Thursday, August 23, 2012

Banks should disclose deals in real estate sector - BSP

ABS-CBN - Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the central bank will issue new rules that will require banks to disclose investments in the real estate sector, as he expressed concern over asset price pressures.

That data is not yet captured by bank loans even if the industry reports regularly to the BSP. Tetangco said, “it could be expensive to clean up after an asset price bubble” so that the BSP policy tack “leans against such price pressures.”

The BSP currently imposes a 20 percent cap (of total loan book) on bank lending to the real estate sector, and the new rules could be a way to check if banks are finding a way to skirt that limit through investments in equity and bonds of property companies.

BPI President Aurelio Montinola, meanwhile, said he sees no problem in the new rules. He said, however, he doesn't see just yet asset price pressures.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

BPOs, restaurants, hotels pay the highest - NSCB

RAPPLER - Call center agents, chefs, and hotel staff were among the most well paid workers in the Philippines, according to data released by the National Statistical Coordination Board (NSCB). Compensation per employee in the country increased to 5.7% in the first quarter this year, the NSCB said in the August 2012 issue of the Quarterly Economic Indices (QEI) of the Philippines.

This increase reflected the growth in the Total Compensation per Employee Index (TCEI) of Private Services of 12% in the first 3 months of the year.

The NSCB explained that private services include the Business Process Outsourcing (BPOs) firms, medical and health industries, recreational industries, personal services, hotel and restaurants, information and waste management services, among others.

"The QEI intends to provide measures of growth in production, gross revenue, employment and compensation in the various sectors of the economy," the NSCB explained.

Real Estate is king

The NSCB said the industry that raked in the highest amount of gross income and the sector that had the most number of employees is the real estate industry.

The real estate sector saw a 28.1% hike in its total gross revenue index (TGRI) and posted a growth of 8.1% in the total employment index (TEI).

Data showed that because of the real estate sector, the TGRI of all Philippine industries posted an 11.3% increase in the first quarter of 2012 from the previous year’s growth of 7.4%.

However, the TEI, the NSCB said, slowed to 3% in the first quarter of 2012 from 3.7% a year ago.

"These indicators were developed to guide users for a more meaningful economic analysis of current economic behavior and events. It is also used as deflators to express a current value in real terms, as bases for wage formulation and for forecasting and projections," the NSCB said.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Wednesday, August 15, 2012

Land titling for inclusive growth

INQUIRER - Promoting inclusive growth is the cornerstone of P-Noy’s development plan. Here’s a simple way to summarize the over-all effort. The “growth” part of the strategy is linked to the effort to boost infrastructure, improve economic competitiveness and drum-up private sector investments (e.g., PPPs or Public-Private Partnerships). On the other hand, the “inclusiveness” part is linked to the effort to strengthen the country’s social protection system (e.g., the 4Ps or Pantawid Pamilyang Pilipino Program and PhilHealth), as well as ensure that the investments and economic activities are not just concentrated in urban areas (and in particular, Luzon and Manila) and involve industries where the bulk of the population could engage (e.g., agriculture and tourism). As noted by Secretary Arsi Balisacan of NEDA, PPPs need to be leveraged in the countryside to meet the infrastructure gaps there, too. Anticorruption efforts then underpin both the “growth” and “inclusiveness” strategies by helping to ensure that the public gets the most “bang for its buck” on both these fronts.

Less ballyhooed, an important additional ingredient—the full roll-out of the Residential Free Patent Act—could also help promote inclusive growth. Republic Act 10023 (an Act Authorizing the Issuance of Free Patents to Residential Lands) aims to simplify and speed-up the titling of unregistered residential lands in the Philippines. You may have already read in the papers that no less than the Vice President and Housing and Urban Development Coordinating Council (HUDCC) Chair Jojo Binay is among those spearheading this effort. By facilitating the issuance of free patents on residential lands to qualified claimants, they no longer need to go through the protracted and costly process to gain legal rights to their properties.

Rough “guesstimates” suggest that only about half of the estimated 22 million parcels of land in the country are titled. Most of these untitled properties are located in urban and low income settings, and approximately 39 million Filipinos stand to benefit from the government’s land titling program. In 2012, some 10,000 titles are set to be distributed. This is expected to increase in the next years as the program gains momentum.

Property rights and development

Lack of clear property rights could undermine inclusive growth in various ways. Unclear and unenforceable rights to property could lead to underinvestment, as the returns from any improvements and investments could be seized by others. For low-income households, lack of access to secure property rights compounds their lack of access to credit by depriving them of potential collateral. This, in turn, further adds to their poverty and insecurity. Lack of property rights could also contribute to conflict within families and communities due to competing land claims. Poorer families which don’t have clear property rights are also much more vulnerable to land-grabbing and corruption in property acquisition.

There are also broader social and economic downsides to a business environment characterized by fragile property rights. Underinvestment in communities could contribute to a stagnant economic environment, crime and urban decline. Lack of (or unenforced) urban planning, due in part to poor property rights enforcement and over-crowding, contributes to urban decay, fire and health hazards and other threats to public safety.

Finally, untitled property is not just underutilized at the household level, it may also be underutilized at the level of the local government unit (LGU). LGUs also have claims to some of this untitled property. Vast tracts of untitled property, coupled with underinvestment, also represent a weaker tax base. Hernando de Soto, an economist from Peru who did extensive work in this area, called all of these untitled lands “dead capital” (i.e., capital that does not fuel investments and growth).

Social and economic impact

While more robust impact evaluation studies on the Philippine land titling effort are still forthcoming, international evidence on land titling for low income communities does suggest possible positive gains. For instance, a study of the 1993 Land Law of Vietnam which gave households the power to exchange, transfer, lease, inherit and mortgage their land-use rights, revealed that these additional land rights increased the share of total area for long term crops and boosted the amount of labor for nonfarm activities. Essentially, the security of property rights incentivized investments and economic activity of a longer term nature. This is good news for sustaining growth, by encouraging investments that have long and stable pay-offs into the future.

Similar results were observed in a study of poor urban communities in Buenos Aires, Argentina. Low-income families that received more secure property rights increased housing investment and enhanced the education of their children compared to those families that did not receive more secure property rights.

Land titling may also have an impact on gender equality and fertility. One study in Peru examined intra-household allocation of ownership rights and fertility focusing on a nationwide titling program in that country. The Peruvian land titling program sought to improve gender equality by promoting the inclusion of female names on land titles. Land titling in that country was associated with a significant and sharp reduction in annual birth rates among program beneficiaries. The researchers noted that this was likely due to the improved bargaining power of women in the household, in turn due to their inclusion in the land title.

Nevertheless, international evidence on using land for collateral to obtain credit is less clear. Even in the Philippines, focus group discussions with beneficiaries suggest that they would rather hold on to their newly titled lands rather than risk losing it to the bank. International experience on land titling, from slums in Ahmedabad, India, to those in Lima, Peru, reveal signs of enhanced social status among land title recipients who could press for their rights to their property.

A reform LGUs would love to support

Possibly the best thing about this reform is that it’s aligned with LGUs’ goals of increasing tax revenues. (You might add that it also doesn’t hurt that distributing land titles is a surefire way to drum up votes.) Lack of clarity in property rights translates to weaker tax revenues for LGUs due to weaker economic activity and diminished property tax revenues.

If we very conservatively “guesstimate” that the average property value for the estimated 11 million untitled parcels is about P50,000, and if we apply a 1 percent property tax on this value, that already translates to about P5.5 billion pesos in tax revenues for LGUs. This amounts to about 10 percent of total internal revenue allotment (IRA) to all Philippine cities. This figure is likely to be a gross underestimate of the potential increase in tax revenues, and it does not yet consider possible social and economic gains and spillover effects from increased investments at the national and regional levels, lower crime, conflict and hazards at the community level, and more financially empowered property owners at the household level.

Of course, land titling alone cannot solve all the challenges of rapid urbanization, and careful phasing and additional support for this reform could help ensure that land titles are effectively enforced and some risks, like gentrification, are mitigated. However, any way you look at it, there’s a lot of dead capital that could be resurrected to promote growth of a much more inclusive kind. These asset-related reforms tackle some of the roots of poverty, inequality, and anemic and unsustained economic growth in our country.

Note from MAP: “Inclusive Growth” will be extensively discussed at the 10th MAP International CEO Conference 2012 to be held this coming September 11, Tuesday, from 8 a.m. to 5 p.m. at the Makati Shangri-La. The theme will be “Transformative Change: The Imperative of Inclusive Growth.” For reservations or inquiries, please email or call 751-1149 to 52 or visit

(The article reflects the personal opinion of the author and it does not reflect the official stand of the Management Association of the Philippines. The author is associate professor of economics at the Asian Institute of Management, and executive director of the AIM Policy Center. He is a recipient of the 2012 Ten Outstanding Young Scientists Award of the National Academy of Science and Technology.)

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Overseas Filipino remittances up by 5% to P10 B in 1st half

INQUIRER - Remittances from overseas Filipinos in June totaled $1.8 billion, up by 4.2 percent compared with June last year, the Bangko Sentral ng Pilipinas announced Wednesday.

This brought remittances during the first half of the year to $10.13 billion, up 5.1 percent from remittances during the same period last Year.

The biggest sources of remittances in the first half were the United States, Canada, Saudi Arabia, Japan, United Kingdom, Singapore and the United Arab Emirates.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Philippines stock market has room to rise

GULFNews - Valuations have become expensive and is a cause for concern.

Dubai: The latest deluge that brought life to a standstill in the Philippines seems not to have dampened its financial market.

On Wednesday, August 8, when the Philippines stock exchange resumed trading after it was suspended the day before due to inclement weather, PSEi, its 30-company benchmark index, closed the day higher at 5,308.38, up 0.46 per cent.

Aided by funds from foreign investors, trying to get away from the debt crisis of Europe, the Philippines stock market this year has climbed 22 per cent, hitting record highs more than 20 times.

Much of the surging foreign interest in the Philippines market since last year is credited to the government’s proactive efforts to reign in fiscal deficit, tackle rampant corruption and create a business-friendly environment. This has contributed to a ratings upgrade from all three major credit agencies: Standard & Poors, Moody’s and Fitch.
While the Philippines stock market has emerged as the year’s top performer in Southeast Asia, it has also become the most expensive, currently trading at 17 times expected earnings compared to Thailand’s 10.5 times and Indonesia’s 12.1 times.
In their July 16 report, Nomura Asset Management wrote that while the Philippines market, like Thailand and Indonesia, remain insulated from the global woes, these markets are no longer cheap and it was going to keep its current, overweight positions.

Asean Investment Management currently has limited exposure to the Philippines market. “We are underweight due to valuation issues,” said David O’Neil, its Singapore-based chief investment officer, “Currently value is lacking in the market.”
Sound fundamentals
But, despite steep valuations, some investors still see the index continuing to climb due to the country’s strong economic outlook for the coming years.

“Over a two to three-year horizon, we believe the Philippine market has strong legs to sustain its uptrend given its sound economic fundamentals — five to six per cent annual GDP growth and strong corporate earnings expansion in the range of 10 per cent to 15 per cent,” said Maria Theresa M. Javier, senior vice-president and group head, BPI Asset Management, the biggest unit trust company in the Philippines.
It has investments worth 130 billion pesos (Dh11.4 billion) under management. Gregg Adrian R. Ilag, equity analyst at AB Capital Securities Inc., agreed. “Even though valuations are high, they are not at illogical levels. I expect earnings to catch up, eventually easing valuations to decent levels.”

BPI’s Asset Management’s outlook is at least a double-digit CAGR [compounded annual growth rate] for market returns, sustained until 2014, said Javier.

O’Neil of Asean Investment Management expects an upside of more than 30 per cent over the next two to three years.

In their July report, asset management firm Maybank ATR Kim Eng said that there are several factors that give the index room to rise.

“One is sustained growth in government spending that can offset weakness coming from developed economies and major emerging markets,” writes Luz Lorenzo, market strategist and head of research at Maybank, in the report. And that is the reason for the bank to upgrade the 2012 GDP forecast to 5.4 per cent from 5 per cent previously.
Attracting capital
He also cites that keeping interest rates low, because of low inflation of 3 per cent year on year for the first half of 2012, is likely to positively impact the market.

Next year’s outlook for inflation remains benign and it is likely that low interest rates will continue to attract capital flows into the Philippines. His optimism is also based on robust private consumption, which accounts for 70 per cent of the GDP, and which has shown no signs of flagging.

“We see the risks as mostly coming from a prolonged and protracted global economic slowdown given the financial volatility in the Eurozone, the fiscal problem in the US, and China’s own growth concerns,” said Javier. “Politically, the risk may come from a possible escalation of tension with China, pertaining to the Scarborough Island.”

Ilag is also wary about inflation. “In terms of risk, we think that significant risk comes from inflation over the long term,” he said. “The current easing measures will cause higher inflation in the years to come.”
Where to invest?
In the first half of 2012 all sectoral indices were positive, led by real estate and banking stocks. The financial index surged 34.6 per cent making it the best performer at the end of June.

BPI Asset Management favours Philippine conglomerates which are well-positioned to benefit from the administration’s infrastructure spending and consumer’s rising disposable income, which should be further buoyed by election spending in 2013, said Maria Theresa M. Javier, senior vice- president and group head, BPI Asset Management.

She believes property and banking stocks will be at the forefront of the market’s upswing. “Property [stocks] remains one of the best proxies for the Philippine economy and we expect their net income growth to be steady as they recognise completion of previous year’s sales. Philippine banks, on the other hand, are expected to exhibit double-digit loan growth moving forward as well. This will be supported by the expected rise in financing requirements by local companies’ participating in the public-private partnership (PPP) projects which are in the administration’s pipeline.”

Maybank has focused on utility and consumer companies, which have continued to provide stable returns, since the beginning of the year. In the July market report, Luz Lorenzo, market strategist and head of research at Maybank, said they were sticking to their current allocations of Universal Robina Corp. Pepsi Cola Products Philippines, First Gen Corp., Manila Water and First Philippines Holding Corp.
Gregg Adrian R. Ilag, equity analyst at AB Capital Securities Inc., said the sectors they like include power, gaming, construction and media.

“We remain bullish on power companies due to the capacity shortages expected to occur in the Philippine regions,” said Illag. “Required additional capacity is approximately 16,550MW over the next 18 years. Out of these only 1,354MW is committed by investors.

“We also like the gaming industry which is going to get a boost from tourist influx in our country. Meanwhile, construction companies are a direct play on the government’s plan to increase spending by releasing more PPP projects. We also favour the media sector as they will be prime beneficiaries on the upcoming election spending.”

Currently he favours: First Philippine Holdings Corp., a conglomerate focused on the power sector and trading at large discount to NAV (net asset value). In media, his pick is GMA Networks Inc. due to its impressive profitability and high dividend payouts.

In the construction sector, he likes EEI Corporation. “EEI’s liquidity, large size and cheap valuations (7x 2012 P/E) makes it attractive,” he explained.

“In gaming, we’re currently looking at Bloomberry Resorts Corporation (Bloom) and Alliance Global Inc. AGI is a conglomerate with a diversified portfolio (food and real estate, among others). It is very attractive in terms of valuations: 10.1x 2011 P/E against the mean of 16x for conglomerates.”

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Manila flood blamed on urbanization

INQUIRER - Group sees unfettered urbanization and political gridlock as main factors
There was no storm over Metro Manila last week. But why was there so much rain? Why was the flooding so severe?

Those were the questions asked by Jose Ma. Lorenzo Tan, CEO of the environmental group Worldwide Fund for Nature (WWF)-Philippines.

Filipinos, not the monsoon rains, are to blame for the deluge that paralyzed the metropolitan area of 14 million residents last week, according to Tan.

In an analysis, Tan said the latest disaster to hit the Philippines was a result of an unfettered and mindless march to urbanization that had replaced soils and trees, which could absorb the rains and reduce flooding, with concrete jungles.

One classic example is Quezon Memorial Circle. What used to be a vast green space has been transformed into a giant “tiangge” (market) and “carinderia” (eatery).

Construction by the Quezon City government of buildings continues unabated in the park, where grass is fast disappearing just a spitting distance from cavernous shopping malls.

Now, during downpours, the areas surrounding the park are flooded and traffic is snarled.

The buildings, the concrete and the asphalt have trapped and increased the temperature in the metropolis, making it an “urban heat island,” or UHI, Tan said.

Pollutants from buses, cars and factories also contribute to the warming of the city as they block the heat rising to the atmosphere.

Because of all these urban development and human activities, there is more heat that lingers on the ground that interacts with the weather, Tan said.

In the case of Metro Manila this time of the year, the UHI worsens the southwest monsoon, the dominant weather system.

Along with the Philippines’ location on the typhoon path and climate change, UHI is the third factor for the unusually heavy and relentless rains that crippled the capital last week, Tan said.

“Urban heat islands” are aggravations that intensify the water cycle. They are “magnets” that draw in and enhance weather systems such as cyclones, low-pressure areas and the monsoon.

“In some cases, they have been known to spawn local tornadoes. We saw that right in Quezon City just last year, where seven barangays (villages) were reported to have been badly affected,” Tan said.

Record rain since ‘Ondoy’

The monsoon drenching last week produced the highest volume of rainfall seen in the city since the record-breaking downpours brought by Tropical Storm “Ondoy” in 2009, claiming close to a hundred lives in the rampaging flood tides.

The amount of rain from August 6 to 8 reached 1,007 millimeters. The weather bureau’s projected accumulated rainfall for August was only 540 millimeters.

The torrential rains that enveloped the city forced 2 million people in Metro Manila to evacuate to safety and crippled 80 per cent of the city.

Tan’s statement aligns with the findings of a researcher at the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa).

The UHI effect distorts the heat balance, wind circulation and precipitation in the city, according to Nivagine Nievares, a weather specialist at the Pagasa.

Nievares’s 2010 masteral thesis showed that rapid development in the city had made Manila hotter compared to the rural regions around it.

Metro Manila’s buildings, the roads and the pollutants in the air absorb and trap the heat from the sun, pushing the mercury higher especially during summer, Nievares said.

Solar heat flux

According to Nievares, Metro Manila’s temperature during April is 1-2 degrees Celsius higher than in the nearby and less developed province of Bulacan.

“Later in the day, as net solar radiation increases, most of the urban surface materials absorb and store a lot of energy [and] convert most of this energy into sensible heat flux,” Nievares said. “The increase of sensible heat flux contributes to the increase of temperature over the urbanized area.”

During the dry season, the UHI phenomenon could generate oppressive heat. But at this time of the year, during the wet season, the phenomenon could help intensify monsoon downpours, she said.

Nievares noted that pollutants interact with the water molecules in the atmosphere.

“A chemical reaction takes place; the pollutants stick to the molecules of the water vapor,” she said in an interview yesterday. “This makes the raindrops bigger. This is why sometimes the rains feel heavy.”

Depending on the season, the UHI could also change the wind circulation and the patterns of cloud formation, variables that affect rain clouds and thunderstorms, she said.

Politics, poor planning

But the UHI effect could not be blamed on the vagaries of weather. Tan’s and Nievares’ findings clearly showed that rapid urbanization was the culprit for the UHI.

“The problem lies in Metro Manila’s poor planning, political gridlock, inadequate or inappropriate urban management, the inadequate implementation of zoning rules and land use plans, haphazard real estate development, among others,” Tan said.

“Like most megacities in Asia, Metro Manila has adopted the long outdated Western development model referred to as ‘the urban sprawl.’ Megacities that extensively convert porous and water-absorbent land to impervious expanses of concrete generate a tremendous amount of heat. When land conversion and real estate development are allowed to grow in a haphazard manner, it only makes things worse,” he said.

Nievares said the concrete and the asphalt that covers Metro Manila generate a lot of heat that contribute to the warming of the city. The dark color of the city’s roofs is also a problem.

Because Metro Manila residents tend to use gray or red paints on their roofs, the heat from the sun is not reflected to the atmosphere. Instead, it is absorbed on the ground.

More erratic weather

Tan warned that Metro Manila would see more extreme and erratic weather in the future, thanks to the triple whammy of the UHI effect, climate change, and the country’s position on the typhoon path.

“Historically, most typhoons entering the Philippines come from the Pacific Ocean. Over the last four years, however, we have seen extreme weather systems develop in the West Philippine Sea,” Tan said.

“Although this was not a frequently recurring situation ten or twenty years ago, the West Philippine Sea is now occasionally warm enough to be a spawning area for a phenomenon called tropical cyclo-genesis, i.e., the birth of storms. The province of Pangasinan has experienced this, first hand. With global warming, we should not be surprised if this is happening,” he added.

“Climate change changes everything. Humankind created it. The haphazardly built megacities of Asia are aggravating it. Metro Manila’s garbage mess and woefully inadequate transport system just makes it worse. We started it. We can stop it. But, let’s stop pointing fingers at the monsoon,” Tan said.

“Some of the decisions will not be easy. But we have no choice. We only have one Philippines, and one planet.”

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Philippine Bonds, Peso Drop on Concern Flood Will Spur Inflation

BLOOMBERG - Philippine bonds fell on concern floods that have affected rice-producing regions and disrupted supplies of farm output will stoke inflation. The peso declined.

At least 92 people died as parts of Manila and nearby provinces were inundated last week and another tropical storm could hit the country this week, the state disaster agency said in a report today. The Philippines cut its rough-rice production forecast this year to 17.8 million tons from 18.5 million tons, Agriculture Secretary Proceso Alcala said today. The inflation rate rose to a six-month high in July, official data show.

“With the flooding and threats of more rain, we’re seeing some renewed concern on inflation,” said Malou Liwag, a senior vice president at Philippine National Bank (PNB) in Manila.

The yield on the 4.625 percent bonds due July 2017 rose two basis points, or 0.02 percentage point, to 4.73 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp.

The consumer-price index, around 39 percent of which is food, rose 3.2 percent last month from a year earlier, still at the lower end of the central bank’s 3 percent to 5 percent target range. Supply disruptions may cause a spike in food prices, central bank Governor Amando Tetangco said on Aug. 8.

Bangko Sentral ng Pilipinas cut its benchmark overnight borrowing rate to a record low 3.75 percent last month. The next policy meeting will be on Sept. 13. The central bank’s next move will be “data dependent,” Tetangco said on Aug. 10.

The peso fell 0.1 percent to 41.927 per dollar in Manila, according to Tullett Prebon Plc. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 5.75 percent.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Wednesday, August 8, 2012

FACT CHECK: Dissecting the State of the Nation Address 2012

Businessworld - PRESIDENT Benigno S. C. Aquino III delivered on Monday his third State of the Nation Address (SONA) at the House of Representatives. As is tradition, he outlined his policy agenda for the rest of his term and gave a detailed progress report to Congress, putting greater emphasis on economic breakthroughs and calling on legislators to act on several measures.

Here are excerpts from the President's speech with fact checks and supplementary information from the BusinessWorld Research team and reporters:

"What was once the sick man of Asia now brims with vitality. When we secured our first positive credit rating action, some said it was pure luck. Now that we have had eight, can it still just be luck? When the Philippine Stock Exchange Index first broke 4,000, many wondered if that was sustainable. But now, with so many record highs, we are having trouble keeping score: For the record, we have had 44, and the index hovers near or above 5,000.

In the first quarter of 2012, our GDP grew by 6.4 percent, much higher than projected, the highest growth in the Southeast Asian region, and the second only to China in the whole of Asia...Once, we were the debtors; now, we are the creditors, clearly no laughing matter. Until recently, we had to beg for investments; now, investors flock to us."

Touting economic gains by citing GDP growth, the stock market, and credit upgrades has been staple fare in previous SONAs. In 2009, President Gloria Macapagal-Arroyo said: “[O]ur economy has posted uninterrupted growth for 33 quarters; more than doubled its size from $76 billion to $186 billion. The average GDP growth from 2001 to the first quarter of 2009 is the highest in 43 years … Our administration, with the highest average rate of growth, recording multiple increases in investments, with the largest job creation in history, and which gets a credit upgrade at the height of a world recession, must be doing something right, even if some of those cocooned in corporate privilege refuse to recognize it.”

The recent announcement that the central bank is lending $1 billion in its reserves to a European crisis fund through the IMF does not mean the Philippines has escaped its debt woes. From January to May, the government required P171.645 billion in net financing from domestic and foreign sources, according to data from the Bureau of Treasury. As of May 2012, the government’s outstanding debt was P5.15 trillion. In 2010, debt stood at P4.72 trillion. -- BW Research

On record highs in the Philippine stock market:

The Philippine Stock Exchange index (PSEi), composed of 30 blue-chip firms, has recorded 21 all-time highs since the start of the year, with the main index last peaking at 5,369.98 on July 5. The PSEi first breached the 4,000 level on Sept. 16, 2010 and the 5,000 mark at the close of March 2 this year, when it settled at 5,016.30.

Before the President delivered his SONA on Monday, the main index slid by 1.37% or 71.49 points to close at 5,139.400 on the back of Spanish debt concerns. -- Franz Jonathan G. de la Fuente, BW reporter


Eight positive rating actions under Aquino's term:

The Aquino administration has made it its goal to secure the Philippines' first ever investment grade credit rating by 2016. An investment grade credit rating would lower the borrowing costs and lure more foreign investments, both for the government and corporations in the country.

November 2010:
Standard & Poor's upgrades the Philippines' credit rating for the first time in 13 years, putting it at to BB -- two notches below investment grade -- from BB-.

January 2011:
Moody's Investors Service raises the country's credit rating outlook to positive from stable, signaling a possible upgrade in the next 12 to 18 months. It rates the Philippines at Ba3 -- three notches below investment grade.

June 2011:
Moody's awards the Philippines with a credit rating upgrade, noting the country's sustained macroeconomic stability and prudent fiscal management. This puts the Philippines on Ba2 -- two notches below investment grade.

June 2011:
Fitch Ratings puts the country at one notch below investment grade as it revised its credit ratings to BB+ from BB. The debt watcher cited "broadly favorable economic prospects."

July 2011:
S&P affirms the Philippines' BB credit rating, remarking that the upside and downside risks to the country remain balanced: strong external liquidity and economic growth were offset by high debt and low income levels.

September 2011:
The Philippines jumps 10 spots from 85th to 75th -- its biggest leap yet -- in the World Economic Forum's 2011 World Competitiveness Report, driven by improvements in infrastructure, ease of doing business and public trust.

May 2012:
Moody's raises the outlook on the country's Ba2 credit rating to positive from stable, recognizing the "faster-than-expected" fiscal consolidation and "active" debt management. -- by Diane Claire J. Jiao, Senior Reporter


"When we began office, there were 760,357 household-beneficiaries of the Pantawid Pamilyang Pilipino Program. Our target: 3.1 million within two years...This is a long-term project, with far-reaching impact. The research is in its initial stages, but already the figures show promise. Based on data from the DSWD: 1,672,977 mothers now get regular checkups; 1,672,814 children have been vaccinated against diarrhea, polio, measles, and various other diseases; 4.57 million students no longer need to miss school because of poverty."

The Pantawid Pamilyang Pilipino Program was started by the previous administration. It was launched by President Arroyo in November 2008. In 2009, Arroyo said in her SONA: “Cash handouts give the most immediate relief and produce the widest stimulating effect. Nakikinabang ang 700,000 na pinakamahihirap na pamilya sa programang Pantawid Pamilya.” -- BW Research


"What we want: True, universal, and holistic health care. This begins not in our hospitals, but within each and every household: Increased consciousness, routine inoculation, and regular checkups are necessary to keep sickness at bay. Add to this our efforts to ensure that we prevent the illnesses that are in our power to prevent.

For example: Last year, I told you about our anti-dengue mosquito traps. It is too early to claim total victory, our scientists are rigorous about testing, but the initial results have been very encouraging.

We tested the efficacy of those mosquito traps in areas with the highest reported incidence of dengue..."

FACT: The development of mosquito traps was already mentioned in President Aquino’s 2011 SONA. -- BW Research


"We are ending the backlogs in the education sector, but the potential for shortages remains as our student population continues to increase. Perhaps Responsible Parenthood can help address this."

Note that President Aquino did not explicitly talk about passing a bill, much less the “Reproductive Health” bill being sought by various groups. The Senate bill, SB 2865, is titled “An Act Providing for a National Policy on Reproductive Health and Population and Development”. The House version, HB 4244, is titled “The Responsible Parenthood, Reproductive Health and Population and Development Act of 2011”. The term “Reproductive Health,” which is the subject of international agreements, is wider than “Responsible Parenthood,” and in some countries is taken to include access to abortion. See President Aquino’s own views on the matter. -- BW Research


"Let us keep in mind: there are about a million new entrants to the job market every year. The jobs we have produced within the past two years total almost 3.1 million.

As a result, our unemployment rate is declining steadily. In 2010, the unemployment rate was at 8 percent. In April 2011, it dropped to 7.2 percent, and dropped further to 6.9 percent this year. Is it not an apt time for us to dream of a day where any Filipino who wishes to work can find a job?"

• The unemployment rates for April 2011 and April 2012 have no statistical difference, according to the National Statistics Office. Meanwhile, based on the results of the April 2010 Labor Force Survey (LFS), 35.411 million Filipinos were employed. Compared with the April 2012 LFS, 37.841 million Filipinos had jobs, or an increase of 2.43 million jobs. -- BW Research

• BusinessWorld columnist Benjamin E. Diokno, a UP economist, warns that the slightly better unemployment numbers are masking the poor quality of jobs. -- BW Research

• Adult unemployment has indeed declined in May from a record-high hit last quarter, the Social Weather Stations (SWS) said, but the tally remains historically high.

Results of a second-quarter survey that were made exclusive to BusinessWorld put the adult unemployment rate at 26.6%, equivalent to some 10.9 million individuals, from first quarter’s record peak of 34.4% (13.8 million).

But since SWS began surveying it, adult unemployment was below 15% from 1993 to March 2004, and ranged from 16.5% to 19.0% from August 2004 to March 2005. It has been above 20% in 23 out of 26 surveys from May 2005 to December 2011. -- Noemi M. Gonzales, BW reporter


We have suffused the nation with light--and it is this light, too, that has exposed the crimes that occur in the shadowed corners of society. What the Filipino works so hard for can no longer be pilfered. Crime volume continues to decline across the country. In 2009, over 500,000 crimes were recorded--this year, we have cut that number by more than half, to 246,958. Moreover, 2010’s recorded 2,200 cases of carnapping has likewise been reduced by half to 966 cases this 2011."

The National Statistical Coordination Board’s Web site explains why 2009 is the basis for comparison: “In 2009, PNP has implemented (sic) a new crime reporting system wherein the crime data for 2009 was set as the baseline for future research, study and comparison. Hence, crime statistics in 2009 cannot be compared with those crime data obtained during the previous years (2008 and earlier) as the parameters are no longer the same.” Comparing 2010 vs 2011, various media outlets reported last January that the crime rate went down by 23%. -- BW Research


"True unity and reconciliation can only emanate from genuine justice. Justice is the plunder case leveled against our former president; justice that she receives her day in court and can defend herself against the accusations leveled against her. Justice is what we witnessed on the 29th of May. On that day, we proved that justice can prevail, even when confronted with an opponent in a position of power. On that day, a woman named Delsa Flores, in Panabo, Davao del Norte, said “It is actually possible: a single law governing both a simple court reporter like me, and the Chief Justice.” It is possible for the scales to be set right, and for even the rich and powerful to be held accountable."

• The case of Delsa Flores involves more than just non-declaration of assets in the Statement of Assets, Liabilities, and Net Worth (SALN). Aside from her failure to disclose her market stall, Ms. Flores was also found to have collected salaries for two different posts. The 1997 Supreme Court decision states:

“By her own admission, respondent had collected her salary from the Municipality of Panabo for the period of May 16-31, 1991, when she was already working at the RTC. She knew that she was no longer entitled to a salary from the municipal government, but she took it just the same. She returned the amount only upon receipt of the Court Resolution dated January 17, 1996, or more than five (5) years later. We cannot countenance the same. Respondent’s conduct is plain dishonesty.” (Source: -- BW Research


"We challenged the [Department of Energy] and the National Electrification Administration], allocating 1.3 billion pesos to light up an initial target of 1,300 sitios, at the cost of one million pesos per sitio. And the agencies met the challenge--they lit up 1,520 sitios, at a total cost of 814 million pesos. They accomplished this in three months, instead of the two years it took the people that preceded them. Secretary Rene Almendras, I give you credit; you never seem to run out of energy. With public service, you are not only ever-ready, but like an energizer bunny too--you keep on going, and going, and going."

The rural and sitio electrification program was supposed to be given around P7 billion budget and its original goal for October to December 2011 was 1,410 sitios not 1,300. -- Emilia Narni J. David, BW senior reporter

From Philippine Independent Power Producers Association, Inc. president Ernesto B. Pantangco:

"PIPPA remains committed to support the President's growth initiatives and specifically Sec. Rene "Energizer" Almendras' policy directions in energy. We are determined to find solutions to make electricity prices more competitive in the near future." -- Danessa Rivera, BW reporter

"When it comes to growth and development, agriculture is at the top of our priorities. Secretary Alcala has been working nonstop to deliver us good news. Before, it seemed as though the officials of DA cultivated nothing but NFA’s debts. The NFA that our predecessors took over had a 12-billion peso debt; when they left office, they then bequeathed to us a debt of 177 billion pesos.

For so long in the past, we were led to believe that we were short 1.3 million metric tons of rice, and that we needed to import 2 million metric tons to address this shortage. They ordered rice as like it was unlimited―but because we had exceeded far more than what we needed, imported rice went to rot in the warehouses."

Actual import figure in 2010 was 2.4 million metric tons, as per the National Food Authority (NFA). -- Bettina Faye V. Roc, BW reporter


"In just our first year, we reduced the annual shortage of 1.3 million metric tons to just 860,000 metric tons. This year, it is down to 500,000―including a buffer stock to dip into in times of calamity. And, if the weather cooperates, we’ll be able to export rice next year."

Rice exports, according to Sec. Alcala, will be limited to high-quality types of rice, such as aromatic and long-grain varieties. -- Bettina Faye V. Roc, BW reporter


"Secretary Alcala has said that key to our success is a feasible irrigation program and the assiduous implementation of the certified seeds program. What is galling is that this knowledge is not new―it simply wasn’t applied. If they had only done their jobs right, where could we have been by now?

Look at our coconut industry: Coconut water, once treated as a waste product, is now being utilized by our farmers. From 483,862 liters exported in 2009, to 1,807,583 liters in 2010, to a staggering 16,756,498 liters of coco water exported in 2011. And where no one previously paid heed to coconut coir, we are now experiencing a shortage due to the high demand of exporters. We are not wasting this opportunity: we are buying the machines that will process the coco fibers. We have allocated 1.75 billion pesos to invest in, and develop, this sector."

According to a May press release from the Philippine Coconut Authority, coconut water exports in 2011 were at 16.68 million liters valued at $15.11 million and not 16.76 million liters as stated in the SONA. -- Bettina Faye V. Roc, BW reporter


"We likewise engaged stakeholders in a level-headed discussion in crafting our Executive Order on mining. The idea behind our consensus we reached: that we be able to utilize our natural resources to uplift the living conditions of the Filipinos not just of today, also of the following generations. We will not reap the rewards of this industry if the cost is the destruction of nature.

But this Executive Order is only the first step. Think about it: In 2010, 145 billion pesos was the total value derived from mining, but only 13.4 billion or 9 percent went to the national treasury. These natural resources are yours; it shouldn’t happen that all that’s left to you is a tip after they’re extracted. We are hoping that Congress will work with us and pass a law that will ensure that the environment is cared for, and that the public and private sectors will receive just benefits from this industry."

Figures are correct, according to data from the Mines and Geosciences Bureau. However, the Chamber of Mines of the Philippines, in an earlier statement this year, said taxes, fees and royalties from mining do not completely reflect the industry’s actual contribution to the local economy, which it said includes mining firms’ social development programs in their host communities and direct and indirect employment created because of mining. -- Bettina Faye V. Roc, BW reporter


"And we are building an environment where progress can be felt by the majority."

• Second quarter surveys of the Social Weather Stations (SWS) show improvements in economic indicators where self-rated hunger and poverty eased reversing the rising trend in the past three years.

The number of Filipino families who claimed to have experienced hunger went below 20% for the first time since June 2011, but it still fell short of surpassing the Aquino administration’s lowest record of 15.1%.

A May 24-27 poll, the results of which were made exclusive to BusinessWorld, found 18.4% of respondents--or an estimated 3.8 million families--said they had nothing to eat at least once in the past three months, an improvement from the record-high 23.8% in March.

The same survey found that families who view themselves as “mahirap” slipped four points to 51%, equivalent to an estimated 10.3 million families, from 55% or 11.1 million in March.

A bigger six-point decline was recorded with respect to being poor in terms of food, as the ratio dropped to 39%, or 7.9 million families, from 45%, or 9.1 million, previously. -- Noemi M. Gonzales, BW Reporter

On the Scarborough territorial dispute:
"The situation in Bajo de Masinloc has been the source of much discussion. Chinese fishermen entered out territory. Our patrol boats intercepted some of their ships, which contain endangered species. As your leader, it is my duty to uphold the laws of our country. And as I did, tension ensued: on one hand, the Chinese had their Nine-Dash Line Theory laying claim to almost the entire West Philippine Sea; on the other, there was the United Nations Convention on the Laws of the Sea, which recognized the rights of many countries, including that of China itself."

Tension between the Philippines and China flared up after eight Chinese fishing boats were caught by the BRP Gregorio del Pilar, the Philippines’ biggest warship to date, carrying fish, corals and other endangered species harvested from Scarborough shoal or what the Philippines call Panatag. A Chinese maritime surveillance vessel arrived at the scene triggering the standoff early April.

The Chinese government claims ownership of the Panatag (or Huangyan island in Chinese) although it is just off the coast of Zambales. It is situated within the 200-nautical mile exclusive economic zone (EEZ) of the Philippines and is about 750 miles (1,200 kilometers) from China’s nearest point in Hainan.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Old street in Davao City witnesses construction frenzy

Businessworld -- The old Claveria street renamed as Claro M. Recto at this city’s central business district is going through a revival with new structures on the rise.

Between now and next year, two business hotels are expected to open on the street, just among the many changes taking place.

Hotel Uno of 3S Realty Corp. will open within this month in time for the annual ‘Kadayawan sa Dabaw,’ said Jason C. Magnaye, chief of the Davao City Investment and Promotions Center.

Early next year, Davao Rogienel Corp. will then open its three-storey, 50-room Brooklyn and Walters Hotel, the company’s second hotel on the stretch.

It already opened last year the 50-room Blue Velvet hotel located just two blocks from the planned structure.

The P80-million Hotel Uno, which sits on a 3,726-square-meter lot, has 148 rooms, said Mr. Magnaye.

Neil S. Oropesa, president of Davao Rogienel, told BusinessWorld his company is committed to “revive” the old Claveria St., saying and that the new hotel’s inauguration would coincide with the opening of a small shopping mall on the same street also run by his company.

The mall, which will have about 3,800 square meters in leasable space, is near the three largest universities in the Davao Region and just a short walk from city hall.

Mr. Oropesa said his company decided to evaluate the investment prospects of Claveria St. noting he wants to “make a difference” in making the city’s old business enclave maintain its relevance.

Also investing in a project along the street is Avida Land, Inc., a subsidiary of Ayala Land Inc.

The firm nannounced it would build a twin-tower condominium in the area after it acquired a 6,000-square-meter lot from the Bank of Philippine Islands, also an Ayala company.

The project, the second for Avida Land in this part of the country, will have 1,053 residential units and would have modern amenities.

The company, whose timetable is to start the project early next year or late this year, is still waiting for the approval of its application for permits from city hall, said Apollo B. Tanco, its strategic management head.

Regarded as the busiest thoroughfare here notwithstanding its old structures, including some which are now dilapidated, Claveria St. is host to close to 40 bank offices, with most banking institutions maintaining two branches in a stretch less than a kilometer long. The street also hosts Marco Polo Hotel and Ateneo de Davao University.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Good for 11.7 MONTHS OF IMPORTS: July int’l reserves hit $79.3B

Manila Standard - The country’s preliminary gross international reserves (GIR) rose to $79.3 billion as of end-July 2012, data from the Bangko Sentral ng Pilipinas showed.

This is higher by $3.2 billion than the end-June 2012 GIR of $76.1 billion.  It has already breached BSP’s full-year forecast of between $77.5 and $78 billion.

BSP Governor Amando Tetangco said that the end-July 2012 GIR level could adequately cover 11.7 months worth of imports of goods and payments of services and income.
It is also equivalent to 10.7 times the country’s short-term external debt based on original maturity and 6.4 times based on residual maturity.2

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

He said that the increase in the end-July 2012 GIR level was due mainly to the foreign exchange operations of the BSP, foreign currency deposits by the Treasurer of the Philippines (TOP), income from investments abroad of the BSP, and revaluation gains on the BSP’s gold holdings arising from the increase in the price of gold in the international market.

 “These were partially offset, however, by outflows for the payments by the National Government (NG) of its maturing foreign exchange obligations and foreign currency withdrawals by authorized agent banks (AABs),” Tetangco said.

Net international reserves (NIR), which include revaluation of reserve assets, increased by $3.2 billion to reach $79.3 billion as of end-July 2012, compared to the end-June 2012 NIR of $76.1 billion.
NIR refers to the difference between the BSP’s GIR and total short-term liabilities.

Tetangco said that the country’s external payments position “continue to benefit from large OFW remittances, rising BPO earnings and the strong capital inflows.”

Remittances coursed through banks during the first five months of the year amounted to $8.3 billion, higher by 5.3 percent relative to the level registered in the same period a year ago.
Fund transfers from land-based workers increased by 2.8 percent to $6.4 billion while those from sea-based workers grew by 14.6 percent to $1.9 billion.

Meanwhile, the Philippines registered lower balance of payments (BOP) surplus last June at $14 million, lower than year-ago’s $222 million and month-ago’s $138 million.

BOP is the difference between a country’s foreign exchange inflows and outflows on a particular period and represents the country’s total transactions with the rest of the world.

Last June, the central bank trimmed, among others, the BOP target for this year to $2.6 billion from $2.8 billion on account of the weak global economy.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit

Housing starts rise in July

Businessworld - BUILDERS BEGAN work on 35% more housing projects last month than in June despite the onset of the rainy season, industry researcher BCI Asia said in a statement last week.

Construction starts in the residential sector reportedly increased to P5.6 billion in July from P4.1 billion in June.

“Residential construction starts short-term growth can be partly attributed to perceived economic growth of our country, and stable OFW (overseas Filipino workers’) remittances,” Ian Paolo Reyes, chief data analyst of BCI Asia Philippines, said in the statement.

Based on BCI Asia research, 85% of residential construction start projects in July were classified as small, while 4% were medium, and 11% were large projects.

“Small residential projects are helping to push the growth of residential construction,” Mr. Reyes said.

“These small projects are very responsive to economic conditions. They have short lead time from concept stage to construction stage, meaning they start soon after being planned,” he said.

“This is also to say that when economic short-term performance is good, we usually see more of these types of projects,” he added.

“[With] large projects, we cannot expect [construction for] them to start right away because stakeholders would want to assure that the long term demand in housing is continuous and stable,” he said further.

Earlier, the firm said total construction starts in June, which includes the public sector’s projects, totaled P4.5 billion, a 56% increase from May.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit