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Moodys upgrades the Philippines credit rating outlook

The Philippines received its sixth upgrade in less than 2 years after New York-based Moodys Investors Service upgraded the credit rating outlook of the Philippines to positive from stable, paving the way for a rating upgrade within the next six months to 18 months. Moodys assistant vice president Christian de Guzman said the credit rating outlook of the Philippines was upgraded on the back of the countrys continued trend fiscal and debt consolidation as well as the enhanced finance-ability of government debt. The government of the Philippines has continued to demonstrate prudence in its fiscal management, as characterized by low budget deficits relative to its rating peers and a steadily declining level of debt relative to GDP. Such outcomes are the result of expenditure restraint and improved revenue performance, De Guzman said. This is the sixth upgrade received by the Philippines since President Aquino assumed office in June of 2010. London-based Fitch Ratings rates the countrys sovereign credit at one notch below investment grade while Moodys as well as Standard & Poors rate the country at two notches below investment grade. Despite the absence of legislative reforms, de Guzman pointed out that more effective tax administration measures have resulted in revenue growth outpacing nominal gross domestic product (GDP) growth over the past five quarters. And although spending disbursements have accelerated since late 2011, he said the uptick in revenues has led to the faster-than-

expected consolidation of the countrys deficits and debt burden. The Philippines booked a budget surplus of P31 billion last April as revenues increased due to the tax-filing season. The country recorded a budget deficit of P2.88 billion in the first four months of the year, a reversal of the P61 million surplus booked in the same period last year. The government hopes to contain this years budget deficit at roughly P280 billion or 2.6 percent of GDP from the P197.8 billion deficit incurred in 2011. De Guzman said Moodys expects the revenue growth to improve further upon the passage of legislation aimed at restructuring excise taxes on alcohol and tobacco products. Nevertheless, deeper structural reforms may be necessary for revenue mobilization to catch up to levels similar to those of Philippines rating peers, he added. According to him, active debt management coupled with the increasingly solid track record of inflation management by the Bangko Sentral ng Pilipinas (BSP) has allowed for an improvement in the countrys debt structure, including lower average borrowing costs and foreign currency exposure, as well as longer average maturities. He also cited the countrys robust external payments position as the gross international reserves (GIR) of the Philippine is expected to hit a new record level of $79 billion this year. The sovereigns vulnerability to global financial market shocks has been reduced by the build-up of foreign exchange reserves,

resulting in turn from robust current account surpluses and healthy capital inflows in recent years, he said. The Cabinet-level Development Budget Coordination Committee (DBCC) sees the countrys GDP growing faster at a range of five percent to six percent this year after slackening to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade and cautious government spending. To achieve a credit rating upgrade, de Guzman said the Philippines should pursue structural improvements in revenue mobilization, continued reductions in the government debt burden, and accelerate investment spending that places the economy on a path of stronger growth. These developments should also be accompanied by the continued health of the countrys balance of payments and stability of the financial system, he said. He said factors that could lead to a downgrade in rating or outlook include a destabilization of macroeconomic conditions that could lead to an unmooring of inflation expectations and an adverse effect on financing condition and a shift away from the focus on good governance, resulting in turn in a deterioration in the investment climate and, ultimately, revenue performance. BSP Governor Amando Tetangco Jr. said the upgrade was based on the countrys continued fiscal consolidation and good debt

management underpinned by sustained robust external position and solid track record of inflation management. This positive rating action is therefore welcome and is a sign that Moodys is seeing the fruits of good governance on all fronts fiscal, monetary, and external, Tetangco said. The Aquino governments good governance battle is translating to prudent spending on the part of the national government as well as improved revenue collection by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The message we have been trying to send to investors in general and credit rating agencies in particular is that fiscal performance can improve with good governance, he added. For his part, Finance secretary Cesar Purisima said the upgrade brings the country closer to the much coveted investment grade credit rating. This is one more step in our march towards investment grade, towards reducing the gap between the market rating and the credit rating, and more importantly towards a more sustainable growth path, Purisima stressed. He pointed out that the Aquino administration would continue to focus on good governance as the basis for good economics, on fiscal sustainability, on macroeconomic stability and on opening up the country to business and tourism.

*Economy grows by 6.4 percent in 1st quarter


Published : Friday, June 01, 2012 THE Philippine economy grew by 6.4 percent in the first quarter of 2012, the highest figure recorded among East Asian and Southeast Asian countries, the National Economic Development Authority (NEDA) and the National Statistical Coordination Board (NSCB) revealed on Thursday. Malacaang praised the better-thanexpected economic growth, which it said was due to sustained private sector confidence and accelerated government spending. Finance Secretary Cesar Purisima also lauded the figure, which he attributed to the countrys resilience and its capacity to be steadfast in terms of economic growth. According to a report presented by NSCB Secretary General Romulo Virola, the Philippine economy got off to a great start this year when the countrys gross domestic product (GDP) grew by 6.4 percent, compared to the 4.9 percent recorded in the same period last year. GDP refers to all goods and services produced in a given period. The 6.4 percent was higher than the 3.7percent preliminary average growth registered in the Southeast Asian region, according to NEDA Director General Dr. Arsenio Balisacan. He said that the Philippines was growing faster than Indonesia (6.3 percent), Vietnam (4.0 percent), Singapore (1.6 percent) and Thailand (0.3 percent). Balisacan added that economic growth

slowed down in East Asian nations like South Korea (2.8 percent), Japan (2.8 percent) and Hong Kong (0.4 percent), with the exception of China (8.1 percent). Benign inflation The above-expectations growth benefited from a regime of benign inflation and drew from the revitalized services sector, particularly from trade and other services, NSCB said. It added that this growth was also supported by the manufacturing sector, recovering from its slow performance during the third and fourth quarters of 2011. On the demand side, the growth came mainly from net exports and robust household spending, according to the NSCB. The net primary income (NPI) also grew by 4.0 percent, pushing the gross national income/gross national product (gni/gnp) growth to 5.8 percent, compared to 3.5 percent in 2011. On a seasonally adjusted basis, GDP gained momentum by growing by 2.5 percent in the first quarter of 2012, while GNI growth was slower at 1.3 percent. Balisacan said that the NSCB reports findings exceeded the markets consensus forecast of 4.8 percent. He added that the growth was supported by accelerated government spending (including for infrastructure and conditional cash transfer spending); low prices, which supported household consumption; betterthan-anticipated exports performance; continued credit expansion; continued robustness of remittances; expansion in the tourism sector; increased business and

consumer confidence; and an overall buoyant domestic economic outlook. On the supply side, the industry sector was primarily driven by manufacturing with 5.7 percent; utilities, 8.0 percent; and construction subsectors, 3.6 percent. The NEDA chief said that government agencies were able to speed up the implementation of major infrastructure projects after the departments budget allocations were released in January. He added that growth in the first quarter translated to an increase in employment by 1.101 million. According to him, job generation was more pronounced in the services sector, followed by the industry sector. The continued strong inflows of remittances, robust inbound tourist receipts and low inflation environment contributed to significant increases in employment creation, particularly in the services sector, which fueled consumption, Balisacan said. Quality jobs He stressed, though, that the government needs to create quality jobs in manufacturing and services, as well as create activity in the agriculture sector. The NEDA director general said that overseas Filipino remittances increased by 5.4 percent to reach $4.84 billion in the first three months of 2012. With the growth in remittances, npi from the rest of the world increased by 4.0 percent, boosting gni by 5.8 percent. He added that, given the preliminary first quarter 2012 estimate, the governments GDP growth-rate projection of 5 percent to 6 percent may be reached or even

surpassed. If we can just maintain the momentum and solve the problems in human development, infrastructure and quality of the institutions, we should be able to reach our target, Balisacan said. He added that the government would remain vigilant on the risks to growth, including those posed by the Eurozone crisis and the uncertainty in oil prices. The first-quarter performance serves as a springboard for the next three quarters. The government remains committed to provide the best opportunities for all Filipinos in the attainment of inclusive growth, Balisacan said. Several factors In a statement, Palace deputy spokeswoman Abigail Valte noted several factors that contributed to the countrys economic growth. There were healthy increases in the services sector, complemented by growth in exports and increases in household consumption expenditures, Valte said. We are confident that the positive trajectory of our GDP growth will be sustained in the latter quarters of this year, which have traditionally demonstrated more robust and dynamic economic performance, she added. This affirmation of our countrys steady advance toward inclusive growth comes at the heels of Moodys Investors Service upgrade of our credit outlook to positive from stable. All indications point to the global economys continued confidence in the Philippines, as well as to a more optimistic outlook within the country, the

spokeswoman said. Inclusive growth Purisima said in a statement that the 6.4 percent growth highlights the countrys capacity to [go] faster toward inclusive growth that shall produce jobs and eradicate poverty in the long run. This expectation-defying result strengthens our resolve to sustain this growth pace toward achieving a sustainable and inclusive

economic expansion. While we recognize the risks that exogenous factors pose, we also see the opportunity that greater investments in agriculture, manufacturing, BPO [business process outsourcing], and tourism present. We look forward to presenting the Philippine case again to credit rating agencies and investors now that results affirm the Aquino administrations core belief that good governance is good economics, he added.

*NEDA: PH can withstand global shocks Published : Thursday, June 14, 2012 00:00 Written by : MAYVELIN U. CARABALLO REPORTER The Philippines would be exempted on the impacts of different economic difficulties around the world, primarily because of the governments continued efforts to achieve broad-based growth, a National Economic and Development Authority (NEDA) official said on Wednesday, following the release of a new World Bank (WB) report on the countrys projected economic growth for this year. According to Ruperto Majuca, NEDA officer-in-charge and deputy director general for planning, the World Banks recent projection on the Philippine economic growth is very low as well as difficult to understand. The WB, in its Global Economic Prospects (GEP) June 2012, cited outside risks such as the eurozone crisis, higher oil prices and the economic slowdown in China on its low 4percent growth forecast for the Philippines for this year, which is lower than its 4.2 percent January forecast. The WBs forecast is also below the 6.4percent Philippine gross domestic product growth in the first quarter of 2012, as well as the governments 5 percent to 6 percent GDP growth target for the whole year. The World Bank report also said that for 2013 and 2014, the Philippines would likely have a GDP growth of 5 percent. Majuca contradicted the WB report by saying that for 2012, NEDA expects that the country will attain the higher end of the growth assumption of 5 percent to 6 percent, with a

considerable probability of exceeding it. He added that for 2013, the Philippine GDP will probably be at 6 percent to 7 percent or higher. The government has laid the foundation for broad-based growth, so that even if the rest of the world are experiencing economic difficulties, the Philippine economy is an exemption, and acting like a star player, he said. The NEDA official added that the government has considerably strengthened domestic demand, so the country is not too dependent negative external developments. Majuca cited examples such as the continued developments in infrastructure, social protection programs, tourism, business process outsourcing, exports and investments. Long period volatility The GEP report had warned developing countries like the Philippines to prepare for a long period of volatility in the global economy by reemphasizing medium-term development strategies, while preparing for tougher times.

It said that a resurgence of tensions in highincome Europe has eroded the gains made during the first four months of 2012, which saw a rebound in economic activity in both developing and advanced countries, and an easing of risk aversion among investors. The report added that since May 1, increased market jitters have spread. Developing and high-income country stock markets have lost some 7 percent, giving up two-thirds of the gains generated over the preceding four months.

Most industrial commodity prices are down, with crude and copper prices down by 19 and 14 percent, respectively, while developing country currencies have lost value against the US dollar, as international capital fled to safe-haven assets, such as German and United States government bonds, the GEP report noted. So far, conditions in most developing countries have not deteriorated as much as in the fourth quarter of 2011, the report also said. According to Hans Timmer, director of Development Prospects at the World Bank, global capital market and investor sentiment are likely to remain volatile over the medium termmaking economic policy setting difficult. In this environment, developing countries should focus on productivity-enhancing reforms and infrastructure investment instead of reacting to day-to-day changes in the international environment, he said. Weak growth Furthermore, the report mentioned that increased uncertainty will add to preexisting headwinds from budget cutting, banking-sector deleveraging and developing country capacity constraints. As a result, the World Bank projected that developing country growth will slow to a relatively weak 5.3 percent in 2012, before strengthening somewhat to 5.9 percent in 2013 and 6.0 percent in 2014.

The GEP report also stated that growth in high-income countries will also be weak, 1.4, 1.9 and 2.3 percent for 2012, 2013 and 2014 respectivelywith GDP in the Euro Area declining 0.3 percent in 2012. Overall, global GDP is projected to rise 2.5, 3.0 and 3.3 percent for the same period. This baseline scenario remains the most likely outcome. However, should the situation in Europe deteriorate sharply no developing region would be spared, the report noted. Where possible, developing countries need to move to reduce vulnerabilities by lowering short-term debt levels, cutting budget deficits and returning to a more neutral monetary policy stance. Doing so will provide them with more leeway to loosen policy, should global conditions take a sharp turn for the worse, said Andrew Burns, manager of Global Macroeconomics and lead author of the report. In the case of the East Asia and Pacific, the GEP revealed that the region is on a moderately easing trend at 7.6-percent growth in 2012. It cited the recent deterioration in global financial conditions is expected to add to pre-existing headwinds, including relatively weak demand from the high-income world, and a slowing phase in China. For 2013 and 2014, because of broader global recovery, the regions projected growth will likely be at 8.1 percent and 7.9 percent, respectively, the report noted.

Can PH economy sustain its growth momentum?


By Cathy Rose A. Garcia, ABSCBNnews.com Posted at 05/31/2012 3:01 PM | Updated as of 05/31/2012 9:15 PM MANILA, Philippines - The Philippines posted surprisingly strong first quarter growth, but some economists are questioning whether the growth momentum can be sustained for the rest of the year. The Philippines saw its first quarter gross domestic product (GDP) climb 6.4% from a year earlier, the fastest quarterly pace in 2 years, on the back of strong government spending, robust domestic demand and rebound in exports. Socioeconomic Planning Secretary Arsenio Balisacan expects the economy to exceed the full-year target. "Given the preliminary first quarter 2012 estimate, we expect that the full year 2012 real GDP growth rate projection of 5 to 6% is well within reach, or may even exceed it... The first quarter performance serves as a springboard for the next three quarters," he said. Bangko Sentral ng Pilipinas Governor Amando Tetangco said the higher than forecast outcome made the government's 2012 target "more manageable," adding that there was less need for monetary authorities to support growth. "We are, of course, hopeful that this trend would continue, as the national government accelerates spending and private consumption remains robust," Tetangco said in a statement.

"Nevertheless we are mindful of the risks in the external environment, particularly the weakness in the euro zone, tentative growth in the United States and slowdown in China," he said. Sustainability in doubt However, some economists do not think the Philippines can sustain its growth momentum for the rest of the year, with uncertainties in the euro zone and the slowdown of the Chinese economy. University of the Philippines School of Economics professor Benjamin Diokno raised some questions about the first quarter GDP numbers. "If the numbers are true (adjusted 4.9% last year) 6.2 in the first quarter of 2012, how come many Filipinos are jobless, poorer, and hungrier? Is the 6.2% GDP growth sustainable in the light of the looming global recession," he asked. HSBC economist Trinh Nguyen attributed the rosy first quarter GDP growth to increased government spending and betterthan-expected exports. She expects the first quarter to be the "best quarter of the year." "Growth, while continuing be robust, will likely slow in the next quarters for the following reasons: a) government spending will likely slow, as already evidenced in the April number; b) exports, although expected to record positive growth, will normalize and expand at a more modest pace due to the worsening of the euro zone crisis, the slowing down of China as well as the gradual decrease consumer confidence in the U.S.; and c) remittances will likely decelerate due to tougher host country conditions, especially in the euro zone," she said.

Bank of the Philippine Islands economist Jun Neri said the question is whether the Philippines can sustain its economic growth. "Of course the question is the sustainability. It's a big question mark, more so that headwinds particularly from peripheral Europe are anticipated to have an impact on the remaining quarters of the year, which again should compel our policymakers to sustain if not to continue to step up on expansionary policies," Neri said. "Rocking in the Philippines"

But for the country to sustain growth momentum, Garcia said the government should introduce policy reforms in investments and fast-track public-private partnership projects. "This is definitely a buy signal for foreign investors and local investors alike... The Philippines is one of the few economies globally, not only in Asia, with very strong macro-economic indicators with growth at around 6%, inflation at around 3%, you have the peso still stronger vs. the dollar by 2-3% and all-time low interest rates for government bond yields," he said. "We are in a sweet spot. We are definitely rocking in the Philippines," Garcia added. With Reuters, ANC

On the other hand, PJ Garcia, senior vicepresident of BPI Asset Management, said the better-than-expected GDP numbers for the first quarter is a positive signal for investors to enter the Philippines.

Moody's raises 2012 growth forecast for PH


ABS-CBNnews.com Posted at 06/06/2012 5:54 PM | Updated as of 06/06/2012 5:54 PM MANILA, Philippines - Moody's Analytics raised its economic growth projection for the Philippines to 4.7% from 4%. This comes after the Philippine economy grew betterthan-expected in the first quarter. Moody's Analytics, sister firm of Moody's Investors Service, said the government's anti-corruption drive is effective in raising business confidence in the country. The government's push for infrastructure projects is also attracting interest from foreign investors. "These twin policy arms, lifting infrastructure and reducing corruption,

should also help to shore up both domestic and foreign direct investment, lifting the economy's longterm growth prospects," Moodys Analytics said. The Philippines' gross domestic product grew by 6.4% in the first quarter from a year ago, beating most projections. This was also the highest growth rate in Southeast Asia. "The investment environment in the Philippines has improved over the past year as President Aquino's plans have begun to take effect, with a focus on infrastructure development, stamping out corruption, and the seemingly obligatory chastisement of his predecessor, Gloria Arroyo, who now sits in jail on charges of electoral sabotage," Moody's Analytics said. The Philippine government is targeting 5 to 6% growth for 2012. Last year, the economy grew by 3.9%.

*Aquino arrives home with $2.5-B investments


ABS-CBNnews.com Posted at 06/10/2012 12:26 PM | Updated as of 06/10/2012 7:14 PM MANILA, Philippines - President Benigno Aquino III has arrived home from his sevenday trip, armed with at least $2.5 billion worth of investments from the United Kingdom and the United States. In London, Aquino met with various companies such as Glencore and Royal Dutch Shell, which are ready to invest in the country. He said at least $1.5 billion in investments are expected to flow into our economy. Over in the US, the president also met with businessmen who have pledged at least P1 billion dollars in investments. "Sa kabuuan po, ang halaga ng kalakal na papasok mula sa mga kumpanyang nakapulong natin, sa Britanya at sa Amerika: Hindi bababa sa dalawa't kalahating bilyong dolyar, o humigitkumulang 100 billion pesos. Trabaho po ang katumbas ng mga numerong ito; trabahong magdadala ng pagkain sa mesa ng Pilipino."

Aquino also announced the Philippines would no longer need to pay its $23 million in debts to the US. Benepisyaryo rin po tayo ng isang debt for nature swap; hindi na raw po natin kailangang bayaran ang 23 million dollars na utang, basta't mapupunta sa pagtatanim ng mga bagong puno ang perang ito, he said. He also added that the US has affirmed the importance of the Philippines as its ally and vowed to continue helping the country beef up its maritime capabilities. "Ipinahayag po ni Secretary of State Hillary Clinton ang suporta nilang ibibigay sa pagtatayo ng ating Coast Watch, na malayo ang mararating upang mabantayan ang ating mga baybayin. Inanunsyo rin ni Secretary Clinton na magkakaroon ng dagdag na Peace Corps volunteers na idedestino sa ating bansa." Aquino also said the Philippines will receive $30 million under the Partnership for Growth program, which supports projects to address poverty. - ANC

PNoy backs use of PCOS machines for 2013 polls


By Delon Porcalla, The Philippine Star Posted at 06/11/2012 8:20 AM | Updated as of 06/11/2012 10:20 AM MANILA, Philippines - As far as President Aquino is concerned, there should be no more debates over the use of the precinct count optical scan (PCOS) machines in the May 2013 senatorial elections, considering their proven credibility particularly in the 2010 presidential elections which he overwhelmingly won. Aquino told journalists over coffee that the country is expected to benefit much in terms of credible poll results if it maximizes the use of PCOS machines. He has urged the Commission on Elections, the independent constitutional body tasked to supervise the conduct of elections, to ensure that the country would not revert to the old manual system for the 2013 senatorial polls. At the same time, the Chief Executive expressed serious concern over the failure of the Supreme Court to act expeditiously on petitions against the Comelecs decision to purchase some 80,000 PCOS machines for the 2013 polls. Of course it is alarming, Aquino said, warning that it would be a tragedy to return to the manual counting system, which is vulnerable to manipulation by corrupt politicians and their supporters. The SC has yet to act on petitions contesting the P1.8-billion deal with the Netherlands-based Smartmatic-Total Information Managements (TIM). Comelec chairman Sixto Brillantes earlier complained about the SCs alleged foot-dragging on the matter before the House committee on suffrage and electoral reforms headed by Cavite Rep. Elpidio Barzaga Jr.. We will be pressed for time. This is the reason why were asking the SC to resolve it immediately. But if it takes time for the SC to resolve the issue until July to August (2012), then we will have no more time anymore for automated polls, he said. Last April, the SC issued a temporary restraining order on the P1.8-billion deal. Lawmakers, led by Speaker Feliciano Sonny Belmonte Jr., earlier rallied behind the Comelecs move to exercise the option to purchase the PCOS machines that the poll body rented from Smartmatic-TIM in 2010. The congressmen pointed out that the House of Representatives Electoral Tribunal (HRET) the quasi-judicial body that resolves poll disputes among representatives has already dismissed claims of irregularities in the 2010 elections.

The Solidarity for Sovereignty and another group, led by Davao City Archbishop Fernando Capalla, sought the issuance of a TRO on the P1.8-billion PCOS machines purchase, saying the Comelecs move was unlawful. SC okays purchase of PCOS machines ABS-CBNnews.com Posted at 06/13/2012 4:21 PM | Updated as of 06/13/2012 8:19 PM Petitioners to appeal, but lawyer says it's a long shot MANILA, Philippines (3rd UPDATE) - The Supreme Court on Wednesday upheld the decision of the Commission on Elections to purchase 82,000 precinct count optical scan (PCOS) machines from automation provider Smartmatic-TIM. SC acting spokesperson Gleo Guerra said the High Court voted 11-3 to uphold the Comelec procurement. Only 3 justices - Martin Villarama, Arturo Brion and Estela Perlas-Bernabe - voted against the Comelec P1.8 billion contract with Smartmatic-TIM. The 11 justices who voted to uphold the PCOS purchase are Acting Chief Justice Antonio Carpio, Diosdado Peralta, Presbitero Velasco Jr., Teresita Leonardo de Castro, Lucas Bersamin, Mariano del Castillo, Roberto Abad, Jose Perez, Jose Mendoza, Maria Lourdes Sereno and Bienvenido Reyes. The SC also lifted a temporary restraining order on the PCOS deal. Smartmatic: PCOS accurate, secure Cesar Flores, president for Asia-Pacific of Smartmatic, said they are pleased with the decision of the Supreme Court. "We believe it is the most advantageous option for the continuation of the automation process started in 2010," he said. "The system used in 2010 is accurate, secure and auditable, and the more than 17,000 officials elected in May 2010 are the legitimate choice of the Filipino people. "We will continue our hard work improving the system and supporting comelec's efforts and following their guidance in the 2013 elections." SC ruling a 'chilling effect'? Meantime, a lawyer representing the petitioners, said the Supreme Court's ruling may be seen as an aftermath of the ouster of Chief Justice Renato Corona.

In an interview with ANC, lawyer Abraham Espejo said, Im afraid to think that this could be a result of the chilling effect after the conviction of Corona. Corona had said that the impeachment complaint against him was a result of President Aquino's desire to also control the Supreme Court. Last May 22, senator-judges voted 20-3 to oust Corona from office due to his failure to disclose in his statement of assets, liabilities and net worth (SALN) his bank accounts. I think our justices have lost their courage to stand up for what is right, Espejo said. In April 24, the SC stopped the Commission on Elections (Comelec) from purchasing 82,000 precinct optical scan. Oral arguments were scheduled on May 2. Espejo said he will file a motion for reconsideration on behalf of the petitioners, admitting though that it is a suntok sa buwan [long shot]. We will file an MR, but thats the last step, we have no other remedies. Its unfortunate that the purchase was allowed despite the fact that there was no bidding, he said. Strict application Espejo said procurements laws are very strict on public bidding procedures because its a matter of public fundstaxpayers money. Comelec purchased the machines from Smartmatic-TIM a day before the option to purchase expired. This was an offshoot of the contract with the private firm for the automation of the 2010 polls on June 9, 2009. The contract provided an option to purchase up to Dec. 31, 2010, which Smartmatic-TIM extended up to March 31, 2012. We have different opinions, but it is clear that it was approved without public bidding, he said. He stressed that the subject of contract is very clear, which is for the automation of the 2010 polls alone. Yes, there was a purchase clause, but it could not possibly refer to the purchase outside the 2010 polls. Former Comelec Commissioner Augusto Lagman shared the same view. His ad interim appointment was not renewed months ago. In a separate interview with dzMM, Lagman said the SCs decision came as a shock. I was shocked. It should have gone through the bidding purchase. It is clear that the option to purchase had already expired, he said. '236 problems with PCOS machines'

Lagman said public bidding is not a problem since there are two to three vendors who have expressed interest to automate the 2013 polls. Time is also not a problem. There is time for bidding, he said. He noted that when he was still with Comelec, the poll body opted to sign anew a deal with Smartmatic even if the latter had failed to address a lot of errors in the machines. He said when he joined Comelec, the PCOS machines had 236 problems. But these problems have not been addressed, and yet Comelec proceeded to enter into the deal, he added. He asked: Are we going to count on Smartmatics word that these will be addressed? Lagman, an IT expert, believes that the machines can be hacked. The petitioners before the SC believe that this could eventually lead to widespread cheating. Be reasonable, says Brillantes In a separate interview with ANC, Comelec Chairman Sixto Brillantes Jr. asked the critics to be reasonable people. Magtulungan na lang tayo, wag nang bara ng bara. [Lets just help each other, we should not always criticize], he said. He asked that the critics come over and discuss the matter with the poll body, although he insisted that the issues they raised are already old. Espejo said, however, that the case here is not personal. We cant just say yes to everything what the government wants to happen. Were in a democratic country. He said the petitioners agree to automation of the polls but it should be in accordance with the law. Comelec working on PCOS enhancements Brillantes said they are happy and will now proceed with the purchase. He said the P1.8 billion contract was signed over a month ago, and they just have to implement it now, starting with the inspection and payment. Brillantes said, once they've inspected 50 percent of the machines, they will start making payments to contractor Smartmatic. He said the decision gives them more time to prepare, considering that in the 2010 elections, the contract was awarded in August of 2009. He said they are now prepared for the 2013 elections.

Brillantes said the en banc would like to reach out to the petitioners and ask them to meet the Comelec so they can once and for all settle differences over the machines. He said the poll body has already finished working on enhancements to the machines to address glitches. Brillantes and the en banc of the Comelec met today for a special session on stricter rules for campaign finance and the party-list elections. -- with reports from RG Cruz and Ina Reformina, ABS-CBN News; Ira Pedrasa, ABS-CBNnews.com; ANC

Massive flooding feared if Angat Dam fails by Henry Omaga-Diaz, ABS-CBN News Posted at 06/12/2012 9:46 PM | Updated as of 06/14/2012 1:22 AM MANILA, Philippines Experts warn of massive flooding and casualties if catastrophe hits the 44-year-old Angat Dam. Experts said the life span of dams is only 50 years. Bulacan Governor Wilhelmino Sy Alvarado says another concern is that the dam's reservoir lies on top of a fault line. Mayroong crack, mayroong fault. Ito ay layer of soil and stones underneath na uneven. Kapag ito raw ay nag-move at nag-trigger ng earthquake, kinakatakot nila ay at 7.2-magnitude, kaya ba ito ng istraktura ng Angat Dam? said Alvarado said. The Metropolitan Waterworks and Sewerage System (MWSS) commissioned a study by US company Grimston, Tonkin and Taylor and the agency's administrator Gerry Esquivel says the results are alarming. Ang projection namin ay P201 billion ang damage and 30,000 lives. Nakakatakot din pero as of today, it has survived 44 years of operation so we are hoping that it can survive the construction period, said Esquivel. If Angat Dam fails, it will result in flooding in 20 towns in Bulacan, 3 towns in Pampanga and 3 cities in Metro Manila. The floodwaters are estimated to reach between 10 and 30 meters. Metro Manila and Bulacan depend on Angat Dam for electricity, drinking water and irrigation. However, Rodolfo German, general manager of the Angat Hydroelectric Power Plant dispels fears that cracks have weakened the dam.

Hindi naman napatunayan pa na yun ay karugtong ng fault, said German. German acknowledges that dam's lifespan is only 50 years but he insists this can be extended with proper maintenance. President Benigno Aquino III has already ordered the release of P5.7 billion for the dam's rehabilitation. -- ANC CAB softens on overbooking, ticket refund By Lenie Lectura, BusinessMirror Posted at 06/15/2012 8:47 AM | Updated as of 06/15/2012 10:09 AM MANILA, Philippines - In a bid to balance the publics welfare and that of the low-cost carriers (LCC), the Civil Aeronautics Board (CAB) has fine-tuned its twin orders following a review of arguments raised by the airlines in their motions for reconsideration. These are not revisions but a refinement based on their motions for reconsideration. CAB orders number 28 and 29 explicitly state that these are the guidelines until further notice, which means they can be subject to further study or clarification, said CAB Secretary Eldric Paul Peredo in a text message. CAB Resolution 28 suspends provisions on overbooking contained in Section 3 of the Economic Regulation (ER) 7. This means that airlines are no longer allowed to overbook. The airlines said the practice of overbooking is often misunderstood as mainly benefiting the airline when, in fact, overbooking benefits the consumers as the airline artificially inflates capacity and is able to spread its cost across more seats which would mean lower passenger fares. Besides, they added, overbooking is a worldwide airline practice which is recognized by various authorities, including the CAB, the United States Department of Transportation (US DOT) and the United States Supreme Court. In response, CAB said it will still allow airlines to overbook but only up to a maximum of 5 percent. There used to be no rules except that the industry standard is 10 percent. This time, we will closely monitor them and we intend to keep the number down to half the industry standard as maximum, said Peredo. The CAB official said overbooking is still being discouraged. We are now looking to merely imposing restrictions rather than totally banning it, he said. Peredo said airlines may face sanctions if the airlines overbooked at the expense of the passenger. He added: There maybe situations where it will happen, and if it does result in

offloading of passengers, then there will be stringent reportorial requirements for us to determine whether they did it maliciously or whether it was a reasonable exercise. CAB Resolution 29, meanwhile, suspends the nonrefundable and non-rebookable conditions of low-cost fares for domestic flights. After careful deliberations, Peredo said the CAB will still allow rebooking and refunding for all fares, including low-cost fares. But we aim to balance airline and public interest by giving guidelines on when to rebook or refund, and the consequences if the passenger does not follow these guidelines. However, we should note that before, promo fares were totally nonrebookable and nonrefundable, the CAB official said. Peredo said the CAB has decided that if rebooking happens too close to the flight, like within 24 hours, there will be additional fees for the passenger. On the other hand, if it is the airline that initiated to rebook the passenger, then the passenger is not obligated to pay anything extra. The airlines argued that the removal of the nonrefundability and nonrebookability conditions of the airline tickets will certainly result to higher airfares to the detriment of the riding public. The airlines explained that the reason promotional fares are highly restricted is because of less transaction costs associated with the same. When these restrictions are removed on certain fare types then these would certainly increase the related transaction cost, which may pave the way for the imposition of higher air fares. What should be done instead is for consumers to make an informed choice, the airlines stressed. The airlines want the resolutions entirely set aside, citing business considerations and worldwide practices. But we cannot deny that there are complaints so we have also to uphold public convenience and service. But we cannot totally overhaul everything because we have to align ourselves with the thrust of the DOTC [Department of Transportation and Communications] to have a more comprehensive passenger rights bill soon, said Peredo. The orders are set to take effect but stressed that these are still interim measures, pending the actual issuance of the DOTCs bill of rights. Transportation Secretary Mar Roxas earlier said there is a step-by-step approach in putting together a comprehensive air passenger bill of rights to address the increasing number of air transport-related complaints. Roxas said the DOTC has completed the first phase in outlining the passenger bill of rights by issuing Department Order 2012-12 on January 9, 2012. The second phase was also done when the CAB amended the ER 7, or the Boarding Priority and Compensation for Denied Boarding, Delayed and Cancelled Flights. This new regulation took effect on June 5.

The amended ER 7 increased the compensation for airline passengers who have been unjustly denied boarding or experienced flight delay or cancellation.

URC raises P7.44B from treasury shares By Zinnia B. Dela Pea, The Philippine Star Posted at 06/15/2012 8:50 AM | Updated as of 06/15/2012 9:14 AM MANILA, Philippines - Universal Robina Corp. (URC), the food and drink manufacturing arm of the John Gokongwei family, has raised P7.44 billion from the sale of treasury shares to institutional investors. In a disclosure to the Philippine Stock Exchange, URC said it sold 120 million common shares previously held as treasury shares at P62 each or a 4.8 percent discount to the previous closing price and a 2.3 percent discount to the 30-day volume weighted average price. The shares were crossed through a special block sale at the PSE yesterday. CLSA Ltd. acted as sole bookrunner and sole placing agent for the sale. URC said proceeds from the share sale will be used to fund potential acquisitions and for general corporate purposes. The company has been expanding its footprint overseas and will soon open a new factory in Burma. Its international operations currently account for about a third of its business and is seen to grow as big as its domestic operations in around five years. For this year, URC has set a capital spending of P5.2 billion, 14 percent higher than the P4.56 billion spent a year before. Majority of the capital budget, or 80 percent, will be used for the continued expansion of its branded consumer foods segment

operations primarily snack foods production facilities in the Philippines and biscuit factories in its two biggest markets, Thailand and Vietnam. The remaining 20 percent of the capex will go to the construction of a $27-million bioethanol plant at URCs sugar milling complex in Negros Occidental. Bioethanol is a form of renewable energy intended to provide a more environmentally and economically friendly alternative fossil fuels such as diesel and gasoline. It can be made from very common crops such as sugarcane, potato and corn. The bioethanol plant, which will churn out 100,00 liters of fuel a day, is projected to contribute a little over one percent to companys revenues. URC grew its net earnings in the first half of its fiscal year ending September 2012 by 36.5 percent to P4.48 billion due to significant improvement in market values of bond and equity holdings and lower foreign exchange loss from foreign currencydenominated transactions. Sales rose 6.6 percent to P35.49 billion while core sales went up 13 percent. URC is involved in a range of food-related businesses, including the manufacture and distribution of branded consumer foods, production of hogs and day-old chicks, manufacture of animal and fish feeds, glucose and veterinary compounds, flour milling, and sugar milling and refining. The branded consumer foods segment manufactures and distributes snack, chocolate, candy, biscuit, bakery, beverage, noodles and tomato-based products.

BSP keeps rates unchanged


By Karen Lema and Erik dela Cruz, Reuters Posted at 06/14/2012 7:08 PM | Updated as of 06/14/2012 7:08 PM MANILA - The Philippine central bank kept its main policy rate steady at a record low for a second consecutive meeting on Thursday, saying inflation pressures were manageable and market liquidity adequate, bolstering expectations it will stand pat on rates for the rest of the year. The monetary authority also expects inflation to remain subdued this year and the next, as it kept its average inflation forecast this year at 3.1 percent and lifted slightly its 2013 estimate to 3.4 percent from 3.3 percent. The decision to hold the overnight borrowing rate at 4 percent was widely expected. All but one of 11 analysts in a Reuters poll this week had forecast steady rates, and most expect the central bank to hold for the rest of the year. "The Monetary Board believes the benign inflation outlook and robust domestic growth provide adequate room to keep policy rates unchanged," Governor Amando Tetangco said in a statement, adding the total 50-basis-point cut in policy rates and bank reserve requirement reductions earlier in the year were still working their way through the economy. But some economists said after the meeting there may be room to cut rates to a new record low with increasing evidence of continued weakness in the global economy. Data earlier on Thursday showed overall Philippine exports recovering slightly in April, but a sharp drop in electronics

shipments underscored the risk of weakening external demand facing Asia.

Weak electronics exports "We think the door is still very much open for more easing and I think the monetary authorities themselves have mentioned this in the past, that they will watch for any development that could lead them to make an adjustment if necessary," said Jun Neri, economist at Bank of the Philippine Islands. Exports, which account for about two-fifths of the country's GDP, rose 7.6 percent in April from a year earlier, as growth in shipments of garments and furniture offset a steep drop of 23.8 percent in electronics and semiconductors, the first decline in the sector since December. "The key short-term risk to watch out for the growth headwind from Europe. If they can get through this dangerous phase relatively unscathed then a normalisation of rates would quickly rise up in the policy agenda," said Aninda Mitra, economist at ANZ in Singapore. "There is no immediate need for stimulus per se." Bucking a global slowdown, the Philippines grew at its strongest quarterly pace in two years in January to March, and the central bank believes the momentum can be sustained with domestic demand seen staying resilient and the government bent on spending more on critical infrastructure. Strong domestic demand, underpinned by more than $1.6 billion in monthly remittances from Filipinos abroad, should help offset the weakness in exports, authorities have said.

Manila ramped up spending in the early part of the year, bolstering economic activity. But the spending level in the first three months of 2012, while 13 percent higher than last year, was still below earlier government projections. Analysts in a Reuters quarterly poll in April were less optimistic about the country's growth prospects as they forecast the economy to grow 3.8 percent this year,

slower than the government's 5 to 6 percent target. Last week, China and Australia cut interest rates to boost domestic demand and help shield their economies from growing downside risks stemming from the deepening euro zone crisis. The central bank's policy-making Monetary Board holds a rate-setting meeting every six weeks. It meets next on July 26.

PH eco grows 6.4% in Q1; highest in ASEAN


ABS-CBNnews.com Posted at 05/31/2012 10:24 AM | Updated as of 05/31/2012 1:58 PM MANILA, Philippines (3RD UPDATE) The Philippine economy grew by 6.4% in the first quarter from an upwardly revised growth of 4.9% last year, the government announced on Thursday. "This growth is well above the markets consensus forecast of 4.8 percent. Also, the Philippines posted the highest growth among ASEAN and other neighboring countries except China," Socioeconomic Planning Secretary Arsenio Balisacan said. ASEAN Philippines Indonesia Vietnam Singapore Thailand NonASEAN Hong Kong 0.4% South Korea 2.8% Japan China 2.8% 8.1% Q1 growth 6.4% 6.3% 4.3% 1.6% 0.3% GDP

The growth was attributed to the government's strong infrastructure spending and its conditional cash transfer (CCT) program. Compared to the fourth quarter of 2011, the Philippine economy grew by 2.5% in the first quarter, slightly below market forecasts, putting pressure on the government to boost spending and raising the case for the central bank to resume cutting rates later this year. Balisacan expressed confidence the government can meet its full-year GDP target, or even exceed it. "Given the preliminary first quarter 2012 estimate, we expect that the full year 2012 real GDP growth rate projection of 5% to 6% is well within reach or may even exceed it," Balisacan said. "At the same time, the government will not let up in its efforts to accelerate the growth of the economy. For example, there is still considerable room for faster acceleration in government spending. Also the government will remain vigilant to risk to growth, including those posed by the euro area woes and uncertainties in the world oil prices," he added. The Philippines is targeting faster growth of 5 to 6 percent this year against last year's 3.7 percent, fuelled by higher government spending, a rebound in exports, and strong domestic consumption. Balisacan said the first quarter performance serves as "a springboard" for the next 3 quarters. "The latest improvement on several governance and competitiveness indicators,

including Moodys recent change of outlook on the countrys Ba2 rating to positive from stable, indicate that our macroeconomic targets for this year are achievable, given the synergy between the public and private sectors," he said. "Surprisingly strong" Economists were surprised by the strong 6.4% year-on-year growth, but there are questions as to whether this can be sustained. Eugene Leow, economist at DBS Bank in Singapore, said the 6.4% growth was "surprisingly strong," on the back of the government's fiscal spending "We do not think the growth momentum can be sustained because of the troubles in Europe. April data from the region has also softened. The 6.4 percent year-on-year growth may raise fears of demand-push pressures but inflation should be comfortably within the central bank's

forecast range. There is scope for easing if necessary but I don't think the central bank is ready to push the trigger just yet. Our forecast is for the rate to stay unchanged this year. The government also has room to introduce a fiscal stimulus if needed," Leow said. Jun Neri, economist at the Bank of the Philippine Islands, said the strong pace of economic growth warrants an upgrade of the Philippines from the major credit ratings agencies. "Moody's and S&P, in particular, will take note of stronger growth performance, as it will make the relative size of our debt much smaller than overall output. Of course the question is the sustainability. It's a big question mark, more so that headwinds particularly from peripheral Europe are anticipated to have an impact on the remaining quarters of the year, which again should compel our policymakers to sustain if not to continue to step up on expansionary policies," Neri said. - With Reuters

NEDA: Q1 growth seen within target By Mia Gonzalez, BusinessMirror Posted at 05/24/2012 8:52 AM | Updated as of 05/24/2012 5:31 PM MANILA, Philippines - Socioeconomic Planning Secretary Arsenio Balisacan said on Wednesday the countrys economy expectedly grew within target in the first quarter as there were no factors that might have pulled it lower than the 5-percent to 6-percent goal set by the government this year. Balisacan, who took his oath before President Aquino in the morning, also said inflation in the country would be quite tame as he does not foresee any major shocks, and also cited moderate oil prices. Asked if first-quarter growth might be around 5.2 percent, as mentioned by Mr. Aquino in a recent interview with Bloomberg, Balisacan said, Its around that. The target is 5 percent to 6 percent. The private sector is forecasting something close to that. He added that there were no major calamities in the first quarter that could have dampened growth, remittances are quite positive, and public spending in the first quarter has been quite robust. As you have seen from the press releases of the various companies, there were high rates in increases in their profits the past year, we expect that could have continued in the first quarter. I am hopeful that we are within the target range [for growth], Balisacan said. On the factors that could have fueled growth in the first quarter, Balisacan said that the manufacturing survey on establishments was quite positive, the volume was positive growth and there were no major problems in agriculture during the period. Asked about inflation, Balisacan said, I think inflation will be quite tame. Now its between 3 percent and 4 percent. It will be within that. Im not foreseeing any major shocks. Oil prices have started to become more moderate. As for the aspirational growth target of 7 percent to 8 percent, Balisacan reiterated that while its a target for the medium term, we should really move in close to that; within that since the countrys neighbors are growing at that rate. I really dont think that is impossible or its a dream. Its doable. But we have bottlenecks; there are constraints that we really have to address. Infrastructure is one, roads, transport, he said. The Neda chief said that the rate of infrastructure development in the Philippines could be likened to Thailands situation 15 years ago, so we really have to make a big push and get the PPP [Public-Private Partnership projects] moving, get all those internally publicly funded projects moving.

Philippines' Q1 GDP growth seen accelerating to 2.9% q/q Reuters Posted at 05/24/2012 5:26 PM | Updated as of 05/24/2012 5:27 PM Annual Q1 growth seen at 4.6% vs 3.7% in Q4

MANILA, Philippines - The Philippine economy may have grown at its fastest quarterly pace in two years in January-March, helped by higher state spending and a recovery in exports, strengthening the case for the central bank to keep interest rates on hold next month. Bucking a global slowdown, the Southeast Asian economy likely expanded a seasonally adjusted 2.9 percent in the first quarter from the previous three months, a Reuters poll showed on Thursday, picking up sharply from 0.9 percent in the last three months of 2011, and the highest since the first quarter of 2010. From a year earlier, growth may have accelerated to 4.6 percent, stronger than the fourth quarter's 3.7 percent. However, analysts doubt this year's 5 to 6 percent growth target will be met as sluggish global demand clouds the outlook for the country's electronics-dominated exports. "The main risk arises from external developments confronting the Philippines' narrow export base," said Aninda Mitra, an economist at ANZ. "If developments in Europe affect regional demand more adversely, then the downside risks will rise." Exports, which account for two-fifths of the country's gross domestic product, fell for the first time in three months in March, after climbing 12.8 percent in February and 3.1 percent in January, as growth in electronics shipments slowed. But central bank Governor Amando Tetangco said late on Wednesday the Philippines was resilient enough to cope with a slowdown in advanced economies, even as he ruled out a breakup of the euro zone. "From the standpoint of the Philippines, (the) EU problem can be likened to a pain in the shoulders... you can feel it but it's not going to cripple you," Tetangco said. "We will be able to absorb any shocks because of our sources of resilience, such as external reserves, improving macroeconomic fundamentals, and improving fiscal position." Manila ramped up spending in the early part of the year, bolstering economic activity. But the spending level in the first three months of 2012, while 13 percent higher than last year, was below earlier projections. Tetangco has said there was less need to support the economy with the pick-up in exports in recent months and higher state spending.

The central bank next reviews base interest rates on June 14. They are currently at an all-time low of 4.0 percent following two cuts totalling 50 basis points in January and March.

No price hikes for basic goods: DTI


By Max V. de Leon, BusinessMirror Posted at 02/24/2012 7:33 AM | Updated as of 02/24/2012 7:33 AM MANILA, Philippines - Good news for the consumers. The Department of Trade and Industry (DTI) said it does not expect any price escalations or supply problems for basic commodities for the rest of the semester. Another positive development for the public, Trade Undersecretary for Consumer Welfare Zenaida Maglaya said, is the foreseen drop in the prices of bread products and canned sardines in the coming weeks. Prices and supply of basic goods should be stable at least for this semester, including rice, vegetable, pork chicken, fish and processed goods, Maglaya said after the National Price Coordinating Council (NPCC) meeting on Thursday at the Board of Investments building in Makati. For bread, Maglaya said the bakers were directed to submit their official receipts as the flour millers have informed the DTI-led NPCC that ex-mill prices of flour have already gone down by P30 to P40 per sack. As a rule of thumb, Maglaya said every P40 drop in the price of flour should translate to a P1 decrease in loaf breads and a reduction of P0.50 for 10-piece packs of pan de sal. Maglaya said if the report of the millers is true, the bakers should start implementing downward price adjustments. In the case of sardines, Maglaya said the lifting of the fishing ban beginning March 1

by the Bureau of Fisheries and Aquatic Resources should lead to lower prices for canned sardines. Tamban is a major cost component of canned sardines, so once the volume of catch has gone up, we will feel the effect on the prices, she said. Because of the fishing ban that started in December, the per-kilo price of Tamban rose to P28 from only P21. Sardines makers also had to import Tamban at a landed cost of P33 per kilo. Marketing monitoring done by the DTI from February 13 to 17 showed that the price of canned sardines went to as high as P14 for the brand Ligo from P13 in the previous month. Maglaya said changes in the prices of canned sardines should be felt by March.

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