiting the overall rise in bank lending in
May. BSP Governor Rafael B. Buenaventura said the moderate credit demand
and investment growth implied that the stance of monetary policy should
continue. "Monetary authorities will continue to monitor developments in
the real and monetary sectors to ensure that credit conditions remain
supportive of the economy's growth path without undermining price
stability," Mr. Buenaventura said.
Aside from moderate growth in bank lending, Mr. Tetangco said
inflationary pressure continued to hang over the horizon, a factor in
maintaining banks' reserve requirement at current level. Inflation has
been on the rise since late last year because of higher oil and food
prices. The inflation rate hit a 32-month high of 5.1% in June, but this
was not enough for government to revise its 4%-5% inflation target for
the entire year. -- Iris Cecilia C.
Gonzales
|
A bill calling for periodic evaluations of state firms' financial
stability has been filed at the Senate. Opposition Sen. Sergio R. Osmeņa
III, who chaired the Senate committee on banks and financial services in
the previous Congress, has filed the Senate Bill 487 or the Sunset Act
of 2004 which proposes a periodic congressional review of the efficiency
and viability of government-owned and -controlled corporations (GOCCs).
In the bill's explanatory note, Mr. Osmeņa noted that GOCCs have a key
role in the country's economic recovery, meaning they should remain
financially viable without much interference from the cash-strapped
government. "These corporations have assumed an increasingly important
role in the national endeavor for accelerated economic and social
development. Their continued expansion and growth through the years
manifest the magnitude of their impact on the economic recovery of our
country... However, most GOCCs have become financial burdens," he said
in the proposed legislation.
The bill provides for "systematic review and evaluation of GOCCs"
every two years. The examination will be conducted by the Senate
committee on government corporations and public enterprises, and the
House committee on government enterprises and privatization. The review
will focus on the efficient use of investment resources; financial and
social investment rate of returns and productivity; duplication or
overlap of functions of GOCCs; and the extent of private sector
participation in the operations of GOCCs. Once the bill is enacted into
law, GOCCs will have to disclose all pertinent information and documents
to the congressional committees. Officers and directors of GOCCs who
fail to comply face administrative, civil and criminal sanctions. After
the review, the Congressional committees will submit consolidated
reports to the Senate Committee on Finance and the House Committee on
Appropriations. These two committees, in turn, will recommend budgetary
allocations, merging of two or more GOCCs with similar or overlapping
functions; or the privatization/termination of a GOCC.
Mr. Osmeņa said the periodic GOCC review is necessary for the
provision of social benefits to the people while preventing undue
competition with the private sector. "The state should continuously
evaluate and review existing GOCCs to determine whether they satisfy the
tests as enshrined in our Constitution. There is a need to improve the
operations of the GOCCs in order to promote economy, efficiency and
effectiveness in the delivery of public service," he said.
The 1987 Constitution provides for the establishment of GOCCs through
special charters "in the interest of common good and subject to the test
of economic viability." Last week, the Department of Finance proposed
the enhancement of the revenue-generating potential of select GOCCs such
as the Public Estates Authority and the Philippine Amusement and Gaming
Corp. to maximize dividend payments. -- Carina I.
Roncesvalles
|
The National Government will report today how it fared in terms of
managing the budget deficit during the first semester. Finance Secretary
Juanita D. Amatong and Budget Secretary Emilia T. Boncodin are scheduled
to hold a press conference at the Department of Finance building in
Manila this afternoon to release data detailing the government's fiscal
performance for the January to June period. Ms. Amatong earlier conceded
that the government will miss its fiscal target for the first half
because expenditures went beyond the amounts budgeted and that revenue
collections were not enough. She, however, has stressed the government
is maintaining its year-end deficit ceiling of
PhP197.8 billion, adding that keeping the final tally below this
cap is achievable.
The government's budget shortfall for January to May was
PhP77.4 billion, just PhP2 billion below the government's
first-half target of
PhP79.6 billion. Consequently, observers and even government
officials admitted that there was no way the government would be able to
meet the January-June cap given the
PhP2-billion leeway. Expenditures for January to May reached
PhP366.1 billion against the
PhP412.4-billion target for the first six months. Ms. Boncodin
said the May deficit was no surprise and that June spending was also
expected to be high because of election-related spending and a
spill-over of expenses for the reopening of the school year. Revenue
generating agencies earned the government
PhP288.7 billion for the period. The Bureau of Internal Revenue,
Bureau of Customs, Bureau of Treasury and other offices aimed to collect
PhP332.8 billion for the first semester.
The government has made a commitment to wipe out the budget deficit
by 2009 through a combination of administrative and legislative measures
which, economic managers claim, will earn the government
PhP126.6 billion annually. The government's fiscal position -- a
reflection of how much it has earned and spent in a given period -- is a
closely watched indicator given its effect on interest rates or the cost
of borrowing as well as inflation or the rise in prices of goods, among
others. |
The Bureau of Internal Revenue (BIR) will take advantage of a planned
Senate inquiry on tax administration to push for amendments to the
National Internal Revenue Code (NIRC). BIR Deputy Commissioner Kim J.
Henares said the BIR welcomes Senate President Franklin Drilon's bid to
investigate tax collections because it would provide the bureau a venue
to point out needed revisions to the 1997 tax code. "We welcome it so
they can see how difficult it is to collect taxes," Ms. Henares told
reporters yesterday, adding that "there are provisions in the tax law
that prevents us from collecting taxes." She said the BIR has prepared a
list of amendments which the tax agency hopes Congress will approve to
help the BIR raise needed revenues for the government.
Including this year's expected shortfall, the Philippines will have
run budget deficits in 10 of the last 14 years, largely due to weak tax
collection and corruption. This year's deficit cap has been set at
PhP197.8 billion and the government hopes to wipe out the shortfall by
2009. For instance, Ms. Henares said the BIR would like Congress to
scrap a provision in the tax code which allows taxpayers to amend their
income tax returns within three years. This, she said, has prevented the
bureau from filing perjury charges against delinquent taxpayers.
Likewise, the tax agency wants Congress to reduce the number of value
added tax (VAT) exemptions provided under the law to plug loopholes in
the scheme. The Tax Reform Act of 1997 exempts more than 20 transactions
from VAT. Ms. Henares said an estimate of how much collections will
increase cannot be determined as of this time. VAT comprises as much as
20% of the BIR's tax collections. It was first adopted locally in 1988,
replacing 12 different kinds of indirect taxes such as annual fixed
taxes and sales tax from manufacturers. BIR Commissioner Guillermo
Parayno has blamed the "defective" tax laws passed by Congress as part
of the reasons why tax leakages remain a problem. "They have given us
defective tax laws for which we are taken to court by taxpayers. So what
has been done to address these legislatively speaking?," he was quoted
as saying. -- Karen L. Lema
|
By JENNEE GRACE U. RUBRICO, Senior Reporter
The Securities and Exchange Commission (SEC) is set to issue new
guidelines in the preparation of the anti-money laundering manuals by
firms covered by the law and regulated by the commission. The SEC said
the new guidelines would incorporate amendments in the Anti-Money
Laundering Law, international best practices and related provisions in
the rules of the Securities Regulation Code for broker dealers. The SEC
is one of the three government agencies comprising the Anti-Money
Laundering Council. Among the institutions covered by the anti-money
laundering law and regulated by the corporate watchdog are securities
brokers, investment houses, common trust fund companies, and pre-need
companies. "The guidelines [have] been drafted to appear as a set of
guidelines that would assist the regulated intermediaries in the
preparation of their individual statement of policies and procedures and
revised anti-money laundering operating manuals," the SEC said in the
19-page draft guidelines.
The guidelines noted three stages of money laundering, namely,
placement, or the physical disposal of cash proceeds derived from
illegal activities, layering, or separating illegal proceeds from their
sources by creating layers of financial transactions to disguise the
audit trail, and integration, or providing of apparent legitimacy to
illegally derived wealth by placing the laundered proceeds back to the
economy. "The business of these regulated intermediaries are most likely
to be used at the second stage of money laundering, i.e., the layering
process as they provide a potential avenue which may allow a dramatic
alteration of the form of funds," the SEC said. Under the draft
guidelines, the SEC requires regulated intermediaries to establish,
document, and maintain a written customer identification program as part
of their anti-money laundering compliance program. "Clients should be
made aware of the regulated intermediaries' explicit policy that
business transactions will not be conducted with applicants who fail to
provide evidence of their identity but without derogating from the
regulated intermediaries obligations to report suspicious transactions,"
the draft guidelines state. They also provide that regulated
intermediaries must ensure they know their customers and to keep current
and accurate all material information with respect to their customers.
The draft guidelines further prohibit the opening of new accounts
without face to face contact. Regulated intermediaries are required to
do a company search before establishing a business relationship with
firms to ensure that these have not been, or are not, in the process of
being dissolved, struck off, wound up or terminated. If significant
changes to the company structure or ownership occur, or suspicions arise
as a result of a change in the payment profile of a company, regulated
intermediaries are required to make further checks in the identities of
the owners, the SEC said.
SHELL COMPANIES
For shell companies, the SEC said regulated intermediaries should
obtain a board of directors' certification that would detail the purpose
of the owners in acquiring the company. "Regulated intermediaries should
note that shell companies may be abused by money launderers and
therefore be cautious in their dealings with them," the SEC said.
Regulated intermediaries are also required to check if the applicant for
business relationship is acting on behalf of another person as trustee,
nominee or agent. If the intermediary believes the trustee, nominee or
agent is being used as a dummy, it is required to make further inquiries
to verify the status of the business relationship between parties, the
SEC said. It added that for transactions undertaken on behalf of
non-account holders, and where the transaction involves significant
amounts, customers should be asked to produce "positive evidence of
identity including nationality the purposes of transaction, and the
sources of funds." The draft guidelines also require regulated
intermediaries to designate at least two persons for the safekeeping of
all records.
The SEC guidelines also state that regulated intermediaries are
required to report before the council transactions in cash or other
equivalent monetary instrument which are over PhP500,000 within one
banking day. This is following amendments in the law on the threshold
amount for reporting transactions, which used to be PhP400,000. The
firms are also required to file a suspicious transaction report before
the council, regardless of the amount of transaction, if there is no
underlying legal or trade obligation, purpose or economic justification;
the client is not properly identified; the amount involved is not
commensurate with the business or financial capacity of the client; the
client's transaction is structured to avoid being the subject of
reporting requirements; circumstances relating to the transaction
deviate from the profile of the client or its past transactions; or if
the transaction is related to unlawful activities. "Covered transaction
and suspicious transaction reporting should be done by the regulated
intermediary within five working days from occurrence thereof unless the
commission prescribes a longer period not exceeding 10 working days,"
the SEC said. The guidelines also require institutions regulated by the
SEC to have internal controls and procedures for preventing and impeding
money laundering. It adds that regulated intermediaries should provide
education and training for all its staff and personnel.
|
Debt-saddled shipping company Negros Navigation Co. (Nenaco) said its
flagship vessel, Mary, Queen of Peace, resumed operations on July 7
after scheduled dry-docking and quality inspection. This completes the
seven-vessel fleet of Nenaco, which is currently facing corporate
rehabilitation for debts amounting to
PhP2.5 billion. The shipping company is in the midst of a
collection case with Japanese-led Tsuneishi Heavy Industries Cebu, Inc.,
whom it owes
PhP130 million for dry-docking and repair services. Tsuneishi
Heavy Industries earlier sought the seizure of Nenaco's six other
vessels to stand as guarantee for the debts. Nenaco said Mary, Queen of
Peace is the fastest interisland vessel in the country, plying the
Manila-Iloilo-Cagayan de Oro route. Nenaco did not divulge how much the
resumption of its flagship vessel's operation would contribute to the
company in terms of revenue.
-- A. B. L. Lorenzo
|
The Australian government has signed an agreement with the Securities
and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE)
for a
PhP3.13-million technical assistance grant to strengthen capital
markets regulation and reforms. The SEC gets PhP2.157 million of the
grant for capability building and convergence of good corporate
governance and international accounting standards. The grant came from
the Australian government through the Philippines-Australia Governance
Facility of the Australian Agency for International Development (AusAID).
The program will seek to enhance the organizational effectiveness of the
SEC by equipping its officials and employees "with new productivity
tools." The program will also promote transparency in the capital market
through seminars on international accounting standards and to harmonize
the country's financial reporting requirements with international
standards.
The PSE, meanwhile, gets PhP975,830 from the total grant. It is meant
for capability building program for the listings and disclosure
department of the bourse. The program will enhance the knowledge and
skills of the listings and disclosure group in financial analysis, and
the relevant accounting standards affecting applicant companies or
listed companies. AusAID Counsellor Angus Macdonald, in a statement,
said the Australian government is "pleased" to support the efforts of
the SEC and PSE in the development of the financial sector.
-- J. G. U. Rubrico
|
By ROULEE JANE F. CALAYAG
As expected, the stock market closed lower yesterday marked by
profit-taking on big capital issues. Astro del Castillo, managing
director of First Grade Securities, Inc., said investors were still
searching for more incentives to enter the market ahead of corporate
earnings reports.
IMPATIENT
"The market is becoming impatient. Investors want to know who will
take the helm of the Department of Finance and what will be [the new
chief's] strategies," said Mr. del Castillo. Jose Vistan, Jr., research
head at AB Capital Securities, observed that the market's sideways
movement was due to investors' growing impatience. "There is no major
news in the market which makes investors impatient. Consolidation
continues as traders take profits on big cap issues," said Mr. Vistan.
Although the market's breadth was positive, with advancers beating
decliners, 46-24, and 42 issues were unchanged, the Philippine Stock
Exchange composite index (Phisix) was still low at 1,544.26.
PROFIT-TAKING
"This shows that the market is shifting to second-liners and small
cap issues because they do not see fundamental basis to keep big cap
issues," added Mr. Vistan. Profit-taking was observed in blue chip
stocks such as telecom giant Philippine Long Distance Telephone Co., (PLDT),
Globe Telecom and Ayala Land, Inc. "The market cannot go up in a
straight line. There were spectacular gains which have been already
factored into the market," said Mr. Vistan. First Grade's Mr. del
Castillo said the consolidation will persist. "The market will continue
to consolidate between 1,530 and 1,570 in the next few days," he said.
Chelsea Dipasupil, research head at RCBC Securities, Inc., gave the
same reason for the sluggish and cautious trading yesterday. "There is
not much support in the market due to some concerns. Investors are
waiting for directions especially on the economy," said Ms. Dipasupil.
She said market players will be looking forward to the State of the
Nation Address of President Gloria Macapagal Arroyo on July 26 as they
await news on the government's budget deficit.
Investors are becoming jittery after Finance Secretary Juanita
Amatong said the government may have exceeded its budget deficit target
for the first semester. Data for the first-semester budget deficit will
be out today. The budget deficit in May reached
PhP77.4 billion, around PhP2-billion short of the PhP79.58
billion target for the first six months. Ms. Amatong said, however, that
the government will meet its full-year goal of PhP197.8 billion by
exercising control over expenditures. "Hopefully, the concern on the
budget deficit will be addressed. The government is getting on the right
track," added RCBC Securities' Ms. Dipasupil. First Grade's Mr. del
Castillo said, "The Bureau of Internal Revenue will keep an eye on it
[the budget deficit]. A spike in the deficit will cause a pressure on
the domestic trade which, in turn, will create ripple effects."
INDICES
At the stock market, the Phisix was down 6.97 or 0.45% to 1,544.26.
Most of the indices slid, with mining shedding 30.40 at 1,616.07. The
commercial-industrial was down 11.32 at 2,421.21. The all-shares index
shed 4.74 at 984.45. Banks and finance slid 4.04 to 465.68. Oil and
property were up 0.01 at 1.45 and 1.61 at 523.23, respectively. The
sharp decline in the mining index is attributed to a technical
correction. A source said the index was just correcting after stock
prices soared last week on reports that new investors are keen on
acquiring a stake in Manila Mining Co. There were 2,195 trades and a
volume of 979.9 million valued at PhP320 million. Mr. del Castillo said
trading volume turnover was thin because investors did not see enough
reasons to enter the market.
TELECOMS
PLDT was still the most actively traded stock, but its stock price
closed lower by PHp10 at PHp1,180 on 56,220 shares worth
PhP66.4 million. It tracked the decline of its American
Depositary Receipts (ADRs) in New York. Its subsidiary, Pilipino
Telephone Corp. (Piltel), extended previous gains. Piltel rose P0.04 to
PhP2.34 on 11.86 million shares valued at PhP27.6 million. The mobile
operator may end up, according to earlier reports, with 80% to 85% of
its net cellular revenue when a new revenue-sharing agreement is
finalized with Smart Communications Inc., which acquired a 32.7% stake
in Piltel. Smart, also a part of the PLDT group, currently takes half of
Piltel's revenue from the Talk N' Text mobile phone service for access
to its network.
Jollibee Foods Corp. advanced PhP0.50 to PhP24. SM Prime Holdings
slowed down PhP0.10 to PhP5.80. Globe retreated by PhP10 to PhP795. DMCI
Holdings was up PhP0.10 at PhP0.83. Ayala Land moved up PhP0.10 to
PhP5.40, while parent Ayala Corp was unchanged. Petron Corp. shed
PhP0.05 at PhP2.80. First Holdings declined PhP0.50 at PhP27.
Although not much activity is expected due to lack of fresh
developments, Ms. Dipasupil said she was optimistic that the market
would turn for the best in the coming days. "Along the way, there may be
come technical rebounds as investors see a traction in the support
levels of stock prices," added Ms. Dipasupil.
|
By RUBY ANNE M. RUBIO, Reporter
Henry Sy-led Banco de Oro Universal Bank is not looking at other
banks to buy as it remains keen on settling its purchase of the 25.8%
stake of the Social Security System (SSS) in Equitable PCI Bank. When
asked about the status of the deal, Banco de Oro chairman Teresita T. Sy
said, "It is something that is up in the air. Nobody knows. [It is] not
that we are keeping anything. But nobody knows anything at this time."
SSS finds itself in a legal squabble as BDO Capital & Investment Corp.
asked Mandaluyong Regional Trial Court to compel the private pension
fund to execute the Equitable PCI share sale and purchase agreement and
immediately transfer its rights, title and interests in the share.
According to the binding agreement signed by Banco de Oro president
Nestor V. Tan and SSS president Corazon S. dela Paz on December 30,
2003, the deal will close no later than June 30, 2004 "unless extended
by mutual agreement of the parties." Before the deal's closure, the
Philippine Association of Retired Persons sought a temporary restraining
order from the Makati Regional Trial Court to prevent SSS and Banco de
Oro from consummating the agreement to sell 187.8 million Equitable PCI
shares. The retired persons' group said the transaction would provide a
bad precedent and would violate public policy on the disposition of
assets. Ms. Sy said, "It is not that we don't talk. We do. But it is
just we could not put things together. They are not asking for
anything."
In its complaint, BDO Capital said SSS "failed and refused to comply
with its obligations" under the agreement despite the opinion rendered
by the Department of Justice (DoJ) favoring the sale. "As a consequence
of SSS unreasonable and unjust refusal to comply with its obligations
under the letter agreement including the execution of the share and sale
purchase agreement and the transfer of all its rights, title and
interests in the shares to BDO Capital, the latter was compelled to
engage the services of counsel and incur litigation expenses to protect
its interest," BDO Capital said in a 15-page complaint.
Under the deal, Banco de Oro was to pay a downpayment of
PhP1 billion for the SSS stake in Equitable PCI. The total value
of the shares was estimated at PhP13.9 billion, which SSS would receive
after six and a half years. The balance of PhP12.9 billion will be paid
through 6-1/2-year zero-coupon, non-amortizing notes. BDO Capital
claimed that the price of the shares at PhP43.50 each was "fair and
reasonable" since the shares were being traded at a high of PhP34.50. It
stated that the sale should be part of the ordinary business operations
of SSS since its charter authorizes it to acquire and dispose of its
assets for the purpose of attaining its objectives.
The retired persons' group -- along with Audio Dyne Farm Production,
Inc., and United Social Security System Members, Inc. -- said in a
22-page opposition to Banco de Oro's motion to dismiss, the bank's
reliance upon the opinion issued separately by the Commission on Audit (CoA)
and Justice department is "sorely misplaced." "What is unquestionable is
that the shares subject of this action are covered under the general
policy on public bidding pursuant to CoA Circular No. 89-296. The CoA
opinion relied upon in the DoJ opinion and quoted by Banco de Oro, taken
as a whole, actually affirmed plaintiffs' position that the shares are
subject to the general public requirement of public bidding pursuant to
CoA Circular No. 89-296," the association said. The circular states 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. When
asked if Banco de Oro will consider joining the bidding if compelled,
Ms. Sy said, "I cannot say as of now. But maybe we will see in a short
while. Let us see how the case moves first." SSS said the sale of its
shareholdings in Equitable PCI will stem further bleeding of the fund's
stocks.
|
Treasury bill rates dropped in yesterday's debt auction. The
government is optimistic of a downtrend even as money market traders
said that the decline was only temporary. "Yields are already attractive
[at this point]," National Treasurer Mina C. Figueroa said. She added
that if there will be a confirmation that the issues traders have been
raising will ease "and this will be sustained, then we'll see a
downtrend." Traders have said that they would continue demanding higher
risk premiums for government debt papers, citing, among others, the
state's gaping budget deficit.
At the auction yesterday, the 91-day T-bill rate went down to 7.443%
from 7.714% on June 7 prior to a couple of rejections. The 182-day rate
likewise dropped to 8.472% from 8.631% previously. Tenders for the
three-month instrument were oversubscribed at
PhP9.515 billion against a PhP4.5-billion public offering. Bids
for the 182-day paper reached PhP5.8 billion against a PhP3.5-billion
offer. The Treasury fully awarded all bids. Market appetite for the
364-day T-bills was also strong as bids hit PhP4.635 billion against a
PhP3-billion offering. The auction committee, however, accepted only
PhP2.98 billion at 9.315%, down by 10.1 basis points from 9.416% on June
7.
Coming in from a tight cash flow last week, traders said banks were
only looking for a rollover of money for government securities that are
maturing weekly. "For them to be able to cover that, they will bid for
lower rates so they'll surely win," a trader said. Traders yesterday
were worried that the government may reject their bids because it
already has a "healthy cash position" following the sale of retail
Treasury bonds valued at PhP41 billion. But Ms. Figueroa said, "We only
have a net of
PhP11 billion" after deducting PhP30 billion worth of small
denominated Treasury bonds which matured last Thursday. The trader said
the net value "is already worth one auction."
Ignoring government's enthusiasm, another trader said in the near
term, the country's fiscal problems will continue to hound financial
markets. The government is scheduled to release today its first-semester
budget deficit data which many believe would exceed the PhP79.6-billion
target. "The basis that yields are really coming off can be seen on the
long-term debt papers, if bids will push up," another trader said. The
Bureau of the Treasury will auction today seven-year bonds which traders
believe would have a lukewarm response from banks. "We can't easily
shrug off the deficit problem or any economic problems for that matter.
It's a perennial problem," one trader said. -- Ira P.
Pedrasa
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Tracking most regional currencies, the Philippine peso closed
stronger by six centavos yesterday before the scheduled release of the
government's first-half budget deficit data today. "It was yen-driven,
most likely," a trader said. The local unit's strength came after the US
dollar failed to rise even after the release last Friday of the United
States' inflation data, which showed June consumer prices rising by only
0.3%, or only half the prior month's rate.
In early trade, the yen's highest value hit 108.12 against recent
lows hovering at the 109 yen level. "Other than that, we have not seen
corporate demands as can be seen in the volume of trading," another
trader said. Total volume of turnover slipped to $108.4 million from
$178.08 million previously. The trader said since fiscal problems
continue to exist, "we'll just have to wait and see again." Traders
polled by BusinessWorld expect the government to breach its
PhP79.6-billion budget deficit target.
The Bangko Sentral ng Pilipinas, however, said the peso was still
undervalued. Amando M. Tetangco, Jr., the central bank's deputy
governor, said yesterday that while the political concerns have
subsided, investors are still waiting for the government's economic
program. "They are waiting for the deficit figures," Mr. Tetangco said.
He added that the market is also waiting for President Gloria Macapagal
Arroyo to present her administration's economic program for the next six
years on July 26 when she delivers her State of the Nation Address. Mr.
Tetangco said the peso is likely to strengthen when the business
community gets a better picture of the government's program to raise
additional revenues and balance the budget by 2009.
The central bank earlier said the peso should appreciate to PhP54
against the dollar after the proclamation of a new President. At the
Philippine Dealing System, the country's electronic currencies exchange,
the peso averaged stronger by more than 10 centavos to PhP55.918 from
PhP56.024. Opening at PhP55.94 per dollar, the local unit continued
appreciating up to PhP55.88. It finally slipped to PhP55.935 against the
greenback. -- Ira P. Pedrasa and Iris
Cecilia C. Gonzales
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Money market traders said the central bank should pace the issuance
of regulatory circulars as they are having a hard time keeping track of
these. "The problem is that it's hard to keep track of these. We have
full-time compliance officers, but most of management time is spent on
reviewing these [circulars]," said Eduardo V. Francisco, executive
vice-president of BDO Capital & Investment Corp., during the recent
Money Market Association of the Philippines' second general membership
meeting. He also said there should be a move to adjust and simplify
these regulations.
Nestor A. Espenilla, Jr., the central bank's assistant governor,
admitted that the bank regulator has indeed been issuing too many
circulars. But he said this was meant to better oversee the money
market. He said in the last three years, the number of "substantive
circulars" issued has reached an average of one and a half a month.
"More recently, two a month," Mr. Espenilla said during the same
meeting. "These [circulars] reflect the situation that, for a long time,
many aspects are not covered by appropriate credentials." Mr. Espenilla
said, however, there is a need for these regulations as these would
enhance the banking system's processes. He cited, for instance, the
market's failure to disclose information on some activities. He also
said the need for the circulars to "curb anti-competitive behavior."
Traders, however, said there is now a smoother road ahead, requiring
simple regulations. "We should loosen the screw, hanker down. During the
Asian crisis, it was only normal that regulations came in," said BDO
Capital's Mr. Francisco. "For an investment house [like us], owned by a
bank, we are automatically audited by two regulatory bodies, the
Securities and Exchange Commission and the central bank, sometimes they
have different sets of interpretations." BDO Capital is the investment
house unit of Banco de Oro. Still, he said the money market applauds the
central bank's consistent regulatory moves "which reflects more
transparency issues [from the market's side]." -- Ira
P. Pedrasa
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The Bangko Sentral ng Pilipinas is already evaluating Allied Banking
Corp.'s plan to raise $50 million in dollar-denominated subordinated
debt that qualifies as Tier 2 capital this year to beef up its capital
base. In a talk with reporters, Reynaldo A. Maclang, president of the
Lucio Tan-led universal bank, said ING Bank N.V., the financial adviser
for the planned debt offering, has lined up the investors. "Our
application is with the [central bank] already. We have the approval in
principle, then we have submitted to them the requirements they asked
for. This is just a private placement. We are not going to do a roadshow...
If it is not for that amount, which is what we think we need, it is not
worth going to the public. The likes of the ING Bank will not be
interested since it is a small amount. They said we can do it in
private, which we are doing. They are the ones lining up [investors] for
us. We are not going to do any public raising of capital," he said. The
Tier 2 scheme calls for the issuance of subordinated debt papers with a
fixed yield.
Unlike traditional equity infusion, Tier 2 capital is raised via the
sale of debt papers that can be converted into shares of stock upon
maturity. "I suppose by this time, they have lined up already the
investors," Mr. Maclang said, adding that the bank's request with the
central bank was "already at the final stages." "As soon as we have the
approval, we are expecting it to come this year," he said.
Despite a 33.1% drop in first quarter profits to
PhP145.08 million from PhP216.86 million year-on-year, Allied
Bank and its subsidiaries is expecting a 30% growth this year from
PhP1.12 million in 2003 through technology and systems upgrade,
bancassurance, more remittance partnership and tie-ups, extensive
marketing strategies and availability of the group's products and
services to its clients through expanded and strategic domestic and
international network. "It will be a continuation of the businesses we
are in now. Probably we will have more elbow room. If you have bigger
capital, you have more flexibility for the business we are doing now,"
he said. Higher revenues are expected from the bank's treasury business
after it received recognition from the Bureau of the Treasury as one of
the top 10 best performing government securities eligible dealers in the
primary market last year. -- Ruby Anne M. Rubio
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