Monday, January 21, 2013

Chinese ‘occupation’ of Bajo de Masinloc could reduce PH territorial waters by 38 percent

by Ellen Tordesillas, VERA Files

The Philippines is at a loss over China’s declaration its ships will stay permanently in Bajo de Masinloc, a declaration some experts say could lead to the Philippines losing 38 percent of its territorial waters.
Bajo de Masinloc, a triangular-shaped coral reef formation that has several rocks encircling a lagoon, is located 124 nautical miles west of Masinloc town in Zambales in the northwestern part of the Philippines.

“The shoal is under virtual occupation by China,” said former foreign undersecretary and former Philippine Permanent Representative to the United Nations Lauro Baja.

Foreign Secretary Albert del Rosario confirmed this, saying, “In a subministerial consultation, Chinese Vice Foreign Minister Fu Ying had said to our people that China’s presence was permanent and they had no intention of withdrawing their ships from the vicinity of Bajo de Masinloc.”

The National Mapping and Resource Information Authority (NAMRIA) says Bajo de Masinloc has an area of about 120 square kilometers. It is also referred to as Panatag (calm in Pilipino) by fishermen who seek refuge in the area during stormy weather.

Its international name is Scarborough shoal after the tea-carrying British boat Scarborough which sank in the vicinity in 1784. China also claims ownership of the shoal which is 467 nautical miles away from its mainland, and refers to it as Huangyan Island.

Republic Act 9522, which defines the country’s archipelagic baseline, includes Bajo de Masinloc as part of Philippine territory. The law classifies it as a regime of islands under Art. 121 of the Law of the Sea Convention (LOSC), which means it generates its own territorial sea, exclusive economic zone (EEZ) and continental shelf.

Under UNCLOS, “an island is a naturally formed area of land, surrounded by water, which is above water at high tide.”
An island generates its own maritime regimes, which are 12 nautical miles (nm) for territorial sea, 24 nm for contiguous zone, 200 nm for EEZ and 200 nm continental shelf.

Under this definition, the Chinese claim over Baja de Masinloc means the Philippines risks losing not only the 120-square-kilometer strategically vital reef formation but also some 494,000 square kilometers EEZ, representing 38 per cent of the country’s EEZ.

One of the Philippines’ options to protest the Chinese encroachment is going to the United Nations International Tribunal on the Law of the Sea (ITLOS), the arbitration arm of UNCLOS, of which the Philippines and China are signatories.

Legal experts say the Philippines can ask the ITLOS, which does not deal with territorial disputes, to declare Bajo de Masinloc as a rock rather than an island.

UNCLOS said, “Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf.”

Retired Philippine Navy Commodore Rex Robles, who has been to the area a few times for gunnery practice, declares that “Panatag shoal is a rock.”

“It cannot support human life. It is not an island,” he concludes.

Lawyer Romel Bagares, executive director of Center for International Law (Philippines), said RA 9522 “does not actually specify whether Bajo de Masinloc consists just of uninhabitable rocks or is capable of economic life pursuant to Art 121 of the UNCLOS. This could be one way of arguing ITLOS has jurisdiction, especially as to the interpretation of provisions. It's a pragmatic approach, no doubt.”

What is obvious, Bagares said, is that RA 9522 assumes that the shoal is part of Philippine territory in the fullest sense of the term.

Del Rosario said, “To the extent that their three ships are within our exclusive economic zone, this is in gross violation of the DOC and UNCLOS.”

DOC is the Declaration of Conduct of Parties in the South China Sea signed in 2002 by members of the Association of Southeast Asian Nations, four of them part claimants to islands in the South China Sea, and China. UNCLOS is the United Nations Convention on the Law of the Sea.

Baja said, “When our ships withdrew from Bajo de Masinloc in June and now (we) could not access the area, the shoal became under virtual occupation by China. “

Baja, who drafted the DOC with Malaysia’s Abdul Kadir, also said Chinese occupation of the disputed shoal has changed the status quo, contrary to the DOC.

The DOC states: “The Parties undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.”

Baja said China is exercising what the International Court of Justice (ICJ) calls “effectivités.” “This is the basis of the Court’s decision on the Ligatan Sipadan case where the court awarded the area to Malaysia over Indonesia. Also the same principle in the case between Chile and Peru and between Nicaragua and Guatemala,” he said.

In 2002, the ICJ awarded sovereignty over Pulau Ligitan and Pulau Sipadan, two very small islands located in the Celebes Sea, off the northeast coast of the island of Borneo, to Malaysia against Indonesia giving weight to the former’s actual and continued exercise of authority over the islands.

Baja said, “We must act and interact before we lose the territory by default and/or estoppel.”

Seven months after China’s occupation of Bajo de Masinloc, the Philippines is still “reviewing” its options.

Asked about the Philippines’ response to China’s declaration it has no intentions of pulling out their ships from Panatag shoal, Del Rosario said, “We are reviewing all our options in accordance with our three track approach encompassing the political, legal and diplomatic means.”

President Benigno Aquino III has refused to discuss publicly the Philippine efforts on Bajo de Masinloc because he said doing so would be “giving the other side a preview of everything that we will do.”
He said, though, in October at a forum by the Foreign Correspondents Association of the Philippines that the matter “is still being studied by our consultants.”

Aquino added, “There are several law firms that we are consulting, conversant and very well thought of and experts in international law, to precisely chart the course of how we will utilize the legal procedures in international law to advance our claims.”

Experts point to two options available to the Philippines: the military option—which is not really an option considering the inferior state of the Philippine Navy compared with China’s naval might—and the legal option.

THE permanent stationing of three of its ships in Bajo de Masinloc is part of China’s “creeping invasion” of disputed territories in the South China Sea, a high-ranking Philippine government official said.

Bajo de Masinloc is Huangyan island to China, which has time and again reiterated “that Huangyan Island and Nansha Islands have always been parts of Chinese territory and that the People’s Republic of China has indisputable sovereignty over these islands and their adjacent waters.”

“The claim to territory sovereignty over Huangyan Island and Nansha Islands by the Philippines is illegal and invalid,” China says.

Nansha is what the Chinese call the Spratly Islands, a group of islands on the South China Sea, parts of which are being claimed by the Philippines, Vietnam, Malaysia, Brunei and Taiwan.

China’s presence on Bajo de Masinloc is also an alarming reminder to the Philippines of how Mischief Reef came under Chinese control 18 years ago.

In the early 1990s, China had built structures it said were just fishermen’s shelters on Mischief Reef. Through the years, China added installations on the island, including a radar system.
Philippine and U.S Air Force reconnaissance revealed military structures on Mischief Reef belying Chinese claims. In January 1995, the captain of a Philippine fishing boat reported that he was arrested and detained for a week by the Chinese when he ventured into Mischief Reef.

Since then Mischief Reef has been under the control of China and inaccessible to Filipinos.

A paper titled “Geopolitics of Scarborough Shoal” written by Francois-Xavier Bonnet of the Bangkok-based Research Institute on Contemporary Southeast Asia (IRASEC) explains the importance of Huangyan Island to the bigger and long-term objective of China.

Bonnet said Huangyan Island/Bajo de Masinloc is crucial to China’s claim over the Zhongsha Qundao islands which is vital in its controversial “nine-dash line map.”

The map is called “nine-dash line” or “nine-dotted line” because it shows a series of nine dashes or dotted lines forming a ring around the South China Sea area, which China claims is part of its territory. The area includes the Spratlys group and Bajo de Masinloc.

The “nine-dash line map” puts 90 percent of the whole South China Sea under Chinese jurisdiction.

The map does not have coordinates, but was submitted by China to the United Nations on May 7, 2009.

Bonnet explained, “The Zhongsha Qundao is composed of Macclesfield Bank, Truro Shoal, Saint Esprit Shoal, Dreyer Shoal and Scarborough Shoal. All these banks and shoals, except for Scarborough Shoal, are under several meters of water even during low tide. Chinese policymakers know too well that without Huangyan island, the chance of their ownership over Zhongsha Qundao recognized is nil.” Bonnet said, “The stakes are high. If China loses Huangyan/Scarborough, it will lose Zhongsha Qundao, which could be divided by the EEZs of the neighboring countries or placed under the regime of the high seas. By consequence, China’s entire claim to the South China Sea supported by the U-shape line would be moot and academic.”

Last June, China elicited international concern when it established Sansha City on Yongxing Island in the southernmost province of Hainan. Sansha City’s territory includes the Spratlys, the Paracels and Macclesfield Bank.

Immediately after establishing Sansha City, China’s Central Military Commission, its most powerful military body, approved the deployment of a garrison of soldiers from the People’s Liberation Army to guard disputed islands.

China’s Ministry of Civil Affairs said in June that putting Macclesfield Bank, the Paracels and the Spratlys under Sansha would “further strengthen China’s administration and development” of the three island groups.

The Philippines protested the establishment of Sansha City, specifically the inclusion of a part of its territory, Macclesfield Bank, one of the largest underwater atolls in the world, covering an area of 6,500 square kilometers.

Former foreign undersecretary and Philippine Permanent Representative to the United Nations Lauro Baja said there is no doubt that China has Bajo de Masinloc in its long-term territorial design.

Incidents of Philippine Navy ships apprehending Chinese fishermen in the vicinity of Bajo de Masinloc is common. In 1999, the Philippine Navy even “accidentally” sank a Chinese fishing boat. But the conflict never went beyond the standard diplomatic protests.

Former Foreign Secretary Domingo Siazon recalled one apprehension in 1998 that was a subject of a diplomatic protest by China involving a young navy officer named Antonio Trillanes IV, who would would later on become a senator and play a controversial role in the tension between the Philippines and China over the disputed shoal.
But Philippine encounters with the Chinese in Baja de Masinloc took a different turn on April 8, 2012, when the BRP Gregorio Del Pilar, the Philippines lone modern warship acquired from the United States, arrested Chinese fishing vessels in the area.

Philippine military officials said BRP Gregorio del Pilar was due for preventive maintenance servicing in Subic at that time but was redirected to Northern Luzon as contingency undertaking for an impending North Korea rocket launch.
The combat ship was also ordered to verify reports about the presence of the Chinese fishing vessels in Bajo de Masinloc. They arrested Chinese fishermen in eight fishing boats caught with sizable quantities of endangered marine species, corals, live sharks and giant clams.

Looking back, officials say the April 8, 2012 incident gave China an excuse to occupy the area.

China immediately deployed three Chinese Marine Surveillance (CMS) ships to Bajo de Masinloc to rescue their fishermen and added more than 80 vessels as the standoff dragged on.

The Philippines later withdrew BRP Gregorio del Pilar, which was replaced by a Philippine Coast Guard ship and a research vessel by the Bureau of Fisheries and Aquatic Resources in observance of “white to white,” referring to civilian ships, and “gray to gray,” meaning navy-to-navy rules of engagement.

The standoff that lasted 57 days spilled over to the economic front with China rejecting inferior quality bananas from the Philippines and cancellation of Philippine-bound Chinese tour groups.

It was only broken upon the insistence of the United States State Department that the issue be resolved because President Barack Obama did not want it included in the agenda of his June 8, 2012 meeting with President Benigno Aquino III at the White House.

With the breakdown of communication between the straight-talking Philippine Foreign Secretary Albert Del Rosario and Chinese Ambassador Ma Keqing in Manila, U.S. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell proposed to Chinese Vice Foreign Minister Fu Ying in Washington D.C. that Chinese and Philippine vessels withdraw simultaneously from the disputed shoal.

By that time, Trillanes had entered the picture and was directly negotiating between Beijing and Malacañang to help de-escalate the tension.

Hours before Aquino left for London and Washington D.C. on June 4, 2012, Malacañang announced the pullout of Philippine ships from Bajo de Masinloc “consistent with our agreement with the Chinese government on withdrawal of all vessels from the shoal’s lagoon to defuse the tensions in the area.”

Diplomatic sources said Fu Ying never committed complete withdrawal of their ships from Bajo de Masinloc as there was resistance from the People’s Liberation Army, an important sector in China’s power structure.

Del Rosario said when he met with Fu Ying during her Manila visit last Oct. 19, “I was very direct in saying that the presence of their ships is in clear violation of our sovereign rights, and they must withdraw their ships at the earliest possible time.”

Fu Ying did not respond, he said. 

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

Saturday, January 19, 2013

BOP surplus, among other factors, to help PHL withstand ‘potential shocks’

Business Mirror - THE surplus in the balance of payments (BOP) in 2012 was not as high as the year before but at $9.23 billion still exceeded the forecast for the year.

At the annual reception of bankers that the Bangko Sentral ng Pilipinas hosted on Friday, BSP Governor Amando M. Tetangco Jr. said the surplus, indicating excess foreign-currency earnings over expenses, continued to widen.

He announced the surplus state of the BOP in the wake of an earlier announcement citing the sustained rise in gross international reserves, an indicator of capacity to pay for imports and maturing foreign debt, to $84.2 billion.

These and many other macroeconomic developments during the year should “continue to enhance confidence in our ability to meet potential shocks” down the line, Tetangco said.

This pertains, for the most part, to the disorderly unwinding of short-term portfolio placements by foreign fund managers looking to exploit emerging markets like the Philippines, where the interest differential and prospect of continued growth form an irresistible incentive not to be missed.

Tetangco, in a moment of reflection, said the Philippines growth story averaging 6.5 percent in just nine months of 2012, when inflation was also well behaved at just 3.2 percent, became a victim of its own success.

“Now, our challenge is dealing with the consequences of this ‘apparent’ success. In particular, surges in capital flows. As Fed Reserve Chairman Ben Bernanke stated, emerging markets have been attracting capital because we have remained resilient even at the height of the recent crisis. Essentially, he was saying we are the victims of our own success.  Of course, the near-zero interest-rate regimes in the advanced economies have also been a factor behind the strong capital flows going to emerging markets,” he said.

He urged that the capital-flow surges be converted into “real economic assets, such as factories in the manufacturing sector or storage facilities in the agricultural sector. In doing so, we would have leveraged the financial resources into added productive capacity.”

Tetangco bared a degree of apprehension over the likelihood that the foreign capital inflows will remain in the financial sector, where its speculative intent could wreak havoc on the economy down the line instead of boosting the growth potential with the building of bricks-and-mortar productive enterprises that generate taxes for the government and employ the bulk of some 3 million jobless Filipinos at present.

“If these resources remain financial in nature and in search of better returns for risks they deem acceptable, then the onus shifts… once again…to the BSP. More than ever, monetary policy-making requires great care and balance—balance to contain speculative actions but not to discourage investments… and balance to maintain financial and macroeconomic stability but not to stifle competition and growth,” he told the gathered crowd of bankers and businessmen.

The surplus BOP was highest month-on-month at $3.18 billion in July last year, when the BSP cut its policy rates by 25 basis points to 3.75 percent for borrowing and 5.75 percent for lending, and in November, when the surplus for the month stood at $2.16 billion also following another 25-basis point cut the previous month.
Tetangco and six other members of the policy-making Monetary Board imposed a full-percentage point cut in 2012 as part of the broad effort to manage the foreign capital inflows.

BSP Deputy Governor Diwa C. Guinigundo also told reporters on Friday the anticipated surplus state in the BOP this year was likely to moderate to a lower level as import activities were seen rising in part because the local currency the peso has grown stronger the past 12 months and because much of those purchases are capital goods.

As a result, local output this year was seen sustained at a high level, averaging 6 percent to 7 percent, based on a forecast bared by the National Economic and Development Authority.

The World Bank anticipates the Philippines growing by around 6.2 percent this year but homegrown analysts at the First Metro Investments Inc. and at Banco de Oro, for example, see growth averaging as high as 8 percent this year.

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

Friday, January 18, 2013

HK investment banker buys into Manila Jockey Club unit

HORSERACING. A new group of investors are betting on Manila Jockey Club. This photo is a screenshot of a page on

Rappler - A group of Hong Kong-based investors is acquiring a 33% stake in a unit of Manila Jockey Club, one of Asia's oldest racing clubs, which will pursue casino, entertainment, and other tourism-related ventures, as well as develop the San Lazaro horse racing hub in Manila.

In a disclosure to the stock exchange on Friday, January 18, MJC Investments Corp. (MJIC), the hotel and tourism estate unit of Manila Jockey, said the group led by investment banker Cheah Teik Seng will subscribe to 450 million MJIC shares with a two-year lock-up period.

It did not provide additional details, except that Manila Jockey will retail control.

Seng is Executive Director of boutique group, ECM Libra Financial Group Berhad, and was former managing director of BNP Paribas in Hong Kong as well as ECM Libra Financial Group Berhad. He has more than 20 years working experience in the international investment banking industry, and currently sits in various boards of companies in Hong Kong, China and Malaysia.

Manila Jockey previously increased its capital base from P1.5 billion to P5 billion to accommodate the entry of new business partners as part of efforts to expand and participate in the growth of the tourism sector without incurring additional debts.

Its key assets are the San Lazaro estate in Sta. Cruz, Manila spanning about 7,500 square meters, as well as undeveloped parcels of land, including a 1.67-hectare property, and another 5,000-square meter property near San Lazaro.

Manila Jockey conducts its racing operations at its facility in Carmona, Cavite.

The Sta. Ana race track -- the other racing circuit in Manila -- is being converted into an entertainment and sports complex by the Ayala group. The development is a joint venture with the Philippine Racing Corporation, which has relocated the Sta. Ana race track to Cavite. 

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

Net hot money inflow hits $3.885B

Philippine Star - Foreign investors swamped the local financial markets last year, with the net inflow of foreign portfolio investments beating official forecasts, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Portfolio investments – also called “hot money” for the ease they enter and exit economies – posted a net inflow of $3.885 billion in 2012, well above the BSP’s revised $3.2-billion projection. The total tally, however, was down 4.7 percent from a net inflow of $4.077 billion reached in 2011.

A net inflow indicates more foreign investments entered the country than left. For December alone, hot money recorded a net inflow of $212.65 million. “(This) reflected… renewed interest in PSE-listed securities, coupled with sustained investor confidence in the country’s sound macroeconomic fundamentals,” the central bank said. Hot money investments are usually placed in the bond and stock markets.

The BSP has been watchful of portfolio investments as they can cause volatility in the stock and foreign exchange markets which could be detrimental to businesses.

 For 2012, data showed gross inflows for the year reached a 10-year high of $18.456 billion, while gross outflows amounted to $14.571 billion. Investments were mainly channeled to listed companies at the Philippine Stock Exchange (PSE), the central bank said.

The benchmark PSE index, which closed up 0.41 percent to 6,072.18 yesterday, has reached seven record-highs this year. By source, the United States, the United Kingdom, Singapore, Luxembourg and Hong Kong were main sources of inflows, the central bank noted. Top beneficiary sectors were not immediately available.

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

Bank loans up 14% to P3.134 T

Philippine Star - Loans granted by big banks grew at a slower pace in November, but the Bangko Sentral ng Pilipinas (BSP) said credit levels remained supportive of economic growth.

Excluding BSP placements, outstanding loans extended by universal and commercial banks rose 14 percent to P3.134 trillion as of November last year, slower than the 15.8-percent growth recorded in the first 10 months.

The growth rate further drops to 13.3 percent when money with the central bank is included, data released yesterday showed. That also marked a slowdown from 14.2 percent the previous month.

Loans are good gauge of economic activity. As a regulator, BSP sees to it that banks are healthy enough and are able to lend to boost consumption and investment activities.

In a statement, BSP Governor Amando Tetangco Jr. attributed the over-all slowdown to an easing across all types of loans. During the period, credit to production activities grew 14.6 percent from 16.4 percent, while consumer loans expanded 12.1 percent from 13.9 percent.

“The growth in bank lending, especially to productive activities, should provide needed resources to raise the growth potential of the economy,” Tetangco explained.

Loans for production activities accounted for the bulk of loans, amounting to P2.860 trillion for the first 11 months of 2012, figures showed.

Under this category, credit to public administration and defense expanded the fastest pace at 48.9 percent. This was followed by loans to the following sectors: financial intermediation (37.3 percent), wholesale and retail trade (26.9 percent) and transportation, storage and communication (26.5 percent).

Lending to real estate, renting and business services and manufacturing sectors also grew by 24.8 percent and 13.6 percent, respectively, data showed.

Declines, on the other hand, were observed in lending to agriculture, hunting and forestry which dipped 41.8 percent, and mining and quarrying that dropped 39.5 percent.

Meanwhile, consumer loans— or credit used to finance household needs such as purchasing of appliances— reached P252.116 billion as of November with credit card and auto loans leading the pack.

Compared to previous year, credit card receivables grew 10.1 percent while auto loans increased 13.1 percent.

Continued loan growth was supported by increasing domestic liquidity, which accelerated to P4.9 trillion as of November, an improvement of 9.8 percent year-on-year, figures showed. Expansion was faster than October’s 8.6 percent.

“The faster expansion in domestic liquidity during the month reflects in part the impact of previous policy actions of the BSP to help support non-inflationary economic growth…,” Tetangco said.

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

Aquino approves P147-B infra projects

Philippine Daily Inquirer - President Benigno Aquino III on Friday approved five big-ticket infrastructure projects that will cost a whopping P146.9 billion.

Two of the projects are designed to decongest traffic and cut travel time in the National Capital Region and outlying provinces.

The infrastructure projects will be funded through a combination of official development assistance (ODA) loans and government equity.

Most of these projects will be implemented from 2013 to 2018 and will not be completed until after Mr. Aquino’s term ends in 2016.

“All these projects are meant to promote inclusive and rapid growth,” Ricky Carandang, head of the Presidential Communications Development and Strategic Planning Office, told reporters following a Palace meeting of the National Economic and Development Authority (Neda) board, which approved the projects.

The President chairs the Neda board.

The biggest of these projects are the Cavite-Laguna Expressway, or Calax (P35.57 billion), and the North Luzon Expressway-South Luzon Expressway (NLEx-SLEx) connector road project (P25.55 billion).

The latter two are on the Aquino administration’s priority public-private partnership (PPP) list. The NLEx-SLEx connector road project was an unsolicited proposal from the Metro Pacific Investments Corp. that was approved and awarded last December.

Three rural infrastructure projects are: the construction of water impounding facilities, or Pasa Small Reservoir Irrigation Project in Isabela City (P1.29 billion); phase 2 of the Cordillera Highland Agricultural Resources Management Project (P2.94 billion); and the continuation of Kalahi-CIDSS National Community Driven Development Project (P89.1 billion).

Kalahi-CIDSS, which stands for Kapit-Bisig Laban sa Kahirapan–Comprehensive Integrated Delivery of Social Service, is a community-driven development project being implemented by the Department of Social Welfare and Development (DSWD).

It is widely viewed as an anti-insurgency program since it is aimed at providing comprehensive livelihood and social services to the countryside.

According to the DSWD, the program trains communities and their local government units “to choose, design and implement subprojects that address their most pressing needs.”

The program is assured of funding until 2018.

On the Calax, a four-lane, 47.02-km highway, Carandang said the total cost of the project was brought down to P35.5 billion, from P43.4 billion, due to “minor revisions in the scope.”

“Little tweaks to specifications of the projects resulted in savings,” he said.

Target date of completion is 2017.

The NLEx-SLEx connector road will be a 13.4-km, four-lane, mostly elevated expressway that will be constructed over the existing Philippine National Railway right of way. When completed in 2016, it will run from Caloocan City to Buendia in Makati City.

Among the PPP programs presented to investors in 2010, the Aquino administration has already awarded to Ayala Corp. the P1.956-billion Daanghari-Southern Luzon Expressway Link Road, the first PPP project of the Aquino administration to be awarded, and two school building contracts awarded to BF Corp. and  Citicore-Megawide consortium for a combined cost of P16.5 billion.

Carandang said the water impounding facility project in Isabela would address climate change.

“The benefit of this is it will prevent flooding and reroute water for greater irrigation [of agricultural lands],” resulting in higher crop yields, he said.

Of the P1.029-billion cost for the Isabela project, P935 million will come from ODA while P93 million will be shouldered by the local government. It will be finished in 2016.

The Cordillera project was started in 2009. Phase 2 will start this year until completion in 2015. 

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

Tuesday, January 15, 2013

Remittances Reach $19.4B In Nov.

11-Month Total

Manila Bulletin - Overseas Filipinos’ cash remittances sent through the formal banking channels grew six percent year-on-year to $19.42 billion as of the end of November and exceeding the five percent forecast for 2012, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

As for personal remittances which include funds transferred through informal means such as the “padala” system, the BSP said this amounted to $21.59 billion, up 6.1 percent compared to what was reported same time in 2011.

The BSP tallies remittances as cash or transfers via the banking networks and as personal remittances. The projection for 2012 is that remittances will reach $21.1 billion or five percent higher than 2011’s $20.1 billion.

For the month of November alone, cash remittances rose 7.6 percent to $1.9 billion while personal remittances also increased by 7.6 percent to $2.1 billion.

In a statement, the BSP said the growth in personal remittances was helped along by the 12.7 percent increase in transfers from sea-based workers and land-based overseas Filipino workers with short-term contracts, as well as the 13.4 percent increase in remittances from land-based workers with work contracts of one year or more.

As for the expansion in cash remittances, BSP stated that remittances “sustained an uptrend” as cash transfers from both land-based and sea-based workers increased by 4.2 percent and 12.5 percent, respectively.

Bulk of cash remittances or about 78 percent are sourced from the US, Canada, Saudi Arabia, United Kingdom, Japan, United Arab Emirates, and Singapore.

According to the BSP, “remittances continued to draw strength from the increasing demand for skilled and professional Filipinos abroad along with innovations in remittance services offered by banks and financial institutions.”

Based on data from the Philippine Overseas Employment Administration, for 2012 there are 782,201 job orders that has been approved. About 42.2 percent or 329,947 are already processed job orders for service, production and related workers, as well as for professional, technical and related workers.

The demand came from mostly Middle East nations such as Saudi Arabia, UAE, Kuwait and Qatar. More job orders from Taiwan and Hong Kong were also processed last year.

The BSP also reported that government efforts to deploy more workers overseas have been improving during the past year.

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

Emerging markets to lead growth this year -- report

Businessworld - NEW YORK -- Emerging markets are likely to lead global economic growth this year, with China’s economic slowdown appearing to have bottomed, Columbia Management and Threadneedle said in their 2013 International Outlook report on Monday.

Boston-based Columbia Management, with $340 billion in assets under management, said approximately 70% of the world’s incremental global growth is coming from emerging markets -- even with the big markets of China and Brazil slowing down materially.

While growth rate levels may not return to emerging markets to what it was during the last decade, it will be of higher quality derived from a consumption-led growth driven by a strong sustainable middle class rather than by fixed asset investment.

It said Chinese market data shows signs of the economic slowdown having bottomed, which is a clear plus for equity markets and risk assets generally. Industrial production, retail sales and fixed income investments among other data showed an uptick since September of last year.

“The easing of tail risks in Europe and China leads us to be more positive on equities than we have been for some time,” Columbia Management said.

“We expect the strong to continue to get stronger in the equity space and M&A activity to remain an important driver in a number of markets as companies put their excess cash to work.”

Although Columbia Management’s long-term view on Japan remains bearish there is a chance that Japanese equities will perform well this year, the report said. But an aging population and a shrinking workforce, a massive government debt problem and signs that the Bank of Japan will not stick with the reflationary policy, could likely hurt any returns from the island.

in 2013, Asian economic growth will depend on exports, the report said. The cost advantage in manufacturing that initially took developed companies overseas is still in place, but now in different countries and in different industries.

Overall demographics in emerging markets are much healthier, the it said, which will continue to act as tailwind over time. Demographic “winners” include Indonesia, the Philippines, Turkey and Brazil and India, while demographic “losers” include Russia and China.

Young populations with lack of social mobility due to poor education levels and structural unemployment are often a recipe for social unrest such as in parts of the Middle East and South Africa, Columbia Management said.

In China, it expects to see more progress in areas including banking sector regulation, exchange rate policy, the development of domestic bond markets and new initiatives to push consumption demand further as a sustainable source of growth.

Investors’ main concern is that China is becoming less competitive, particularly on the low end of the value chain as well as the deterioration in the return on invested capital and earnings of the listed companies.

Markets such as the Philippines, Thailand, Turkey and Mexico have continued to post very strong returns supported by very strong fundamentals.

Expectations for emerging market equities are low, but with the help of accommodative monetary policy, growth seems to have stabilized.

Asian fixed income, which has grown sizeable enough in terms of market capitalization, geographic and industries coverage, is now a distinctive choice of an investment asset class for global investors, the report said.

In Europe, some of the periphery countries such as Spain and Ireland appear to be making the necessary structural adjustments, the report said. Greece, through a series of measures has made progress on refinancing itself, “but we are not comfortable they are really dealing with the structural issues.” -- Reuters

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

Monday, January 14, 2013

PH up 10 notches in ‘economic freedom’ list

Philippine Daily Inquirer (January 14, 2013) - The government’s anti-corruption efforts helped push the Philippines’ global ranking in terms of economic freedom by 10 notches to 97th among 177 countries and territories.

This was according to the editors of the 2013 Index of Economic Freedom, jointly released by Washington D.C.-based The Heritage Foundation and The Wall Street Journal.

Based on the latest annual index, the 19th since it first came out in 1995, the Philippines scored 58.2 out of 100 points.

Such score keeps the Philippines in the category of “mostly unfree” countries or those within the range of 50 points to 59.9 points.

“(The) score is 1.1 points higher than last year, with notable improvements in investment freedom and freedom from corruption outweighing a decline in business freedom,” the editors said in a statement.

They added that such score was below the global average of 59.6, but noted that the Philippines’ improvement provided contrast to the world’s 0.1 point gain.

“The global advance toward economic freedom has ground to a halt,” they said. “Since reaching a global peak in 2008, economic freedom has continued to stagnate.”

Even then, the editors observed an overall positive trend in 2012, with 91 countries improving their scores compared to 78 that declined.

As for the Philippines, they noted that the government has pursued a series of legislative reforms toward an improved business environment that encourages broader-based job growth.

Still, the editors said Philippine institutions needed “deeper commitment to reform.”

“Although the perceived level of corruption has declined in recent years, more effective anti-corruption measures need to be institutionalized,” they said.

“The inefficient judiciary remains susceptible to political interference and does not provide strong and transparent enforcement of the law, undermining prospects for long-term economic development,” they added.

The index takes into account 10 criteria, including property rights, freedom in trade and financial freedom—of which the Philippines’ record showed no change from the previous year. This suggested a need for improvement in terms of market liberalization.

The country improved in terms of government spending, freedom from corruption, fiscal freedom and investment freedom.

However, the Philippines worsened in terms of business freedom and freedom in trade. This meant that the regulatory environment has become more inefficient.

Hong Kong remained the “freest” economy for the 19th time with 89.3 points. Mainland China placed 136th while Taiwan ranked 20th.

There were only four others in the league of “free” economies or those with scores of 80-100. These were Singapore, Australia, New Zealand and Switzerland.

North Korea retained its bottom rank at 177th with 1.5 points, improving from the previous one point. It was among 32 other “repressed” countries, all scoring less than 50 points.  

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Sunday, January 13, 2013

Gov’t Focus: Stronger Fiscal Position

Manila Bulletin (January 13 2013) - The Department of Budget and Management (DBM) expects the tax effort of the government to continue improving in the coming years in keeping with its ultimate goal of reducing public debt while increasing its tax take that should ensure a stronger and healthier fiscal position for the country.

Data from the DBM showed that the national government plans to downscale its budget deficit to 2 percent of the country’s gross domestic product (GDP) starting this year up to 2016 when President Aquino’s term ends.

“The fiscal year 2014 budget will continue the policy of fiscal consolidation,” the DBM said in its national budget memorandum that kicked off the preparation for the Aquino administration’s budget for next year.
Aside from reducing the government fiscal deficit, the DBM said that the country’s tax effort would, likewise, continue to increase to around 17 percent by 2016.

“The ultimate objective is to reduce the public debt and increase the government’s tax take to levels comparable with peer countries for a stronger and healthier fiscal position,” the DBM said.
In the first semester of last year, the government’s tax effort increased to 13.3 percent despite the absence of any new revenue measure from 12.7 percent in the same period in the previous year.

Meanwhile, as of October 2012, the national government debt stood at P5.359 trillion, while its budget deficit was at P127.3 billion at end-November, well below the P279.1 billion ceiling for the year, equivalent to 2.6 percent of the country’s GDP.

“In view of the continuing economic weakness of Europe and the United States, it will be prudent for the government to strengthen its fiscal position and sustain its fiscal reform,” the DBM said.

The budget department cited the need for more revenue generating measures.

The Department of Finance (DOF) and the DBM have lined up several proposed measures to bolster state revenues, including the rationalization of fiscal incentives and the new mining regulations.

“The success of these reforms will depend on the government’s strategy of aggressively pursuing tax administration reforms to improve tax compliance, expanding its revenue base, and further sharpening its sector and geographical expenditure prioritization and execution,” the DBM said.

“These reforms will also determine the extent of government’s ability to use its expenditures to push domestic economic activity,” the department added.

Last year, President Aquino signed into law the long-delayed new excise tax law that is expected to generate additional P33.5 billion in revenues for 2013.

Proceeds of the excise tax reform law will be used for the government’s universal healthcare  program and the livelihood, training, and assistance needs of tobacco farmers and workers in the alcohol industry.

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Taiwanese Investments Relocate In RP

Manila Bulletin (January 13 2013) - Year 2012 was a good year for Taiwanese investors whose investments reached $400 million from $300 million in 2011 as more investors dismayed by the high cost of labor in China  migrated into the Philippines.
MECO president and CEO Amadeo Perez Jr., in an interview with reporters that the  Philippines has become the beneficiary of Taiwanese firms relocating from China because of the increasing cost of doing business there.

“The reason that we are able to come up with sizable investments is because lots of investors in mainland China want out because of stringent labor cost,” said Perez.
According to Perez, some of these disgruntled Chinese investors relocated to Vietnam but while they were able to get cheap labor, they were dissatisfied with the quality of Vietnamese labor.

In addition, Vietnam is also suffering from power supply shortage making it difficult for companies to operate continuously.

There were at least 16 Taiwanese firms that relocated into the Philippines in 2012, most of which chose the economic zones in Clark, Batangas, Cavite and Laguna as other ecozones in the country like Subic have been filled up already.

Perez even noted that three Taiwanese investors alone invested $100 million. All the Taiwanese investments are for the export market.  

The new entrants, he said, are not into the electronics manufacturing that Taiwanese have been known for, but are into other export-oriented industries such as furniture making.
MECO will to continue its investment promotion this year noting that last year’s inflow was a result of high-profile missions led by Trade and Industry Secretary Gregory L. Domingo and Philippine Economic Zone Authority director-general Lilia B. De Lima.

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Tetangco named as best central banker for Asia-Pacific

Businessworld (January 10, 2013) – BANGKO Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. was again recognized as one of the best central bankers in the world for keeping the Philippines afloat amid the global economic downturn.

The Banker, a monthly magazine published by The Financial Times, Ltd., cited Mr. Tetangco as the Central Banker of the Year for Asia-Pacific, the BSP said in a statement yesterday.

“The Banker’s Central Bank Governor of the Year awards celebrates the officials that successfully steered their countries through the economic turbulence of 2012,” the magazine said.

Along with Mr. Tetangco, other awardees were Erdem Basci of Turkey, representing Europe; Mark Carney of Canada, representing the Americas; Jose Massano of Angola, representing Africa; and Fahad Al-Mubarak of Saudi Arabia, representing the Middle East.

The Banker cited the BSP’s role in the Philippines’ strong fundamentals: inflation fell to only 3.2% in 2012, well within the 3-5% target, despite the expansion of the gross domestic product (GDP) by 6.5% as of the third quarter, which exceeded the government’s goal of 5-6%.

The central bank has even cut its inflation target to 2-4% for 2015 and 2016, it noted. Mr. Tetangco told the magazine that this would send a signal to the market that the regulator is “serious about keeping prices low and stable.”

Moreover, the BSP should be lauded for placing importance on the stability of the banking system and consumer protection, the Banker added.

Looking ahead, Mr. Tetangco said the major challenge for the Philippines now is the “magnitude, speed and volatility of capital flows.”

“Because there is a time lag between when the capital flows into the financial markets and when the funds are actually absorbed into the real economy, their presence makes policymaking more challenging,” he explained.

As investors flee struggling markets like the United States and Europe in search of better yields in emerging economies such as the Philippines, the BSP is put in a precarious position.

“The very tool which textbooks say we should employ in the face of surges of inflows -- raise interest rates to combat the potential inflationary effect of increased domestic liquidity -- could in fact attract more inflows and thus perpetrate the cycle,” Mr. Tetangco said.

This is the third time that the BSP chief has been ranked among the world’s best for 2012. Global Finance Magazine gave Mr. Tetangco an “A” rating along with five other governors in its Central Banker Report Card last year. Emerging Markets, an international magazine of the Euromoney group, also named Mr. Tetangco as the Central Bank Governor of the Year for Asia.

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

Entrepreneurship in RP's leisure property sector

BY DANILO A. ANTONIO, Entrepnews (Nov 2010) 

The local real estate industry is experiencing an upsurge after years of flat growth. The overall market confidence brought about by the new Aquino administration promises a rosy scenario for the sector over the next few years.

Strong performance across all residential product lines points to sustained demand for dwelling units. Shopping center projects likewise benefited from a very strong consumer spending base that has been expanding, thanks in no small part to the remittances sent by overseas Filipino workers (OFW).
And so long as the Philippines continues to be a preferred site for outsourcing services, office space builders can expect a continuous growth in demand from business process outsourcing firms.

Encouraging Signals
Ranged against the sterling performance of other real estate products, investments in resorts and hotel projects have not been as buoyant. The international decline in tourism, brought about by the weakening propensity for leisure among citizens of developed countries, have caused this below par performance.
But things are looking brighter for the segment. For one, major real estate players are now adding hotel and resorts projects into their portfolio. Likewise, the increasing interest among foreign resort and hotel operators to locate themselves in local leisure spots is a source of optimism in the subsector.
The country actually has all the necessary elements needed to become a strong player in the resort tourism business. We have all the natural spots waiting to be developed, and all the manpower competencies to staff all the key positions for tourist facilities, from managers to front desk clerks. What we lack are more entrepreneurs to put up all these facilities in significant numbers.

Potential Investment Areas

Condotel projects in selected tourist areas should be further explored. OFWs and returning Filipinos could be invited as “passive investors,” particularly in the provinces and localities from which they originally came. Not only will they earn handsomely from their investments, they can also contribute to the growth and economic improvement of their hometowns.
Setting up health and wellness facilities is likewise a lucrative opportunity that’s worth exploring. Thailand and Indonesia are doing great here; and there is no reason why we can’t do the same.
Finally, retirement facilities and gaming sites are other investment possibilities that are just waiting to be tapped. Again, there is no dearth of qualified and competent local manpower to provide the needed staffing for these projects.

The Segment’s Critical Role
Apart from the inherent business rewards, leisure property’s major contribution to the economy should not be overlooked. Tourism dollars from increasing traffic in the medium term should go up dramatically, as we currently make only one third of what Thailand makes. The infrastructure and facilities investments in resorts and hotels create a lot of value added and multiplier effects to the rest of the country. Finally, the jobs created by escalating resort tourism investments should go a long way towards improving overall labor and employment rates.

All told, it is hoped that with all of these positive signals, a lot more investment activity among local entrepreneurs in the resort tourism subsector can be expected in the next few years.

Danilo A. Antonio is one of the Gurus for the Master in Entrepreneurship Program of the Ateneo Graduate School of Business. He is currently the president of the ACE Center for Entrepreneurship and Management Education, Inc. and the chief executive officer of Land Excel Consulting, Inc. (LEC).  A former faculty member at the Asian Institute of Management, he handled the Development of Enterprise (DE) and Real Estate/Property Management and Finance elective of the AIM’s Master in Business Administration Program. For inquiries about the Ateneo’s Master in Entrepreneurship Program, call 8994579, 8997691 loc 2407.

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