By CECILLE S. VISTO,
Sub-Editor
Ma. ELISA P. OSORIO and RUBY ANNE M. RUBIO, Reporters
The Supreme Court yesterday stopped the Social Security
System (SSS) from selling its 25.84% stake in Equitable PCI Bank
on October 20. In a two-page resolution, the high tribunal en
banc also ordered the pension fund, the Social Security
Commission (SSC) and the Sy-controlled BDO Capital & Investment
Corporation to submit their comments on a petition by Senator
Sergio R. Osmeña III within 10 days. "The Court hereby requires
the parties to observe the status quo prevailing before the
issuance by the Social Security Commission," the court said.
On Aug. 18, the Commission, which serves as the SSS board,
approved the move to subject the shares to a "Swiss Challenge"
where the result is subject to the right of Banco de Oro's
wholly owned investment house to match the highest bid. Mr.
Osmeña last week questioned the mode of the sale before the
court, alleging it may result in the government losing at least
PhP3 billion from the transaction. The legislator claimed
the 26% outstanding capital stock may be sold for as much as
PhP60 instead of only PhP43.50, the offer of BDO Capital, if
properly bid out Mr. Osmeña, together with Senators Juan Flavier,
Rodolfo Biazon, Alfredo Lim and Ana Consuelo Madrigal, elevated
the issue to the Supreme Court. They asked the court to prevent
SSS from selling the shares through a Swiss Challenge, claiming
it is "simply a scheme to sell the shares to BDO Capital without
a public auction." "The Swiss Challenge is not a mode of bidding
but a mechanism for awarding government contracts on negotiated
basis," Mr. Osmeña said in a statement. He said a public bidding
is the fundamental mode of selling government assets. "By using
a Swiss Challenge, SSS may even have violated penal and
anti-graft statutes," he added.
The legislator chided SSS for insisting on pushing the
supposedly dubious sale method despite questions over its
legality. "It is a case of granting BDO Capital the privilege of
purchasing the shares at its own price even if other buyers are
willing to pay a higher price," Mr. Osmeña said. Mr. Osmeña said
even the bidding rules have provisions that unduly favor BDO
Capital and even discourage the participation of other
interested buyers. These rules include that BDO Capital is
allowed to match the second highest bid under certain
circumstances; SSS is bound to automatically offer the shares to
BDO Capital in case there are no bidders or prospective bidders
do not qualify; all bidders, with the exception of BDO Capital,
must acknowledge that title to the shares may be affected by at
least two civil cases pending before the Makati and Mandaluyong
trial courts; and all bidders, except BDO Capital, are required
to waive its right to sue SSS for any defect or irregularity in
the sale.
BDO Capital, Mr. Osmeña also noted, has not paid any
consideration for the preferential right to match. In an earlier
pleading filed at the Mandaluyong Regional Trial Court, the SSS
said there is still "no perfected and binding agreement" between
the government agency and BDO Capital over the shares. The
investment house, meanwhile, stressed that a public auction is
not necessary in the sale of the Equitable PCI bank shares
because public bidding is not required in the disposal of
merchandise or inventory held primarily for sale in the regular
course of business. Banco de Oro was originally to pay a
downpayment of PhP1 billion for the SSS stake in listed
Equitable PCI. The total value of the SSS Equitable PCI stake
was estimated at PhP13.9 billion, which the SSS would receive
after six and a half years. The balance of PhP12.9 billion will
be paid through six and a half-year zero-coupon, non-amortizing
notes. The SSC later agreed to cash payment terms, and the SSS
agreed to sell the 25.84% stake in Equitable PCI for PhP8.169
billion or at PhP43.50 per share. The stake is equivalent to
four board seats. The deal was supposed to close no later than
June 30 "unless extended by mutual agreement of the parties."
Atty. Jose A. Bernas, the senators' legal counsel, said the
Supreme Court moved to halt the sale because it has been "quite
concerned" about government contracts. "If the court does not
interfere, the transaction would provide a bad precedent and
would violate public policy on the disposition of assets," he
told BusinessWorld. Eduardo V. Franciso, executive
vice-president of BDO Capital, said this is "another temporary
setback but that does not deter us from the ultimate goal." "We
have not seen the ruling. We still have to get a copy of it. At
the end of the day, we will still protect our interests," he
said. "From the start, we entered into a legally binding
agreement with SSS. That is why we brought them to court. They
should have delivered the shares to us. We will see what we can
do," Mr. Francisco told BusinessWorld. Banco de Oro has
said it "has entrusted the future" of its bid in the country's
third largest lender and will await a decision by the
Mandaluyong Regional Trial Court. In June, BDO Capital asked the
court to compel the SSS to execute the Equitable PCI share sale
and purchase agreement and immediately transfer its rights,
title and interests in the shares. The Philippine Association of
Retired Persons, meanwhile, sought a temporary restraining order
from the Makati Regional Trial Court to prevent the consummation
of the agreement.
|
By LARISSA JOSEPHINE C. VILA,
Researcher
A rebound in electronics shipments boosted Philippine
merchandise exports in August by 13.7% to $3.415 billion, the
highest for the year, from $3.003 billion in the same month last
year. The month's performance -- which followed a disappointing
July -- boosted expectations that a 10% export growth target
would be met, but some analysts said the specter of rising oil
prices could dampen the rest of the year. July exports growth
was the lowest so far for the year, with shipments at $3.105
billion, up a mere 3.2% from the $3.009 billion in July 2003.
That helped inflate the trade deficit by 37%. The month of
August, said to AB Capital Securities research head Jose Vistan,
is when manufacturers start stockpiling inventories ahead of the
fourth-quarter peak season for consumption. "In order not to
risk running out of inventories, I think they are already
stacking up on supplies in anticipation of a strong fourth
quarter, globally," he said.
For the eight months to August, exports totaled $25.255
billion, 8.5% more than the yearago $23.277 billion, the
National Statistics Office (NSO) reported. According to Erico
Claudio of Unicapital Securities, 8.5% is not a bad figure but
added that at this pace the government's 10% growth forecast
appears to be on the high side. "It is not going to be easy. You
have to bring up the 8.5% to 10%, or grow much faster than 10%,"
he said. "As far as I know, the US economy has slowed down, so
you will have some expected slowdown here in the Philippines.
Though a 10% growth is not impossible, it is still on the high
side," he said. Mr. Vistan, however, thinks otherwise, saying
"The global economy is going to be healthy and I think there
won't be any negative events. The only problem really is the
volatility of oil prices." "With the 13.7% August growth and the
8.5% total growth, I think we would be doing a little better as
we move towards September and October. So, we would hit the 10%
target."
Sergio R. Ortiz Luis, Jr., head of the Philippine Exporters
Confederation, expressed confidence that the full year growth
goal would be met. "Year-to-date I think we're hitting now
between 10% to 11%, which is right on track with the target for
the year [of] at least 10%. We're very happy with it," he said.
Trade and Industry Secretary Cesar A.V. Purisima noted that the
growth in August was the second highest recorded this year after
May's 15.27%. His view was echoed by Socioeconomic Planning
secretary Romulo L. Neri, who also said he is confident the
country will meet its 2004 export growth target. "For this year,
we expect our export growth to be at 10% to 11%. We have faith
in the capability of our exporters and in the marketability of
our products," Mr. Purisima said. "Our electronic and garments
products will continue to pace the growth of our export sales.
However, we have [also] increased our efforts to develop other
market groups so that the country will not have to rely on these
two product groups," he added.
The Cabinet official also said China is emerging as a major
export destination, jumping to fifth place in the list of top
buyers from eighth in January. "China will continue to be one of
the top export markets of the country. If this trend continues,
China will become one of the country's top three export
destinations together with USA and Japan," he said. Mr. Purisima
said emphasis will be given on products such as furniture,
marine products, automotive and parts, toys, and house wares.
"These industries, mostly small and medium enterprises, are
being given marketing, training and product development support
with the aim to enabling small firms to penetrate the export
market and increase the country's manufacturing base," he said.
"We remain biased toward the development of the country's export
market and this is the reason why we continue to give
export-oriented industries incentives through the Board of
Investments and the Philippine Economic Zone Authority," he
added. The government is also stepping up a campaign to help
local firms obtain certifications on Good Manufacturing Practice
and Hazard Analysis Critical Control Point systems which are
necessary to gain access to the American and European markets.
Meanwhile, University of the Philippines economist Dr.
Ernesto Pernia, however, warned that the full-year target could
be threatened by rising oil prices. Mr. Pernia said the export
growth was good but added that the country may "barely" reach
the 10% target. He said unabated increases in oil prices tend to
dampen consumer demand and investor enthusiasm in the
short-term. University of Asia and the Pacific economist Victor
A. Abola said the August performance was "good", considering
that exports for the month usually slow down due to bad weather.
"August was supposed to be a bad month because of the typhoons.
Normally, exports dip during this month," he said in an
interview. He also expressed confidence that the country is on
track in meeting the full year target. "The impact of oil price
hikes will not be felt much this year. The main effect will be
felt next year. That's what we have to worry about," Mr. Abola
said.
Accounting for two-thirds of total shipments, electronics
exports grew 15.7% year-on-year to $2.251 billion after hardly
growing the previous month. Among the major groups of electronic
products, the semiconductor sector still contributed the biggest
share of 46.7% to total exports, up by 14.8% to $1.596 billion
from $1.390 billion in August 2003.
MERCHANDISE EXPORTS
(F.O.B. Value
in Million U.S. Dollars) |
Top--10 Exports Commodity |
Aug 04 |
Aug 03 |
Electronics Components |
2251.48 |
1945.24 |
Articles of Apparel and Clothing Accessories |
229.47 |
205.67 |
Ignition Wiring and Other Wiring Sets used in V. A. S. |
87.20 |
46.94 |
Coconut Oil |
49.34 |
42.07 |
Petroleum Products |
41.17 |
62.30 |
Other Prod. Manufac. from Materials Imported on
Consignment basis |
39.37 |
42.72 |
Woodcrafts and Furniture |
36.31 |
40.84 |
Metal Components |
32.42 |
22.26 |
Cathodes & sec.of cathodes |
30.30 |
23.80 |
Bananas(fresh) |
21.91 |
32.04 |
* V.A.S. -
Vehicles, Aircrafts and Ships
Source: National Statistical Office |
"A 15.7% growth in the electronic sector is good, given that
we are expecting the market to soften in the second half," said
Ernesto Santiago, executive director of the Semiconductors and
Electronics Industries in the Philippines, Inc. (SEIPI). The
electronics export industry reported a first-half growth of
9.75%, which Mr. Santiago called "aggressive." Telecommunication
products, meanwhile, posted a remarkable 315.5% growth but
accounted for only 0.8% of aggregate exports.
Other electronic products that showed substantial gains were
communication/radar, which grew 35.4%, and control and
instrumentation, 35%. Medical/industrial instrumentation was the
only sector that posted a decline of 40.8%. Articles of apparel
and clothing accessories remained the country's second top
earner with a combined share of 6.7%. Its aggregate receipts of
$229.47 million reflected an 11.6% improvement from last year's
$205.67 million as the country's trading partners stock up for
the Christmas season. This performance likewise displays a
positive shift from the performance in July which recorded a
year-on-year 9.2% decline.
Also improving from the previous month's sluggish growth were
ignition wiring sets and other wiring sets used in vehicles,
aircraft and ships. The third biggest earner, wiring posted
$87.2 million in total revenues, an 85.8% increase from $46.94
million in August 2003. The fourth biggest earner was coconut
oil, with sales amounting to $49.34 million for a year-on-year
growth of 17.3% from $42.07 million. Coconut oil has been the
country's leading farm product over the past years, and the
Philippines is the world's largest exporter of coconut oil and
other coconut-based products. In contrast, revenues from
petroleum products dropped 56.5% to $41.17 million from $26.3
million.
Rounding up the list of the top exports were other products
manufactured from materials imported on consignment basis,
$39.37 million; woodcraft and furniture, $36.31 million; metal
components, $32.42 million; cathodes and sections of cathodes of
refined copper, $30.30 million; and bananas (fresh), $21.91
million. Total receipts for the top 10 exports reached $2.819
billion, or 82.5% of total exports.
In line with the August exports growth, the Philippine
Economic Zone Authority (PEZA) reported that actual exports for
economic zones in August stood at $20.619 billion, 22.48% higher
than $16.834 billion in the same month last year. Investments in
August, meanwhile, generated one million jobs against 887,030 in
August 2003. Despite a reported slowdown in the US economy,
America remained the Philippines' primary market. Accounting for
24.8% of the country's aggregate income for the month, exports
to the US were valued at $847.92 million. Receipts increased by
34.7% from last year's $629.69 million. Demand from Japan
likewise went up 44.3% to $667.86 million versus $463.75 million
in August 2003. The country accounted for 19.6% of total
exports.
Overtaking Hong Kong as the third biggest market was
Singapore, whose receipts amounted to $260.03 million or 7.6% of
the total. Receipts climbed by 27.6% from $203.76 million last
year. Shipments to Hong Kong, meanwhile, inched up 0.7% to
$254.2 million from $252.34 million in the same month last year.
Other big markets for August were China, $223.35 million;
Taiwan, $171.99 million; Malaysia, $166.79 million; The
Netherlands, $113.04 million; Germany $100.63 million; and
Vietnam, $86.61 million. Total export receipts from the
Philippines' top ten markets for August amounted to $2.892
billion, or 84.7% of the total. --
with reports from Felipe F. Salvosa and
Jennifer A. Ng
|
The Department of Finance (DoF) is sticking to its fiscal
deficit reduction schedule despite a recommendation by the
International Monetary Fund (IMF) to accelerate the program.
Finance undersecretary Eric O. Recto said that the IMF's
recommendation to "front-load" or accelerate the fiscal deficit
reduction program would limit the government's flexibility in
spending for much needed infrastructure. "We will maintain that
we also need to use revenues to spend for productive capital
expenditures (CAPEX), which will help the economy grow," Mr.
Recto said. The Washington-based Fund is pushing for the
acceleration of the fiscal deficit reduction program, arguing
that markets were looking for strong initial evidence of the
government's ability to tackle its fiscal problems.
In a recent report, the IMF said that the government should
have a large part of its deficit reduced in 2005 and 2006 to
make the 2009 balanced budget goal easier to attain. The Fund
favored a reduction in the deficit of the non-financial public
sector -- referring to the national government itself and the
government-owned and controlled corporations -- by 2.5
percentage points of GDP by 2005. In contrast, the IMF dubbed as
"insufficiently ambitious" the government's plan to reduce the
deficit in a linear fashion or by about 3/4 percentage point of
gross domestic product (GDP) each year from 2004 to 2009. The
IMF team also argued that fiscal measures were likely to be
easiest in the opening period of the new administration.
The government incurred a deficit of
PhP199 billion last year and hopes to contain the deficit at
PhP197 billion this year. Mr. Recto said the government
agreed with the need to front-load the revenue-raising measures
by pushing for their immediate passage this year. He said the
government agreed with front-loading the deficit reduction
program because it will try to get as much of the measures
passed "up front." The Macapagal-Arroyo administration is asking
Congress to pass eight tax measures estimated to raise
PhP83 billion yearly. These include a two-step increase in
the value added tax (VAT) rate, a shift to gross income taxation
and tax amnesty. The IMF, however, shot down the government's
proposal to grant tax amnesty for individuals and corporations
and the planned shift to gross income taxation. Mr. Recto said
the government is still counting on the passage of at least four
measures this year. These include measures that will grant a
general tax amnesty, institutionalize a lateral attrition
system, rationalize fiscal incentives and a higher excise tax on
alcohol and tobacco products. -- Iris Cecilia
C. Gonzales
|
... rates kept
steady
The government has hiked its inflation target for the whole
year to 5.4% due to rising oil and food prices. This followed a
National Statistics Office (NSO) announcement that September
inflation rate had hit 6.9%, the highest in three years. Key
policy rates, however, may likely be maintained by the Bangko
Sentral ng Pilipinas (BSP), which said monetary policies have
limited effect on supply-side pressures caused by oil, food and
power prices. Reactions from economists were mixed, with one
saying the September figure is a cause for concern while another
declaring the increase has not gone long enough to be a reason
to worry. Socioeconomic Planning secretary Romulo L. Neri, in a
statement, yesterday said "The government expects full-year
inflation to average 5.4%, slightly above the 4% to 5% inflation
target earlier set by the government." The National Economic
Development Authority (NEDA) said it expects inflation for
October to December to average 7%, due largely to sharp
increases in oil prices.
BSP Assistant Governor Diwa C. Guinigundo, meanwhile, said
"The Monetary Board will look for demand pressure on inflation
before changing course." The BSP's policy-making Monetary Board
said supply-side inflationary pressures are outside the
influence of monetary policy. It has kept policy rates unchanged
at a 12-year low of 6.75% for overnight borrowing and 9% for
overnight lending. September inflation topped the upper end of
the Bangko Sentral's inflation forecast for the month of
6.3%-6.8%.Mr. Guinigundo said the BSP had anticipated the latest
figure. He said pressures continue to come from the supply-side
such as oil prices, higher power costs and an increase in prices
of certain food items. The same point was echoed by Mr. Neri,
who said the increase in the inflation target for 2004 was
brought about by continuous pressures being exerted by oil
prices and the further tightening in oil supply. The NEDA said
core inflation, a measure of long-term inflationary pressure,
rose to 6.6% in September from 6.2% in August. "This shows that
inflationary pressures are becoming more permanent than
transitory," Mr. Neri said.
NO CAUSE FOR CONCERN
Meanwhile, University of Asia and the Pacific economist
Victor A. Abola said the September inflation should not be a
cause for concern. University of the Philippines economist
Ernesto Pernia, however, said the government should start
worrying. "It was only in July that prices started climbing due
to oil price hikes. Also, the base for this year's inflation
rate was very low since the yearago figure was at 2.9%," Mr.
Abola said in an interview. He also said that on a month to
month basis, prices have been declining. "Inflation increased by
1.1 percentage points in June, then 1.1 in July but inflation
increased by only 0.3 percentage points in August. Prices have
in fact been decelerating on a month to month basis," he said.
But Mr. Abola cautioned that the country may be in for tough
times next year, especially if the hike in oil prices will
continue.
Mr. Pernia, meanwhile, said the inflation rate is already a
"cause for worry" since it may have an adverse impact on the
country's gross domestic product and debt servicing. "I think
inflation will approach 6% this year and this is a cause for
worry since it could slowdown consumer demand as consumers will
be discouraged," he said. A high inflation rate, he said, could
force the government to increase interest rates which may make
the country's debts more expensive to service.
SAVINGS
To counter the inflationary pressures caused by oil, Mr.
Abola called for the immediate implementation of energy saving
schemes. To move away from its dependency on imported oil, Mr.
Pernia said the government should start developing alternative
sources of energy. Oil prices have been shooting up, with Dubai
crude -- the benchmark for local oil prices -- hitting $37 per
barrel in September from $33 in June. Added to these woes,
several typhoons hit Luzon, particularly Metro Manila last
month, raising the prices of basic commodities.
The Bangko Sentral is assuming a year-end average price of
$33.56 per barrel for Dubai crude. The BSP increases rates to
siphon off excess money in the local economy that could be
pushing inflation upward and slash the purchasing power of the
peso. Monetary authorities have repeatedly said an increase in
rates will not be effective in addressing inflation in the
current situation. "Monetary authorities will continue to assess
economic and financial developments and undertake the necessary
adjustment in monetary policy settings to arrest the buildup in
inflation expectations and prevent inflation persistence," BSP
officer-in-charge Armando L. Suratos yesterday said in a
statement. The International Monetary Fund has urged the BSP to
keep a close watch against inflationary pressures and move to
tighten rates if necessary amid rising interest rates and higher
oil prices. -- Jennifer A. Ng
and Iris Cecilia C. Gonzales
|
Forty-nine government-owned and -controlled corporations (GOCCs)
and government financial institutions (GFIs) will post a
combined net loss of
PhP131.16 billion at the end of this year, the chairman of
the House of Representatives committee on appropriations said
yesterday. Consequently, some of these GOCCs and GFIs will
require some PhP13.7 billion in subsidies from the National
Government to keep them afloat this year, Camarines Sur Rep.
Rolando G. Andaya, Jr. said in a statement. Based on the Budget
of Expenditures and Sources of Financing for 2005 that the
Department of Budget and Management (DBM) submitted to the House
of Representatives in August, only 20 of the 49 GOCCs and GFIs
are projected to earn income totaling some PhP8 billion by
yearend.
These include the Land Bank of the Philippines which is
projected to earn PhP2.2 billion; Development Bank of the
Philippines, PhP2 billion; National Development Co., PhP1.074
billion; and the Philippine Ports Authority, PhP1.584 billion.
The other GOCCs and GFIs that are expected to post earnings this
year are:
- the National Irrigation Administration;
- Philippine Crop Insurance Corp.;
- Philippine Fisheries Development Authority;
- Quedan and Rural Credit Guarantee Corp.;
- Laguna Lake Development Authority;
- Trade and Investment Development Corp.;
- Employee Compensation Commission;
- Phividec Industrial Authority;
- Public Estates Authority;
- Philippine Tourism Authority;
- Philippine Economic Zone Authority;
- Philippine Leisure and Retirement Authority;
- Cebu Ports Authority;
- Development Academy of the Philippines;
- National Housing Authority; and
- the Philippine Charity Sweepstakes Office.
The National Food Authority, meanwhile, is expected to post a
loss of PhP14.552 billion by yearend, almost double the PhP7.585
billion recorded at the end of 2003. The Light Rail Transit
Authority, Philippine National Oil Co., National Home Mortgage
and Finance Corp., Technology and Livelihood Resource Center,
National Tobacco Administration and Philippine Television
Network. Inc. will similarly incur losses, although
substantially less or just a little more than what they incurred
in 2003. These are among 15 losing GOCCs and GFIs that Budget
Secretary Emilia T. Boncodin has warned to shape up or else they
will be abolished. The gain/loss projections were based on
reports submitted by the 49 GOCCs and GFIs to the DBM prior to
its preparation of the 2005 budget. The Al Amanah Islamic
Investment Bank Philippines, Philippine National Railways and
the Human Settlement Development Corp. failed to submit their
gain or loss projections to the DBM, Mr. Andaya noted.
GOCCs that will require National Government subsidies
include:
- the National Food Authority;
- National Irrigation Administration;
- National Tobacco Administration;
- Philippine Coconut Authority;
- Sugar Regulatory Administration;
- National Dairy Authority;
- National Electrification Administration;
- Lung Center of the Philippines;
- National Kidney and Transplant Institute;
- Philippine Children's Medical Center;
- Philippine Heart Center;
- Philippine Institute of Traditional and Alternative
Health Care;
- Philippine Convention and Visitors Corp.;
- Center for International Trade Expositions and Missions;
- Cottage Industry Technology Center;
- Light Rail Transit Authority;
- Philippine Institute for Development Studies;
- PTV 4;
- Cultural Center of the Philippines;
- National Home Mortgage and Finance Corp.;
- National Housing Authority;
- Philippine Rice Research Institute;
- Zamboanga City Special Economic Zone Authority; and
- the Cagayan Economic Zone Authority.
"Although it can be argued that GOCCs imbued with a social
welfare function are expected to lose money by the nature of
their mandate, as in the case of specialty hospitals, that
defense, however, is not applicable in all cases," Mr. Andaya
said. -- Judy T. Gulane
|
By KRISTINE L. ALAVE and
BARBARA L. LORENZO, Reporters
A Manila court yesterday approved the 10-year corporate
rehabilitation plan of debt-ridden shipping firm Negros
Navigation Corporation (Nenaco). Noting receiver Monico V.
Jacob's rehabilitation map to be "exhaustive, impartial, and
most reliable," Judge Artemio S. Tipon of Branch 46 ruled that
the firm would be in a better position to pay its debts if it
follows the 10-year plan rather than liquidating all its assets.
Mr. Tipon said the liquidation scenario will only account for
80% of the shipping firm's debts, lead to the loss of more than
1,000 jobs, and permit one shipping firm to monopolize the
domestic shipping industry. "The Court is convinced that given
enough breathing spell, the business of Nenaco can be
rehabilitated and revitalized, given the fact that it has a
loyal clientele in its Manila-Iloilo-Bacolod route and that it
has a firm grasp in the passenger and freight market," the judge
said in his order, which was signed yesterday.
Nenaco, the country's second largest shipping firm, filed for
corporate rehabilitation on March 29, 2004. Its debts had hit
PhP2.5 billion and the firm said its financial woes could be
traced to a decrease in passenger volume and to the 1997 Asian
financial crisis, which increased interest rates and operating
costs. Mr. Jacob submitted a three-phase rehabilitation plan
early September. The first phase, from 2004-2006, is aimed at
firming up the company's finances and a 10% yearly increase in
revenues. The next phase calls for route expansion to capture a
larger market, and by 2015 the company must have settled all its
debts. The court also ruled, as suggested by the receiver, that
the company pay its creditors, both secured and unsecured, under
equal terms and conditions to eliminate preferential treatment.
"This Court has the obligation to look out for the welfare, not
only of the said secured creditors of Nenaco, but also the
welfare of the unsecured creditors, employees and stockholders
of Nenaco and the general riding public," Mr. Tipon said. The
judge also criticized the creditors' opposition to the
rehabilitation guidelines, particularly their request to hike
interest rates and shorten the time line of the rehabilitation
plan.
Creditors will get four board seats under Mr. Tipon's order:
one to be appointed by the court and three to be allotted by the
shipping firm. Mr. Jacob was ordered to attend the board
meetings and submit a report on the company's rehabilitation
every three months. Nenaco president Sulficio Tagud Jr.,
meanwhile, said the shipping firm can now focus on its
operations following approval of the rehabilitation plan. "With
the rehabilitation, we can now focus on the real work of turning
the company around. There is no need for us to talk with various
creditors because there is now a debt service parameter," Mr.
Tagud said. Nenaco has 10 years to pay its PhP2.5-billion debt.
Creditors will be paid under an interest rate of 5% for the
first four years and 7.5% for the next six years. Unsecured
creditors will be paid 2.5% in interest. Mr. Tagud said Nenaco
is expected to post losses during the first two years of its
rehabilitation. "We want to charge all the mistakes of the past
on the current year so we would be in a better position moving
forward," he said.
Nenaco incurred an PhP8.2-million loss in 2003 after posting
a PhP102.7-million income in 2002. In 2001, Nenaco losses stood
at PhP1.8 billion. The debt-saddled shipping firm recently
received financial support from its parent, Metro Pacific Corp.,
which provided PhP123 million so the company could settle its
August tax dues. Nenaco still owes the Bureau of Internal
Revenue some PhP302-million. "Nenaco still needs PhP130 million.
Metro Pacific is helping us raise the money because creditors
won't lend to Nenaco at this point," Mr. Tagud earlier said. The
remaining amount will be used to finance the dry-docking and
repair of Nenaco vessels San Paolo, St. Peter the Apostle, and
St. Ezekiel Moreno. Nenaco currently operates nine vessels
versus the 20 vessels run by leading shipping firm Aboitiz
Transport Services Co.
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By IRIS CECILIA C. GONZALES, Reporter
The Japan Credit Rating Agency (JCRA) expects the
Philippine's gross domestic product to grow 5% this year, in
line with the government's own projection of 5.9% to 6.1%. In a
September report, JCRA said growth could be higher if not for an
expected slowdown of the world economy in the second half of the
year and rising oil prices. The International Monetary Fund has
raised its 2004 growth forecast for the Philippines to 5.2% from
4.5%, citing the strong first half performance of the economy.
The Asian Development Bank has also upgraded its growth outlook
for the Philippines to 5.5% from 5%, also citing improved
prospect for agriculture.
Earlier in September, investment bank Morgan Stanley also
raised its forecast for the Philippines to 5.6% from 4.5%, also
on first half growth. JCRA, which maintains a BBB or investment
grade on the Philippines' sovereign debt, however, urged the
Macapagal-Arroyo administration to continue its fiscal reform
programs to help support economic growth. "The fiscal position
of the country has not reached the proportions of a default
crisis. However, the continuation of the fiscal reform programs
initiated by her previous administration is indispensable to
improve the country's weak fiscal position," the rating agency
said. The agency said the government should continue to increase
revenues and control expenditures to improve the fiscal position
and hold the public debts at manageable levels. "Given the debt
owed by the National Power Corporation (Napocor), a failure to
do so could mean the country's fiscal position would again
deteriorate, making it impossible to stem an expansion of public
debts in the medium term," it added. The government plans to
absorb Napocor's
PhP500 billion debts to help the privatization of the
money-losing power firm be more viable and make it more
attractive to investors.
Standard and Poor's Ratings Services, meanwhile, said in a
report yesterday that a hike in the US Federal Reserve System
rates is not likely to affect the credit quality of most
emerging markets including the Philippines. Still, it stressed
the need for the Philippines to maintain its projected fiscal
balances. The government aims to balance the budget deficit by
2009. The government incurred a deficit of
PhP199 billion last year and hopes to contain the deficit at
PhP197 billion this year. S&P reviewed the debt profiles of
eight key governments -- the Republics of Hungary, Poland, South
Africa, Colombia, Philippines, Turkey, the Republic of Brazil
and the United Mexican States. "Even under sharply higher global
and domestic nominal interest rates. Standard and Poor's
believes that these eight government should keep their debt
trajectory under control so long as they make sufficient
mid-course corrections to maintain currently projected fiscal
balances and so long as they continue to pursue reforms that
underpin growth," S&P said.
The US Federal Reserve System had already raised rates to
1.75% so far to contain inflation in the growing US economy. The
Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP), however, said it still had enough room to keep rates
steady given the "comfortable" interest rate differential
between peso and dollar-denominated bonds. The BSP usually
matches a move by the Fed to prevent capital flight which could
happen when investors shift their funds to economies with higher
interest rates.
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The country risks a credit downgrade if Congress fails to
pass new tax measures being pushed by the Arroyo administration,
the President's economic spokesman yesterday warned. During the
government's "global-no-deal road show" late last month, credit
rating agencies Fitch Ratings, Moody's Investors' Service, and
Standard and Poor's (S&P) said "no new taxes passed means the
Philippines will suffer a downgrade in international credit
ratings," Trade and Industry Secretary Cesar A.V. Purisima told
the 30th Philippine Business Conference at the Manila Hotel.
"This will dry up financial support from the international
markets" aside from resulting in a peso depreciation, he said.
Mr. Purisima argued that additional revenues are needed to rein
in the ballooning deficit, which is expected to reach
PhP197 billion this year.
A ratings downgrade will make it more expensive for the
government to borrow money abroad. The Philippines is the second
largest debt issuer in Asia after Japan. Philippine credit
ratings are currently a couple of notches below investment
grade. Fitch, saying that the speculative possibility of credit
risk was developing, issued a "BB" rating last year. Moody's has
given the Philippines a "Ba2" largely on the same grounds.
Recently, S&P downgraded the country's currency rating to
BBB- from BBB citing political risks, huge government debt, and
a shallow capital market. S&P has a BB rating for Philippine
debt. President Gloria Macapagal Arroyo has said the Philippines
is currently in a "fiscal crisis," widely interpreted as a
justification for new tax measures. Mr. Purisima said the
PhP80 billion in additional revenues expected to be
collected annually from the new tax measures are not even enough
to cover the budget deficit. He also pointed out that the
consolidated public sector deficit by yearend would be bigger at
PhP318 billion. Nonetheless, the Philippines' $57-billion
foreign debt is still manageable with an average maturity of
19.5 years, Mr. Purisima said. He acknowledged, though, that
aside from new taxes, more revenues could be raised by efficient
tax collection and by "growing the economy." To reduce poverty
gross domestic product or GDP must grow at a sustained 7.3% in
the next six years, he said. This would double the income of the
bottom 35 million of the population earning $2 or less a day.
Doubling the income of poor Filipinos means a $25-billion
increase in the country's approximately $80-billion annual GDP
over a six-year-period, Mr. Purisima said. It would also be
easier to achieve this by doubling the economic contribution of
small and medium enterprises, which currently account for $25
billion of the GDP, than increasing the output of the country's
10,000 large firms. It costs
PhP50,000 to create a new job in a small enterprise, as
against
PhP1 million for a large company, he said.
-- Felipe F. Salvosa II
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Former Malaysian strongman Mahathir Mohamad yesterday said
"affirmative action" enabled his country to achieve national
unity and economic growth. This was done by reducing class and
racial animosities as well as striking a balance between rich
people's desire to earn profit and the poor's right to a decent
living, he told the 30th Philippine Business Conference and
Exposition organized by the Philippine Chamber of Commerce and
Industry at the Manila Hotel. The 78-year-old ex-prime minister
declined to offer advice to President Gloria Macapagal Arroyo,
saying he preferred to share his experiences in presiding over
Malaysia economic success. "The Malaysian experience is an open
book," he said.
Mr. Mahathir said affirmative action helps prevent racial
animosities caused by economic disparities "but the disparities
in income between rich and poor must also be reduced if an
equitable and harmonious society is to be built." "Governments
must therefore oversee that wage demands and increases are
sustainable, while employers do not exploit workers. There
should be not only fair wages for the workers but wages should
increase in real terms so that workers will enjoy a better life
as the economy grows. After all, the increasing prosperity of
the country is due also to their inputs," he said. Mr. Mahathir
also cited to need to control prices of essential goods, saying
this was the case in Malaysia since World War II. "With low
inflation, the increase in wages need not be too high to give
greater purchasing power and improve the standard of living.
With improvement in [the] standard of living the disparity in
income between rich and poor would not be so great, and there
would be less envy and jealousy." He pointed out that the
instruments in achieving class equity are the "usual ones" --
tax the rich and exempt the poor. However, the rich should be
recognized as "assets" since they create economic activity and
new jobs. "The activities of the rich are overseen by the
government so as to prevent exploitation of the poor and of
society itself, but the rich must be helped to legitimately make
reasonably more money so as to grow the economy," Mr. Mahathir
said.
In Malaysia, he said there is "positive discrimination in
favor of the economically weak race," the Malays and indigenous
peoples, in terms of licenses, permits, scholarships, discounts,
and access to loans. To appease the wealthy Chinese and the
Indians, the Malaysian leadership decided to share power with
them in creating a national political coalition. This helped
solved race riots and an insurgency led by the Chinese who had
been denied citizenship and the right to own land, he said. As a
result, the Malays have achieved a 20% share of the economic
wealth in 20 years, or a 2000% growth. At the same time, the
Chinese and the Indians increased their share of economic wealth
to 40% from 30%, or "40% of a much larger economic cake," he
said. Mr. Mahathir said it is also important for parliamentary
governments to achieve a solid majority that has the continued
support of constituents, otherwise, it would be difficult to
craft an economic strategy for the long term. During Mr.
Mahathir's 22-year reign, Malaysia transformed from a basketcase
into a major trader, with trade twice the size of its gross
domestic product. GDP grew at an estimated 5.2% last year.
Purchase power parity-adjusted per capita income is pegged at
$9,000.
The former prime minister's speech, scheduled before lunch,
was briefly interrupted by a power failure, for which organizers
apologized profusely. But he later resumed his jolly mood,
joking that Malaysia came to be known internationally for
issuing "outrageous" statements and upstaging the world's
tallest skyscrapers by building Kuala Lumpur's twin Petronas
Towers. "If you are short, stand on a big soapbox so you can be
seen," Mr. Mahathir quipped. He also gamely answered a question
from a member of a panel of reactors who asked for a statement
on the acquittal of political rival Anwar Ibrahim on a sodomy
charge. Mr. Mahathir pointed out that Mr. Anwar still faces a
corruption charge. There was also no question from the judge
that Mr. Anwar committed the act of sodomy but that police
bungled the case by indicating the wrong date on the charge, he
said. It would likewise be hard for Mr. Anwar to make a
political comeback in case of a conviction, which would mean a
five-year ban in government service. "We are not worried about
him because the acquittal was on flimsy grounds," Mr. Mahathir
said.
HUNGER STUDY
President Gloria Macapagal Arroyo yesterday vowed decisive
action against escalating incidence of hunger in the country,
pledging to combat communist and Muslim separatist insurgencies
as well as the high unemployment rate, which she blamed
starvation and poverty in the Philippines. "We cannot shut our
eyes to the truth of hunger and poverty. The immediate causes
are unemployment in the cities, and pockets of conflict in the
countryside," the President said in a statement. "Our key and
current programs are to forge peace at the rural community level
and move to decongest the slum belts in the cities so that we
can spread more room for self-reliant enterprise," she added.
A survey of the Social Weather Stations last month found a
"near-record-high 15.1% of household heads reporting that their
families had experienced hunger, without having anything to eat,
at least once in the last three months". The national survey,
conducted from August 5-22, also showed that 53% of households
rated themselves as poor. The President said that her 10-point
agenda, which she first articulated in her
State of the Nation Address (SONA) last July, hopes to solve
the challenges of hunger and poverty. She, however, admits that
fiscal constraints limit the government's ability to help the
poor. "Our nation has all the resources to feed its people but
we have to unlock the channels for food and opportunity to flow.
This is the first step even before we can think of the equally
strategic factor of education," the President said. "I spend
most of my working day on these challenges -- building the
physical, digital and human infrastructure to fight poverty,
while nursing precious resources to extend the lifeline to the
most needy families," she added. Despite the prevailing hunger
among Filipinos, as well as the continued economic woes of the
country, Malacañang yesterday remained upbeat on the economic
prospects of the Philippines.
Press Secretary Ignacio R. Bunye said there is much reason
for optimism than dismay despite the nation's fiscal turmoil
because there are now more opportunities for development than
ever before. He said indicators that the economy is recovering
are seen by the way the share prices in the Philippine Stock
Exchange have been rising and in how the peso has withstood
attacks by foreign exchange speculators. "Investor confidence
remains strong and this is a clear measure of satisfaction in
the President's political and economic agenda," the Palace
official said. Mr. Bunye also pointed out that the streamlining
of the government is under way, industrial peace is at hand, and
the quest for an end to three decades of conflict in Mindanao is
moving forward.
Senate President Pro-Tempore Juan M. Flavier, meanwhile,
blamed the high population growth rate for the high incidence of
hunger in the country. Mr. Flavier noted that the annual 2.36%
population growth was bigger than the annual 2.1% food supply
growth. "If you will look at the [SWS] survey, the poverty
incidence went down but those households experiencing hunger
increased," he told reporters. The lawmaker who earlier served
as Health Secretary noted the urgent need to step up the family
planning program. "I go for a more aggressive program which I
exemplified when I was the secretary of health."
Administration Sen. Miriam Defensor Santiago, for her part,
called on the government to decisively resolve the high hunger
proportion and poverty incidence. "We cannot hide the truth that
the people are getting impatiently dissatisfied with the
economic situation. But what choice do we have other than to
rally and throw our support behind the President?" Mr. Santiago
said in a statement. Fellow Administration Sen. Richard J.
Gordon called for food donations from hotels, restaurants and
supermarkets to be distributed to the less fortunate citizens.
"Tons of edible and unused food is wasted in dining
establishments and markets. It is a shame that we do not utilize
these resources and turn them into something palatable for the
others," Mr. Gordon said. Based on the latest SWS survey, the
incidence of hunger was highest in Mindanao at 23%. "We believe
that the solutions of the President are on the right track, and
the President is very determined to address poverty and the
hunger situation in the country," he said.
The Press Secretary cited the government's on-going
supplemental feeding programs, as well as the food voucher
system in addressing starvation in the country. The President
earlier ordered the Social Welfare Department to issue "food
coupons" in order to allow poor families to avail of free
grocery and food supplies from the government. "Whatever the
survey says is unfortunate and it is our collective
responsibility to see to it that people don't suffer the pain
and shame of hunger," Mr. Bunye said. "We are pushing these
programs higher in the realm of socioeconomic safety nets."
-- Felipe F. Salvosa II, Jeffrey O. Valisno and
Carina I. Roncesvalles
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By RUBY ANNE M. RUBIO,
Reporter
After months of negotiations, United Coconut Planters Bank (UCPB)
has reached an agreement "in principle" with asset management
company First Sovereign Funds Corp. for the sale of
PhP13.6 billion worth of idle assets. Jose L. Querubin, UCPB
president and chief executive, said the bank expects to close
the agreement and get regulatory approvals "very soon." "The
sale, when consummated, will be the biggest SPV transaction so
far under the SPV Act and the first one that will involve purely
bank real and other properties owned or acquired [ROPOA].
Previous SPV deals mainly covered non-performing loans. The sale
will also cut by more than 55% UCPB's level of ROPOA," he said.
Mr. Querubin also said the bank is mulling more special purpose
vehicle (SPV) transactions before the law expires next year.
First Sovereign Funds is an SPV set up by Pennsylvania
Capital Holdings, Inc., the Philippine affiliate of investment
management firm Shinhan M&A of South Korea, which has done
several SPV deals in the Asia-Pacific region. "This is a
landmark deal for the Philippine banking industry. We think it
will create a very bullish climate for SPV transactions and we
expect to see more banks following UCPB's lead in the wake of
this deal," said First Sovereign Funds Chairman Han Kim.
Together with its financial advisor US-based management
consultancy firm PricewaterhouseCooper and legal counsel SyCip
Salazar Hernandez & Gatmaitan Law Office, UCPB and First
Sovereign Funds are now working out the "finer" details of the
agreement and expect to be able to close the transaction before
the April 8, 2005 deadline mandated under the SPV Act. The
state-led bank said it entered into direct negotiations with
First Sovereign Funds in late August following two failed public
auctions. First Sovereign Funds submitted the highest bids in
the second auction although these did not to meet the bank's
price. UCPB held an auction for PhP15 billion worth of
foreclosed properties last July 19 but failed to close a deal
with any of the six investment banks after the bidders'
noncompliance with the bank's requirements. UCPB was supposed to
be the first bank to close an SPV deal since the SPV Act was
passed in 2003.
Earlier, Ayala-led Bank of the Philippine Islands inked a
deal with Morgan Stanley Emerging Markets, Inc. for the sale of
PhP8.6 billion worth of bad loans. The transaction is expected
to be completed within the year after complying with regulatory
requirements. Mr. Querubin said UCPB registered an SPV with the
Securities and Exchange Commission early last month and this
will be used as the vehicle for the succeeding SPV transaction.
Banks that want to take advantage of perks under Republic Act
9182 had until Sept. 18 to establish and register their SPVs
with the securities regulator before incentives offered to
purchasers expire in April 2005. Incentives include tax perks
and reduced transaction fees. Aside from the SPV transaction,
the bank has resorted to retail public auctions and direct sales
as modes of asset disposition in its idle asset reduction
strategy.
As of end-August, it has unloaded PhP1.6 billion of acquired
assets, mainly commercial and residential properties. It expects
to sell another PhP200 million to PhP500 million bad assets
through two more public auctions, one of which is set for this
month and the other within the second quarter of 2005. UCPB has
been negotiating with other private investors to form joint
ventures to transform select real estate holdings into earning
assets. The bank inked a joint venture agreement with Sta. Lucia
Realty and Development, Inc. and another private landowner last
month to develop a 12.25- hectare property in the outskirts of
Tagaytay into a middle-income subdivision. "It is also in
advanced talks with Brittany Corp. to develop a bank-acquired
property along and at the back of Daanghari Road in Muntinlupa
City into various residential subdivisions," it said.
The Bankers Association of the Philippines and the central
bank have asked the Senate to extend for at least two more years
the deadline to set up SPVs. The Philippine banking system's bad
loan ratio peaked at 18.81% in October 2001 from a single-digit
level before the 1997 Asian financial crisis. In its published
statement of condition, UCPB's bad loan ratio hit 33% of its
total loan portfolio as of June 23. Nonperforming loans -- or
loans at least 90 days past due -- amounted to PhP18.75 billion,
while ROPOAs hit PhP21.96 billion.
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Despite another rise in the country's inflation rate, banks'
excess liquidity still pulled down the rate of the reissued
three-year debt instrument. In yesterday's auction, the
three-year Treasury bond fetched a yield to maturity rate of
11.254%, down by 34 basis points when it was last offered on
September 14. The Bureau of the Treasury sold
PhP4 billion worth of bonds but tenders reached PhP12.688
billion. The auction committee accepted all bids. "For a
three-year paper at 11%? At these levels, it's already
attractive. [We were expecting] that it would shoot up because
of the inflation [figure] but I think the market is already
comfortable at this yield," National Treasurer Mina C. Figueroa
said. At the secondary market, the three-year paper was traded
at 11.4667%. Yesterday, the government reported that inflation
in September surged to 6.9% from 6.3% in August, following the
rounds of oil price hikes. Traders said, however, that the
three-year debt instrument was still a good buy at this time.
"While liquidity is still there, the paper is still a
shorter-dated security. There are really demands for the two and
three years," a trader said.
PESO STRONGER
At the Philippine Dealing System, the country's electronic
currencies exchange, the Philippine peso averaged stronger by
more than three centavos at PhP56.266 from PhP56.298. Trading
within a tight range of three centavos, the peso hit its high at
PhP56.255 against the dollar after opening at PhP56.27. It
closed at PhP56.28 against the greenback. Total volume of dollar
turnovers decreased to $141 million from $148 million
previously. -- Ira P. Pedrasa
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Second largest lender Bank of the Philippine Islands (BPI)
confirmed that the consortium to which it was invited to
participate in the bidding for PT Bank Permata Tbk failed to get
in the short list. In a disclosure to the stock exchange, BPI
said the privatization program for Indonesia's seventh largest
lender by assets "presented an opportunity to possibly enter"
the Indonesian market. "We confirm that the consortium to which
BPI was invited to participate conducted a preliminary
evaluation of this opportunity in the early stages of the
privatization process," the Ayala bank said, adding that the
consortium was not chosen to proceed beyond the first stage of
the process. It teamed up with Indonesia's Bank Danamon,
UK-based Barclays Bank and Temasek Holdings of Singapore to bid
for Bank Permata, the last bank to be sold under a government
divestment program. -- Ruby Anne M. Rubio
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By ROULEE JANE F. CALAYAG
The Philippine Stock Exchange (PSE) is not wasting time to
convince companies enjoying fiscal perks to go public. PSE
President Francis Lim said luring companies to list at the
bourse will top his agenda. "It is payback time," he said,
considering the firms have been receiving government support
through tax incentives. He said the PSE will cooperate with
concerned government agencies to convince companies to comply
with regulations in order to enhance the mix of stocks at the
exchange. "It will be good to see in the future that wives,
drivers, new graduates and others invest in the market," he
said. But Mr. Lim is aware that this is not an easy task. Many
issues need to be ironed out first before the bourse could get
these firms on board.
In the case of companies registered with the Board of
Investments (BoI), the PSE recognizes that it is critical to
convince these firms the exchange is a worthy investment
facility. This, he said, can be done by implementing reforms
that would correct impressions the exchange is an old boys'
club. "The public do not invest in the stock market because they
do not know the fundamentals and they do not trust it," Mr. Lim
said. This requires change, not only from the exchange but also
from the government. "Realistically, it could be done but there
are underlying factors in the country such as the economic
condition and political stability [that hamper moves to get
these firms listed]," Mr. Lim said.
Trade and Industry Secretary Cesar Purisima launched a drive
in August to compel about 5,000 companies registered with the
BoI to list at the exchange, ordering trade authorities to look
beyond canceling the perks given to firms existing for 10 years
but still have not complied with the requirement of Executive
Order 226 or the Omnibus Investments Act of 1997. The directive
requires BoI-registered firms to offer shares to go public. "It
will be ideal to have them as well as energy and other quality
companies listed to enhance the menu of stocks," Mr. Lim said.
"We will support the move of the government and have to look at
the [impediments] seriously. We should persuade these companies
in a friendly way." Jose Cervantes, PSE senior vice-president
and head of research and business development group, said that
companies basically list to raise money.
Given this, multinational companies and other local firms
doing good in their respective businesses may not have the
motivation to list because they see no need to raise additional
funds. The BoI requires firms registered under it and which are
enjoying incentives for at least 10 years to offer at least 10%
of their total shares to the public. "Only 10%? That is
nothing.," Mr. Cervantes said. He is also concerned some firms
may go ahead with listing even without preparation just to hold
on to their incentives. "They may only end up as dormant
companies because there is no liquidity. They do not have enough
cash and yet they will list just to comply with the BoI
requirement."
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Sourcing, procurement, and supply chain service provider
BayanTrade yesterday said the trades it managed since it began
operations in 2000 has hit $500 million. In a statement, the
company said that hitting $500 million in trades makes it the
first Philippine-based sourcing and procurement services
provider to hit the half-billion-dollar mark. BayanTrade is
owned by Aboitiz Equity Ventures, Inc., Ayala Corp., Benpres
Holdings Corp., JG Summit Holdings, Inc., Philippine Long
Distance Telephone Co., and United Laboratories, Inc. "Being
able to process $500 million worth of trade is a significant
measure of BayanTrade's success as a sourcing and procurement
service provider. A Filipino company taking on a leadership
position in this field, which is the next big segment of
business process outsourcing, shows the market our capability in
providing world-class sourcing and procurement services,"
BayanTrade President and Chief Operating Officer Dante Briones
said.
The company said it achieved the $500-million mark by
managing the sourcing and procurement requirements of 325 key
regional, multinational and top Philippine corporations across
different industries; facilitating 1,800 sourcing events; and
managing transactions involving over 165,000 purchase orders. It
said the continuous expansion of its industry networks also
accounts for the company's growth. BayanTrade said its customers
"have realized the advantages of leveraging its rapidly
expanding network." It said that buyers that use BayanTrade's
system have reported an average of 15%-20% in cost savings and
that overall transparency in the bidding process has improved.
-- J. G. U. Rubrico
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Local credit rating agency Philippine Rating Services Corp.
is reviewing the debt rating of listed Filinvest Land, Inc. In a
statement, PhilRatings said it is determining whether it will
maintain the PRS Aa rating on the
PhP2-billion long term commercial papers of the Gotianun-led
company. PhilRatings, an affiliate of Standard and Poor's, said
it will take into consideration Filinvest's "above average
business profile" in its ongoing review. The property developer
has a significant presence in the domestic homebuilding sector.
"Housing sales have seen substantial improvements in the last
two years although sector growth may remain moderate going
forward owing to overall economic conditions," it noted.
A PRS Aa rating means the debt instruments, which will mature
next month, have margins of protection, although not as large as
PRS Aaa-rated issues. Thus, a small degree of investment risk
still accompanies the commercial papers. Filinvest has
maintained a fairly conservative capital structure while
earnings generation and cash flow coverage of debt have been
moderate and stable. Although the needed refinancing of its
maturing debt has yet to be finalized, the company already
informed the Philippine Stock Exchange yesterday that it plans
to issue PhP2 billion worth of five-year notes to finance debts
maturing in November. Filinvest Land has tapped First Metro
Investment Corp. to head a group of banks that will manage the
debt issue. -- Cecille S. Visto
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By ROULEE JANE F. CALAYAG
The Philippine stock market took a breather yesterday with
share prices finishing lower after moving up to a four-year
record close. Profit-taking drove share prices down but at a
manageable pace. Mylene Crucena Mercado, investment analyst at
2tradeasia.com, said investors' move to pocket gains was not
surprising after the market moved up more than 20 points last
Friday and higher on Monday. The market's rise on the first
trading day of October signalled the end of the previous
profit-taking which was confirmed further by a 64.92 jump in the
Philippine Stock Exchange composite index (Phisix) the other
day. "There is a lot of good news in the country today. [The
market's drop] was only due to profit-taking," said Ms. Mercado.
The benchmark Phisix was down 18.25 or 0.96% to 1,833.35, still
within market expectations.
FACTORS
Ms. Mercado cited several reasons for the continued optimism
among investors who see the decline as a temporary blip. First
was the positive outlook on the consumer confidence for the
fourth quarter of the year. Based on an expectations survey
conducted by the Bangko Sentral ng Pilipinas (central bank) on
2,425 households in Metro Manila last July, consumers are
optimistic that from the third quarter this year to the same
period in 2005, prices will become more stable, power costs will
decline, income from jobs and investments will improve and crime
rate will drop. The survey showed a 7.6% diffusion index, the
percentage share of households that gave positive answers minus
the percentage share of households that gave negative replies.
With September heralding the start of the Christmas shopping
season in the Philippines, consumer spending is expected to rise
proportionately, resulting in better gains for companies,
particularly listed firms. The second factor for the confident
stride in the Philippine stock market was the strong bullish
sentiment. As had been expressed by various groups, the local
bourse is poised for a bull run this year.
The Philippine Stock Exchange has been forecasting good times
ahead for the market with its chairman, Alicia Rita M. Arroyo
stressing that the bearish sentiment will soon be over. This was
echoed by the bourse's president Francis Lim, noting that there
are strong indications of a bull run from this year onwards.
Stock market analysts as well as research firms and asset
management groups have also given the same outlook based on
technical indicators. "The market's sentiment is bullish
especially after it breached the 1,800 level which was the
previous resistance. It's an upward trend," said
2tradeasia.com's Ms. Mercado. She added that the upgraded
outlook of the International Monetary Fund (IMF) also served as
an anchor for the market. The IMF adjusted its gross domestic
product growth forecast for the Philippines this year to 5.2%
from 4.5% earlier on the economy's strong first-semester
performance, consistent with the improved outlook of the Asian
Development Bank (ADB) for the country's growth.
Last month, the ADB upgraded to 5.5% from 5% its growth
forecast for the Philippines given the bright prospects for the
agriculture sector. While the market awaits the release of
third-quarter reports, investors are on the lookout for stocks
that have been performing well for the past nine months. "We are
now looking at eight-month and nine-month results which are
fully satisfactory," said Ms. Mercado.
CORPORATE NEWS
In corporate news, the net profit of listed China Banking
Corp. grew 6.7% to PhP1.95 billion from January to August due to
improved interest margins, increased loan bookings, its
fee-based business and sustained contributions from its trust
operations and treasury-related business. The bank said this
strengthens its position as one of the leading universal banks
in the country in terms of strength and profitability. Its
return on average equity for the period was at 15.65%, still one
of the highest in the industry.
Ginebra San Miguel, Inc., the hard liquor arm of food,
beverage and packaging conglomerate San Miguel Corp., reported
an 8% increase in its eight-month net income of
PhP103 million due to a successful thematic campaign aimed at
repositioning its flagship brand.
At the stock market, the indices were down except for oil and
small and medium enterprise (SME) counters which were unchanged.
Mining racked losses of 71.72 or 3.53% at 1,957.80. The
commercial-industrial trailed behind as it dipped 24.05 to
2,909.14. Property also weakened 14.18 or 2.15% at 644.87. The
banks and financial services dropped 3.05 to 507.57. The
all-shares lost 10.87 at 1,117.92. There were only 4,035 trades
for 1.8 billion shares worth
PhP1.2 billion.
The market's breadth was bearish with decliners beating
advancers, 48-34. The number of ssues that clung to their
previous levels was at 45. It was still net buying at the
Philippine bourse with total foreign buying reaching PhP757.9
million against total foreign selling of PhP545.5 million. Net
foreign buying dropped by more than half at PhP212.3 million.
Philippine Long Distance Telephone Co. remained the leader among
the actively traded stock, up at PhP1,470 with increased market
share of 19.05%. Ayala Corp. moved up to the second slot,
unchanged at PhP6.60. The Securities and Exchange Commission
granted the company last Monday the authority to increase the
size of its bond issuance to PhP7 billion from PhP5 billion.
Ayala Corp. will issue the bonds, which have coupon rate of
12.677%, tomorrow.
|
The Macapagal-Arroyo administration must immediately
implement bold reforms such as a drastic reduction in the budget
deficit and new tax measures to be able to stay on the radar
screen of investors, the International Monetary Fund (IMF) said.
The recommendations are contained in an IMF staff report on the
Philippines, which the government allowed to be published for
the first time as part of efforts to be more transparent with
its policies and economic programs. Among the more drastic
measures is a reduction in the country's debt level over the
medium term to give the government more room for needed
development expenditures. The IMF said the government should
have a large part of its debt reduced in 2005 and 2006 to make
the 2009 balanced budget goal easier to attain. "While the
authorities had yet to commit to annual deficit targets, staff
argued that the deficit reduction should be front-loaded," the
Fund said in the report, completed by the IMF team last August
11 following a post-program meeting with government officials on
July 8.
The Fund said reducing the deficit, as planned by government
-- by about three-fourths percentage point of gross domestic
product (GDP) each year from 2004 to 2009 -- "seemed
insufficiently ambitious." For one, the IMF said markets will be
looking for strong initial evidence of the authorities' ability
to tackle the fiscal problem. The IMF team also argued that
fiscal measures are likely to be easiest in the opening period
of the new administration. Hence, it advocated a reduction in
the nonfinancial public sector deficit of 2.5% of GDP by 2005.
"If achieved, such a reduction would make the 2009 deficit
easier to attain, as well as place the ratio of nonfinancial
public sector debt to GDP on a clear downward path," the IMF
said. The IMF defines nonfinancial public sector debt as
consolidated public sector debt minus the debts of government
financial institutions and local government units. The
government incurred a deficit of
PhP199 billion last year and hopes to contain the deficit
below PhP197.8 billion this year.
NOT ALL NEEDED
The IMF urged the government to push through with its planned
revenue-raising measures, albeit not all eight Malacañang-backed
proposals. IMF resident representative Vikram Haksar, who
presented the staff report, said at least three of the eight
proposed measures of government may be viable options for
raising revenues. For one, he said a higher value added tax rate
is attractive, saying that the current 10% VAT rate in the
Philippines is still relatively low. A two step increase in the
VAT rate to 12% and 14% would significantly increase revenues,
he added. Mr. Haksar said the Fund also supports a government
plan to increase excise taxes on tobacco products and alcoholic
drinks as well as an upward adjustment in excise taxes on
petroleum products.
Based on government estimates, a two-step increase in the VAT
rate will raise PhP19 billion yearly; a higher excise tax on sin
products, PhP7 billion; and an upward adjustment in excise taxes
on petroleum products, PhP29 billion. The IMF shot down the
government's proposal to grant a tax amnesty for individuals and
corporations and the planned shift to gross income taxation (GIT).
"While there was scope to simplify the corporate income tax by
tightening loopholes and limiting tax official discretion, a GIT
seemed ill-advised, particularly given the uncertainty attached
to the likely revenue impact," the IMF said in its paper.
CLOSE WATCH
Mr. Haksar said financial markets are keeping a close watch
on how the government advances its reform agenda. "The
Philippines is best off with a reform program that is
implemented well. There is no substitute for action," he said.
Aside from strengthening fiscal performance, the IMF said
government should restore financial soundness in the power
sector and reinvigorate the banking industry. With regard to the
power sector, the IMF said the government still faces a "large
unfinished agenda of power sector reforms." "The privatization
program has made little headway, while populist influences on
tariff setting have created a perception of regulatory
uncertainty and have left the National Power Corp. unable to
cover costs," the paper said.
Banking sector reforms also remain wanting given the high
level of non-performing assets and low profitability, the IMF
said. The IMF said there has been little progress in resolving
non-performing assets (NPAs) under the Special Purpose Vehicle
framework. "The staff argued that significant NPA sales were
more likely if the Bangko Sentral put more pressure on banks to
enhance valuation and provisioning of nonperforming assets," it
said. The paper reiterated previous IMF recommendations to
strengthen legal protection for the Bangko Sentral ng Pilipinas.
-- Iris Cecilia C. Gonzales
|
President Gloria Macapagal Arroyo yesterday signed an
executive order (EO) aimed at speeding up the streamlining of
the bureaucracy and the reorganization of government offices.
The President issued EO 366 "Directing a Strategic Review of the
Operations and Organizations of the Executive Branch and
Providing Options and Incentives for Government Employees Who
May Be Affected by the Rationalization of the Functions and
Agencies of the Executive Branch." "In the midst of challenges
facing the public sector such as globalization, increasing
democratic pressures and scarce resources, the government has to
define its proper role in society, focus its efforts on its core
governance functions, and improve its performance on the same,"
the President said in the order. "To attain improved government
performance, there is a need to institute reforms that would
transform the bureaucracy into an efficient and results-oriented
structure," she added.
Mrs. Arroyo signed the order as "an initial effort" following
reports that Congress may not approve a Palace-backed bill
proposing the creation of a performance-driven system for
government agencies this year. The job cutback scheme is
expected to affect 300,000 workers, excluding teachers, police
and soldiers, and could generate between
PhP6 billion to
PhP7 billion in annual savings for the government. he bill
calling for a rationalization in government offices is one of
eight measures that the President has endorsed for immediate
Congress approval in order to generate as much as PhP80 billion
in additional revenues and PhP20 billion in savings.
Under EO 366, the President banned all government agencies
from hiring additional personnel and renewing the contracts or
appointments of all employees hired on a contractual, casual, or
temporary basis. Aside from this, the President required all
department secretaries to prepare a Rationalization Plan for the
whole department, as well as all attached agencies and
government firms under their supervision. The plan aims to
determine which functions, programs, and projects should be
scaled down, phased out, or abolished for either being
redundant, outdated, or unnecessary. The plan will also
determine which department activities should be removed for "not
producing desired outcomes", and for "directly competing with
the [functions] of the private sector that can be done more
efficiently and effectively by the said sector." The resulting
changes in the department's organizational scheme, staffing
pattern, and resource allocation will be submitted for review by
the Budget department before the President's approval.
Government employees affected by the rationalization scheme
will have the option to remain in government service or avail of
a retirement and separation package. Those who chose to stay
will be placed in a pool for redeployment to undermanned
agencies. The government gave assurances that those reassigned
will not suffer any pay cuts. However, those who refuse their
new job assignments will be deemed separated and will be given
separation benefits. Those with 20 years of service or less will
be given one-half month of their present basic salary for every
year of government service. Those who have served between 21-30
years will get three-fourths month of their present basic salary
for every year in government, while those who have serving for
31 years or more are eligible for one month of their present
basic pay for every year of service. Those who have rendered
less than three years of government service will be given a
still to be determined retirement "gratuity."
The EO states no employee who avails of the retirement or
separation package will receive less than PhP50,000. The same EO
also limits the benefits of retired or separated employees
belonging to government firms to PhP1.5 million per employee.
Those who chose to retire will also be given their benefits from
the Government Service Insurance System, as well as a refund of
their contributions to the Pag-IBIG fund, and commutation of
unused vacation and sick leave credits. Those who receive
separation or retirement benefits from the government will be
prohibited from being rehired by any government agency within
the next five years, except in educational institutions and
hospitals. Funding for the separation and retirement benefits of
employees of government-owned and -controlled corporations (GOCCs)
and government financial institutions (GFIs) will come from
their respective corporate funds. The benefits of other
government employees will come from the national government. The
rest of the benefits will be financed through a World Bank
facility to cover the cost of the re-engineering program. The
President signed the EO a day after Budget Secretary Emilia T.
Boncodin identified at least 15 GOCCs and GFIs that have been
incurring huge losses. --
Jeffrey O. Valisno
|
The International Monetary Fund (IMF) has raised its 2004
gross domestic product growth forecast for the Philippines to
5.2% from 4.5%, citing the strong first half performance of the
economy. The IMF, however, has forecast a slower growth of 4.2%
for the country next year because of rising world oil prices.
The Fund's growth forecast for the Philippines this year also
trails behind the projected growth forecasts for some of the
country's neighbors. Thailand is expected to grow by 6.2%,
Malaysia by 6.5% and India by 6.4%. The IMF's forecast compares
to the Asian Development Bank (ADB) which late last month
updated its growth outlook for the Philippines to 5.5% from 5%,
also citing improved prospects for agriculture. For 2005, the
ADB also upped its forecast to 5.5% from an initial 5%.
Earlier in September, investment bank Morgan Stanley also
raised its forecast for the Philippines to 5.6% from 4.5%, also
on first half growth despite noting an economic deceleration
beginning the third quarter. According to the IMF's September
2004 World Economic Outlook, which was presented to the media
yesterday, Philippine consumer prices will rise by 5.4% this
year from 2003, exceeding the government's target of 4% to 5%.
In 2005, meanwhile, the IMF projects the country's inflation
rate to accelerate to 6.8%, also way above the government's
inflation target of 4% to 5%. The Philippine economy, as
measured by GDP, expanded 6.3% year on year in the first half of
the year. The government earlier raised its full year growth
forecast to a range of 5.9% to 6.1% from the original
4.9%-to-5.8% projection, also because of the strong performance
of the economy in the first half which was buoyed by the
agricultural sector's robust growth.
IMF resident representative Vikram Haksar said skyrocketing
oil prices -- which hit $50.47 per barrel at the New York
Mercantile Exchange last week -- will weigh on the Philippine
economy next year. "Oil is a pressing problem right now," he
told a briefing as he presented the IMF's economic outlook. He
said, however, that 2004 will be a good year not only for the
Philippines but for the rest of the developing world. "Asia as a
whole has done very well but next year we will see some
softening because of major uncertainties such as oil prices," he
said. He said political disruption in the Middle East and in
Nigeria, which is the world's fifth largest oil producing
country, has added to the factors which could further push oil
prices upward. He said the Philippines may be able to cope
better if it moves to lessen its dependence on oil by tapping
alternatives sources of energy. In its report, the IMF said
growth in Asia is projected to average 7.3% in 2004 and
moderating to 6.5% in 2005. --
Iris Cecilia C. Gonzales
|
Local share prices finished at their best in four years
yesterday, buoyed by strong technical indicators and tight
positioning by investors awaiting optimistic third quarter
results. The benchmark Philippine Stock Exchange composite index
(Phisix) soared 64.35 or 3.6% to 1,851.60, its highest close
since Feb. 18, 2000 when it finished at 1,884.28. Although the
market was only on its second trading day for this month, its
gains were spectacular, with the main index almost tripling that
made last Friday.
The market's breadth was bullish, with gainers outpacing
losers at 85-8 and unchanged issues at 27. All counters were up,
sustaining the momentum achieved at the close of September. Net
foreign buying continued to be strong at PhP516.2 million,
reflecting the renewed confidence of foreign portfolio managers
in the local bourse. Jose Vistan, Jr., research director at AB
Capital Securities, Inc., said the absence of bad news fuelled
market activity, with investors taking this as a cue to take
aggressive positions. He said the market's strong performance
indicates continuing bullish sentiment in line with general
projections. Last week, BPI Asset Management and Trust Group
said the market is looking to a bull run at the close of the
year through 2005, especially as a six-year bearish period draws
to a close.
|
The 30th Philippine Business Conference and Exposition will
open this morning, with former Malaysian Prime Minister Mahathir
Mohamad, President Gloria-Macapagal Arroyo and top
administration officials in attendance. The 78-year-old Mr.
Mahathir, who ruled Malaysia for 22 years before stepping down
last year, will deliver the keynote speech in which he is
expected to share his experiences on Malaysia's economic
success. President Gloria Macapagal Arroyo is scheduled to
address the three-day conference on Wednesday after receiving a
number of resolutions crafted by the Philippine Chamber of
Commerce and Industry (PCCI) and its regional members.
The PCCI, in a statement, said it will present an
"action-oriented business road map" focusing on a number of
"developmental challenges" such as human development, economic
growth, "government and business efficiencies," and
infrastructure. The annual conference, which will be held at the
Manila Hotel, will focus on the theme "One. Global. Filipino.
Beyond Business" to show the business community's desire to
expand its involvement "outside the four corners of the
boardroom," conference chairwoman Alegria Sibal Limjoco earlier
told reporters. Also scheduled to speak are Trade Secretary
Cesar A.V. Purisima, Agriculture Secretary Arthur Yap, Interior
and Local Government Secretary Angelo T. Reyes, Socioeconomic
Planning Secretary Romulo L. Neri and Transportation and
Communications Secretary Leandro R. Mendoza.
Speeches will also be made by undersecretaries Antonio Lopez
of Health and Fe Hidalgo of Education, Naga mayor Jesse Robredo,
and Senator Francis N. Pangilinan. Vice-President Noli L. de
Castro, who also heads the Housing and Urban Development
Coordinating Council, will speak at the concluding plenary
session on Thursday. PCCI officials have promised to "grill"
Cabinet officials on their accomplishments and their programs in
connection with the President's 10-point agenda, which primarily
aims for a balanced budget at the end of her term. The country's
largest group of businessmen earlier gave the Arroyo
administration a "passing grade" of six out of 10 in a system
introduced in last year's conference. The conference will also
offer business matching, with "roadshow presentations" by Brad
Geiser of Geiser Maclang Communication, who will talk about
marketing and public relations trends, and tuberculosis expert
Dr. Charles Yu, who will tackle health problems in the
workplace.Mario Valderrama of the Chartered Institute of
Arbitration and Annabelle Abaya of the Core Group Foundation
will speak on alternative dispute resolution, while Canadian
Ambassador Peter Sutherland will speak on business opportunities
in Canada.
|
Food and beverage giant San Miguel Corp. yesterday confirmed
that it is looking at the feasibility of buying into Del Monte
Pacific, Inc., but said the company has yet to finalize its
decision. San Miguel was earlier reported to be among the
potential buyers of a 40% stake in Del Monte Pacific. "We
confirm that San Miguel Corporation is conducting due diligence
on Del Monte Pacific Inc. The due diligence is continuing and no
decision has been made on whether or not to submit a definitive
bid," San Miguel said in a disclosure to the Philippine Stock
Exchange. The 40% stake in Del Monte Pacific which is up for
sale is currently held by Italian good group Cirio.
Tinned food producer Cirio, one of Italy's best-known brand
names, defaulted on 1.1 billion euros in bonds in November 2002
and is being liquidated after investors rejected a restructuring
plan. The company already sold its holdings in Del Monte Foods
for $340 million to Fresh Del Monte, reports state. Besides San
Miguel, other companies said to be looking at purchasing the 40%
stake Del Monte Pacific stake are Japanese company Sumitomo,
tinned food and pickles producer Heinz and US-based fruit
distributor Fresh Del Monte. The Philippines' Del Monte Pacific
specializes in pineapple-based drinks and food. The company
reported a 23% fall in second-quarter net profit to $6.6
million, the reports said. San Miguel is Asia's largest food and
beverage conglomerate.
Last month, the company completed the purchase of a 50% stake
in Australian juice company Berri Ltd. San Miguel declined to
divulge how much the stake cost, but it earlier said Berri is
valued at A$335 million. San Miguel reported a consolidated net
income of
PhP4.76 billion for the period of January to August, up 28%
from
PhP3.72 billion in the same period last year. It also
reported operating income of
PhP10.1 billion and consolidated revenues of
PhP107.9 billion. -- J. G.
U. Rubrico
|
By Bernardette S. Sto.
Domingo , Reporter
The Department of Energy (DoE) yesterday warned that oil
prices in the world market would remain high until the end of
the year and would force the local oil sector to implement
further increases. Energy Sec. Vincent S. Perez said high diesel
rates would continue to push small oil firms to raise prices,
adding major companies, with more stable financial resources,
should be able to hold on to current rates or impose minimal
increases. This as he announced that small oil company Eastern
Petroleum Corp. already increased yesterday diesel prices by 75
centavos a liter. "Prices of oil are still on the upward trend
and are expected to remain high due to the onset of the winter
season. We have to brace ourselves for high oil prices," Mr.
Perez told a press briefing even as he urged oil companies to
implement smaller adjustments. For his part, industrialist Raul
T. Concepcion said oil giants Petron Corp. and Pilipinas Shell
Petroleum Corp. would likely cut gasoline and diesel prices in
the third week of October but he expected smaller oil firms to
implement immediate diesel price increases.
In a talk with reporters yesterday, the chairman of Consumer
and Oil Price Watch said Petron and Shell are seen to rollback
PhP1.65 a liter for unleaded gasoline and 11 centavos a liter
for diesel on Oct. 18 or anytime within the third week of the
month.For their part, Caltex Philippines, Inc., Total
Philippines, Corp., and other smaller oil firms would likely
bring down rates of unleaded gasoline by PhP1.72 a liter due to
a continuous drop in world oil prices, Mr. Concepcion said.
Mean of Platts Singapore (MOPS)-based unleaded gasoline
decreased by $2.46 a barrel to $49.04 a barrel for September
from $51.50 a barrel in August. "For diesel, it is the reverse
and the price of unleaded diesel will increase by PhP 2.08
because the MOPS regional price of diesel increased by $ 2.63 to
$54.29 a barrel in September against $ 51.66 a barrel in
August," Mr. Concepcion said. He stressed the difference
represents the balance of the under-recovery for August of P1.74
and the September under-recovery of 34 centavos due in October.
Mr. Perez said prices softened during the first weeks of
September but escalated towards the month's end due to rebel
threats on Nigerian oil facilities, production losses in the
Gulf of Mexico brought by the several hurricanes that passed in
the area, continuing violence in Iraq and the ongoing legal and
financial problems one of Russia's largest oil company Yukos.
DoE data showed that Dubai crude, which dropped to $35.50 per
barrel average in September from $38.55 in August, is nearing
$37 to $38 per barrel spot price in the last five days of
trading. MOPS-based unleaded gasoline used by importers,
meanwhile, is also hitting $51 to $52 per barrel level, with the
October 1 spot price at $52.05 per barrel. Unleaded gasoline
averaged at $49.03 per barrel in September from $51.49 in
August. MOPS-based diesel, on the other hand, further jumped to
$55.45 per barrel in Oct. 1 trading day. The average price of
diesel rose by $2.63 to $54.29 per barrel last month from $51.66
in August.
Records showed that the price of diesel had shot up by 71.15%
in September this year compared to the same period a year ago of
$31.72 per barrel, Mr. Perez said. He said the tightening of
diesel stocks in the United States and Europe have kept prices
on the steady upward trend. In Asia, China's shift from being an
exporter of diesel to a net importer has also contributed to
increasing prices of diesel. Records show that China has already
imported almost one million metric tons (MT) of diesel compared
with last year's diesel exports of 775,357 MT to meet the rapid
increase in fuel supply for its transportation sector.
Given market developments for the month of September, Mr.
Perez said local oil companies should offset the possible
increase in diesel prices by keeping the price of unleaded
gasoline at current levels to lessen the impact of adjustments
to the public. The Energy chief also stressed that the contract
price of liquefied petroleum gas has also climbed to $401.50 per
MT in October from $383 per MT in September.
Oil smuggling
Meanwhile, Malacañang yesterday vowed to go after big-time
smugglers of oil operating in the country, and pledged to bring
smuggling syndicates to justice. "Economic saboteurs must pay
the price for the pain they are inflicting upon the people,"
Press Sec. Ignacio R. Bunye said in a statement. The Palace made
the statement following reports quoting Mr. Concepcion regarding
the alleged rampant smuggling of oil happening under "the very
noses of the Coast Guard and the Philippine Navy." Mr.
Concepcion reportedly said the country has an oversupply of oil,
which is good for six months because of the shipments brought in
by the syndicate. Despite the oversupply, Mr. Concepcion said
gas and diesel prices would remain high as the smugglers sell
oil at prevailing high prices to rake in more profit. Mr. Bunye
reiterated the President has asked Customs chief George Jereos
to draw up an order of battle for smugglers.
The government has implemented a similar strategy of coming
up an order of battle in its campaign against drug lords, and
kidnappers. "We have already seen kidnappers and drug
traffickers being arrested and presented before the public, we
will make sure that smugglers are exposed in the same manner,"
Mr. Bunye said. The President has given the Mr. Jereos two
months to "produce significant results" in the fight against
smuggling syndicates. -- with Jeffrey O.
Valisno
|
Government-run corporations blamed for contributing to a
looming fiscal crisis in the country should reverse huge losses
or risk being abolished or privatized, Malacañang said
yesterday. "The ball is in the court of the losing government
firms," Press Sec. Ignacio R. Bunye said in a statement. He said
the board and management of the companies in question are being
given a "fair chance" to turn around their performance and make
a profit or they will preside "over the abolition or
privatization of the hopeless cases." "They must repay the trust
and confidence bestowed upon them by he national leadership and
the people by meeting pressing expectations of performance and
managerial ability," Mr. Bunye said.
The warning came a day after Budget Secretary Emilia T.
Boncodin identified at least 15 government-owned and -controlled
corporations (GOCCs) and government financial institutions (GFIs)
as being the most to blame for the Philippines' ballooning debt.
The agencies, she said, were inefficient, have insufficient
funds to cover operations and money-losing subsidiaries while
their charters prevent them from increasing revenue.
BLEEDING FIRMS
Among those bleeding red ink are the state utility National
Power Corp. which is already up for privatization. Other
money-losing state firms are:
- National Food Authority;
- Light Rail Transit Authority;
- Philippine National Oil Co.;
- National Home Mortgage an Finance Corp.;
- Philippine National Railways;
- Technology and Livelihood Resource Center;
- National Irrigation Administration;
- National Tobacco Administration;
- National Development Corp.;
- Philippine Coconut Authority;
- Al-Amanah Islamic Investment Bank of the Philippines;
- Philippine Television Network, Inc.;
- Philippine Crop Insurance Corp.;
- Human Settlement and Development Corp.; and
- National Housing Authority.
JOINT REVIEW
Ms. Boncodin on Sunday said the budget and finance
departments were to conduct a joint review of the firms before
deciding what to do with them. The heads of these agencies
should start looking for ways to improve their finances as the
government would no longer subsidize "inefficiently run
corporations," she said. Among measures being considered are to
merge money-losing institutions with other firms, streamlining
or deactivating them and transferring some of their functions.
Mrs. Arroyo has previously said the Philippines was "in the
midst of a fiscal crisis" amid a widening budget deficit and
huge debts.
Meanwhile, lawmakers were unanimous in their support to
either abolish or privatize money-losing GOCCs and GFIs and
urged their immediate review. The review of the operations of
the 15 GOCCs and GFIs is long overdue, administration Senators
Ralph G. Recto and Manuel B. Villar, Jr. said. "We have long
asked for a review of the status of the GOCCs, way back in 2000.
If the Senate did not come out with the hearings on the GOCCs,
nothing could have happened. But I am glad that the Malacañang
has acted on this already," Mr. Recto said in an interview.
"These GOCCs and GFIs are not only wallowing in debts and
losses, they have been relying hugely on government subsidies to
finance their operations. The government should really stop
giving subsidies to these ailing GOCCs and GFIs, which are
supposed to be profitable and add money to the national coffers
-- not contribute to the fiscal problems," Mr. Villar added in a
statement. The lawmaker added that the identification of the 15
money-losing agencies which have been suffering lower collection
efficiency, insufficient corporate funds for operations and
money-losing subsidiaries might only be the tip of the iceberg.
Mr. Villar has filed a bill to repeal the provisions in the
charters of GOCCs and GFIs pertaining to their executives'
current salary structure. This in reaction to the recent
Commission on Audit report that annual salaries of some GOCC and
GFI heads reached
PhP9 million or as much as
PhP750,000 a month.
Opposition Sen. Sergio R. Osme§a III, meanwhile, has filed
Senate Bill No. 487 or the Sunset Act of 2004 to provide a
periodic Congressional review of the efficiency and viability of
GOCCs. The proposed legislation provides "systematic review and
evaluation of GOCCs" every two years. The examination would be
conducted by the Senate Committee on Government Corporations and
Public Enterprises, and the House Committee on Government
Enterprises and Privatization.
House Deputy Leader Del R. de Guzman of Marikina City and
Rep. Vincent K. Garcia of Davao City, for their part, said the
money the National Government has been infusing into these
losing GOCCs and GFIs could be better used on social services
and infrastructure development. Negros Occidental Rep. Alfredo
D. Mara§on III added the "financial hemorrhage" of these GOCCs
and GFIs -- and government's financial hemorrhage as a
consequence when it assumes their debts -- should be stopped
immediately. "There is no logic of prolonging their operations
when they are not self-sufficient." Related to this, Bacolod
City Rep. Monico O. Puentevella has filed House Bill No. 295
that seeks to rationalize the salaries of GOCC and GFI
officials. The bill proposes, among others, that GOCC and GFI
officials and employees receive compensation not more than twice
the compensation received by officials and employees with
equivalent rank and position in other government agencies. But a
religious group yesterday said abolishing money-losing state
firms would not solve the country's fiscal problem.
Bangon Pilipinas National Renewal Movement, headed by former
presidential candidate Eduardo C. Villanueva, assailed the
administration's move to cut costs, saying it would not close
the country's budget deficit. Anthony Ian Cruz, acting
communication director of Bangon Pilipinas, said the problem was
in the administration's policy of giving a huge chunk of the
budget to debt servicing at the expense of other sectors.
"Foreign debt should not be treated as sacred cow," Mr. Cruz
said. -- AFP with Carina I. Roncesvalles, Judy T.
Gulane and Kristine L. Alave
|
By IRIS CECILIA C. GONZALES,
Reporter
The International Monetary Fund (IMF) urged the Bangko
Sentral ng Pilipinas (central bank) to be vigilant on
inflationary pressures that have been building up and move to
tighten key policy rates if necessary. According to an IMF staff
report on the Philippines, pressures for a rate hike are
mounting because of rising global interest rates. "The IMF staff
argued that there was a case for monetary tightening given that
world interest rates were rising, while the increases in
indirect taxation and power prices being considered as part of
the reform package would exert upward pressure on inflation,"
the IMF said in the report completed by an IMF team last August
11, following a post-program meeting with government officials
last July 8.
The Bangko Sentral has kept its key policy rates at a 12-year
low of 6.75% for the overnight borrowing rate and 9% for the
overnight lending rate despite inflationary pressures and a hike
in the US Federal Reserve rates. Bangko Sentral tightens rates
-- used by banks as benchmarks in pricing loans -- to siphon off
cheap money in the system that could otherwise add pressure to
inflation.
In maintaining policy rates, monetary authorities argued that
pressures were coming from the supply-side such as rising oil
prices, which were outside the influence of monetary policy. The
IMF said central bank officials were convinced that the sluggish
economy limited the potential for second-round effects of supply
shocks. The Bangko Sentral also said food prices were expected
to ease in the coming months due to improved availability as
government agencies move to increase supply in the market. The
IMF, however, said Bangko Sentral should keep a close watch on
the inflationary environment in the coming months as markets
react to the government's reform package. "The staff urged
authorities to review the 2005 inflation forecast in the next
few months once markets had reacted to the reform package, with
a view to tightening monetary policy if necessary," the IMF said
in the paper.
The central bank is sticking to its yearend inflation target
of 4%-5% for 2004 and 2005 but officials have conceded that
pressures could push the upward price swings to as high as 6%.
Inflation has been creeping faster than expected because of
skyrocketing oil prices. The national inflation rate hit 6.3% in
August, its highest level in three years and the central bank
expects this to have accelerated faster in September to as much
as 6.8%. Last week, oil prices at the New York Mercantile
Exchange hit $50.47 per barrel. IMF Resident Representative
Vikram Haksar said the Philippines should continue to tap
alternative sources of energy to lessen its dependence on oil.
"The dependence on oil should be reduced. The government should
help promote the shift to other sources of energy," he said
yesterday. In its paper, the IMF said should it adjust its
inflation target for 2005, the Bangko Sentral should give the
public a quantitative explanation on the reasons for the
revisions.
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A rosy economic scenario brought about by the government's
move to improve its cash flow propped up the Philippine peso
yesterday, traders said. Taking its cue from stocks, the peso
strengthened by almost three centavos from Friday's close
because of positive market sentiments. "Partly, inflows came
from the stock market. There were no hints of corporate demands
and the season for remittances is almost here," a trader said,
adding that banks are seeing a rise in remittances from overseas
workers. Coupled with the Bangko Sentral ng Pilipinas' move to
halt a peso fall, the local currency was also upbeat during
intraday trading, the trader said. "We saw this [central bank's
intervention] last week. The central bank can come in anytime
when the peso's in danger," he added.
Last week, the peso fell to its record low on seasonal
corporate demands and lingering fiscal concerns. Regulators,
however, denied any intervention. Meanwhile, the government's
thrust to track down the movements of government-owned or
-controlled corporations drew praise from the market. "This is a
good sign. The government already realizes the impact of the
budget deficit," another trader said. At the Philippine Dealing
System, the country's electronic currencies exchange, the peso
averaged weaker by almost three centavos to PhP56.298 after it
tracked a 7.5-centavo range. It capped its low at its opening
value of PhP56.34. Hitting as high as PhP56.265, the peso
settled one centavo lower at PhP56.275 to the dollar.
-- Ira P. Pedrasa
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HONG KONG -- Asian dollar bond spreads strengthened across
the board yesterday, encouraged by the G7 focus on bringing down
oil prices and sentiment toward emerging market debt. Group of
Seven finance ministers and central bank chiefs on Friday asked
oil producers to pump more crude to rein in the price of oil,
which last week topped US$50 a barrel, for fear that sustained
high prices could imperil world economic growth. "Oil prices are
high and remain a risk," the officials from the United States,
Britain, Japan, France, Germany, Italy and Canada said in a
closing communique after hours of talks. "We call on oil
producers to provide adequate supplies to ensure that prices
moderate."
Asian dollar bond traders said that all key benchmark credits
were trading higher on Monday, after slack trade last week due
to public holidays in both South Korea and Hong Kong. "All bonds
are up by about five basis points [bps] across the board," said
the head of credit trading at a European bank in Hong Kong.
Hutchison Whampoa Ltd. bonds due in 2014, among the most liquid
of Asian dollar bonds, were trading at 174/170 bps over
comparable Treasuries, while PCCW bonds due in 2013 were quoted
at 135/125 bps over. South Korean sovereign bonds due in 2014
were trading at 87/82 bps over Treasuries. He said sentiment had
turned bullish for the time being towards Asian dollar bonds
after spreads had weakened recently due to high oil prices and
new debt supply. But he also said the sentiment underpinning the
market would fade if US Treasury prices continued to slip.
Last week, US Treasury prices fell for four straight sessions
through Friday, as investors began to unwind bets that the
world's largest economy would weaken enough to prompt the
Federal Reserve to slow the pace of interest rate hikes.
Philippine sovereign dollar bond prices were up between a
quarter and three-eighths of a point. The ROP '14s were trading
at 98.5/99. "The market's slightly firmer despite the weakness
in US Treasuries, mainly because the rest of Asia's emerging
markets have also performed very well vis-a-vis US Treasuries,"
said a trader in Manila. -- Reuters
|
Banco de Oro Universal Bank said yesterday its 25-million
five-year redeemable preferred shares series B will have an
indicative price of $2 apiece. In a disclosure to the Philippine
Stock Exchange, Elmer B. Serrano, Banco de Oro corporate
information officer, said the preferred shares will be made
available to local investors on a private placement basis. The
shares have a par value of PhP10 per share to be issued in US
dollars. The Henry Sy-led bank's first-semester net profit
climbed 25.3% to
PhP831 million from PhP663.2 million in 2003.
|
Strengthening its position as one of the leading universal
banks in the country, China Banking Corp. posted a 5.6% growth
in net earnings to
PhP1.95 billion during the first eight months. Improved interest
margins, increase in loan bookings, fee-based business and
sustained contributions from its trust operations and
Treasury-related business gave the bank a boost. Return on
average equity of 15.65% for the period continues to be the
highest in the banking industry, the bank claimed in a
disclosure. Net interest income grew by 33% to PhP3.22 billion
from PhP2.42 billion last year. It set aside PhP560 million in
loan loss provisions while loan loss reserves reached PhP7.06
billion for a bad loan coverage ratio of 73.7%, one of the
highest in the industry.
|
By JENNEE GRACE U. RUBRICO,
Senior Reporter
The Securities and Exchange Commission (SEC) has allowed
Ayala Corp. to increase the size of its bond issuance to
PhP7 billion from
PhP5 billion. SEC director Justina Callangan said the commission
approved the
PhP2-billion hike in the issue size of the bond float yesterday.
Ayala Corp., in a disclosure to the Philippine Stock Exchange,
confirmed the company amended its registration statement to
increase the bond issuance to PhP7 billion from PhP5 billion.
"Consequently, the [SEC] has issued an order dated 4 October
2004 rendering effective Ayala's registration statement, as
amended, and a permit to offer securities for sale covering the
full aggregate principal amounts of the bonds of PhP7 billion,"
the company said. It said the underwriting agreement it signed
with issue managers and underwriters will also be amended.
Ayala Corp.'s issue managers and underwriters are BDO Capital
and Investment Corp., BPI Capital Corp., PCI Bank Capital Corp.,
First Metro Investment Corp., ING Bank, NV, Land Bank of the
Philippines and Standard Chartered Bank. Ayala Corp. is set to
issue the bonds, which have coupon rate of 12.677%, on Oct. 7.
The coupon rate of the bonds would be payable quarterly. The
bonds have been assigned a PRS Aaa rating by local ratings
agency PhilRatings, Inc. They constitute direct, unconditional,
unsecured and unsubordinated peso denominated obligations of
Ayala Corp. The offer period for the bonds ended yesterday.
Ayala Corp. is issuing the bonds to refinance dollar-denominated
bonds that would fall due in 2005. The dollar-denominated bonds,
which were issued in 1999 by Ayala's wholly owned subsidiary AC
International Finance Ltd., total
PhP8.354 million. Ayala Corp. earlier said that it expects net
proceeds from the bond issuance to total
PhP4.943 billion after deducting issue-related expenses.
|
A law firm yesterday said it would be "illegal" for the
Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) to certify the sale of National Steel Corp. to Indian-owned
Global Infrastructure Holdings Ltd. as eligible under the
Special Purpose Vehicle or SPV law, pointing out a number of
"grave and serious violations."
In a letter to BSP Governor Rafael Buenaventura, the Roque
and Butuyan Law Offices said National Steel is not a qualified
financial institution under Republic Act 9182 or the SPV law.
Only the BSP, banks, financing companies, investment houses,
government financial institutions, government corporations, and
quasi-banking institutions are qualified to avail of SPV perks
and exemption privileges. While the creditor-banks have said
they would handle the SPV application, the law partnership said
it is National Steel that would sell its land, plant, and other
assets to Global, "and not the creditor-banks." A certificate of
eligibility is crucial to the closure of the National Steel
sale, the Philippine National Bank, which heads the group of
creditors, earlier said. While an asset purchase agreement was
signed last month, a sharing agreement that will apportion the
proceeds among the banks and an omnibus agreement which will
settle all National Steel's debts will not be signed without the
SPV eligibility, as well as an agreement with another creditor,
the National Power Corp.
The five-page letter, copies of which were given to Trade
Secretary Cesar A.V. Purisima, Finance Secretary Juanita D.
Amatong, and Securities and Exchange Commission Chairman Fe
Barin, was signed by lawyers Napoleon C. Reyes, Gary S. Mallari,
and Rommel B. Bagares. The lawyers did not indicate if they are
representing anyone in connection with the National Steel sale.
They said the National Steel sale, under which Global will pay
PhP13.25 billion in eight years with a
PhP1-billion down payment, is not a "true sale" under the law.
"The sale of the creditor-banks of their [National Steel] loan
receivables to [Global] does not pass the test of a 'true sale'
under the SPV law because the creditor-banks retain their liens
on the assets of [National Steel]. In fact, under the asset
purchase agreement, the creditor-banks retain a 'first-ranking
mortgage over the [National Steel] Plant Assets' until Global
shall have fully paid the PhP13.25-billion purchase price in
eight years." "The fact that the same creditor-banks can still
legally foreclose on the [National Steel] assets simply shows
that the creditor banks still retain 'effective control' of the
assets sold. Therefore, there is no 'true sale' to speak of."
The law firm also asked the BSP to withhold the certificate
of eligibility as the government stands to lose an estimated
PhP1 billion in taxes. "Based on the way it is structured, the
[National Steel] purchase agreement is a scheme thinly veiled
with superficial compliance with the SPV law. [The] purchase
agreement however, is nothing but an illegal scheme to evade
liabilities for payment of capital gains tax, documentary stamps
tax, transfer fees, and registration fees, in criminal violation
of applicable laws," the lawyers said. They noted that under the
SPV law, violators face criminal prosecution with a fine of PhP1
million and imprisonment of up to 12 years.
SONIC STEEL VS STEELCORP
Meanwhile, two steel manufacturers are fighting over the
right to produce aluminum-coated galvanized steel sheets for the
local market. Sonic Steel Industries and Steel Corp. of the
Philippines (Steelcorp) are embroiled in a case at the Manila
Regional Trial Court, with Steelcorp, an affiliate of Philsteel
Holdings Corp., claiming that it has exclusive right to
manufacture the specially coated sheets under the trade name
Galvalume. But Sonic Steel said the patent for the
aluminum-zinc-coated steel expired in 1981 giving manufacturers
like it to come up with a product using the coating technology.
The firm markets GI sheets called Superlume. Manila judge
Antonio Eugenio dismissed the case last Thursday on a
technicality. He said Sonic Steel chose the wrong legal strategy
when it asked the court to resolve the dispute. The case is on
appeal. The controversy stemmed from a petition filed by
Sonic Steel, which questioned the claim of Steelcorp and its
chairman, Abeto A. Uy, that it has the patent to exclusively use
the aluminum-zinc coating technology.
The Intellectual Property Office had registered Mr. Uy's
"metal sheet ornamentation," the crystalline cluster patterns
which naturally form on steel sheets after they are dipped and
coated with the aluminum-zinc preparation. Steelcorp supposedly
even had the police seize similar products produced by
competitors. "What respondent Uy claims as an 'original and
ornamental work' or an embellishment of metal sheets used for
roofing and other metal products' is a natural byproduct of the
process of coating Because this is no 'original' or derivative
artistic work, it cannot be copyrightable," said Sonic Steel. In
his answer, Mr. Uy said he has a valid copyright that is
protected under the Intellectual Property Code. He added a
former employee actually leaked his trade secret to Sonic Steel.
The Steelcorp chief asked the court to cite Sonic Steel for
unfair competition. Before Mr. Eugenio dismissed the case, Sonic
Steel was able to obtain a three-day restraining order that
lapsed on Sept. 24. -- Felipe F. Salvosa II
and Cecille S. Visto
|
By CECILLE S. VISTO,
Senior Reporter
Bank creditors of cash-strapped Maynilad Water Services, Inc.
have asked the Quezon City Regional Trial Court to appoint an
independent auditor and technical consultant to study the
feasibility of the utility's revised rehabilitation plan. In a
pleading, bridge loan banks, led by BNP Paribas, said there is a
need to verify whether Maynilad could indeed return to financial
profitability based on the assumptions used in the proposed
recovery blueprint.
These financial institutions, which also include Citibank N.A.
(Manila branch), Fortis Bank NV-SA, KBC Bank N.V. (Manila
branch), UFJ Bank Ltd. and Citicorp International Ltd, said
Judge Reynaldo B. Daway should first consult them before naming
an auditor and consultant or engineer to ensure those who will
be appointed are "trustworthy." "The viability of the revised
rehabilitation plan primarily hinges on an impartial validation
of the technical aspects of the rehabilitation plan, that is,
proposed capital expenditures and monitoring of achievement of
infrastructure targets. Maynilad's operation is heavily reliant
on capital expenditures to sustain revenue growth. Thus, capital
expenditures outlay will affect the business plan and cash flow
and accordingly, must be prudently monitored and managed," said
the banks through counsel Enrique W. Galang. They said the
assessment of the technical aspects of the plan by a competent
engineer or consultant is necessary "to ensure an optimal
capital expenditures program."
An independent auditor, they noted, is also needed to monitor
Maynilad's cash flow and institute internal controls. The
auditor will also be tasked to verify the firm's financial data
to determine whether Maynilad can meet its rescheduled debt
obligations. The appointee should be competent to provide
alternative financial projections based on differing business
scenarios. "Creditors must be able able to arrive at an informed
decision on whether or not the revised rehabilitation plan is
fair and equitable. Creditors, however, cannot verify the
financial data themselves either because of lack of expertise
for such task or lack of immediate access to the books of
account and financial records of Maynilad," the banks said.
Court-appointed rehabilitation receiver, Rosario S. Bernaldo, is
a lawyer and a certified public accountant. The proposed
Maynilad rehabilitation plan was referred to her last week for
examination.
It is still unknown whether Mr. Daway will grant the request
for an independent auditor and consultant to collaborate with
Ms. Bernaldo. Ms. Bernaldo was given until Nov. 29 to submit a
plan acceptable to the creditors. Based on Maynilad's revised
rehabilitation plan, these banks will be paid in two tranches.
Those who extended a syndicated loan of $43 million will be
reimbursed based on cash flow over a period of seven years with
one-year grace period, while pure bridge lenders that extended a
$3-million loan will be paid only within one year starting 2004.
Maynilad's parent, Benpres Holdings Corp., will still exit from
Maynilad to make way for a new operator. It will also write off
its entire paid-in capital and advances to Maynilad totaling
PhP3.4 billion as it relinquishes its 60% control of the company.
State-run Metropolitan Waterworks and Sewerage System (MWSS)
will withdraw Maynilad's $120-million performance bond to partly
pay for
PhP8 billion in unpaid concession fees that accrued from March
2001 to November 2003. The bond guarantors -- led by Hong
Kong-based Citicorp. -- will collect $48 million from Maynilad's
French partner, Ondeo Services Philippines, Inc., with $39
million to be paid by Maynilad and the remaining $33 million to
be converted into equity in the water company.
In a related development, Ondeo told the trial court that
Maynilad should correctly account its exposure in the company.
It said Ondeo's credits to Maynilad "should be identified and
accounted for separately" from the collectibles of affiliates
Suez S.A. and Suez Environment. "They are separate and distinct
corporations," said Ondeo, represented by lawyer Rodrigo Lope S.
Quimbo. Ondeo said Maynilad, in its revised rehabilitation plan,
also erroneously converted its exposure and that of its
affiliates in pesos. This could result in the companies'
incurring of foreign exchange losses since they paid the amounts
in foreign currencies. It said the exposure is not limited to
PhP3 billion and $54.3 million, as claimed by Maynilad, but is
actually $61.13 million for Suez, £13,547.76, $3.02 million and
3.81 million euros for Suez Environment and $6.52 million for
Ondeo. Ondeo had earlier agreed to write off PhP1.13 billion in
payables from Maynilad as well as $6 million in loans. It also
said it could wait for as long as eight years to be paid. Based
on the recovery blueprint, Maynilad will only start to repay its
foreign joint-venture party after 50% of principal bank loans
have been settled.
|
By IRIS CECILIA C. GONZALES,
Reporter
The Bangko Sentral ng Pilipinas (Central Bank of the
Philippines, or BSP) has approved the government's $50-million
borrowing to finance the rehabilitation project for the southern
Metro Manila line of the Philippine National Railways (PNR). A
BSP official said the policy-making Monetary Board approved on
Thursday the government's borrowing program for the first phase
of the railway project. "The board gave its final approval," the
official said. The government earlier tapped South Korean
multilateral institutions to fund the project. South Korea's
Economic Development Cooperation Fund and Export-Import Bank
have agreed to provide 10-year loans of $35 million and $15.42
million , respectively, at 2.5% annual interest.
Based on the program, the government will provide a sovereign
guarantee on the loans, which will complete the foreign
financing for the first phase of the project to upgrade the
32-kilometer South Manila line from Caloocan City to Alabang
town in Muntinlupa City. The government will provide the local
financing component equivalent to $14.26 million, to be used to
secure right-of-way and build additional infrastructure for the
railway line. President Gloria Macapagal Arroyo has said that
infrastructure improvement in the mass railway transport will be
a priority program. The rehabilitation of the railway, however,
has long been delayed because of financing and right-of-way
issues. The government wants to improve the South Manila line
following several fatal accidents.
The Department of Transportation and Communications earlier
said the first phase of the project involves fencing of station
premises as well as improvement of communications facilities to
help prevent accidents on the railway tracks. The rehabilitation
of the Caloocan-Alabang line is expected to speed up travel time
to 30 minutes for the whole stretch. Under the PNR plan, the
upgrade will give the South Manila line a capacity of 187,000
passengers a day, using 21 new diesel-powered railcars to be
acquired under the project. The first-phase upgrade would also
cover improvement of the railway tracks, strengthening of the
old PNR lines, double tracking of the line from Sucat Road in
Parañaque City to Alabang and improvement of maintenance
equipment.
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By BEVERLY T. NATIVIDAD,
Reporter
Several workers of Asia Brewery yesterday staged a strike in
the brewer's Laguna plant as employers' groups and labor unions
signed a deal in Malacañang to implement a strike moratorium.
About 40 workers from the glass plant and brewery department of
Lucio Tan-controlled Asia Brewery, Inc. in Cabuyao, Laguna
mounted the strike to protest management's alleged
nonrecognition of their union. The independent union, Tunay na
Pagkakaisa ng Manggagawa sa Asia, said in a statement that more
than a hundred workers participated in the strike, paralyzing
the glass plant and brewery department, and eventually halting
production of all other departments in the Cabuyao plant.
However, according to reports from National Conciliation and
Mediation Board (NCMB) Region 4 conciliator, Francisco Cruz, the
operations of the Cabuyao plant were not affected by the strike
as only about 40 workers participated in the protests. The firm
brews and distributes local and international beer brands. The
320-hectare Cabuyao facility was designed to process an annual
production capacity of 4 million hectoliters of beer.
Asia Brewery employs about 900 rank and file workers and
about 2000 contractual workers. According to Securities and
Exchange Commission data, Asia Brewery's earnings as of 2003
stood at
PhP12 billion. The NCMB said the union workers filed a notice of
strike as early as Aug. 12 for alleged illegal dismissal and
union busting of management. As of Oct. 2, Labor Secretary
Patricia A. Sto. Tomas assumed jurisdiction over the case to
prevent the situation from worsening. The Labor Secretary
assumes jurisdiction over a dispute when it involves an industry
indispensable to the national interest. The workers, on the
other hand, decried the assumption of jurisdiction. "The
assumption of jurisdiction is unreasonable. Asia Brewery makes
beer. The provision of assumption of jurisdiction is for labor
disputes involving industries indispensable to national
interest. Since when is beer a national interest?]," the union
workers said in a statement.
In Malacañang yesterday, employers' groups led by the
Employers Confederation of the Philippines and labor unions led
by the Trade Union Congress of the Philippines inked a deal for
a strike moratorium in the face of the fiscal crisis to preserve
jobs. The parties agreed to use strikes and lockouts "only as a
last resort" in resolving disputes between workers and
management.
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Thanks to a successful marketing campaign, Ginebra San
Miguel, Inc. said it saw an 8% increase in its net income in
August. The hard liquor unit of food, beverage and packaging
conglomerate San Miguel Corp. said net income rose to
PhP103 million in August from
PhP95 million previously as sales volume rose steadily in line
with intensified marketing and domestic selling programs.
Year-to-August net income climbed to
PhP1.19 billion from
PhP1.31 billion in the same period last year.
The tri-media campaign, dubbed "Bilog Ang Mundo," was
designed to enhance the appeal of Ginebra San Miguel to a wider
consumer segment. Aside from advertisements on television, radio
and print, Ginebra's campaign also includes a text message-based
"Share-a-Bilog-Joke" and a 13-week noontime quiz show at
television show Masayang Tanghali, Bayan aired on Tuesdays,
Thursdays and Saturdays on ABS-CBN Channel 2.
Ginebra's operating income for August stood at PhP174
million, up 17% from
PhP158 million in August 2003. Revenues soared 18% as volumes
improved 14% on robust exports and strong sales in southern
Philippines. An upsurge in sales of Vino Kulafu and Ginebra San
Miguel Frasquito propped up domestic sales volume by 5%. Vino
Kulafu was still tops in the southern market. Exports closed up
20,000%, supporting earlier reports that it remains the choice
gin, beating even those from the US. Double-digit growth was
recorded in the year-to-date volumes of Ginebra San Miguel
Frasco, Frasquito and Angelito in the northern parts. The
company said it embarked on consumption-driven promotions to
sustain the sales momentum of Ginebra San Miguel Frasco,
Frasquito and Vino Kulafu. It also implemented programs to
improve packaging. These include a redesigned bottle for the
one-liter Vino Kulafu Jumbo and a "de luxe pourer" for the Gran
Matador Brandy 700-ml which also comes in tamper-evident caps.
The "de luxe pourer" is a pioneering innovation in the local
hard liquor industry to regulate pouring and avoid spillage.
-- Roulee Jane F. Calayag
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By ROULEE JANE F. CALAYAG
The Philippine stock market kicked off to a good start this
week with the benchmark main index closing at a four-year high
of 1,851.60. The market's movement yesterday was consistent with
the projections made by analysts over the weekend that the local
bourse is poised for strong gains.
ROSY FORECAST
Jose Vistan, Jr., research director at AB Capital Securities,
Inc., said the market's notable performance resulted from the
positioning of investors as they waited for third-quarter
earnings results. "Investors were positioning for earnings
reports," said Mr. Vistan. Dealers also identified this as a
major driving force for the market, noting that most investors
bank on stocks that will declare rosy income for the third
quarter. Net income results are expected to start coming in this
month until the middle of November. The noteworthy rise in the
market, he added, was also fed by technical indicators. "Another
strong reason for the optimism and the rally in the market is
the technicals. Technical indicators are pointing to 1,900 level
within this week. This indicates a continuation of the bullish
sentiment in the market," explained Mr. Vistan.
The Philippine Stock Exchange composite index (Phisix) rose
3.6% or 64.35 points, almost thrice as much as Friday's 25.68
jump, at 1,851.60. It opened at 1,798.07, also its intra-day
low. It was only the second trading day of the month and the
Phisix already leapt almost 100 points. The performance of the
indices were also positive, sustaining gains from last Friday.
All the counters took the same positions with mining still the
leader, cornering the largest gains. It was up 95.49 at
2,029.52. The commercial-industrial moved close, advancing 92.54
to 2,933.19. Property soared 35.39 to close at 659.05. Banks and
financial services were not to be outdone as it gained 13.23
points at 510.62. Oil rose 0.02 at 1.67. As usual, the small and
medium enterprise counter was unchanged at 100. The all-shares
index kept up its upward momentum, rising 24.94 to 1,128.79.
Trades increased by 2,555 to 6,323. Although the total shares
traded decreased slightly from over two billion to 1.5 billion,
total value rose to
PhP1.7 billion from PhP972.9 million previously.
BULLISH SENTIMENT
The market's breadth was positive with advancers taking the
lead over decliners by more than 10 times at 85-8. "It was a
continuation of the bullish sentiment with gainers beating
losers at 8:1," said Mr. Vistan. Unchanged issues were
relatively few at 27. Mr. Vistan said investors are already
immune to concerns over the government's fiscal deficit. What
market makers are looking forward to are actions from the
government. "The issue is nothing if one only spouts things and
does not act on the problem [referring to the fiscal deficit],"
he argued. As the main index soared to a four-year high, players
may likely take more pro-active steps to engage the market.
"There may be a continuation [of the bullish trend] until at
least [today]," added AB Capital's Mr. Vistan.
FOREIGN BUYING
Foreign investors were net buyers yesterday. Net foreign
buying totalling PhP516.2 million more than surpassed total
foreign selling of PhP439.5 million. Total foreign buying grew
heftier at PhP955.7 million from the PhP532.9 million on October
1. Main board transactions totalling 97.4 million resulted in
PhP395.6 million. All the 20 top traded stocks finished high,
led by Philippine Long Distance Telephone Co. (PLDT) which
closed higher at PhP1,465 on 196,000 shares worth PhP287.7
million. It cornered 17.37% of the market. Mall developer and
operator SM Prime Holdings, Inc. (SMPH) of retail tycoon Henry
Sy, Sr. ended on the second spot. It rose at seven pesos on 31.6
million shares worth PhP220 million.
Gokongwei-led Digital Telecommunications Philippines, Inc. (Digitel)
closed higher at PhP1.16 on 66.2 million shares at PhP72.4
million. Its stock has risen consistently for a fortnight after
it was rumored that Hong Kong-based tycoon Li Ka Shing, Asia's
richest man, is interested to strike a deal with the
telecommunications firm to strengthen its network in the region.
Hutchison Whampoa, a subsidiary of Hutchison International,
Inc., was reportedly in talks with Digitel for a possible
partnership but the rumor was squashed immediately by Digitel
president and chief executive Lance Gokongwei. The "B" shares of
Southeast Asia's food and beverage giant San Miguel Corp. was
was up at PhP71.
Over the weekend, San Miguel and Japanese conglomerate
Sumitomo were identified as among the possible buyers of a 40%
stake in Del Monte Pacific. San Miguel, a food and beverage
conglomerate, did not confirm whether it is interested in the
business currently held by insolvent Italian food group Cirio. A
company source only told a news agency that it was a "good
brand." San Miguel just completed the purchase of a 50% stake in
Australian juice company Berri Ltd. which is valued at A$335
million. Other stocks that made it to the top 20 included Ayala
firms Bank of the Philippine Islands, Ayala Land, Inc. and Ayala
Corp., and Metro Pacific Corp.
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