Officials of international credit rating agencies will visit
the country in the coming weeks to look into the progress of key
reform measures necessary to resolve the Philippines' fiscal
woes. Bangko Sentral ng Pilipinas (Central Bank of the
Philippines, or BSP) Governor Rafael B. Buenaventura said the
country cannot afford a credit downgrade since this will further
increase the government's borrowing costs. "We will have to show
some progress [on economic reforms] or face the possibility of a
downgrade," he told a press briefing yesterday. A credit
downgrade makes it more expensive for the Philippines to borrow
as it reflects the country's ability to pay its debts. It also
increases the costs of doing business in the country.
Representatives of Fitch Ratings Services and Moody's
Investors Services will arrive next week and next month,
respectively, to review the progress of the government's reform
program, which includes a package of new tax measures.
Philippine Investor Relations Office executive director Corazon
P. Guidote said credit rating agencies need to see enough
improvement in government efforts to raise new revenues before
upgrading the country's credit ratings. "Specific reforms are
needed. It is a make-or-break situation. If we make it, we may
get an upgrade," she told reporters. The Macapagal-Arroyo
administration is asking Congress to pass eight revenue measures
that are expected to raise
PhP83 billion yearly. These are:
- a shift to gross income taxation;
- indexation of excise taxes on tobacco and liquor
(composed of two separate laws);
- additional
PhP2 excise tax on petroleum products;
- rationalization of fiscal incentives;
- general tax amnesty; lateral attrition system;
- a tax on telecommunications companies; and
- a review of the value-added tax system.
The new tax bills have met opposition from lawmakers who said
the government should first improve revenue collections before
asking for new taxes. The House of Representatives, however, has
vowed to approve four out of the eight tax bills, while the
Senate pledged to act on two proposed measures before the year
ends. Moody's downgraded the Philippines' credit rating in
January to Ba2, with a negative outlook, from Ba1. A Ba, or
speculative grade, rating means a borrower has substantial
credit risk, particularly as a result of adverse economic change
over time. Ms. Guidote said Moody's "may not be generous this
time" since it had already postponed a multiple downgrade early
this year.
Fitch, meanwhile, maintains a BB grade with a stable outlook
on the Philippines. However, it stressed in July the need to
show progress in key reforms by end-2005. Standard & Poor's
Ratings Services (S&P), meanwhile, has warned the Philippines of
another credit downgrade, citing the lack of progress on key
revenue measures that could help address the fiscal deficit. The
credit rating agency last week said that President Gloria
Macapagal-Arroyo's new term, which began July 1, is already
approaching its six-month mark but has yet been unable to push
reform measures.
In July, S&P downgraded its credit rating on the Philippines'
long-term local currency to 'BBB-', which is the lowest
investment grade, from 'BBB', citing the government's fiscal
woes. It kept the foreign currency rating at 'BB' or
speculative, which means there are substantial credit risks for
borrowers. Mr. Buenaventura, who returned to work yesterday
after two months in the US both for a medical leave and to lead
the US leg of a Philippine road show, said global investors want
to see specific milestones in resolving the fiscal problem.
"They accept the economic program and are now looking for
milestones," he said. Government economic managers led by Mr.
Buenaventura, Finance Secretary Juanita D. Amatong and Trade and
Industry Secretary Cesar V. Purisima went on a road show in
Asia, Europe and the US to convince businessmen to invest in the
Philippines. Ms. Guidote said new taxes are necessary for the
National Government to push through with its plan to absorb
PhP500 billion in debts of National Power Corporation (Napocor).
Government estimates show the government will have to start
paying
PhP34 billion yearly in Napocor interest expenses alone. "We
really need to improve the cash flow," she said.
-- Iris Cecilia C. Gonzales
|
The government will earn an additional
PhP9 billion to
PhP10 billion in revenues if Congress agrees to cut the
number of exemptions granted under the value added tax (VAT)
regime, Finance Secretary Juanita D. Amatong said in a statement
yesterday. This will be on top of the
PhP8 billion to
PhP12 billion in expected revenues if Congress approves a
bill that would repeal provisions in at least 25 laws that grant
tax perks and exemptions to businesses and investors, Ms.
Amatong added. The Department of Finance (DoF) wants Congress to
cancel at least six VAT exemptions, including those enjoyed by
doctors and lawyers that were legislated only last year. It
submitted to Congress last month a bill that limited exemptions
in a bid to increase VAT collection. The bill, however, has yet
to find a sponsor. Finance data show the government lost
PhP144 billion in potential VAT last year because of
collection inefficiency and numerous exemptions.
In its proposed bill, Finance seeks to repeal Section 109 of
the 1997 Tax Code, removing VAT exemptions granted to the
following activities:
- sale or importation of coal, natural gas and petroleum
products;
- sale or importation of raw materials used in the
manufacture of petroleum products by the buyer or importer
himself;
- importation of passenger and/or cargo vessels of more
than 5,000 tons, whether coastwise or oceangoing, including
engine and spare parts of said vessel to be used by the
importer himself as operator;
- sales and importation by cooperatives, excluding lending
activities of credit and multipurpose cooperatives;
- sale, importation, printing and publication of books;
and
- services rendered in the exercise of the medical and
legal professions.
The Tax Reform Act of 1997 exempts 26 transactions from VAT.
The tax exemptions for lawyers and doctors were okayed by
Congress only last year. Ms. Amatong said the reduction of VAT
exemptions is necessary to plug the loopholes in the system. The
move, she added, will widen the base of VAT payers and raise
more revenues to help narrow the budget deficit. Changes in the
VAT system, as well as the move to amend special laws granting
tax perks, are part of the government's effort to address its
fiscal problems.
Last month, the DoF asked Congress to revoke fiscal
incentives under Presidential Decree 1869, the consolidation of
previous decrees granting a franchise to state-run Philippine
Amusement and Gaming Corp. It also sought the scrapping of tax
provisions in 24 other laws, which include, among others:
- Republic Act 7308 on the creation of a National Seed
Industry Council;
- RA 7884 on the creation of the National Dairy Authority;
- RA 8367 on regulation of non-stock savings and loan
associations;
- RA 7354 on the creation of the Philippine Postal Corp.;
- RA 7925 on the development of telecommunications and the
delivery of public telecommunications services;
- RA 7306 on the creation of the People's Television
Network Inc.; and
- RA 6938 or the Cooperative Code of the Philippines.
The DoF said its proposed bill would address revenue loss;
relative ineffectiveness in achieving intended goals to promote
social, political and economic objectives; distortions in
resource allocation; and the vulnerability of the tax incentives
systems to syndicated crimes, graft and corruption. Ms. Amatong
has said the grant of fiscal incentives cost the government
PhP229.4 billion last year, equivalent to 5.33% of gross
domestic product (GDP) or total economic output. The amount
includes tax incentives given to foreign and domestic investors
by the Board of Investment and the Philippine Economic Zone
Authority. The rationalization of fiscal incentives is one of
the four measures which the DoF hopes Congress will pass before
the end of the year. The other measures are the higher excise
taxes on alcohol and cigarettes, a tax amnesty and a lateral
attrition system. Ms. Amatong said she is confident the national
government will be able to balance the budget by 2009 if it
succeeds in raising new taxes. --
Karen L. Lema
|
A proposal by businessmen to lower the tax amnesty rate to 1%
from the 3% pushed by the government has been rejected by the
Department of Finance (DoF). Finance Secretary Juanita D.
Amatong told reporters that the DoF will insist on the 3% tax
amnesty rate contained in the Executive's version of the tax
amnesty bill. Finance undersecretary Grace P. Tan earlier said
the 1% rate is "too low" and that the 3% is already a
"compromise". Ms. Tan has said the amnesty tax rate should
approximate the tax the government failed to collect, or what is
owed the government by the erring taxpayer. In this manner, a
tax amnesty would be put in proper perspective and not be
misinterpreted as favoring or rewarding the tax cheats.
The Federation of Filipino Chinese Chamber of Commerce and
Industry Inc. on Tuesday tried to convince lawmakers to bring
down the tax rate to 1%. It said this will entice high-income
businessmen to avail of the program. The business group claimed
that a 50 taxpayers, each with a net worth of
PhP1 billion; 7,500 filers, each with a net worth of
PhP100 million; 15,000 filers, each with a net worth of
PhP50 million; and some 20,000 filers each with a net worth
of
PhP1 million are willing to avail of the tax amnesty program
if they are charged 1% of their net worth. The total net worth
of the 42,550 "first-time filers" of statements of assets and
liabilities and net worth (SALNs) would total
PhP15.7 trillion, the chamber said. If these taxpayers are
charged a 1% tax, then the government will generate
PhP15.7 billion in revenues, it added. Ms. Amatong, however,
doubted the accuracy of the chamber's numbers, saying "we do not
know where they got the figures and that data still have to be
verified." She added the chamber has to identify the taxpayers
it claims are willing to avail of the amnesty.
Finance undersecretary Emmanuel P. Bonoan told a Senate
hearing on Tuesday that the imposition of a 3% tax amnesty rate
would yield a low estimate of
PhP8 billion in revenues, a medium estimate of
PhP13.86 billion and a high estimate of
PhP20.4 billion. The revenue estimates were based on a
survey of the 2000 taxpayer database, which showed total
taxpayer assets of
PhP11.8 trillion and total net worth of
PhP4.4 trillion. The House of Representatives ways and means
committee has approved a bill granting a one-time tax amnesty on
all unpaid national internal revenue taxes imposed during the
taxable year 2003 and prior years. The bill provides that those
who volunteer for the amnesty have to pay 3% of their net worth
instead of their outstanding tax deficiencies. The tax amnesty
is one of the eight revenue measures President Gloria Macapagal
Arroyo wants Congress to pass in a bid to address the country's
fiscal problems. -- Karen L.
Lema
|
The peso once again hit its all-time low of PhP56.45 to the
dollar yesterday on renewed worries over the government's fiscal
problems. The currency closed at PhP56.45, touching a record set
in March over concerns arising from the upcoming May elections.
That low was revisited on September 27, in what traders and
monetary officials said was seasonal demand for the dollar.
Yesterday at the Philippine Dealing System, the country's
electronic currencies exchange, the peso weakened on the average
by more than six centavos to PhP56.412 from PhP56.351 the other
day. It opened at PhP56.40 and strengthened by only two centavos
to cap its intraday high.
The Bangko Sentral ng Pilipinas (Central Bank of the
Philippines, or BSP) denied intervening, but traders polled by
BusinessWorld said they felt cushioning during intraday
trading. "As much as $25 million was injected when the peso was
already at PhP56.40. Demands were too high, though, and supplies
did not last," a trader said. The BSP said the peso can be
expected to recover starting next month on the back of increased
remittances by overseas Filipino workers (OFWs), but said
government action on needed reforms is necessary for permanent
support. One factor cited for yesterday's fall was the central
bank's declaring on Tuesday that the peso could fall to PhP57
starting next year, staying at this level until the government
gets a grip on its finances.
World Bank country director Joachim von Amsberg's statements
that the country's fiscal situation is scary also contributed,
traders said. Mr. Amsberg told reporters on Tuesday "I do feel
scared looking at the fiscal situation of the Philippines and I
do feel worried about it." "If one country's public sector debt
is already at 136% of its gross domestic product and the ratio
of its revenues is only at 12%, that's scary," he added. These
factors, coupled with earlier statements from financial officers
and credit agencies that the country was at a risk of a
downgrade, prompted "banks as well as other oil and
manufacturing companies ... to hedge their requirements in
coming months. The outlook is that the peso is not going to
strengthen, they probably made use of the time while the peso is
still at such levels," another trader said. Total volume of
transacted dollars went up to $166.75 million from $135 million
the other day. Oil and other manufacturing companies have to
contend with increasing oil prices in the world market, which
have hit new highs.
THE KEY QUESTION
Concerns over the country's fiscal scenario mounted when
President Gloria Macapagal Arroyo declared in August that the
country was "in the midst of a financial crisis." While this has
been described as play-acting to get Congress to act on needed
reform measures, traders yesterday said approval of those
measures is needed temper the currency's fall. "Ask the ordinary
man in the street. They know that we are facing hard times,"
another trader said.
Song Seng Wun, regional economist at GK Goh Securities in
Singapore, said "There is certainly risk that the rating
agencies could punish the government, basically telling them
they should do a lot more to turn the situation from becoming a
much more serious structural problem." "The bottom line here is
the administration knows what is needed. Whether they will have
the political will to get things implemented or passed remains
the key question." The BSP, meanwhile, expects the peso to
recover starting next month as Filipinos abroad start sending
money home in time for the holidays. BSP Governor Rafael B.
Buenaventura, however, said the peso's strength in the long run
depends on the immediate passage of key economic reforms. "It's
trading range bound and [because of] the spike in oil prices,"
Mr. Buenaventura told reporters yesterday, as he said the BSP
did not intervene to prop up the currency.
Oil prices have been steadily moving up amid uncertainties in
oil producing countries such as Nigeria and those in the Middle
East. Dubai crude -- the benchmark for local oil prices -- shot
up to $40 a barrel yesterday, breaching the BSP's assumption of
a yearend average of $34/barrel. HSBC Treasurer Wick Veloso said
oil prices have really been putting pressure on the peso. He
said there were no signs of BSP intervention in yesterday's
trading. Mr. Buenaventura said dollar inflows would help prop up
the peso starting next month as the more than eight million OFWs
abroad start sending money to their relatives. "There are no
inflows yet," he said, adding that these will start coming by
November and accelerate in the first two weeks of December.
The BSP expects OFW remittances to grow by 6% billion to $8
billion this year, as Filipinos adjust to anti-money laundering
rules of host countries and as the global economy improves.
Aside from the usual OFW remittances, Mr. Buenaventura said the
implementation of key tax measures will help strengthen the
local currency against the greenback. BSP assumptions show the
peso could fall to PhP57 against the dollar starting next year,
staying at this level until the government gets the economy back
on track. Mr. Buenaventura said the BSP expects modest capital
inflows if investors do not see enough progress in the
government's efforts to fix its finances. Government economic
managers are asking Congress to pass eight tax measures expected
to raise
PhP83 billion yearly to help government balance the budget
by 2010. Mr. Buenaventura reiterated that the BSP is maintaining
its current assumption of a PhP54-PhP56 to the dollar exchange
rate for the rest of the year. --
reports from Ira P. Pedrasa, Iris Cecilia C. Gonzales
and Reuters
|
... firm to be
delisted
Metro Pacific Corporation is offering to buy out minority
stakeholders in its debt-saddled subsidiary Negros Navigation
Co., Inc. (Nenaco) prior to delisting the latter under a
rehabilitation program. A tender offer, or an offer to purchase
some or all of shareholders' shares in a corporation, is
required for the voluntary delisting of shares of a listed
company. The price offered is usually at a premium to the market
price. Trading in Nenaco shares has been suspended since March
29 after the firm sought approval of its rehabilitation program.
A Manila court approved the plan last week. A few days ago,
Metro Pacific said delisting Nenaco, which had
PhP2.5 billion in liabilities as of March, will be
advantageous to its minority shareholders.
In a statement, Nenaco yesterday said it will endorse to its
minority stockholders a tender offer by Metro Pacific for 2.81%
or 85 million of the over three billion common shares which will
commence on Oct. 20 and end Nov. 17. David Nugent,
vice-president for corporate communications at Metro Pacific,
told BusinessWorld the tender offer will be advantageous
to the 3,600 remaining minority shareholders of Nenaco, given
the 10-year time frame in a rehabilitation plan approved by the
Manila Regional Trial Court last week. "Basically, we believe
this will be a fair and clear exit mechanism for longstanding
shareholders, and Nenaco will be able to do its rehabilitation
with greater flexibility as a private company," Mr. Nugent said.
Metro Pacific already owns 97.19% of Nenaco's 3.025 billion
shares with par value of
PhP1 each. Nenaco incurred a net loss of
PhP220.8 million in the first half.
THE RIGHT THING TO DO
Ron Rodrigo, senior analyst at Accord Securities, Inc., said
Metro Pacific's decision to buy back the shares of its
subsidiary was notable. "The delisting of Nenaco will not affect
the market per se. The tender offer of Metro Pacific is the
appropriate thing to do by a parent firm given the bad shape its
subsidiary is in," Mr. Rodrigo said. He added that Metro Pacific
would want to "clean Nenaco first". "It is good for the mother
company to carry the burden of Nenaco and try to delist its
shares. But it is too early to say whether it will consider
listing again. We have to see first if the company can reverse
its losses." Metro Pacific has said "Nenaco will benefit from
the greater flexibility and options presented to it as a private
firm". Nenaco was organized and incorporated on July 26, 1932 to
own, maintain, service and operate vessels, and engage in
domestic shipping operations. --
R. J. F. Calayag with a report from Reuters
|
Listed company Mondragon International Philippines Inc. may
have its licence to sell securities suspended by the Securities
and Exchange Commission (SEC) over its failure to explain why it
failed to meet reportorial requirements and pay the
corresponding penalties. The SEC's corporation finance
department is set to recommend the suspension along with
revocation of the permit to sell securities of subsidiary
Mondragon Leisure and Resorts Corp. after the latter failed to
explain why it has not paid installment payments for penalties
imposed for also failing to meet reportorial requirements. An
SEC official said that the recommendation will be issued since
the two firms have failed to respond to notices of hearing sent
by the SEC
The notice for Mondragon International asked the company to
justify why its license to trade securities should not be
suspended over its failure to submit its 2003 annual report and
its 2004 first quarter report. The company was also fined
PhP175,000. The notice of hearing sent to Mondragon Leisure,
meanwhile, was for the firm to explain its failure to meet
installment payments for the penalties. Mondragon Leisure's
permit to sell securities is already suspended. "The next step
is to issue a memo to the commission recommending that [the
permit to sell securities of] Mondragon International be
suspended while [that of] Mondragon Leisure be revoked," the
official said. The notice of hearing for Mondragon International
was returned unserved to the SEC on October 11, 2004. The notice
for Mondragon Leisure was served, but company representatives
were absent during the Sept. 1 hearing.
Mondragon International president Jose Antonio Gonzalez,
however, said that he is not aware of the move to suspend or
revoke his firms' licenses, saying as far as the company is con
cerned, it has been talking with the SEC. "We have ongoing
communication with them. As far as we are concerned, we are
dealing with the right people concerned," Mr. Gonzalez said. He
also said he was unaware that the SEC had served a notice of
hearing for his company, or that a Mondragon Leisure
representative failed to attend the hearing. Mr. Mondragon said
he will not comment "on recommendations, only on facts," adding
"If there is a final decision, we will let the right people
handle it." Mondragon International is a holding company with
business interests in the development of resort facilities and
gaming. The company was originally incorporated as Mondragon
Industries, Inc. on January 28, 1969. Its wholly owned
subsidiary, Mondragon Leisure, was incorporated on January 6,
1991 to acquire, manage, own, lease, operate, act as consultant
of and/or engage in the business of hotels, resorts, inns,
casinos, restaurants and other tourism related activities. The
leisure company operates a 36-hole championship golf course, a
304-room five-star hotel, various deluxe furnished villas and a
gaming casino, all located within the Clark Special Economic
Zone in Central Luzon. Mondragon Leisure derived its income
principally from the earnings of its subsidiaries, from rentals
and up to 1997, from management fees.
-- Jennee Grace U. Rubrico
|
The government is sticking to a plan to raise taxes on
tobacco and other "sin" products by adjusting the tax brackets
and their corresponding rates to inflation, despite opposition
from cigarette manufacturers and lobby groups who want either a
uniform tax increase or a return to the ad valorem system. Trade
and Industry Secretary Cesar A.V. Purisima urged lawmakers to
immediately pass the "sin" tax bill, which he said was the most
important of four priority measures the President earlier asked
Congress to approve before the end of the year. The Trade
deparment said this was also the position of Finance Secretary
Juanita D. Amatong. "It is very important to pass this not in a
diluted form," Mr. Purisima said in a press release yesterday.
"[The rates] should be indexed to inflation." The Cabinet
official said the government wants tobacco taxes hiked by a
minimum of 20%.
The "sin" tax measure is important, he stressed, since it
could help ease the budget deficit. "Except for the 'sin' taxes,
the other three [priority bills] are not revenue enhancing
measures. [Without the passage of the 'sin' tax bill, we] may
still have problems in [closing] the fiscal gap," Mr. Purisima
said. The three other priority legislative measures of the
Arroyo administration are lateral attrition, which aims to
reduce the number of government employees through a
performance-based scheme; tax amnesty; and the "rationalization"
of various fiscal incentives granted to investors. Justifying
the government's stance, Mr. Purisima said "Indexing the excise
tax on cigarettes and liquor will correct the tax rate vis-a-vis
the price of these commodities." Malacaņang's economic team
earlier proposed to hike the four cigarette excise tax brackets
by 37.3%, which is the cumulative inflation from 1997 to 2001;
and the corresponding tax rates by 22.6%, which is the
cumulative inflation from 2000 to 2001.
While tax rates were increased by 12% in 2000, the tax
brackets have not been adjusted since the adoption of the
National Internal Revenue Code of 1997. For the lowest price
bracket of below
PhP5.00 a pack, the current tax is
PhP1.12/pack. With indexation, the bracket will be adjusted
to
PhP6.87 and the tax to
PhP1.37/pack. Mid-priced brands under the
PhP5.00 to
PhP6.50 bracket will be taxed
PhP6.87/pack from
PhP5.60. For high-end brands priced from
PhP6.51 to
PhP10, the current tax is
PhP8.96/pack. Indexation will raise the tax to
PhP10.98. Premium brands priced above
PhP10, meanwhile, will have a tax of
PhP16.48/pack from
PhP13.44. Mr. Purisima acknowledged that tobacco prices
would increase but it would be the least burdensome for
consumers because such commodities are "nonessential." Two
competing tobacco firms are against indexation and are proposing
alternatives.
'THE BEST COMPROMISE'
In a statement, two lawmakers yesterday said a fixed increase
was the "best compromise" between indexation and a return to ad
valorem. Meanwhile, a solon said the House committee on ways and
means should look at retaining the current structure of taxation
on alcohol, cigarette and tobacco products and implement an
across-the-board percentage increase given the short time it has
before its deadline in December. Quezon Rep. Danilo A. Suarez
said this might be the best option, given the variety of
proposals currently lodged with the committee on how to increase
or restructure the excise tax on alcohol, cigarette and tobacco
products, all of which might take too much time to reconcile.
Proposals include a
PhP1 to
PhP2 uniform increase in the prices of all cigarette brands,
a shift back to the ad valorem system of taxation, and
increasing the specific tax on alcohol, cigarette and tobacco
products and indexing the tax rate to inflation. "Given the
shortage of time, the best option might be to maintain the
status quo and implement a uniform across-the-board percentage
increase. The question is how much," he told BusinessWorld.
"It should be acceptable to all players, and should guarantee
the targeted revenues for the government." "If we allow a full
debate on all the proposals, then senators and congressmen will
just come up with many objections, mirroring the objections of
the manufacturers of cigarette and alcohol products," he added.
"We cannot afford not increasing the tax on sin products."
-- Felipe F. Salvosa II and Judy T. Gulane
|
The government's decision to terminate negotiations with
prospective investors for the operation of state-run National
Transmission Corporation (Transco) and resort instead to public
bidding will create a more transparent and competitive
environment among interested investors, economists yesterday
said. Although changing the rules every so often may discourage
some investors, the move may also be beneficial to the
government, economist Bienvenido Oplas, Jr. of Think Tank, Inc.
said. "Their decision to open it to public bidding may be more
beneficial to the government in this case since there would be
more bidders. It would be more competitive," he said.
For her part, economist Winnie Monsod said there's no reason
to conduct negotiations for the privatization of Transco. "There
should be no negotiations. Transco is not losing money. It's not
like we are selling it desperately; it is actually making
money," she said. She said since there are four consortia that
are interested to run Transco, it would be better to conduct a
public bidding.
Energy Secretary Vincent S. Perez Jr. on Tuesday announced it
has scrapped negotiations with four prospective concessionaires
and instead opted to conduct a public auction. Socioeconomic
Planning Secretary Romulo L. Neri said the decision to go
through a public bidding would make the deal more transparent.
He said that negotiations were cancelled because the offers
"were too complicated". "So I guess it was difficult to gauge
which bid is superior because there were many provisions that
would make the bids non-comparable," Mr. Neri told reporters in
a chance interview in Malacaņang.
Meanwhile, Justice Secretary Raul M. Gonzalez said he is not
intent on issuing another legal opinion regarding the
negotiations to operate Transco because the President wants it
bid out. "President wants it bid...why will I issue another
opinion?" Mr. Gonzalez told reporters yesterday. Earlier, Mr.
Perez said the government would no longer proceed with
negotiations to operate the country's nationwide network of
electricity transmission lines through a concession agreement
because Transco will now be awarded through public bidding.
However, Mr. Gonzalez said, legally,a bidding is not needed
anymore since there was already two failed bids. "There is no
need for another bidding. After two failed bids you can already
negotiate. If bidding failed, you cannot keep on continuing
bidding," Mr. Gonzalez said. The Power Sector Assets and
Liabilities Management Corporation (PSALM) first bid out the
transmission assets in July 2003. It was declared a failed
bidding.
Earlier this week, the Energy Secretary said the they have
decided to terminate negotiations with possible investors,
noting that the terms and conditions given to PSALM can be
described as highly unique and complex. --
Jennifer A. Ng, Jeffrey O. Valisno and Bernardette
S. Sto. Domingo
|
Private funds will be mobilized for the first time to
initiate water and sanitation projects in Philippine rural
communities, foreign donor agencies said. Last Tuesday, the
Japan Bank for International Cooperation (JBIC), the United
States Agency for International Development (USAID), and the
Development Bank of the Philippines (DBP) forged a memorandum of
understanding with private sector-led LGU Guarantee Corp. for a
syndicated loan to jumpstart two long-term water-related
programs.
The two schemes -- named the Philippine Water Revolving Fund
and the Municipal Water Loan Financing Initiative -- are under
the Clean Water for People Initiative, a joint endeavor between
the governments of Japan and United States launched in 2002 to
provide safe water supply and sanitation to the world's poor,
improve watershed management and raise water output.
JBIC chief representative Osamu Murata said the initiative is
the first time a collaboration between JBIC and USAID has been
realized. "At long last we were able to realize it here in the
Philippines by obtaining strong supports and active
participations from our local partners for utilizing their
current facilities and structuring a co-financing scheme," he
said in his speech. The revolving fund is expected to encourage
funding from private financial institutions, which have stayed
away from investing in water and sanitation projects of local
government units and water districts, by reducing the investment
risk through the guarantee facility. These projects will be
financed though an existing program of JBIC and DBP, wherein DBP
funds up to 50% of project costs while private financial
institutions shoulders the other half and guaranteed by the LGU
Guarantee Corp. via a USAID program.
The loan term for a project under the revolving fund is up to
seven years for private financial institutions and up to 15
years for DBP, inclusive of a common grace period. A total of
PhP1.02 billion is available under such fund equally allocated by
the existing JBIC program and LGU Guarantee Corp. DBP president
and chief executive officer Reynaldo G. David said the bank
looks at each water project using three basic dimensions:
environmental protection, economic development, and social
safeguards.
While the country is seemingly endowed with abundant water
resources, there is a "looming water crisis" in urban areas.
Many rural areas remain unsupplied with piped, clean water.
Centralized sewerage and treatment facilities cover only parts
of Metro Manila. "The signing is a major first step toward
attaining sustainable water for everyone. Today, there is need
to do more with regard to resource conservation, conflict
management, efficient allocation, and water quality, rather than
just simply focusing on water supply infrastructure," Mr. David
said. The revolving fund is expected to be modelled after the
State Revolving Fund of the US and incorporate Japanese
expertise in such projects accumulated under JBIC's official
development assistance or ODA project in the country. Mr. David
said the increasing role being played by the private sector in
bulk water supply and the management of water services
diminishes the need to rely exclusively on government projects.
"The private sector continues to provide efficient technologies
on water use and waste water treatment. Outsourcing of water
supply operations for cost efficiency is also being done lately.
Government's role is now shifting toward providing a proper
balance of regulation and incentives. It is thus very evident
that public-private partnership plays a very important role in
this endeavor," he said. Originally created in the US to finance
water supply and sanitation projects, the revolving fund will
need cooperation from the Philippine government to make the
scheme sustainable. -- Ruby Anne M. Rubio
|
HONG KONG -- Asian debt spreads were broadly stable yesterday
but traders said the mood was cautious ahead of new issuance
later this week and following upbeat corporate results from US
companies. Activity was low-key as investors chose to ignore the
brief rally in US Treasuries overnight. "Spreads have tightened
to very low levels and investors have an eye on the supply
calendar," said a Tokyo-based dealer. He said besides issues
from China and Korea Development Bank later this week, there
were expectations of issues from other Korean companies looking
to finance redemptions due early next year.
Ports-to-telecoms conglomerate Hutchison Whampoa Ltd.'s bonds
due in 2014 were quoted at 178/172 basis points (bps) over
comparable US Treasuries and China sovereign dollar bonds due in
2013 were steady at 71/68 bps over. Beijing is due to begin
marketing a US$1.7 billion-equivalent, dual-tranche bond issue
on Friday. KDB is due to price a US$500 million floating-rate
note later in the week, marking its third dollar-debt offering
this year, market sources said. Strong earnings from technology
bellwether Intel Corp. and Internet media company Yahoo Inc.
were also moving the focus away from the safety of US
Treasuries. "If US Treasury yields rise, we could see some
profit-taking in our markets, but the broad trend is one of
range-bound movement until the end of the year," said Ben Yuen,
Hong Kong-based bond fund manager with First State Investments.
Analysts said they were still watching oil prices, despite
Tuesday's fall. "If oil prices remain higher on a sustained
basis, we could see some impact on bonds because governments
will then have fiscal challenges," Yuen added. Bonds from
telecoms firm PCCW due in 2013 were trading steady at 138/33
basis points. In credit derivatives, traders said bids were
steady and there was some switch-trade activity in the Korean
and Philippines credits. Five-year Philippine credit default
swaps -- insurance-like contracts that offer protection against
debt default or restructuring -- were unchanged at 445/460 bps.
Traders expect activity to taper off over the next couple of
weeks as the year-end approaches. -- Reuters
|
LONDON -- No heroics, none but the brave, wait and see. These
are the new watchwords. Investors are treading so carefully as
the fourth quarter gets underway and next year looms that few
seem willing to take the kind of aggressive positions that could
knock financial markets out of their trading ranges. Soaring oil
prices, a slowing US economy, rising interest rates, fears of
inflation or, indeed, stagflation, worries about China crashing,
Middle East turmoil and the US election -- these are all
combining to put strategists in a highly defensive mood. And
with the exception of the US election, there is little sign of
any of them disappearing in the short term. "Now isn't the time
to make heroic market calls," Mike Felton, head of UK high alpha
equities at Britain's F&C Asset Management said in a recent
outlook, summing up what appears to be investors' order of the
day.
Successive Reuters asset allocation polls and other surveys
such as Merrill Lynch's soundings of fund managers have shown
widespread caution for months. Risk aversion has been routine
throughout the year in such gauges as State Street's and JP
Morgan's investor confidence indices, albeit with the odd upward
blip. "No large positions. That's consensus. It's not an
environment to be exceptionally brave," said Emiel van den
Heligenberg, head of asset allocation at Fortis Investments. The
Belgo-Dutch firm's stance typifies that of the cautious investor
-- mildly underweight equities, neutral bonds, overweight cash.
Others switch the emphasis, but few seem willing to step forward
aggressively. "We are still overweight equities, but it is as
much because we don't like any of the other asset classes," said
Michala Marcussen, associate director of strategy at France's
Societe Generale Asset Management. The repercussions of this
mood on the financial markets are clear. Equities continue to
take on the appearance of a corrugated roof, rising and falling
but never quite finding a long-term direction.
-- Reuters
|
Ayala-led Globe Telecom, Inc. and the Gokongweis' Sun
Cellular have recently agreed on a multimedia messaging service
(MMS) connection. The carriers are testing their networks for
the MMS service among their subscribers, said the National
Telecommunications Commission common carrier authorization
division. Globe and Sun Cellular subscribers can send and
receive MMS while both operators test their networks, but full
interconnection will start next month. Subscribers will be able
to exchange MMS, or messages with graphics and audio through
their cellular phones by November when Globe and Sun Cellular
have already agreed on the access charges. "They still have to
come up with an agreement on the charges before MMS
interconnection between the two is commercially activated," an
NTC official said. He said operators are considering a charge of
10 centavos for every kilobyte of MMS successfully sent.
The NTC asked Globe to pursue the interconnection with Sun
Cellular, as the Ayala-led carrier said it would only consider
the link after Smart Communications, Inc. approves the same
agreement with the Gokongweis' cellular brand. Smart and Sun
Cellular have been conducting network tests for MMS since last
month after agreeing on the interconnection. "Both parties are
now configuring their networks. Smart has agreed to open up its
network for Sun Cellular. They are both expected to turn in
results within the month," the source said. The MMS service
allows the exchange of graphic and audio messages among
subscribers, unlike the short messaging service (SMS) which only
transmits text messages. It took Globe and Smart two years to
open their networks for SMS interconnection.
-- Anna Barbara L. Lorenzo
|
By CARMELITO Q. FRANCISCO,
Reporter
DAVAO CITY in Southern Mindanao -- Four foreign companies
plan to invest
PhP81 billion in mining projects in southeastern Mindanao, Edgar
Martinez, president of the Mindanao Association of Mining
Industry, yesterday said. Mr. Martinez declined to identify the
companies but said two are Australian, one American and one
Canadian. However, the companies are still waiting whether the
Supreme Court would reverse its earlier ruling on the
restriction on foreign ownership in mining projects,
specifically the Financial and Technical Assistance Agreement, a
scheme that allows 100% foreign control of a mining project.
Last month, Canadian Ambassador to the Philippines Peter
Sutherland said global players are looking at how the Philippine
government, particularly the Supreme Court, would address the
ownership issue as many foreign companies are ready to invest
here. Mr. Sutherland said many of the foreign companies were
eager to invest, but the Supreme Court ruling has forced them to
rethink planned investments. President Gloria Macapagal Arroyo
has pushed for the entry of foreigners into mining by calling
for the revitalization of the industry. Progressive
organizations claimed that the entry of foreigners into the
industry was among the reasons why the government was pushing
for constitutional change. "The constitutional amendment might
result in the removal of the protectionist provision of the
Constitution," said Bayan Muna Rep. Joel Virador.
LARGE MINERAL DEPOSIT
Mr. Martinez said Mindanao has a large mineral deposit that
is waiting to be tapped, but because of the Supreme Court
ruling, the industry's growth has been stunted. He said only
foreign companies have the interest and capability of developing
the country's mining industry, so they should also be given the
chance to put in the investments. The Mindanao Business Council
has moved for the revitalization of the mining industry, saying
the development of 25 mining sites, or about
PhP730 billion in investments, will result in about
PhP55 billion in annual taxes,
PhP1 billion in community development and another
PhP3 billion in royalties to communities of indigenous peoples
where these mining areas are located. "The minerals industry is
a very viable solution to the crisis we are now facing, but
divergent perspectives have kept the potentials of the industry
in limbo for years. The equitable and sustainable development of
this industry should act as lever for development, utilizing our
vast mineral resources for the greater good," said Antonio
Santos, council chairman, said in a statement.
|
First Pacific Co. of Hong Kong yesterday completed the sale
of 930.2 million common shares or 5% of its stake in subsidiary
Metro Pacific Corp. This came after First Pacific sold a total
of 581.1 million common shares, representing a 3.12% stake in
Metro Pacific between Sept. 13 and Oct. 11. First Pacific
yesterday sold 349.1 million common shares of Metro Pacific
equivalent to a 1.88% stake. It did not disclose the sale price.
Metro Pacific's share price closed higher at PhP0.47 from
PhP0.46 after the sale.
Metro Pacific informed the exchange that it does not expect
any more sales. With the completion of the sales, Metro
Pacific's total issued common shares now stand at
PhP17.7 billion, less than a billion short of the 18.6 billion
common shares it had as of June 30. "We understand there will be
no further sales of shares of stock beyond what has now been
accomplished." The firm "regards this one-time sale of shares,
with its benefit of raising additional capital for the company,
as a significant demonstration of support for its ongoing
business transformation and restructuring efforts." Metro
Pacific said the net proceeds from the sales will be used to
fund its general corporate requirements, including the
rehabilitation of its debt-saddled unit Negros Navigation Co. A
part of the net proceeds will also be used for new business
initiatives. -- Roulee Jane F. Calayag
|
The National Government is expected to revive a plan to sell
its equity in top corporations like San Miguel Corp. and Manila
Electric Co. (Meralco) to raise additional cash to help the
government fix its financial woes. Finance Secretary Juanita D.
Amatong said the sale of government's San Miguel and Meralco
stakes is still included in the privatization program aimed at
propping up state coffers. Prior to this, Finance Undersecretary
Eric O. Recto, also head of the Finance department's
Privatization Office said the government is open to proposals
for the sale of state-owned and sequestered television channels
as a means to generate much needed revenues.
Based on yesterday's closing prices, the government can earn
PhP27 billion from its holdings in San Miguel and
PhP1.89 billion from its stakes in the power utility firm. The
government has been trying to find a way to dispose of its 27%
stake in San Miguel and its 20% stake in Meralco -- 10% held by
the government with another 10% held by two government asset
disposition entities. The government is in desperate need for
cash to finance the budget deficit and pay for maturing loans.
The government aims to wipe out the budget shortfall by 2010
through a combination of revenue and expenditure reforms.
-- Karen L. Lema
|
By ROULEE JANE F. CALAYAG,
Reporter
The selling pressure at the stock market subsided yesterday,
pushing the main index to the positive side. The market was
buoyed by a change in tack among investors who began buying
shares again after two consecutive days of losses. The benchmark
Philippine Stock Exchange Composite Index (Phisix) rose 5.82 to
1,790.73. The all-shares index jumped 4.71 to 1,122.24. The
commercial-industrial advanced 8.52 to 2,846.79, and property
went up by 5.30 to 624.34. But other counters were not as
enthusiastic. Mining slumped 3.38 to 1,916.60. Following on its
tracks were banks and financial services, and oil, which shed
0.16 to 503.27 and 0.04 to 1.73, respectively. The number of
gainers and losers were equal in number at 33 issues each.
Unchanged issues were higher at 52.
UPBEAT
Trades packed some strength at 4,639 as 2.4 billion shares
exchanged hands for roughly
PhP1.2 billion. Even the net foreign trade was upbeat. Net
foreign buying rose to PhP271.2 million. Total foreign buying
amounted to PhP516.3 million, more than twice total foreign
selling of PhP245.1 million. With the improving indicators in
yesterday's session, investors may be encouraged to step up
their buying. Although it made a rebound, Ron Rodrigo, senior
analyst at Accord Securities, Inc., said the market is still
likely to experience some corrections. "More corrections are
expected as the market consolidates," said Mr. Rodrigo. He noted
that traditionally, October is not a good month for the stock
market. "Global markets are often down in October," Mr. Rodrigo
said, referring to "Black Monday" -- the Oct. 19, 1987 stock
market crash where the Dow Jones Industrial Average recorded its
largest one-day decline of 22.6%.
This slump was mirrored all over the world, particularly in
major markets such as Australia, Canada, Hong Kong, and the
United Kingdom. "This is also the time when analysts reassess
their forecasts. With October signalling the start of the fourth
quarter, analysts try to see if their forecasts are achievable,"
explained Mr. Rodrigo, adding that the results would be taken by
the market as a cue. "It is safe to say that we are betting on
history," he said.
In addition, oil prices in the world market continue to
fluctuate and demand for the commodity is expected to intensify
during the winter season. These developments may affect the
Philippine market. But investors are advised to keep a close eye
on events in the domestic scene and weigh the overall situation
to arrive at a sound and decisive investment judgment during
these times. "It will be good if the market will not go lower,"
said Mr. Rodrigo, who is optimistic that the market will regain
its strength despite the temporary weakness. Projections for
various listed companies, he said, are all "in line," indicating
that these firms may even exceed expectations. "This could
offset a major downturn in the stock market," added Mr. Rodrigo.
METRO PACIFIC
Meanwhile, Hong Kong-based First Pacific Corp. yesterday
completed the sale of 5% of its stake in subsidiary Metro
Pacific Corp. It sold in the open market the remaining tranche
amounting to 1.88% or 349.1 million common shares. This brings
the total common shares sold to 930.2 million. The sale spurred
investors to snap up shares of Metro Pacific, which bested 19
other top actively traded stocks. Net foreign buying for the
stock amounted to almost
PhP286 million. It closed higher at PhP0.47 with a market share
of 52.70%. Its 1.5 billion shares fetched a total of
PhP620 million. The firm also confirmed its plan to delist the
shares of its debt-saddled shipping subsidiary, Negros
Navigation Co., Inc.
David Nugent, vice-president for corporate communications of
Metro Pacific, told BusinessWorld that the firm offered
to buy back 2.81% of the more than three billion common shares
of Nenaco from 3,600 remaining minority shareholders. The tender
offer will commence on Oct. 20 and end on Nov. 17.
OTHER ACTIVE STOCKS
Ayala Corp. was also up at PhP6.30 with 17.6 million shares
traded for PhP111.1 million. Philippine Long Distance Telephone
Co., another unit of First Pacific, was unchanged at PhP1,450.
Other gainers include the Digital Telecommunications
Philippines, Inc. (Digitel) of the Gokongweis, up at PhP1.48;
the "B" shares of San Miguel Corp., which closed higher at
PhP73; and Ayala subsidiary Globe Telecom, Inc., which slipped
to PhP1,040. San Miguel's plan to revive its ice cream business
seemed to have boded well for its stock as buyers flocked to its
"B" shares. The rest of the most actively traded stocks were
sister companies of the top performers. There were also some
second-tier stocks that made it to the list.
|
By IRIS CECILIA C. GONZALES,
Reporter
The peso could fall to PhP57 to the US dollar starting next
year and may stay at this level until the government finally
balances its budget and gets the economy back on track. The
Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or
BSP) said the local currency may weaken on the back of modest
capital inflows but can easily recover if the government gets a
grip on its fragile fiscal position. "For the period 2005-2010,
we propose an assumption of PhP55-PhP57," BSP Deputy Governor
and Officer-in-Charge Armando L. Suratos said in a briefing
paper submitted to the House of Representatives yesterday. The
assumption implies a nominal depreciation of 1.8% relative to
2004. "Conditions for capital flows to the country may continue
to be modest over the medium term, depending on the pace of
implementation of key economic reforms," he said. He said
investors are awaiting specific milestones from the government
on its proposed measures, the same message relayed to fiscal
planners who attended the government's recently concluded
international road show. "However, it also recognizes the
possibility of having more vigorous capital inflows premised on
a credible government policy on the fiscal and power sectors and
a more stable political situation," the BSP deputy chief said.
Government economic managers are asking Congress to pass
eight tax measures that would raise
PhP83 billion yearly to help government balance the budget
by 2010. Based on the medium-term plan, the government will cut
the budget deficit to at most
PhP197.8 billion this year,
PhP184.5 billion next year and a "negligible level" of
PhP14.4 billion by 2009. It is targeting a zero deficit by
2010. For this year, however, the BSP is maintaining its current
assumption of a PhP54-PhP56 to the dollar. Mr. Suratos said the
peso is likely to stay at this range this year on expectations
that the interest rate differentials between peso and
dollar-denominated bonds will remain at comfortable levels. The
interest rate differential between the BSP's policy rates and
the US Federal Reserve rates narrowed to 500 basis points as the
US central bank raised its rates to 1.75% last September 21.
A narrowing differential affects peso- and dollar-denominated
bond rates and could influence decisions of fund managers and
investors to shift their assets to economies that offer higher
interest rates such as the US. Monetary authorities are trying
to hold off any increase in the BSP rates despite rising global
interest rates, saying inflationary pressures continue to come
from the supply side. The local currency has been trading at the
PhP56 level in recent weeks. It fell to a record low of PhP56.45
on September 28 as importers bought more dollars from the spot
market for month-end and quarter-end payments.
Sought for comment, traders said the local currency could see
further weakness this year if Congress fails to pass new tax
measures. Although some agree with the BSP's assumptions, they
said that the peso could further weaken beyond PhP57 if the no
new measures are passed. "If no new measures are passed the peso
will be stressed," a trader at a foreign bank said. The trader
explained that investors are awaiting the new measures before
they make new investments or even decide to keep their funds in
the country.
Another trader shared a similar view, saying that Congress
should recognize the urgency of passing new measures. "Without
the measures, investors will get the message that we are not
serious with our reforms. They would rather stay in other
countries." London-based Standard Chartered Bank regional
economist Mike Moran, who met with cental bank officials late
Monday, also said slow progress in proposed reforms means that
the peso will remain soft and retest the PhP57 level. At the
PhP55-57 level, the government may still meet its economic
growth target of 5.3%-6.3% next year, traders said. A BSP
official said any adjustments in the government's growth
projections will depend on National Economic and Development
Authority (NEDA). This year, NEDA expects the economy to grow by
4.9%-5.8%.
|
The World Bank yesterday expressed concern over the
government's current fiscal situation, citing the need for the
country to immediately move away from debates to decisive
action. "I do feel scared looking at the fiscal situation of the
Philippines and I do feel worried about it," World Bank country
director Joachim von Amsberg told reporters yesterday. "If one
country's public sector debt is already at 136% of its gross
domestic product (GDP) and the ratio of its revenues to GDP is
only at 12%, that's scary," Mr. Von Amsberg said. He also
expressed concern over the seeming lack of consensus on how to
resolve the country's fiscal problems. "I think the government
understands, the President understands [the problem]. What
surprises me is how quickly the debate degenerates into a
political debate on the specific measures and their cost and
benefits," Mr. Von Amsberg said. "That is where I see the risk
right now: that people will get bogged down on debates on
specific measures and may lose track of the real objectives," he
stressed.
Mr. Von Amsberg said he agrees with the sentiment of market
analysts on to the need to implement concrete revenue-generating
measures within the year to increase competitiveness and regain
some market confidence. "If the measures announced by the
President are implemented, it will send a strong signal [to the
international community]. [But] if the country waits for another
year, [the proposed measures] wouldn't be enough anymore," he
said. Mr. Von Amsberg said, however, that he remains hopeful
given the fact that the government has acknowledged the problem
and has come up with prescriptions. He also said the Bank would
like to encourage loans that will finance the priority programs
of the government and to move away from project-based financing
as a way to help the country manage its debts. "We really want
to make sure that the Bank's loans would finance expenditures
that the government has prioritized that are particularly
promising and particularly important," he said.
-- J. A. Ng
|
Finance Secretary Juanita D. Amatong appears to be more
optimistic than the other government economic managers as she
expressed confidence the government will be able to wipe out its
budget deficit by 2009. "As far as I am concerned, we could
still balance the budget by 2009 if we raise new taxes," Ms.
Amatong told reporters yesterday. She issued the statement even
as the government has officially decided to push its balanced
budget goal back by a year to 2010. Based on the government's
targets, it assumes a drop in the budget deficit numbers to
PhP161.769 billion or 2.9% of gross domestic product (GDP)
by 2006 from 2005's target of
PhP184.526 billion or 3.6% of GDP. The government then hopes
to trim the shortfall to
PhP126.999 billion or 2.1% of GDP in 2007,
PhP79.032 billion or 1.2% of GDP in 2008. and
PhP14 billion or 0.20% in 2009 and finally to zero in 2010.
Ms. Amatong said the government can easily reduce the numbers to
zero in 2009 by raising taxes, reducing expenditures, or a
combination of both.
The government aims to raise
PhP80 billion in annual revenues from the eight
Palace-proposed revenue measures, she said. But in case Congress
fails to approve the proposals, "we have to be ready with other
bills that will generate
PhP80 billion," she said. Ms. Amatong earlier said the DoF
is studying the possibility of taxing the income of overseas
Filipino workers (OFWs) to raise additional revenues. However,
she stressed that lifting the tax exempt status of OFWs is just
an "alternative" and will be proposed only in case Congress
thumbs down many of President Gloria Macapagal Arroyo's
proposals.
The Finance chief said the government has long recognized the
urgency of passing new taxes to address the fiscal problem even
before credit rating agencies like Standard & Poor's warned of a
possible downgrade. The Department of Finance hopes both houses
of Congress will pass at least four measures by yearend: the
rationalization of fiscal incentives, higher excise taxes on
alcohol and cigarettes, a tax amnesty and a lateral attrition
system. The other Palace-proposed measures are a shift to gross
income taxation, additional
PhP2 excise tax on petroleum products, a tax on
telecommunications companies, and a review of the value-added
tax system. Ms. Amatong said she is confident Congress will be
able to deliver and that President Gloria Macapagal Arroyo "will
be pushing for that." "People should start thinking about this
country [rather] than themselves," she stressed.
-- Karen L. Lema
|
Finance Secretary Juanita D. Amatong yesterday defended the
government's recent $1-billion bond issuance against criticisms
it had jeopardized the country's future borrowings. Reports have
said that Bangko Sentral ng Pilipinas (Central Bank) Investor
Relations Office executive director Corazon P. Guidote, who
tendered her resignation last week effective October 31, cited
the alleged ill-timed bond issuance as a major reason for
leaving her post.
Even the resignation of National Treasurer Mina Figueroa was
earlier tied to the controversial bond offering, as she
reportedly felt that the cost of the $1-billion global bond
issued last September was higher than prevailing market rates.
Ms. Figueroa, however, has denied this, saying she left to fix
her own "personal deficit." Ms. Figueroa, who is leaving Oct.
16, yesterday also denied that she had reprimanded Finance
officials over the bond float. "I only advised them that I can't
be involved in the issuance because I was out for an investor
briefing," she told reporters after the regular auction of
government securities. Ms. Amatong maintained that there was
nothing irregular with the government's decision to tap the
international market at that time. "The policy is made by the
DoF (Department of Finance) and not anybody else...not the
Treasurer," Ms. Amatong said in a telephone interview. "So lower
people have no business complaining about it."
Despite the perceived "internal conflict" between Finance
undersecretary Eric O. Recto and Misses. Figueroa and Guidote,
Mr. Recto said "I don't think we are in a disarray." "In my
case, work is getting done. In the case of the other DoF
deliverables, work is getting done, bills are being filed,
hearings are being held," he told reporters yesterday. "It is
unfortunate that this has become more public than its should
have."
However, a Bureau of the Treasury (BTr) official yesterday
said investor concerns have apparently not been limited to the
$1-billion bond issuance but also includes a 300-million
eurobond offer in July. This is in contrast to citations
received by Philippine bond issuances last year, said the
official, who requested anonymity. Both Euro Money and
Asia Money cited the government's
PhP74.3-billion retail treasury bond issued in June 2003 as
the "Best Domestic Bond Deal in the Region." In November that
year, the two publications also awarded the government's global
bond issue amounting to $1 billion as the "Best Offshore
Sovereign Bonds". "These garnered international recognition
largely on the account of successful float amid challenging
times," the citations said, referring to the political
uncertainties during the period.
Given the criticisms received by the government following its
latest bond issuance, the BTr official said "It's really
embarrassing because in the past, we used to get awards." Last
September 8, the government sold $300 million worth of sovereign
bonds due 2015 at 8.875% and $700 million worth of bonds
maturing in 2025 at 10.625%. It set a price guidance of 98 for
the 2015 bonds and 106 for the 2025 series. Underwritten by
Credit Suisse First Boston, Deutsche Bank and JP Morgan Chase,
the bonds were four times oversubscribed, which meant that
orders reached as much as $4 billion. Based on the prevailing
price at the time, the government gave a discount of about a
point when it sold the bonds. The next day, prices of 15- and
25-year bonds went up by as much as two percentage points. This
meant the Philippines lost about $20 million. An official who
attended the government's recent economic road show said global
investors also raised concern on the issuance of the
euro-denominated bonds immediately after a supposedly no-deal
road show. -- Karen L. Lema,
Iris Cecilia C. Gonzales and Ira P. Pedrasa
|
Former PCI Leasing and Bankard board member Rolando Jose L.
Macasaet has been named the new National Treasurer, the
Malacaņan presidential palace announced in a press release
yesterday. But his appointment, announced by the office of
Executive Secretary Eduardo Ermita, was immediately followed by
unconfirmed reports that it had been recalled. Palace officials,
however, insisted that his papers had been signed by President
Gloria Macapagal Arroyo. Mr. Macasaet, who also served as
president and chief executive officer of the Philippine National
Construction Corporation (PNCC) during the Estrada
administration, will replace Mina C. Figueroa who leaves her
post this Friday.
Traders said they were unfamiliar with Mr. Macasaet, with one
saying "We can only hope that he communicates with us." A
reversal of the appointment, they added, would hardly stir the
market. "The market is simply looking for the real Treasurer who
would direct the market. Maybe there are other candidates who
can do better or that this guy has a better position that would
fit his qualities. The issue would always revolve around a
Treasurer who knows when to reject or award our bids," a trader
said.
Another trader said that while Mr. Macasaet was not on the
market's list of possible candidates, "it is unfair that we
[should] already judge him. We should wait." "We keep on
reiterating, a treasurer can only do so much to curb whatever we
are facing right now. He might be tough enough to hold down
rates, but it is still the initiative of the rest of the
government to enact revenue-generating measures," another trader
said. Ms. Figueroa said she does not know Mr. Macasaet and is
unfamiliar with his record. Ms. Figueroa, who resigned last
September 10 and will serve the Treasury until October 16, had
explained that a "personal" deficit had prompted her to leave.
She denied reports that she quit over disagreements with the way
the Finance department handled a $1-billion bond float early
September which has been called by some as disadvantageous to
the government.
Mr. Macasaet graduated from the University of the Philippines
with a bachelors degree in Business Economics, and a masters
degree in Business Administration. He also underwent
professional development programs in Columbia, and Harvard. He
was a business partner of San Juan mayor Jose Victor Ejercito in
Foremost Credit Resources, Inc., a lending company formed in
1995. He also served as board member of Traffic Control Products
Corp., Tierra Factors Corp., and Dasmariņas Industrial and
Steelworks Corp. He was also a board member of the Manila North
Tollways Corp. Mr. Macasaet was chosen to be the new head of the
Bureau of Treasury over Finance undersecretary Nieves L. Osorio
and Deputy Treasurer Eduardo Mendiola, who were reportedly being
considered for the said post. --
Jeffrey O. Valisno and Ira P. Pedrasa
|
New York-based Global Finance Magazine has given
Bangko Sentral ng Pilipinas (Central Bank) Governor Rafael B.
Buenaventura a grade of 'B' for 2004, down from the 'A' he
received in the past two years. Mr. Buenaventura returns to work
today after spending two months in the United States both for a
medical leave and to lead the US leg of the government's
international road show.
In its yearly Central Banker Report Cards, Global Finance
credited Mr. Buenaventura for bringing the country's inflation
under control since he became governor in 1999. The publication
noted, however, Mr. Buenaventura's apparent policy differences
with President Gloria Macapagal-Arroyo recently, an assessment
which the BSP chief did not agree with. "While he is credited
with bringing the country's inflation bogey under control since
taking office, Rafael Buenaventura is facing new challenges that
may be a bit harder to deal with," the publication said.
It said that among the BSP chief's problems are a mounting
fiscal deficit and a debt load that remains high. "Part of the
problem is that Buenaventura does not appear to see eye to eye
with President Gloria Macapagal-Arroyo on key issues," it said.
It particularly noted Mr. Buenaventura's position that the
sovereign debt load remains serviceable, in contrast with Ms.
Arroyo's announcement last month that the Philippines was in the
midst of a fiscal crisis. "While Buenaventura suggests the
government tap international capital markets if foreign direct
investment continues to drop, the president wants to plug the
shortfall by raising taxes," Global Finance said.
Reacting to the publication's assessment, Mr. Buenaventura
said he has been a strong advocate of reducing the budget
deficit and has been consistent with the President's policy of
getting domestic support to raise revenues. "We have been
warning about debt sustainability and the need to increase
revenues. The president's call is to bring it to the people to
get support for the increase in revenues," the BSP chief said.
Central bank governors of Norway, Sweden, Australia, Indonesia
and Malaysia got an 'A', while the governor of South Africa got
an 'A-'. Ten other central bank governors from Switzerland,
India, Japan, Poland, Israel, South Korea, Taiwan, Poland and
New Zealand received a grade of 'B'. Central bank governors of
Chile and Turkey got a 'B+' while those from Mexico got a grade
of 'B-'. Seven governors received a 'C', including US Federal
Reserve chairman Alan Greenspan and the governors of the Czech
Republic, United Kingdom, China, Thailand and the European
Union. The Central bank governors of Argentina, Hungary and
Russia received the lowest grade of 'D'.
-- Iris Cecilia C. Gonzales
|
President Gloria Macapagal Arroyo has been given a failing
mark for her performance during her first three months in office
by an overwhelming majority of business executives surveyed by a
consultancy firm. Peter Wallace of the Wallace Business Forum
presented the results of the survey during yesterday's
Philippine Economic Update 2004 at the Asian Institute of
Management in Makati City which was also broadcast live in
Canberra, Australia.
Details of how the survey were not discussed during the
videoconference, but Benvenuto Icamina, vice-president and chief
economist of the Wallace Business Forum, later told
BusinessWorld the survey was conducted last month during the
quarterly roundtable of the Philippine Corporate Update Program
which was attended by executives of multinational corporations
and some members of the diplomatic community. More than 100
survey forms were handed out, of which half responded. Details
of who responded to the survey were not released, but among the
companies represented were, according to a list provided by Mr.
Icamina, were SGV & Co., Hongkong & Shanghai Banking Corp.,
Abbot Laboratories (Phils.), Inc., BNP Paribas, Cisco Systems,
Coca-Cola Far East, Ltd., General Electric Phils., Inc. and
General Motors Phils., Inc.
During the videoconference, Mr. Wallace claimed a measly 12%
of the 50 chief executives who responed expressed satisfaction
with Ms. Arroyo at the helm given the increased number of
problems besetting the country. "More than 88% of the
businessmen who participated in the survey said she is not doing
enough. The Philippines has now become a land of crisis -- oil
crisis, foreign direct investment crisis, an electricity crisis,
fiscal crisis and even a volatile leadership," he said. Vested
interests, uncontrolled population growth, weak educational
system, corruption and inadequate infrastructure, said Mr.
Wallace, were among the top problems that plague the
Philippines. He also cited the Catholic Church, which is
"negative rather positive", and the security situation which is
marred by alleged links of local rebels to international
terrorists. "The government must have the political will to
institute changes and these reform should be done now.
Otherwise, this country will never achieve its proposed growth
rate of 7%," Mr. Wallace added. "The bottom line is that the
Filipino people are good, but the government is not. The peso is
declining rather rapidly, and corruption is becoming more
institutionalized," he said.
A study conducted by the Asian Development Bank, he added,
predicted that the Philippines will lag behind Vietnam seven
years from now if fiscal issues are not addressed. Mr. Wallace
said the government should capitalize on agriculture, mining,
tourism, information technology, and healthcare to boost the
economy. The Philippines, he added, continues to have a
competitive advantage in terms of English language proficiency,
labor quality and low labor cost.
-- Ma. Eloisa P. Calderon
|
Food and beverage giant San Miguel Corporation is looking at
reviving its Magnolia ice cream brand and plans to build a
production plant in a multi-product industrial park in Sta.
Rosa, Laguna, just south of Metro Manila. In a statement, San
Miguel said reviving Magnolia ice cream responds public demand.
"The option and opportunity for San Miguel to reenter the market
is open, as in the minds of consumers, Magnolia ice cream never
left the market. People have always known Magnolia as a quality
brand of ice cream. Loyalty to the brand is strong because it is
part of our heritage," San Miguel chairman and chief executive
officer Eduardo M. Cojuangco said. San Miguel said Magnolia is
"one of the most recognizable and enduring brands in the
country."
San Miguel stopped selling Magnolia ice cream in 1998 to
honor a "non-compete" clause contained in the terms of the
divestment of its entire stake in Nestlé Philippines. San
Miguel, however, retained the Magnolia brand. The agreement to
not compete in the ice cream sector was for a period of five
years and lapsed in November last year. San Miguel is expected
to resume selling its ice cream brand in the middle of next
year, a source from the company said. This would dovetail with
the commercial operations of the ice cream plant that San Miguel
would put up in Laguna, the source added.
San Miguel, through subsidiary Magnolia Inc., has a
processing plant in Cavite for its main business lines. Magnolia
currently manufactures and markets butter, cheese and margarine.
San Miguel said Magnolia accounts for nine out of every 10
non-refrigerated margarine products in the Philippines and four
out of every five refrigerated margarine products.
In 1998, the company completed a nationwide
distribution selling system that made Magnolia products
available in all parts of the country. Besides the ice cream
production plant, San Miguel said it is also planning to build
two other production facilities for other "value-added food
segments" in the industrial park, which will be located near its
Coca Cola Bottling Plant in Sta. Rosa. "The industrial park will
house manufacturing and packaging plants primed for new products
that San Miguel is set to roll out next year," it added. The
plan to put up an industrial park in Sta. Rosa is part of San
Miguel's expansion and modernization program that involves a
PhP15-billion investment in the Philippines for the next
three years.
Earlier, San Miguel said that, as part of its
PhP15-billion program, it is building an alcohol distillery
in Misamis Oriental in Northern Mindanao which will produce up
to 75,000 liters of hard liquor a day to support its export
operations. It is also expanding its existing distillery in
Negros Occidental in Western Visayas to meet domestic demand for
hard liquor. "We aim to continue to grow in revenue and income
by double digits, and we believe the Philippine economy is
strong enough to stimulate the growth of consumer goods
companies like San Miguel," Mr. Cojuangco said.
San Miguel is Asia's largest food and beverage conglomerate.
It is aggressively expanding in the Asia-Pacific region, with
its acquisition of, among others, facilities in Thailand and its
purchase of a 50% stake in Australia's Berri Ltd. earlier this
year. The company 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.
-- Jennee Grace U. Rubrico
|
At least three independent power producers (IPPs) have
expressed interest in supplying the power needs of Metro Rail
Transit 3 (MRT3), the Department of Transportation and
Communications (DoTC) said in a press release yesterday. The
DoTC has been scouting for other means to cut power costs after
the Manila Electric Company (Meralco) denied its request for a
15% discount on the rates charged on the MRT3 and two light rail
transit (LRT) lines. Of the three IPPs, the DoTC said only Chase
Power Management Philippines, Inc. has submitted its proposal.
Chase Power proposed to supply MRT3 by building a 17.4-megawatt
power plant under a build-operate-transfer agreement. As a rule
of thumb, one megawatt requires $1 million in capital, hence the
project is expected to cost around $17 million. "This is [an]
unsolicited [proposal], so it will be subject to a Swiss
challenge. The plan is only for MRT3, but it might include Lines
1 and 2 [of the Light Railway Transit]," said DoTC assistant
secretary Robert Castaņares.
In a Swiss challenge, other parties are welcome to bid for
the project, but Chase Power has the right to adjust its price
to match the best bid. Chase Power operates turnkey cogeneration
power plants in the Philippines. Mr. Castaņares said the DoTC as
asked Chase Power to submit a feasibility study, adding that two
other IPPs are set to submit their own proposals. He did not
disclose the names of the two other firms. "We are entertaining
the idea, but we still don't know whether the project is
feasible or not," Mr. Castaņares said.
Meralco rejected the power discount request, saying it is
only a power distributor and that the MRT3 should seek
assistance from the National Power Corporation (Napocor)
instead. MRT3 officials dropped the plan, given Napocor's fiscal
constraints. Metro Manila's elevated railway systems are powered
by electricity and officials said this eats up 30% of operating
costs. Meralco vice-president Ivanna Dela Peņa refused to
comment on the issue, saying it would be premature to issue any
statement getting more details on how the DoTC and the potential
power suppliers will go about the project. High operational
costs have prompted MRT3, LRT1 and LRT2 to file fare hike
petitions, which are still awaiting the approval of President
Gloria Macapagal-Arroyo. --
Anna Barbara L. Lorenzo
|
Economists have criticized the government for its failure to
hold widespread consultations for the formulation of its growth
blueprint, arguing that this flaw could lead to lack of
"ownership" and difficulty in gaining support. President Gloria
Macapagal Arroyo, on the other hand, has stressed that the
Medium Term Philippine Development Plan (MTPDP) is the country's
"last hope" to improve the economy in the next six years. She
has asked for public support for the said blueprint, especially
its unpopular measures. "This is our last chance, and we must
swim together or sink together," the President said in a
statement.
Former National Economic and Development Authority (NEDA)
director-general and Ateneo de Manila University economist
Cielito F. Habito noted that the process observed by the
government in drafting the MTPDP was not "consultative." "I have
not read the entire MTPDP, but compared to the MTPDP of the
Ramos administration, the current plan did not seek the inputs
of civil society," Mr. Habito said in a telephone interview. Mr.
Habito, who was the NEDA chief during the time of President
Fidel V. Ramos, said the government undertook extensive
consultations for the 1993-1998 MTPDP. "We even launched two
road shows for it. But in the current MTPDP, the government
(merely) created committees to draft it," he said. Mr. Habito
explained that prior consultations were essential if the
government would like to muster enough support for it. "When
there's weak ownership (of the MTPDP) especially (by) the civil
society, it will be difficult to muster support for it," he
said.
Dr. Fernando T. Aldaba, dean of the Ateneo school of
economics agreed with Mr. Habito. "The consultations [on the
MTPDP] were more participatory, with more sectors being invited
to join committees especially during the time of Mr. Ramos," Mr.
Aldaba said. "If you want a lot of stakeholders pushing for your
goals, you need to consult [more sectors]." An economic adviser
of the Arroyo government hailed the plan for presenting
"out-of-the-box" solutions to the fiscal crisis. At the same
time, however, Albay Rep. Jose Clemente S. Salceda noted that
the MTPDP, which was unveiled on Monday, did not benefit from
public consultations. Without a sense of collective ownership or
support from stakeholders, execution of the MTPDP might get
impraired, he warned. "From an analytical standpoint, we see the
logic of the promised legacies of the Arroyo administration plus
the Millennium Development Goals embedded in the MTPDP," Mr.
Salceda said. "However, the framework must be validated with the
business sector and other stakeholders." "It is the job of NEDA
(National Economic Development Authority) to rigorously
test-market and vigorously pre-sell President Arroyo's inputs,"
he stressed.
RUSH JOB?
Mr. Salceda said the MTPDP might have been rushed, because no
consultations were made with regional development councils,
nongovernment organizations and even Congress. This presents
another problem because it jeopardizes balanced regional
development. For the Bicol Region in southern Luzon, for
example, he said that inputs have to be submitted to the
regional development council before submission to the NEDA
secretariat. A fiscal road map that Mr. Salceda has drafted
looks at a balanced budget by 2008 and a surplus by 2009. The
latest medium-term plan adjusts the deadline for a balanced
budget to 2010. Still, he said that this fiscal road map
"remains a workable road map" of the Arroyo administration.
The House of Representatives committee on economic affairs,
which Mr. Salceda heads, will scrutinize the MTPDP and enhance
it with more inputs. But University of Asia and the Pacific (UA&P)
economist Victor A. Abola said that while consultations with
certain sectors of society on the MTPDP is important, he said
the government does not have to undertake consultations unless
it is introducing major policy shifts. "I don't see any real
major policy shifts, only perhaps a greater emphasis on poverty
alleviation, a provision that was also included in the 2001-2004
MTPDP," he said.
The President is scheduled to formally present the plan to
the public on October 26, to mark her first 100 days in office
under her new six-year term. Ms. Arroyo expressed confidence
that the ambitious plan would prosper with the public's support.
"We are now in an inexorable course towards greater national
stability and prosperity. But the government cannot do this
alone," she said. "It will require sacrifice and supreme acts of
service, and supreme efforts at honest enterprise, on the part
of every institution and citizen," she added. The President told
skeptics that the government would remain committed in attaining
its "clear and concrete" targets despite the expected opposition
from various camps. "Doomsayers and vested interests will be
ever present to deter our efforts and push back the clock of
reform and progress, but we must resist, forge on and stay the
course," she said.
Some observers earlier warned that the government would not
be able to afford financing the MTPDP, which Socioeconomic
Planning Secretary Romulo L. Neri said would cost
PhP300 billion. Budget Secretary Emilia T. Boncodin vowed to
implement the President's programs under the MTPDP, including
Ms. Arroyo's directive for the deployment of key Cabinet
departments to the regions. "The relocation of key departments
will push through in full transparency, and consultation," Ms.
Boncodin said in a statement. "These rationalization programs
are being done to bring government closer to the people, and
deliver optimum service at less cost," she added.
The President earlier announced her decision to transfer the
Department of Transportation and Communications to Clark Field,
Pampanga in Central Luzon to enable it to directly monitor the
government's plan to transform the former US bases as the
premier logistics hub of the region. Ms. Arroyo also wants to
transfer the Tourism Department to Cebu City in Central Visayas,
and the Agriculture Department to Iloilo in Western Visayas in
line with her government's thrust to decongest Metro Manila, and
distribute the development to the other regions. The Budget
official assured that the government employees who might be
dislocated with the transfers would be given the option to
retire under the government's streamlining program.
-- Jennifer A. Ng, Judy T. Gulane and Jeffrey
O. Valisno
|
The government will no longer proceed with negotiations to
operate the country's nationwide network of electricity
transmission lines through a concession agreement, Energy
Secretary Vincent S. Perez Jr. told reporters yesterday. In a
talk with reporters, he said the concession for the operation of
state-run National Transmission Corporation (Transco) will now
be awarded through public bidding. "We decided to terminate the
discussions with the investor groups because the terms and
conditions, including the price of their proposals submitted to
the Power Sector Assets and Liabilities Management Corporation
(PSALM), are highly unique and complex," Mr. Perez said. "Hence,
it would be in the best interest of all concerned to award the
concession through public bidding." He said PSALM, the
government firm tasked to privatize debt-saddled National Power
Corporation's (Napocor) transmission and generation assets, is
set to immediately start the bidding preparations.
The government, Mr. Perez said, would also try to meet the
December 2004 target for the Transco's privatization. "It's good
that they (investor groups) still have a chance to bid because
in a negotiated deal, only one will be chosen. We hope all
investor groups will participate," the Energy chief said. He
also said the decision to go on a public bidding has nothing to
do with the legal opinion which is set to be released by the
Department of Justice (DoJ). "The legal opinion will give us
guidance on how to proceed, but we would rather have a public
bidding even with the DoJ opinion. It was difficult for us to
select proposals and the appropriate investor group to negotiate
with. The term offers were so different that it was difficult to
compare," Mr. Perez said. Four investor groups have submitted
proposals to operate Transco, a spin off firm of state-run
Napocor. While the government has terminated discussions with
several interested investors for a negotiated award, Mr. Perez
said the groups are still welcome to participate in the bidding.
PSALM president Raphael Perpetuo M. Lotilla earlier said a
favorable opinion from the Justice department should be secured
before going into formal talks.
SUSTAINED SERIOUS INTEREST
The price offers submitted by the four groups on October 6
indicated a sustained and serious interest in Transco, the
government earlier said. Mr. Lotilla said should PSALM pursue
formal negotiations, the term sheets and price offers submitted
will not bind PSALM; hence, it may negotiate for better terms
and conditions. The privatization of Transco through a
concession agreement allows government to retain ownership and
control of strategic transmission assets, pending award of
franchise, and gain maximized revenues as investors are expected
to bid a price as if they had permanent ownership of assets.
Transco's privatization is part of the government plan to
raise $4 billion to $5 billion to reduce its budget deficit. The
winning bidder will operate Transco for 25 years. The contract
will be renewable for another 25 years, subject to the
concessionaire's performance. The government will require the
winning firm to pay at least 25% of the enterprise value of the
Transco business upon the close of the transaction. As an
incentive, investors have the option to pay the balance in
installments over a period of up to 25 years. The winning bidder
is expected to pay around $500 million, and assume about $1.5
billion of debts. PSALM first bid out the transmission assets in
July last year. But after only one party, Singapore Power,
submitted a pre-qualification proposal, the bidding was declared
a failure. A second bidding barely a month later also failed
after the same company expressed the sole interest to bid.
-- Bernardette S. Sto. Domingo
|
The National Government is likely to assume
PhP309.85 billion in financial obligations owed by 18
build-operate-transfer (BOT) projects to creditors, the chairman
of the House of Representatives committee on appropriations said
in a press release yesterday. Based on a Department of Finance
report submitted to his committee, Camarines Sur (southern
Luzon) Rep. Rolando G. Andaya, Jr. said in a press release
yesterday that the amount arises from government guarantees that
are now deemed likely to be assumed by the government.
Topping the 18 BOT projects is the NAIA International
Passenger Terminal 3, with its contingent liability of
PhP94.25 billion or $1.71 billion. It is presently the
object of a three-way dispute involving the government. Mr.
Andaya said that no matter which party wins, "the public that
will use the airport will have to ultimately foot the bill...I
just hope that the projected income was accurately made so that
the government will not end up paying for the difference, if a
proviso to that effect is embedded in the contract."
Other big-ticket BOT projects are:
- Casecnan irrigation project of the National Irrigation
Administration, with its contingent liability of
PhP63.81 billion;
- Metro Manila Skyway project of the Toll Regulatory
Board,
PhP43.87 billion;
- Leyte Geothermal Project of PNOC-EDC,
PhP34.39 billion;
- Metro Rail Transit 3 of the Department of Transportation
and Communication,
PhP31.26 billion; and
- the West Zone Concession of the Metropolitan Waterworks
and Sewerage System (MWSS),
PhP17.73 billion.
Mr. Andaya noted that the National Government has assumed and
paid
PhP11.57 billion of Metro Rail Transit's contingent
liability, and will likely assume and pay the additional
PhP31.26 billion contingent liability. The project has
incurred losses -- which the National Government has guaranteed
to cover -- because of peso devaluation.
Other BOT projects whose contingent liability the National
Government will mostly likely assume include: LRTA Extension 1
of the Light Rail Transit Authority South Luzon Expressway and
Manila-Cavite Expressway Projects of the Toll Regulatory Board,
North Luzon Expressway Project of the Philippine National
Construction Company, Southern Tagalog Arterial Road of the
Department of Public Works and Highways, Civil Registry System
of the National Statistics Office, Database Infrastructure and
IT System of the Land Transportation Office, Machine Readable
Passport and Visa of the Department of Foreign Affairs, Land
Titling Computerization Project of the Land Registration
Authority, MWSS East Zone Concession, Subic Water of the SBMA,
Olangapo City Water District and the Mindanao Geothermal Project
of the PNOC-EDC. -- J. T. Gulane
|
The Finance department yesterday revised its revenue
collection target from the tax amnesty bill to a range of
PhP8 billion to
PhP20 billion from the previous
PhP9-billion estimate, but the Senate committee on ways and
means remained unconvinced. Finance undersecretary Emmanuel
Bonoan said the imposition a 3% tax amnesty rate would yield a
low estimate of
PhP8-billion revenues, a medium estimate of
PhP13.86-billion revenues, and high estimate of
PhP20.46 billion. "After conferring among ourselves, we err
on the more conservative side to the low of
PhP8 billion to a high of
PhP13.86 billion," Mr. Bonoan told a Senate hearing on the
proposed tax amnesty.
The Finance official explained that the revenue estimates
were based on a survey of the 2000 taxpayer database, which
showed total taxpayer assets of
PhP11.8 trillion and total net worth of
PhP4.4 trillion. Mr. Bonoan added that from the
PhP4.4-trillion total net worth, 90% or
PhP3.96 trillion belongs to large taxpayers, while 10% or
PhP440 billion belongs to medium and small taxpayers. He
further said the large taxpayers failed to pay
PhP54.052 billion in corporate income tax and
PhP180.3 billion in value added tax over the last five
years. The two taxes account for 5.5% of the
PhP3.96-trillion total net worth of large taxpayers. This
means the taxable amount reached
PhP217.8 billion. The application of a 3% amnesty rate will
mean
PhP6.53-billion revenues for the government. Mr. Bonoan
added that medium and small taxpayers failed to pay
PhP26.696 billion in professional income tax and
PhP4.578 billion in compensation income tax.
These two figures, plus the
PhP180.3-billion value added tax, account for 11.17% of the
total net worth of medium and small taxpayers, or a taxable
amount of
PhP49.1 billion. When applied a 3% amnesty rate, the
government will earn
PhP1.47 billion in revenues from the medium and small
taxpayers. The low revenue estimate from large, as well as
medium and small taxpayers of
PhP6.53 billion and
PhP1.47 billion, respectively, totaled some
PhP8 billion. The same formula was used while the tax
amnesty coverage was stretched to get medium and high revenue
estimate of
PhP13.86 billion and
PhP20.46 billion, respectively. Committee chairman Sen.
Ralph G. Recto said the annual tax gap totaled
PhP265.626 billion, which when stretched to five years,
meant that the tax gap hit around
PhP1.3 trillion. This figure, when multiplied to the
proposed 3% amnesty rate, would mean more than
PhP39 billion in revenues in five years. "You are using data
for five years, but the tax amnesty will not only cover five
years, but from 2001 and prior years. The moral hazards should
be weighed by the high revenues from the tax amnesty. Please
review again your estimates," Mr. Recto said. Opposition Sen.
Juan Ponce Enrile also asked the Finance department to give a
"well-studied proposal."
'LIMITED RECORDS'
Mr. Bonoan said limited records prevented them from giving
the complete picture of the tax base and foregone taxes over the
last years. He added that the mandatory filing of the of
statements of assets, liabilities and net worth (SALN) was
designed to address the documentary problem. For his part,
Filipino Chinese Chamber of Commerce and Industry (FCCCI)
representative Guillermo de Joya said lowering the tax amnesty
rate to 1% will encourage more taxpayers to avail of the
amnesty. Mr. De Joya noted that the organization has 50 members
with at least
PhP1-billion net worth who might avail of the amnesty
program. He added that 7,500 members have at least
PhP100-million net worth; 15,000 members with
PhP50-million net worth; and 20,000 members with
PhP1-million net worth. "We will now concentrate on the
potential of how much we can collect out of this exercise. On a
very conservative estimate, we just estimated there will be 50
filers on a billion bracket," Mr. De Joya said. "With these
items -- when you add it up -- you have
PhP1,570,000,000 and at 1% percent, it will be
PhP15.7 billion. This far exceeds the estimate of the
Department of Finance when they said their estimate is only
PhP9 billion," he added.
When asked by Opposition Sen. Sergio Osmeņa III to reveal the
names of the billionaires who failed to pay the right taxes, the
businessman refused. "We got this information from a very
confidential and best effort basis and we have that privilege
communication and we cannot and I don't think we can reveal it.
Yes, they are very willing to come out and file," Mr. De Joya
said. At the Senate, Mr. Recto has filed a bill for the granting
of tax amnesty on all unpaid internal revenue taxes for the
taxable year 2001 and prior years. The tax amnesty bill is the
first revenue measure that has been passed by the House ways and
means committee. President Gloria Macapagal Arroyo has certified
the bill as urgent.
|
By Ma. ELISA P. OSORIO,
Reporter
Henry Sy-owned investment house BDO Capital & Investment
Corp. asked the Supreme Court to lift the status quo order
issued on the sale of the stake of the Social Security System (SSS)
in Equitable PCI Bank. In an October 11 filing, BDO Capital said
there was nothing irregular in the sale of the Equitable PCI
shares as there was already a valid and binding agreement
between the Sy group and the SSS. It cited the Letter of
Agreement dated December 30, 2003. SSS agreed to sell 188
million shares or approximately 25.84% of the outstanding
capital stock of Equitable PCI at PhP43.50 apiece. "At the
outset, it should be stressed that if there is a party who is
placed at a disadvantage by reason of respondent SSS's decision
to sell its [Equitable PCI] shares through a public bidding, it
is respondent BDO Capital," the 61-page comment read.
BDO Capital inisisted that there is no need for a public
bidding. It said Commission on Audit guidelines on public
auction indicate that a public bidding is not necessary in the
disposal of merchandise or inventory held primarily for sale in
the regular course of business. SSS, as a fund manger, engages
in investment activities. It regularly trades shares of stock in
the course of its business, the firm said. "[The Equitable PCI
shares] clearly fall under the term 'merchandise or inventory
held for sale in the ordinary course of business' such that the
sale is exempted from the requirements of COA Circular No.
89-296 [circular on public auction]," BDO Capital said. BDO
Capital added that the commission is of the opinion that the SSS
and BDO Capital transaction can be classified as a "stock
exchange transaction." It also cited a Department of Justice
opinion, penned by then Acting Secretary Ma. Merceditas N.
Gutierrez, which stated that "it found nothing legally
objectionable with the provisions" of the share purchase
agreement forged between public respondent SSS and respondent
BDO Capital.
BDO Capital further explained that the sale of the shares was
not disadvantageous to the government. It said the complaint of
Senator Sergio R. Osmeņa III was anchored on the wrong premise
that the shares could fetch a price of PhP60 each. BDO Capital,
however, said the last time the shares hit the PhP60 mark was in
1987, adding that the price even fell to PhP16 in 2002 but
managed to climb to PhP34 last year. "There is no disadvantage
that is caused to public respondent SSS because the [shares]
were bought at a premium of 30% of the market price," it said.
BDO Capital claimed that "the only reason it is at PhP40 level
is because of the market's response to BDO Capital's price at
PhP43.50." Also, it said SSS chief executive officer and
president Corazon de la Paz has already issued a statement
saying that after four years, SSS has yet to realize any return
on its Equitable PCI investment because the bank has not paid
dividends since 2000.
Last October 5, the Supreme Court ordered SSS to stop the
sale through a "Swiss Challenge" -- an option resorted to by the
pension fund, following opposition from many sectors over the
deal with BDO Capital. The status quo order was issued upon the
allegation of Mr. Osmeņa that the government could potentially
lose at least
PhP3 billion if the method of sale will be through the Swiss
Challenge. Mr. Osmeņa said the Equitable PCI shares may be sold
for PhP60 instead of PhP43.50 per share, the offer of BDO
Capital, if properly bid out. Last October 1, Mr. Osmeņa filed a
petition before the Supreme Court questioning the sale of SSS'
equity stake in Equitable PCI through a Swiss Challenge
procedure. Mr. Osmeņa, together with Senators Juan Flavier,
Rodolfo Biazon, Alfredo Lim and Ana Consuelo Madrigal, asked the
court to prevent SSS from selling the shares through this method
because it is "simply a scheme to sell the shares to BDO Capital
without a public auction."
In a statement, Mr. Osmeņa said SSS insists on pushing
through with the October 20 Swiss Challenge in spite of
objection raised about its illegality. "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. Osmeņa said. The senator said BDO Capital will be given the
chance to match the highest price if it is within the price
range contemplated by it. He said the "Instruction to Bidders"
have provisions that unduly favor BDO Capital and even
discourage the participation of other bidders. First, he said
BDO Capital, under certain circumstances, was allowed to match
the second highest bid. Second, in case there were no bidders or
the prospective bidders do not qualify, SSS was bound to
automatically offer the shares to BDO Capital. Third, 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 Regional Trial Courts of Makati and
Mandaluyong. Fourth, all bidders except BDO Capital, were
required to waive their right to sue SSS for any defect or
irregularity in the sale. Mr. Osmeņa likewise said BDO Capital
has not paid any consideration for the preferential right to
match.
SSS, in the case filed before the Mandaluyong court, said
there was still no perfected and binding agreement between the
pension fund and BDO Capital over the shares. Mr. Osmeņa further
said the Swiss Challenge violates public policy because the
fundamental method of disposing government assets is through
public bidding. "The Swiss Challenge is not a mode of bidding
but a mechanism for awarding government contracts on negotiated
basis," said Mr. Osmeņa in a statement. He added that "by using
a Swiss Challenge, SSS may even have violated penal and
anti-graft statutes."
|
Philippine Bank of Communications (PBCom), a midsize
commercial bank, concluded yesterday the sale of
PhP12.156 billion worth of idle assets to Unimark Investments
Corp., bank corporate secretary Edmundo L. Tan told the
Philippine Stock Exchange. PBCom officials were not available
for comment as of presstime. Unimark Investments Corp. was one
of the 36 special purpose vehicles (SPVs) registered at the
Securities and Exchange Commission (SEC).
Except for one, all of the SPVs registered at the SEC have
complied with the law's minimum authorized capital of PhP500
million, minimum subscribed capital of PhP125 million and
paid-up capital of PhP31.25 million. Only Unimark Investments
Corp. had a PhP2-billion authorized capital and PhP500-million
paid-up capital. Stockholders of the SPV include Robin C. Sy,
Hilarion P. Uy, William Chi Eng S. Co, Peter P. Ong and Adriano
Tio Chua. Banks that want to take advantage of the perks under
Republic Act 9182 or Special Purpose Vehicle (SPV) Act of 2002
have until September 18 to establish and register their SPVs
with the SEC. The incentives, which include tax perks and
reduced transaction fees, are available to idle asset buyers
until April 2005.
PBCom earlier disclosed it was reviewing three bids after it
auctioned PhP12.5 billion worth of foreclosed properties and bad
loans last August 24. Half of the total asset portfolio put on
the auction block are nonperforming loans while the rest are
nonperforming assets or those classified as real estate and
other properties owned or acquired. Only three bids were
submitted during the public auction of the assets while eight
groups conducted due diligence. PBCom is confident that a
significant improvement in its revenue base will be achieved for
the second half of the year, resulting in increased
profitability. After incurring a net loss of PhP200.72 million
during the first quarter, the publicly listed bank swung to
profit of PhP9.7 million in the succeeding quarter, largely
because of higher interest income on investments. This came
after a PhP3-billion capital infusion by major shareholders last
March and interest income from PhP7.64 billion in government
securities put in by the Philippine Deposit Insurance Corp.
relative to auction of the bank's PhP12.5 billion worth of
foreclosed properties and bad loans. -- Ruby
Anne M. Rubio
|
PCI Leasing & Finance Inc. confirmed yesterday its proposed
PhP500 million in short-term commercial papers representsa
significant increase from the company's previous PhP100-million
line for 2003 to 2004. "The amount is being increased in the
light of expansion in the volume of bookings and an increase in
the company's portfolio," PCI Leasing vice-president Marlo R.
Cruz said in a disclosure to the stock exchange.
Philippine Rating Services Corp. recently gave PCI Leasing a
rating of PRS 1, which is defined as "strongest capability for
timely payment of debt instrument issue on both interest and
principal." PCI Leasing is a majority-owned subsidiary of
Equitable PCI Bank, the country's fourth largest lender.
|
The National Bureau of Investigation (NBI) yesterday warned
the public of the existence of "phishing" syndicates that are
victimizing clients of banks and financial companies. Phishing
involves spoofing or sending a fake email to convince a bank
client or customer to "confirm" online their account information
and passwords. According to the authorities, they are now
working on tighter filtering systems for banks' internet
transactions. NBI is now closely coordinating with Internet
Service Providers and bank officials in an attempt to bust the
ring. Citing information reaching them, NBI agents said a newer
browser software would prevent fake sites from being accessed
even if the user clicks on the email message. "Not only do we
need stricter software, but we also need a publicity drive so
people will be aware of this scam. We hope the banks and
financial institutions can do their part by informing not just
their clients but also the general public," said a senior
official at the NBI, who requested anonymity. However, the NBI
official said the work should not rest completely with the
government. Banks also need to help disseminate anti-Phising
information since syndicates have started using banks' logos and
spoofing their websites.
In one instance, the source said, a syndicate even managed to
copy the logo and website of a financial consultancy firm
affiliated with US-based CitiGroup. "Such a racket has been
going on in past years in the United States and Europe. Many
phishing emails have been traced to syndicates in Russia," the
source said. In one particular email of the syndicate, it showed
that it originated from the Smith Barney Group, a subsidiary of
CitiGroup Global Markets Inc., owned by universal bank Citibank.
The sender had a supposed customer service reference number
(cust_service.ref.num669743363403@smithbarney.com), and bore the
subject line "Please Read This Message." "Dear Smith Barney
Customer, Technical services of the Smith Barney are carrying
out a planned software upgrade. We earnestly ask you to visit
the following link to start the procedure of confirmation of
customers' data," the letter said. An Internet hyperlink
(https://www.smithbarney.com/cgi-bin/login/confirm.cgi) followed
the first two sentences. "This instruction has been sent to all
Smith Barney customers and is obligatory to follow. Customers
support service," the email added. Upon closer inspection of the
email however, it would show that the message itself was a link
that did not lead to the Smith Barney website.
|
By KRISTINE L. ALAVE
A Manila court yesterday dismissed the petition for corporate
rehabilitation of the Panlilios' Grand Boulevard Hotel, formerly
Silahis International Hotel, after deeming the firm was not
doing its best to come up with a rehabilitation plan that would
be fair to all stakeholders. The court also recalled the "stay
order" which allowed the company to suspend payments to all of
its obligations, making it now vulnerable to the demands of its
creditors. In a seven-page ruling, Manila judge Artemio S. Tipon
hit the corporate rehabilitation plan of the hotel describing it
to be "manifestly undesirable." The "management, directors and
stockholders of the Hotel are not proposing to take sacrifices
in rehabilitating the Hotel," the judge said. Mr. Tipon said for
a corporate rehabilitation to succeed, "there must be a change
in management or at least management style; the obligations
(liabilities side) must be reduced, while additional funds
(assets side) must be brought into the business; and there must
be common sacrifices among all parties concerned." The hotel's
proposed plan, the judge stressed, failed to address these three
main components.
According to the order, the rehabilitation plan submitted by
the company stipulates that the management will remain in place
"presumably for the entire 18-year period proposed as the
pay-back period." The 18-year-pay back time, the judge noted,
was "extraordinarily long." The company also did not give the
court assurance that it would work for additional capital
infusion despite its intentions to renovate and refurbish the
hotel. The court also criticized the stockholders of the hotel
for making little effort in alleviating the company's financial
woes. While the hotel proposed to convert its
PhP20-million debt into equity, "there is no offer on the part of
the stockholders of the Hotel to give up their controlling
interest under the Plan" even if it maintained that it "still
has more than sufficient assets to answer for all its debts."
Further, the provision in the rehabilitation plan on the
settlement of secured obligations was not detailed and
ambiguous, Mr. Tipon pointed out. He added there was no firm
signal from the company's board of directors and stockholders
that they have "irrevocably approved and/or consented to," to
rehabilitate the firm. The court also felt the hotel was trying
to shut out the creditors for saying that there was a
revaluation increment in the hotel's properties worth
PhP255.29 million. Revealing this would effectively deny
creditors from opposing the plan and make their objections
"manifestly unreasonable." Mr. Tipon also scored the hotel for
insisting that rehabilitation receiver nominee Patrick V. Caoile
was qualified for the post. Mr. Tipon rejected Mr. Caoile and
assigned the job to lawyer Manuel Yngson Jr. Mr. Caoile was
unable to articulate his qualifications and answer sufficiently
his questions regarding the rules of rehabilitation, Mr. Tipon
said. He stood by his decision to appoint Mr. Yngson, stressing
he answered eloquently in matters pertaining to rehabilitation
matters and was the unanimous choice of the creditors. Mr. Tipon
advised the appointed receiver, Mr. Yngson, to urge the hotel to
revise their rehabilitation plan immediately. "Otherwise, there
may not even be a ghost of a chance for the rehabilitation to
succeed," he added. The hotel owes around PhP1.06 billion to
various banks. It blamed the 1997 Asian financial crisis and the
eight-month strike in 1999 for the slowdown of its operations.
|
By ROULEE JANE F. CALAYAG
Hong Kong's First Pacific Co. has sold 581.1 million common
shares, equivalent to a 3.12% stake in unit Metro Pacific Corp.
Subject to market conditions, First Pacific plans to sell an
additional 349.1 million shares or 1.88% of Metro Pacific's
total issued common shares. "The intention is to sell into the
market, in aggregate, no more than 5% of Metro Pacific's total
issued common shares," Jose Ma. K. Lim, Metro Pacific president,
said in a statement. Metro Pacific has 18.6 billion common
shares as of June 30. Before the sale, First Pacific had about
an 80% stake in Metro Pacific. Part of the proceeds will be used
to help Metro Pacific unit Negros Navigation Co. (Nenaco), which
is under rehabilitation. First Pacific sold the 581.1 million
common shares from Sept. 13 to Oct. 11.
The share price of Metro Pacific moved at a tight range of
PhP0.50 to PhP0.59 before closing lower at PhP0.46 yesterday
after the sale was announced. The stock traded at PhP0.55 when
the sale commenced on Sept. 13, dipped to a low of PhP0.50 on
Sept. 20. It reached its highest close of PhP0.59 on Sept. 24.
Mr. Lim told the exchange that a significant portion of the sale
proceeds will be used to fund the general corporate requirements
of Metro Pacific. He said these include, but not limited to, a
funding support to implement the rehabilitation plan of Nenaco.
The Manila Regional Trial Court approved last week the
rehabilitation plan of the debt-saddled shipping firm, enabling
the management to pay debts and restructe the business. Metro
Pacific had made it clear the sale proceeds will be put to
"better use", specifically in helping Nenaco with its
rehabilitation plan, said Astro del Castillo, managing director
of First Grade Holdings, Inc. However, this may cause some
selling pressure which could eventually pull down the price of
Metro Pacific stock. "The sizeable number of shares to be sold
may possibly [trigger] a move to sell," Mr. del Castillo said.
Metro Pacific was reportedly considering the stock delisting of
its shipping subsidiary.
In a statement, Metro Pacific yesterday said it is confident
of being able to "assist in accelerating the implementation of
the rehabilitation program" of Nenaco. "Metro Pacific believes
that Nenaco will benefit from the greater flexibility and
options presented to it as a private firm. We also understand
that given the 10-year time frame for rehabilitation, many of
Nenaco's remaining minority shareholders may prefer to exercise
a clear and fair exit mechanism for their investments in Nenaco
shares which have depreciated in value over the years," it said
in a statement. The stock reached a closing high of PhP0.59 last
Sept. 24 with
PhP1.2 million worth of net foreign selling. Most of the trading
sessions during the period saw a number of net foreign selling
in the stock. It was only last Oct. 6 that there was net foreign
buying of
PhP6.2 million. The stock was the third actively traded stock
yesterday. Metro Pacific has substantial interests in Lanco
Pacific Corp., Nenaco, and Pacific Plaza Towers.
|
The Philippine Stock Exchange (PSE) yesterday suspended the
trading of shares of publicly listed Asia Amalgamated Holdings
Corp. after the Securities and Exchange Commission (SEC) said it
is set to suspend the company's permit to sell securities.
"Please be informed that the Exchange was advised by the
Securities and Exchange Commission of its impending issuance of
a suspension order of the registration to sell securities and
permit to sell securities of Asia Amalgamated Holdings Corp. In
view of the foregoing, the exchange shall issue an indefinite
trading suspension of [the firm's] shares effective 9 a.m. of
Oct. 12," the PSE said in a circular. The SEC is set to
suspend the company's license to sell securities and
registration of securities after it failed to meet reportorial
requirements and failed to pay the fine imposed by the
commission, an SEC official said.
The suspension order is set to be signed tomorrow, she added.
Asia Amalgamated was incorporated in 1970 as Sulu Sea Oil
Development Corp. to engage in the business of hydrocarbon,
petroleum and oil exploration. In 1981, its name was changed to
The Energy Corp. Its name was again changed to Asia Amalgamated
after the change in majority ownership. --
Jennee Grace U. Rubrico
|
The Securities and Exchange Commission (SEC) has given the
Philippine Stock Exchange (PSE) until Nov. 12 to name the
independent director who would replace PSE President Francis
Lim. In a letter to the PSE, the commission said the Nov. 12
deadline is "non-extendable." This was after the PSE asked the
SEC to extend the Oct. 1 deadline for the bourse to find Mr.
Lim's replacement. "In a meeting on Oct. 7, the SEC decided to
grant PSE's request. They were given until Nov. 12 to elect an
independent director. The deadline is non-extendable," SEC
director Jose Aquino said. If the PSE fails to name an
independent director after the Nov. 12 deadline, Mr. Aquino
said, the SEC "will take the necessary action."
Under the Securities Regulation Code, the PSE is required to
have three independent directors. Of the 14 directors that the
PSE has, two are independent. This is because Mr. Lim stopped
being the third independent director of the PSE when he became
president. As president, Mr. Lim is now a non-broker,
non-independent director, taking the slot of former PSE
President Cayetano Paderanga. The PSE, however, could not give
the slot that Mr. Lim vacated to Mr. Paderanga because the SEC
said that while he could remain as a director, the former PSE
president could not qualify as an independent director.
-- J. G. U. Rubrico
|
SINGAPORE -- Royal Dutch/Shell, the world's third-largest oil
company, has kicked off an auction of its InterGen power joint
venture under a strategy to focus on production and exploration.
Shell and its partner, US building firm Bechtel, are trying to
sell their global power assets in one swoop, rather than
piecemeal, sources close to the deal said on Tuesday. The assets
are valued at $3 billion including debt, one source estimated.
The company also is considering the sale of its liquefied
petroleum gas business, valued by analysts at $2 billion.
Goldman Sachs Group, Inc. and private equity firm Kohlberg,
Kravis Roberts plan to bid for the LPG business, the Financial
Times reported.
MAJOR DISPOSALS
Last month, Shell unveiled plans for major disposals and new
production in its bid to move beyond a reserves scandal that
rocked the group. Shell said it planned $10 billion to $12
billion of asset sales for 2004 to 2006. InterGen, set up in
1995 and 68% owned by Shell, runs power plants around the world
with total capacity of 16,200 megawatts -- about a fifth of the
UK's total. InterGen's power plants, including those under
construction, are in the US, Britain, the Philippines, Colombia,
Mexico, China, Egypt, Turkey, Australia, the Netherlands, Spain
and Singapore. -- Reuters
|
By ROULEE JANE F. CALAYAG,
Reporter
Investors played safe yesterday as a host of factors shook
share prices at the Philippine stock market. "Investors locked
in on their gains as they were still reeling from the continued
increase in oil prices, concerns on possible rise on domestic
rates as well as a [threat of a credit] downgrade," said Astro
del Castillo, managing director of First Grade Holdings, Inc. US
light crude oil soared to $53.80 per barrel at the New York
Mercantile Exchange. As if this were not enough to rattle
investors, the London Brent crude exceeded $50 on worries of
prolonged disruptions in supply from Nigeria and Norway. This
was the first time in the 16 years since the contract began
trading that it soared beyond $50.
With the dependence of the Philippines on the world market
for its oil needs, it will not take long before the recent round
of oil price increases spills into the country, making it even
more difficult for Juan de la Cruz to have a decent meal in a
day. It is likely that the inflation rate may rise in reaction
to rising pump prices. The Bangko Sentral ng Pilipinas may also
review interest rates and implement some necessary adjustments.
Although the benchmark Philippine Stock Exchange composite index
(Phisix) slumped 37.06 or 2.03% to 1,784.91, the market remains
sound, said Mr. del Castillo. "It was a healthy correction. The
market is still strong," he said, adding that the Philippine
stock market is at an overbought level.
INDICES
For a second consecutive trading day this week, the
commercial-industrial fell. It dropped 65.45 to 2,838.27
yesterday, more than thrice its losses the other day. Property
went down by 12.49 to 619.04. Mining reversed its gains, losing
9.29 at 1,919.98. Banks and financial services declined 4.89 to
503.43. Oil settled at 1.77 after slipping by 0.06. The small
and medium enterprise counter was unchanged. The all-shares
dipped 7.65 at 1,117.53. Trades were reduced to 4,511 for over
two billion shares worth
PhP927.3 million.
Decliners outnumbered advancers at 86-10, indicating that the
bears were moving in faster than expected. Issues that kept to
their previous levels totalled 38. The prices of only two of the
20 most actively traded stocks were up and five were unchanged.
The rest suffered a decline. The Bank of the Philippine Islands
(BPI), the banking arm of the Ayala Group, was the most active
stock, edging out the telecom stocks which led trading
previously. BPI closed lower at PhP47.50, with 4.1 million
shares worth PhP198.7 million accounting for 21.42% of trades.
Philippine Long Distance Telephone Co. followed with its
price down at PhP1,450 from P1,480. Metro Pacific Corp. came in
third, with its stock price down to PhP0.46. The holdings firm
of First Pacific Co. Ltd. told the exchange that 581.1 million
of its common shares were sold between Sept. 13 and Oct. 11.
Metro Pacific president Jose Ma. K. Lim said in a statement that
subject to market conditions prevailing from time to time, an
additional 349.1 million shares representing 1.88% of the firm
will be sold. Mr. Lim explained that the intention is to sell to
the market not more than 5% of the company's total issued common
shares. The holdings firm has 18.6 billion common shares as of
June 30. The net proceeds of the sale will be used for its
corporate requirements and to support the rehabilitation plan of
subsidiary, Negros Navigation Co., Inc.
Other telecom stocks Globe Telecom of the Ayala Group,
Digital Telecommunications Philippines, Inc. (Digitel) of the
Gokongweis and PLDT subsidiary Pilipino Telephone Corp. (Piltel)
were also actively traded. Globe was down to PhP1.045. Digitel
and Piltel also finished lower at PhP1.30 and PhP2.55,
respectively. Confidence of foreign fund managers in the
Philippine market was back. Net foreign buying regained strength
at PhP148.3 million with total foreign buying at PhP446.3
million against total foreign selling of PhP298 million. In
other news, Philippine Savings Bank, which was unchanged at
PhP28, will pay a cash dividend of PhP0.20 per share starting
Nov. 10 to stockholders on record as of Oct. 26.
Although the market swerved to the negative side for a second
day, Mr. del Castillo is confident that the situation would not
persist for long and would not hurt market prospects for the
last quarter of the year. "The earnings season is just around
the corner. This could cushion the impact [of the bearish
sessions]. Investors remain bullish of the prospects of
companies as they take positions in those that promise
substantial earnings," he added.
|
|