What's new

Philippines Defence Forum

Europeans head to Philippines to escape financial woe
The Economist on Tue, 04/30/2013

philippines-maninla-edsa-traffic-jpg_040736.jpg


Increasing numbers of Europeans are moving to countries the Philippines in a bid to find opportunities in the world’s emerging markets

Europeans head to Philippines to escape financial woe | Philippines, ASIA and the Global Economy
 
.
PH earmarks P18 billion for two new warships
By Aaron B. Recuenco
Published: April 29, 2013

The government has allocated P18 billion for the purchase of two brand new frigates as the Department of the National Defense (DND) has opted to ditch its original plan of purchasing second-hand war ships.

Fernando Manalo, DND Undersecretary for Finance, Munitions, Installations and Materiel, said the original allocation for the second-hand frigate is P6 billion each to maximize what the budget that the government has.

“We realized that it will be expensive in the long run if we are going to buy second hand,” said Manalo.

Manalo did not discuss the specifications of the frigate but said the two planned procurement war ships would be of big help in guarding the territorial waters of the country.

Unlike second-hand frigates wherein spare parts and efficiency are usually the problems, Manalo said the brand new ones assures good running condition for some 20 to 30 years.

The DND is planning to bid out the procurement of two frigates, with Spain, Singapore and South Korea reportedly planning to join.

The government earlier revealed that it may also buy fighter jets from South Korea.

He said they are now expediting the procurement process to make sure that all the procedures would be completed within the second quarter of this year.

Aside from fighter jets and frigates, the second Hamilton-class war ship that the Philippines bought from the United States is expected to arrive in July this year.

The Philippines has embarked on a modernization program for its Armed Forces after it was locked in a territorial dispute with China over the South China Sea which is locally referred to as West Philippine Sea.

PH earmarks P18 billion for two new warships
 
.
PH stock market is one of the world's 'hottest'

ABS-CBNnews.com
Posted at 04/30/2013

MANILA, Philippines - The Philippine stock market is one of the "hottest" in the world so far this year, according to a CNN report.

On the CNN Money website, the Philippine Stock Exchange index (PSEi) was ranked the 5th "hottest" stock market in the world, after Kuwait, Argentina, United Arab Emirates and Japan.

The PSEi has rallied 20% so far this year, as it breached the 7,000 level for the first time ever. The main index has reached 27 new all-time highs so far this year.

Investors have flocked to the Philippines as the country earned its first ever investment grade credit rating from any ratings agency last March.

CNN Money quoted Ashraf Laidi, chief global strategist at City Index in London, as saying investors have been attracted to the Philippines "because it's shielded from the economic slowdown in China."

"The economy doesn't depend on exports to China like many other countries in the region... It's more tied to domestic consumption," Laidi said.

As of 12 noon Tuesday, the PSEi was up 0.46% to 7,060.81.

Barely four months after it first breached the 6,000 level, the PSEi breached the 7,000 level last April 22. Analysts and fund managers are betting the PSEi will continue to rise, driven by optimism on the Philippine economy and further cut in interest rate of special deposit accounts (SDA).

The Palace earlier said the PSEi's record highs is a "manifestation of continued confidence in the prospects of our economy, not only from the international community, but also from Filipinos who are raising their stake in our country’s success."

PH stock market is one of the world's 'hottest' | ABS-CBN News




PH picks Vietnam to supply 187,000 tonnes of rice
Reuters
Posted at 04/30/2013

MANILA - The Philippines has chosen Vietnam's bid for supplying 187,000 tonnes of rice to boost stocks and meet its annual import needs ahead of the typhoon season in the third quarter, the National Food Authority (NFA) said on Tuesday.

This year's demand from the Philippines, the world's biggest rice buyer in 2010, represents a small fraction of the 8 million tonnes Vietnam aims to export in 2013.

"We agreed to buy the 25 percent broken rice grade and the volume will form part of our buffer stock for the lean months from July to September," NFA Administrator Orlan Calayag told reporters.

Calayag said there was no need for the Philippines to import more rice as the government expects another record harvest this year.

The Philippines is targeting an 11 percent increase in unmilled rice output to 20 million tonnes this year, from a record harvest of 18 million tonnes last year.

State-run Vietnam Southern Food Corp, or Vinafood II, offered a price of $459.75 per tonne on a cost, insurance and freight basis, beating Thailand's offer of $568 per tonne, Calayag said.

Vinafood's offer translates to a free-on-board cost of $367.62 per tonne, he said. Vietnamese 25 percent broken rice was quoted at $360-$370 a tonne FOB last week.

Rice prices in Vietnam, the world's second-biggest exporter, fell to their lowest in more than two years last week and further declines may be expected as demand remained soft amid rising supply.

The Philippines, which targets self-sufficiency in the grain this year, imported 500,000 tonnes of rice last year, after buying 860,000 tonnes in 2011 and a record 2.45 million tonnes in 2010.

PH picks Vietnam to supply 187,000 tonnes of rice | ABS-CBN News
 
.
'Iron Man 3' posts P306M in 5 days, biggest in Philippine box office history
By Dexter Rodrigo Matilla (philstar.com) | Updated April 30, 2013

bkingsleyrdowney01.JPG


"Iron Man 3" has shattered all Philippine box office records with its P306M 5-day output. It stars Ben Kingsley (left) and Robert Downey Jr. (right). - (Walt Disney Studios)

MANILA, Philippines - "Iron Man 3" debuted with the biggest opening day take in Philippine history, and now, five days later, the film has broken all existing box-office records in the Philippines.

'Iron Man 3' opening day now highest grossing in Philippine history with P62.6M

The third installment in the "Iron Man" film series grossed a monumental P305.96-million in five days – the biggest opening weekend ever and the fastest time to reach the P300-M mark in local history, according to Victor R. Cabrera, Managing Director of Walt Disney Studios Motion Pictures Philippines, which distributed the film.

“We are elated and proud of this remarkable achievement,” said Cabrera. “Marvel has crafted a spectacular film and this just adds to Disney and Marvel’s commitment in keeping the property evergreen. You see Marvel and Iron Man everywhere, in movie theatres, on TV, malls, in retail, publishing, etc. You see people in Iron Man t-shirts, kids playing with Iron Man toys. Filipinos are just true Iron Man fans. We cannot be happier with the way the Filipino consumer is embracing the movie and the property.”

“Iron Man 3” opened across the country April 24 with a stunning P62.9-M which obliterated two box-office records – the highest opening day ever (beating 2007's “Spider-Man 3”) and all-time most successful Wednesday (surpassing “Marvel's The Avengers”).

From then on, the film never looked back – smashing single-day records one after another, specifically, biggest Thursday (P48-M), Friday (P48.41-M), Saturday (P71.94-M) and Sunday (P74.63-M). All previous records were established last year by “Marvel's The Avengers.”

Disney rolled out “Iron Man 3” in more than 500 cinemas throughout the archipelago and in 3D, 2D, IMAX 3D and 35mm formats. Getting the lion's share of gross receipts was SM Mall of Asia (P19.56-M), followed by SM North EDSA (P17.69-M) and Trinoma (P13.11-M).

Next are SM Megamall (P12.58-M), SM Cebu (P9.25-M) Glorietta 4 (P9.11-M), SM Southmall (P7.85-M), Newport (P6.35-M), SM Fairview (P6.29-M), Eastwood (P5.99-M) and Power Plant (P5.82-M).

Also posting impressive receipts are Alabang Town Center (P5.81-M), Greenbelt 3 (P5.73-M), SM Clark (P5.30-M), Market! Market! (P5.10-M), Gateway (P4.89-M), SM Marikina (P4.28-M), Ayala Cebu (P4.22-M) Shang Cineplex (P4.20-M), Robinsons Ermita (P4.156-M), SM San Lazaro (P4.154-M) and Robinsons Galleria (P4.02-M).

Now playing across the Philippines, “Iron Man 3” is presented by Marvel Studios in association with Paramount Pictures and DMG Entertainment. The film is distributed by Walt Disney Studios Motion Pictures.

'Iron Man 3' posts P306M in 5 days, biggest in Philippine box office history | Movies, Special Reports, Home | philstar.com

Great movie! :tup:
 
.
Natawa ko dito na-starstruck ang Sultan kay Kris
n71ua1.gif


x3u7ps.jpg


EYE-CATCHING The President’s sister and incidentally the country’s No. 1 taxpayer, Kris Aquino, at the state luncheon

6rh5di.jpg
 
.
PN to get anti-submarine chopper
Tuesday, April 30. 2013
by Priam F. Nepomuceno

Dutch-navy-receives-anti-submarine-chopper.jpg


MANILA — The Philippine Navy (PN) on Tuesday announced that it will acquire an anti-submarine helicopter to boost up its naval air group.

This is aside from the three AgustaWestland "Power" 109 helicopters that will be arriving in 2014.
"This is under the Medium Term Capability Development Program (MTCDP 2013-2017)," PN spokesperson Lt. Cmdr. Gregory Fabic said.

The PN air group is based at Sangley Point, Cavite. It operates around 12 to 14 helicopters and light aircraft.
He added that the acquisition of the anti-submarine helicopter is part of the PN's efforts to build its anti-submarine warfare (ASW) capability.

ASW refers to the capability to detect, locate and if necessary destroy submarines found intruding in the country's territorial waters.

He added that this program will be an important part of the Philippines' defense system once it reaches full bloom.

The PN earlier called the signing of the contract with AgustaWestland, regarding the delivery of three AW-109 "Power" helicopters by 2014, a "significant milestone".

"The PN finds it to be a significant development in line with the (ongoing) modernization program and capability upgrade," it stated.

The AW-109 "Power" helicopters will enhance the PN's capability in various naval operations such as maritime security patrols and search-and-rescue among others.

"These helicopters are just a few among the list of future acquisition for the PN in order to attain its vision of becoming a strong and credible Navy that our maritime nation can be proud of," Fabic emphasized. (PNA)
LAM/PFN

PN to get anti-submarine chopper - ZamboTimes
 
.
PH earmarks P18 billion for two new warships
By Aaron B. Recuenco
Published: April 29, 2013

The government has allocated P18 billion for the purchase of two brand new frigates as the Department of the National Defense (DND) has opted to ditch its original plan of purchasing second-hand war ships.

Fernando Manalo, DND Undersecretary for Finance, Munitions, Installations and Materiel, said the original allocation for the second-hand frigate is P6 billion each to maximize what the budget that the government has.

“We realized that it will be expensive in the long run if we are going to buy second hand,” said Manalo.

Manalo did not discuss the specifications of the frigate but said the two planned procurement war ships would be of big help in guarding the territorial waters of the country.

Unlike second-hand frigates wherein spare parts and efficiency are usually the problems, Manalo said the brand new ones assures good running condition for some 20 to 30 years.

The DND is planning to bid out the procurement of two frigates, with Spain, Singapore and South Korea reportedly planning to join.

The government earlier revealed that it may also buy fighter jets from South Korea.

He said they are now expediting the procurement process to make sure that all the procedures would be completed within the second quarter of this year.

Aside from fighter jets and frigates, the second Hamilton-class war ship that the Philippines bought from the United States is expected to arrive in July this year.

The Philippines has embarked on a modernization program for its Armed Forces after it was locked in a territorial dispute with China over the South China Sea which is locally referred to as West Philippine Sea.

PH earmarks P18 billion for two new warships

In China there is a department of warnings. In the Philippines there is a department of press releases which is also called the Department of Defence. That is all your defence ministry does, issue press releases. All talk and hot air. Your military announced to the world you were buying Italian frigates, sent your naval officers to Italy yet it was all talk in the end. This annoucement about new frigate will just be all talk.
 
.
Well it doesn't matter what these Chinese crabs will say.
n71ua1.gif


That is still a good news indeed, just wait and see.

A good start for military modernization and upgrading.

Thanks to the Aquino administration.

:cheers:
 
.
Military to acquire P40-M grenades
(The Philippine Star) | Updated May 2, 2013

gen6newq.jpg


MANILA, Philippines - The Armed Forces of the Philippines (AFP) will acquire close to P40 million worth of hand grenades to be used for security operations.

A bid bulletin published in The STAR yesterday showed that the AFP will acquire 11,364 smoke grenades and 11,460 fragmentation grenades.

The government has allotted P19.944 million for the smoke grenades and P19.998 million for the fragmentation grenades.

The opening of bids will be on May 20 at the AFP Bids and Awards Committee Conference Room in Camp Aguinaldo.

The AFP assures the public that the process would comply with the provisions of the procurement law.

The acquisitions of smoke and fragmentation hand grenades are separate projects. Interested parties can submit bids for one project or for both.

To be qualified, prospective bidders should have undertaken similar projects within the last five years.

Bidders should have inked a single contract equivalent to at least 25 percent of the approved budget for each project.

They should also have completed at least two similar contracts, the total amount of which should be equivalent to at least 25 percent of the approved budget for the project.

The larger of the two contracts must be equivalent to at least 12.5 percent of the approved budget for the project.

Prospective suppliers may buy a set of bid documents worth P6,000 for each project from May 2 to 29 in Camp Aguinaldo. — Alexis Romero

Military to acquire P40-M grenades | Headlines, News, The Philippine Star | philstar.com
 
.
Indofood may invest in PH
By Anna Leah G. Estrada | Posted on May. 02, 2013

PT Indofood Sukses Makmur Tbk of Indonesia may form a joint venture in the Philippines to invest in a large-scale commercial farm, according to its top executive.

First Pacific Co. Ltd. managing director Manuel Pangilinan, who is also president commissioner of PT Indofood, said his group was in talks with officials of the Agriculture Department about the major farm investment in the country.

PT Indofood is controlled by First Pacific, a Hong Kong-based conglomerate, which has stakes in Philippine Long Distance Telephone Co., Metro Pacific Investments Corp., Manila Electric Co. and Philex Mining Corp.

Pangilinan told reporters he relayed the intention of the group to Agriculture Secretary Proceso Alcala in a recent meeting.

“It was a broad ranging discussion, and we have requested them to identify parcels of land which could be available for large-scale commercial farming,” said Pangilinan.

Pangilinan said his group preferred to lease and develop the land into a large-scale commercial farm.

He said the group was willing to form a new company in partnership with Indofood, the largest food company in Indonesia.

“Indofood is a major plantation operator in Indonesia in palm oil, sugar, rubber, coffee and cacao. These are the crops that we’re familiar with,” he said.

“We are large scale. In Indonesia, for example, the plantation of palm oil alone is around 240,000 hectares. That is the scale we are looking for, maybe not entirely 240,000 but a sizable hectarage,” Pangilinan added.

Indofood, controlled by the Salim family, is engaged in oil palm cultivation and milling; as well as the production and marketing of branded cooking oils, margarine and shortening. It is also engaged in the cultivation and processing of rubber, sugar cane and other crops.

Alcala said he would meet Pangilinan’s group this month to discuss the proposed areas and crops for the possible investment.

He said Pangilinan’s investment would be most welcomed, as this would be a big help for the Filipino farmers.

Pangilinan is chairman of PLDT, Philex Mining Corp. and Meralco.

Indofood may invest in PH - Manila Standard Today
 
.
PH picks Vietnam to supply 187,000 tonnes of rice
Reuters
Posted at 04/30/2013

MANILA - The Philippines has chosen Vietnam's bid for supplying 187,000 tonnes of rice to boost stocks and meet its annual import needs ahead of the typhoon season in the third quarter, the National Food Authority (NFA) said on Tuesday.

This year's demand from the Philippines, the world's biggest rice buyer in 2010, represents a small fraction of the 8 million tonnes Vietnam aims to export in 2013.

"We agreed to buy the 25 percent broken rice grade and the volume will form part of our buffer stock for the lean months from July to September," NFA Administrator Orlan Calayag told reporters.

Calayag said there was no need for the Philippines to import more rice as the government expects another record harvest this year.

The Philippines is targeting an 11 percent increase in unmilled rice output to 20 million tonnes this year, from a record harvest of 18 million tonnes last year.

State-run Vietnam Southern Food Corp, or Vinafood II, offered a price of $459.75 per tonne on a cost, insurance and freight basis, beating Thailand's offer of $568 per tonne, Calayag said.

Vinafood's offer translates to a free-on-board cost of $367.62 per tonne, he said. Vietnamese 25 percent broken rice was quoted at $360-$370 a tonne FOB last week.

Rice prices in Vietnam, the world's second-biggest exporter, fell to their lowest in more than two years last week and further declines may be expected as demand remained soft amid rising supply.

The Philippines, which targets self-sufficiency in the grain this year, imported 500,000 tonnes of rice last year, after buying 860,000 tonnes in 2011 and a record 2.45 million tonnes in 2010.

Nice, we need to have more economic and military cooperation between the two countries. This is the only way to fence off the You-Know-Who bully from the north. Vietnam has military advantage, Philippines has economic advantage. We can help each other out. I'm also glad that Philippines is boosting up her defense capabilities. Don't forget behind us are Russia and America. From Cam Ranh Bay to Subic Port, the two best natural military garrisons in Asia, we can surround the bully and catch all its pirates.:cheers:
 
.
Nice, we need to have more economic and military cooperation between the two countries. This is the only way to fence off the You-Know-Who bully from the north. Vietnam has military advantage, Philippines has economic advantage. We can help each other out. I'm also glad that Philippines is boosting up her defense capabilities. Don't forget behind us are Russia and America. From Cam Ranh Bay to Subic Port, the two best natural military garrisons in Asia, we can surround the bully and catch all its pirates.:cheers:
I couldn't agree more. Filipinos and Vietnamese should be closer diplomatically, economically, socially and militarily. We need to forge that strong alliance 'cos it creates strength. Vietnam and Phil strong trade alliance will compete with China. While we're still beefing up our defense. Vietnam already has strong military advantage with lots of sophisticated guided missiles, strong Armed Forces, weapons etc. China will surely have to pay the highest price if they dare to take a flare and of course our strong military ties with the US, Russia, plus India and Japan will also help keep that big bully’s military adventurism always in check.

:cheers:
 
.
PH wins second investment grade
BY RAPPLER.COM
POSTED ON 05/02/2013

standard-poors-credit-rating-philippines-investment-grade-20130502.png


MANILA, Philippines (4th UPDATE) - The Philippines won its second investment grade, this time from international credit rating firm Standard & Poors.

Seen as another vote of confidence in the country, S&P upgraded the Philippines' credit rating to BBB- on Thursday, May 2, from BB+. The outlook is stable.

"The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government's declining reliance on foreign currency debt," said S&P's credit analyst Agost Benard.

standard-poors-credit-rating-philippines-investment-grade-20130502-aquino-arroyo.png


This was the second investment grade rating for the Philippines in less than two months.

On March 27, the Philippines joined the ranks of A-lister countries after Fitch Ratings raised its credit rating to BBB-.

Malacañang hailed the news. "We welcome the upgrade," it said in a statement, citing this as "the latest institutional affirmation of the Aquino administration’s good governance initiatives" as well as another indication of "sustained confidence in the Philippine economy."

"We are very pleased that S&P, along with Fitch, has also now affirmed the Philippines’ strong economic and fiscal gains, progress that has been made thanks to the discipline and prudence in financial management instilled by President Aquino in his administration," Finance Secretary Cesar Purisima also said in a statement.

Purisima said S&P's new rating only reflects "what the markets already recognize."

"This investment grade rating is another resounding vote of confidence in the Philippines... Our economy's underlying soundness is on par with countries rated investment grade or higher," he added.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the S&P upgrade "cements the Philippines' status as an economy with one of the brightest prospects globally."

An investment grade is a seal of good housekeeping. It tells investors it is safe to do business in the country, and encourages them to put huge capital here.

An investment grade means the Philippines, as a borrowing country, has a strong ability to pay its debt. This lowers its borrowing costs, generating savings, which will be spent for social services.

(VIEW OUR INFOGRAPHIC: What a credit rating upgrade means for Filipinos)

What led to the upgrade?

In summary, these are the reasons S&P granted the Philippines an upgrade:

FISCAL FLEXIBILITY. The creditor rating firm cited the government's efforts to reduce the share of foreign-denominated debts to total borrowings, as well as the more robust domestic capital and improvements in revenue collections.

HEALTHY FOREX BUFFER. With foreign reserves buffer reaching substantial levels following sustained surplus in current accounts, modest net foreign direct investment (FDI) and hot money inflows, S&P said the Philippines has "low refinancing risk and an import cover ratio well above prudential norms."

RESILIENT REMITTANCES. Despite slowdown in economies that host overseas Filipino workers, S&P noted that remittances continue to be resilient. Coupled with the strong performance of the business process outsourcing (BPO) sector, another dollar earner, both could "generate foreign exchange earnings of approximately 15% of GDP, comfortably covering trade deficits of 6% to 9% of GDP."

MANAGEABLE INFLATION. S&P also noted the role of the healthy inflation environment, which supports economic growth. "Despite some shortcomings in monetary policy transmission, inflation is low and fairly stable, helped partly by currency appreciation," S&P's Benard said.

However, S&P cited the following factors the Philippines could improve:

LOW PER CAPITA INCOME. The "low income level remains a key rating constraint. Per capita GDP, at a projected US$2,850 in 2013, is below that of most similarly rated sovereigns," S&P said.

LIMITED JOB OPPORTUNITIES. S&P noted that "the economy is also unable to absorb its entire productive and workforce, as suggested by the high level of emigration." It cited the "concentrated nature of the economy, infrastructure shortfalls, and restrictions on foreign ownership, which deter foreign investment, are factors that hamper growth."

INCLUSIVE GROWTH. "Real GDP per capita growth averaged 3.3% over the past decade--somewhat slow at this stage in the country's development. Based on ongoing structural changes in the economy, rising private sector investment, and with increased fiscal space allowing greater public spending, we expect real GDP per capita growth to rise to 4.5% in the forecast period to 2016," S&P said.

Higher portfolio inflows

S&P's upgrade was not a surprise. University of Asia and the Pacific economist Victor Abola told Rappler that the debt watcher's decision was expected after Fitch's historic announcement in March.

Abola said with two credit rating agencies giving the country investment grade status, the Philippines can expect a steady inflow of portfolio investments.

"It was not a surprise, the market was expecting it. Nonetheless, its a confirmation that two out of 3 credit rating agencies has come to the same conclusion that the Philipppines is worthy of investment grade status," Abola said.

BDO chief market strategist Jonathan Ravelas said the credit rating upgrade given by S&P confirms that the Philippines is a worthy investment destination.

"This is a confirmatory upgrade. The market itself has anticipated this from Standard & Poor's. It just highlighted what was eventually happening in the market already," he said.

"This second (credit rating) upgrade will eventually allow investors to start looking at the Philippines as a serious investment destination."

Stronger peso?

Ravelas added that while the peso could further strengthen as a result of the investment grade, the BSP could counter any appreciation of the peso.

Abola, for his part, said the FMIC-UA&P Capital Market Research Center does not plan to revise its forecast on the peso following S&P's move. He said they still expect the peso to appreciate by 4% to 5% in 2013.

Philippine Economic Society (PES) President Alvin Ang told Rappler that the impact of the credit rating upgrade would be immediate on the bond and equity markets, but would not have a drastic effect on the peso.

Ang explained that the peso is stable at around P40 to P41.20 to the dollar and this could hold even with the second investment grade rating.

BSP's Tetangco said the central bank would remain vigilant against the risks associated with greater inflows. He expressed hope that these inflows would also include much-needed FDI that would help create more jobs for Filipinos.

"With our investment grade rating, we are more confident that these inflows, particularly of more FDIs, will swing toward increasing the country's productive capacity, thereby generating more employment and higher incomes," Tetangco said.

Infrastructure

Ang said the government still needs to focus on improving the business environment, particularly the ease of doing business in the country. He said the Philippines still has a long way to go in terms of making it easier for businesses to set up shops here.

Among the country's development constraints is lack of infrastructure, not only in terms of roads, but also power supply.

"The credit rating has no direct impact on the local economy," Ang said. "What (government) needs to do now is to go into the details to improve the country's investment climate."

Ravelas agreed and said there is still a lot more work to be done on infrastructure for growth to be inclusive. - Rappler.com

PH wins second investment grade
 
.
Philippines Beats Indonesia in Gaining S&P Investment Grade
By Karl Lester M. Yap - May 3, 2013

gen1k.jpg


Philippine stocks rose to a record after it beat Indonesia to win an investment grade from Standard & Poor’s, as President Benigno Aquino outshines Susilo Bambang Yudhoyono in improving government finances and spurring growth.

The rating on the Philippines’ long-term foreign-currency- denominated debt was raised one level to BBB- from BB+, with a stable outlook, S&P said in a statement yesterday. In contrast, the assessor revised its outlook on Indonesia’s BB+ rating to stable from positive.

“We’re continuing to address constraints to growth,” Philippine Finance Secretary Cesar Purisima said in a Bloomberg Television interview with Susan Li today. “We’re fast tracking our infrastructure projects. We’re looking at areas we can open up to foreign investors.”

Aquino’s drive to transform the nation into one of the region’s fastest-growing economies is gaining strength, with the government forecasting record investment pledges this year as companies including Murata Manufacturing Co. expand. In Indonesia, President Yudhoyono has delayed cutting fuel subsidies that have drained government finances even as he tries to allocate more funds to infrastructure spending.

“For the Philippines, this is yet another confirmation that Aquino’s reforms have borne fruit, which would help in attracting not just short-term flows, but long-term direct investments,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “The rating momentum for Indonesia is moving in the wrong direction.”

Capital Inflows

The Philippine Stock Exchange Index (PCOMP) rose as much as 1.9 percent today to a record. Indonesia’s benchmark Jakarta Composite Index (JCI) slid a second day.

The peso climbed to a four-week high, rising 0.3 percent to 40.93 per dollar, according to Tullett Prebon Plc. In the past 12 months, it is the biggest gainer after the Thai baht among 11 Asian currencies tracked by Bloomberg.

“The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt,” S&P said. “In our assessment, the stalling of the reform momentum in Indonesia and a weaker external profile have diminished the potential for an upgrade over the next 12 months,” it said separately.

Higher ratings may boost capital inflows into the Philippines and prompt the central bank to add to measures to curb asset-bubble risks. Bangko Sentral ng Pilipinas last month cut the rate it pays on special deposit accounts for a third time this year, while keeping the rate it pays lenders for overnight deposits at a record-low 3.5 percent.
Continued Strength

“The Philippine central bank has done a good job in managing inflows,” S&P credit analyst Agost Benard said in a teleconference today. Still, the peso will likely have to appreciate as inflows continue to rise, he said.

Moody’s Investors Service, which rates the Philippines one step below investment grade, is keeping a close eye on developments on the ground, Singapore-based sovereign analyst Christian de Guzman said in an interview today.

“Much of the momentum has continued in terms of growth, as well as the health of external payments position, as evidenced by the continued strength of remittance inflows and stability of foreign exchange reserves,” he said. “However, revenue performance is starting to slow and begs the question if efforts to increase tax efficiency have already been maximized.”

Philippine revenue collection fell a second month in March, a report showed yesterday, even after the implementation of a “sin tax” on alcohol and tobacco products. Indonesia’s rating of Baa3 above the Philippines is still justified, de Guzman said, citing a longer track record of growth and fiscal management.

Infrastructure Investment

Aquino has increased state spending and narrowed the budget deficit while seeking more than $17 billion of infrastructure investments to spur growth to as much as 7 percent this year. The Philippine economy, which was more than twice the size of Malaysia and 10 times bigger than Singapore’s in 1960, expanded 6.8 percent in the fourth quarter.

The president has taken on the Catholic Church with a bill to provide free contraceptives to the poor, arrested his predecessor on graft charges, and ousted the country’s top judge for illegally concealing his wealth. Transparency International raised the country’s ranking on its annual corruption index last year to 105, versus Indonesia’s 118.

Fitch Ratings was the first to upgrade the Philippines to investment grade in March. Moody’s Investors Service rates the nation one step below.

Fuel Prices

Ratings changes aren’t always followed by investors. French bonds and U.S. Treasuries both made gains after the nations were stripped of their AAA credit ratings, in a sign that downgrades may have little bearing on borrowing costs. Almost half the time, government bond yields fall when an action suggests they should climb, or they increase even as a change signals a decline, according to 38 years of data compiled by Bloomberg.

Yudhoyono said this week he will only increase fuel prices after Parliament approves compensation programs for the poor, a move that could delay efforts to contain a budget deficit that may be more than twice as much as estimated without subsidy cuts.

Fuel Prices

Failure to reduce subsidies last year drained government finances and led to a record current-account shortfall, hurting the rupiah as foreign investors lost confidence. Indonesia’s economy probably expanded near the slowest pace in more than two years last quarter as a decline in commodity prices hurt exports.

Indonesia may implement incremental measures such as a moderate increase in fuel prices, S&P’s Benard said, while stopping short of bold measures given the stage of the electoral cycle the country is in, he said.

S&P said yesterday it may raise the country’s rating if the fuel reforms are finalized, the state budget is improved, or if structural reforms boost economic growth. The assessment may be lowered if renewed fiscal or external pressures are not met with “timely and adequate policy responses,” it said.

“Policy and exchange-rate management need to be more focused on sending the right signals to the market so as not to induce portfolio outflows,” Benard said.
 
. .

Pakistan Affairs Latest Posts

Back
Top Bottom