Only five regions grew faster in 2011, gov’t data show

Businessworld - FIVE out of 17 regions posted faster economic growth in 2011, with the Caraga region recording the highest growth rate, data released by the National Statistical Coordination Board (NSCB) showed.

Caraga, which is composed of the Agusan and Surigao provinces and Dinagat Islands, grew by 9.6% in 2011, faster than 2010’s 7.4%, based on gross regional domestic product (GRDP).

“Cagayan Valley posted the biggest jump in growth with 6.5 percentage points as its economy bounced back from a decline of 1.1% in 2010 to a growth of 5.4% in 2011. Other regions which experienced accelerated growths were: Caraga, [from] 7.4% to 9.6%; Soccsksargen, [from] 2.0% to 4.0%; Western Visayas, [from] 3.7%to 5.5%; and, MIMAROPA, [from] 1.1% to 2.5%,” the NSCB reported.

The fastest growth rates were also recorded in Central Visayas which had 7.9% growth, Central Luzon, 7.5%; Western Visayas, 5.5%; and Cagayan Valley, 5.4%.

The Autonomous Region in Muslim Mindanao (ARMM) was the only region that saw its economy shrink. It declined by 1% percent in 2011, reversing the growth of 2.3% the previous year.

Calabarzon shaved 8.5 percentage points off its growth at 2.6% in 2011, while Central Visayas cut its pace by 4.6 percentage points from 12.5% in 2010. “The other regions that posted the biggest deceleration were Zamboanga Peninsula, 0.1% from 3.6%; Eastern Visayas, 1.8% from 2.0%; Cordillera Administrative Region, 2.1% from 6.3%; and, Northern Mindanao, 2.5% from 6.9%,” the NSCB said.

Metro Manila continued to account for the biggest chunk of the Philippine economy, at 35.7% of the total. Calabarzon had a share of 17.4% while Central Luzon had 9.3%. ARMM had the lowest share, at 0.8%.

The Philippine economy grew by 3.9% in 2011. Metro Manila’s growth was slower at 3.5%. At current prices, Metro Manila’s economy was valued at P3.5 trillion. The country’s GDP hit P9.7 trillion at current prices last year. 

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Philippines could be 'next rising star'

Businessworld - THE PHILIPPINES could be the “world’s next rising star” because it is relatively insulated from the turbulent global environment, economists said on Friday, but the country’s ascent will depend on finding solutions to key constraints.


“When you look for countries that could be the world’s next rising star, you look for increasing growth, a stable fiscal deficit, strong English skills and a belief in education,” said Tyler Cowen, an economist at George Mason University, at the inaugural conference of the Angara Centre for Law and Economics.


“The Philippines has all of those things. It has the best chance,” he added.


Exposure to Europe’s ongoing debt woes and the slowdown in China is limited, Mr. Cowen explained as he lumped the Philippines along with Indonesia, Ghana and Nigeria as among the countries expected to be resilient amid the global downturn.


Mr. Cowen stressed, though, that this was not an “absolute prediction,” with much depending on how the government makes the most its opportunities.


“The discussions must begin with structural transformation,” added John Nye, a fellow economist at George Mason University.


One of the main issues that needs to be resolved is how to move people from poor agriculture jobs to better-paying ones in industry, Mr. Nye said, adding that more often than not, this also involves physically moving people to the urban centers.


“However, there are so many laws that make this difficult -- laws on zoning, taxation, competition, labor, trade. This network of policies adds up,” Mr. he said. No single law -- not even the often-blamed foreign ownership limits in the 1987 Philippine Constitution -- is to blame, he added.


Changes must be made to these “redundant,” “misguided” and “contradictory” laws so that more businesses and investments can come into the Philippines and generate much-needed employment.


“The fact that we have so many overseas Filipino workers only means that we have a lot of highly-skilled people willing to work. Why are they so employable abroad but not here? Clearly, there are obstacles to creating employment,” Mr. Nye said.


University of the Philippines economist and Monetary Board member Felipe M. Medalla, meanwhile, tagged infrastructure as another constraint to the Philippine economy.


He lamented the sluggish pace of domestic infrastructure development, pointing to the Ninoy Aquino International Airport Terminal 3 (NAIA 3), which “can’t even be fully operational after three presidents”.


“The connector road between the North Luzon Expressway and the South Luzon Expressway can increase development and bring it to the provinces without congesting Manila,” Mr. Medalla noted.


For his part, Socioeconomic Planning Secretary Arsenio M. Balisacan claimed the government was already eyeing several “low-hanging fruits,” among them the computerization of government processes.


“I find it surprising that any entrepreneur who wants to set up a business has to show up at the Department of Trade and Industry and apply for his permits there,” Mr. Balisacan said.


“This exposes entrepreneurs to direct contact with the bureaucracy and encourages patronage and corruption. If the procedures were online, it would be much more simple, quick and transparent for everyone.”


Another is the integration of terminal fees to the price of airplane tickets, a policy move due to take effect this month.


“We are the only country in Asia or even the world that collects a separate fee when it can just be billed directly. These small inconveniences increase the cost of doing business,” he noted.


Mr. Balisacan recognized that the government’s infrastructure program had taken some time to get off the ground, but he explained that this was due to the “utmost care” that goes into reviewing contracts.


“There is a trade-off: the projects could be fast now but they could get bogged down in the future. We don’t want another Northrail mess or another Piatco (Philippine International Air Terminals Co., Inc.) mess,” he said.


The 80-kilometer Northrail project that will link the northern part of Metro Manila with the Diosdado Macapagal International Airport in Clark, Pampanga, was suspended in March 2010 pending the review of the contract with China National Machinery Industry Corp.


The Commission on Audit has estimated that delays in the project works cost the government P2.21 billion last year from penalties and interest charges.


The Piatco controversy, meanwhile, stems from the government’s decision to scrap the firm’s contract to build NAIA-3 due to alleged irregularities. Lawsuits filed over the government’s seizure of the facility and the compensation that needs to be paid to Piatco remain unresolved.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Urban experts plan ‘future’ of Metro Manila

Philippine Daily Inquirer - Imagine Metro Manila as a humongous stock room filled with millions upon millions of boxes randomly arranged. Now imagine what amount of effort it must take to rearrange all these boxes into a certain pattern. Still imagine the added difficulty when you realize that the big room is getting even bigger, and more boxes are being added.

This is the prospect facing property experts, top developers and urban planning experts when they were recently gathered by global nonprofit education and research hub Urban Land Institute. The overriding agenda here was finding out how to make one of the Asia-Pacific region’s fastest-growing metropolitan areas livable and sustainable.

The July 9 meeting brought together heads of Net Group, Ayala Land Inc., SM Prime Holdings, Filinvest Land Inc., Eton Properties Philippines Inc., Federal Land Inc., Century Properties Inc., Robinsons Land Corp., the Philippine Stock Exchange and the government departments of public works and highways, transportation and communication, and national defense. DMCI Holdings Inc. and Nuvoland Philippines Inc. also relayed their commitments to the group as founding members of the Urban Land Institute.

Being the political, economic, social, cultural and educational center of the Philippines that has reaped the most significant effects of the modern phenomenon of the BPO (business process outsourcing) sector and overseas Filipinos’ remittances, Metro Manila may already be bursting at the seams. Experts have observed that rapid urbanization could lead to poor environmental quality, severe traffic congestion, substandard public amenities and utilities, housing shortages, socioeconomic inequity and deteriorating infrastructure that can, in turn, result in overall diminishing competitiveness among other cities in the region.

Future report

Dr. Sujata S. Govada, project director, ULI North Asia, and founder and managing director of Urban Design & Planning Consultants Ltd. (UDP Int’l), said: “For the first time, multiple stakeholders, including developers, government officials, professionals, the academe and civil society came together to discuss key issues and concerns of the Metro Manila urban core. Through this collaborative process, the development of the 10 Principles (ULI’s future report for sustainable development of Metro Manila’s urban core+) will not only guide future sustainable development and create a better understanding of the issues and the problems and how they can (be) addressed with a strategic vision.” She added that the future report would cover the urban core of Metro Manila, including Makati, Bonifacio Global City and surrounding neighborhoods.

The report will look at ways the Philippines’ political and economic center can be improved with a more sustainable approach to city development. It is currently being developed as part of a collaborative process, with different members of the real estate industry, and will incorporate information discussed during the course of the event.

“Sustainability goes beyond buildings and includes physical, social, environmental and economic aspects, and should focus on the people and long-term value for the city. This includes social cohesion, equity and community development as well,” Govada told Inquirer Property in a statement.

The salient talking points of the July 9 gathering included: transport and infrastructure integration; PPP (public-private partnership) collaboration and management; strong leadership and commitment; strategic vision, master plan and policy framework; city image and identity; comprehensive planning process and coordination; sustainability, social equity and disaster relief; public engagement and transparency; social cohesion, housing and community development; and public space, walkability and open space.

Charlie Rufino, The Net Group president and ULI Philippines chair, said, “ULI, as an organization, is passionate about encouraging best practices in sustainable development, and by facilitating these meetings it broadens the dialogue on the subject and provides the means for these best practices to become a reality.”

Final authority

“ULI wants to be considered the final authority on matters related to the responsible use of land. We expect the solid research will result in implementing guidelines for LGUs,” Rufino added.

John Fitzgerald, ULI Asia Pacific’s senior vice president and executive director, said that “as an organization, we will continue to bring the collective experience and knowledge of different members of the property industry together to help pave the way to a more sustainable future.”

Brandon Sedloff, ULI Asia Pacific managing director, said: “ULI is uniquely positioned to facilitate gatherings of the most senior real estate and land use professionals from the private and public sectors. Collaboration and dialogue are critical to responsible land use.”

Sedloff, who gave the keynote presentation during the event, said that “in the Philippines, there is a great opportunity to convene ULI’s preeminent thought-leaders to share global best practices, insights and perspectives on land use and real estate development issues as part of the ULI Advisory Services program of work.”

Industry movers, shakers

Present at the July 9 dinner were the ULI Philippines founding members Rufino; Tony Aquino, Ayala Land president; Hans Sy, SM Prime Holdings president; Josephine Yap, Filinvest Land co-vice chair; Michael Tan, Eton Properties Philippines president; Alfred Ty, Federal Land president; Robbie Antonio, Century Properties managing director; Henry Yap, vice president for design and planning representing RLC president and COO Frederick Go. Isidro Consunji, DMCI Holdings president; and Rally Martinez, Nuvoland Philippines Inc. president, were unable to attend.

Also present were Public Works Secretary Rogelio Singson; Philippine Stock Exchange president Hans Sicat; Transportation Undersecretary Rene Limcaoco; Defense acting chief of staff Dr. Peter Galvez and the “ULI 10 Principles” sponsors Forbes Park barangay chair Rosanna Fores, Forbes Park Association president Alex Ledesma, Makati Commercial Estate Association president David Balangue, and Bonifacio Global City Estate Association Inc. director Manny Blas. Other supporters of ULI Philippines who came were Judith Lopez, chair and senior partner of Isla Lipana & Co.; the Philippine member-firm of PwC (Pricewaterhouse Coopers) and architect Anna Sy-Lawrence of CS Architecture. BGCEA and the Transnational Diversified Group of Robbie Delgado helped bring together the key members of the event.

ULI Philippines’ executive council members were also in full attendance, namely lawyer Arnel P. Casanova, president of BCDA; lawyer Eusebio Tan, senior partner, ACCRA Law; architect Willie Coscolluela, vice president of Macea; David Leechiu, managing director of Jones Lang La Salle Leechiu; and Rick Santos, CBRE Philippines chair. The advisory council members in attendance were lawyer Ricardo Castro, managing partner of Quisumbing Torres, a member of Baker McKenzie; Eric Manuel, ULI Young Leaders Group and head of Brycg Inc.; and Karima Palafox, urban planner, Palafox & Associates/ULI YLG.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Putting numbers to P-Noy's good news

Philippine Star (Boo Chanco) - I just had a long talk with DTI undersecretary Tito Panlilio and he tried to put more numbers to P-Noy’s good news about the economy. Some numbers are goals they have set for themselves and have yet to meet. Other numbers show the reported good feeling of the business community with P-Noy is actually true.

The usec tried to give the impression that this administration is starting to get some work done, even if slower than required to meet their goals. But even this is good news and somehow, P-Noy’s information people are doing a good job of keeping the good news under wraps. That makes P-Noy look silly for castigating media for not accentuating the good news P-Noy’s own people are keeping as state secrets.

I came out of that three hour conversation with usec Tito convinced that at least for DTI, they are working towards some quantifiable goals… that there is a game plan. A quantifiable deliverable usec Tito mentioned is moving up the value of our GDP from the current level of about $225 billion to as much as $450 billion by 2016.

Usec Tito conceded that means they must deliver a consistent growth rate of about seven percent, which however isn’t likely to make a real dent on poverty.  They are also dreaming of 10-percent growth, which is probably a tall order though not impossible.

Usec Tito also said they are working to bring down the unemployment rate to the three percent level by 2016. He must have seen me roll my eyes so he defensively intoned this goal is doable by focusing on SMEs as the backbone for job creation.

He said that last year, around 200,000 new businesses were registered by the DTI, mostly SMEs. In the first quarter of this year, 150,000 have already registered and they are looking at some 450,000 total registrants by year-end.

If these SMEs hire just two or three employees each, over a million new jobs would be created. That’s on top of employment created by foreign direct investments (FDI). He thinks FDIs will hit $5 billion this year by the reckoning of the Board of Investments (BOI). The BSP only reported FDIs of $1.8 billion last year.
There is a difference in the FDI numbers of the BOI and the BSP. The BOI reports the value of all FDI applications they have approved. The BSP reports only those FDIs that register with them. Some BOI approved projects don’t materialize. But on the other hand, some approved projects that are implemented are not reported to the BSP.

 

Usec Tito said many investors do not find the need to register with the BSP because they trust our forex situation. A BSP registration would give them priority in the allocation of forex if our forex situation becomes precarious and that isn’t the case now. Our $76-billion gross international reserve is enough to reassure investors of stability.

I asked usec Tito how he felt about the strong peso and like most of us he had mixed feelings about it. But he said he is worried it may go beyond the P42 to the dollar optimum level which will hurt not just OFW families but the exporters and the BPOs as well. The P41 level is breakeven already, he said, and P39 will prove catastrophic to the BPOs whose contracts are in dollar terms but expenses in peso terms.

The BPO industry roadmap for the medium-term (2011-2016) estimates growth in revenues to rise to between $15 billion to $25 billion or equivalent to 10 percent of the global market. The industry also sees its workforce hitting 1.3 million by 2016. The Philippines cannot afford to risk losing the BPO industry because of a strong peso.

Usec Tito also offered more proof that foreign investors are really interested in the Philippines these days. He said the number of in-bound trade missions (defined as a group of five or more investors from different companies) have increased from 18 last year to 28 just in the first half of this year. Interests expressed by these potential investors were across a cross section of the Philippine economy, the usec added.

The usec gave me a list of DTI initiatives in the manufacturing sector and the development of SMEs is being given the strongest push. He said they look at the SMEs not only for strong employment generation but also for producing the greatest impact in reducing poverty in the countryside.

Helping the SMEs includes a P700-million program that would buy and install shared facilities for SME clusters. For instance, in Marikina, a machine to test leather was bought to assist the shoemakers.
In other areas where dairy is a popular enterprise, pasteurization machinery housed in a local university are being acquired. The SMEs using these facilities only need to pay operational costs and don’t have to worry about depreciating fairly expensive capital equipment.

The DTI usec conceded that their efforts could be frustrated by failure to make our cost of electricity competitive with the region. The possibility of Luzon-wide power shortages next year is also in his list of nightmares.

Also among the problems they hope to deal with is smuggling. Smugglers have killed and is still killing local industries. On the other hand, usec Tito thinks they are making progress in reducing the cost of doing business, as in eliminating corruption and red tape specially at the LGU level.

Asked if he thinks we are still competitive in the garments industry, the usec said we still are. Reacting to the complaint of high labor costs aired in this column by garments industry pioneer Bernadine Siy, the usec said relocating to the least developed provinces should be a viable strategy to lower labor costs in addition to BOI incentives.

The usec said that PEZA can also establish industrial zones dedicated to domestic enterprises. He urged the garments industry to explore with PEZA the possibility of trying innovative labor pricing options in special zones located in the least developed provinces.

We talked about other plans and programs for other manufacturing industries which we will write about in future columns. Suffice it to say now that at the very least, they have the right intentions at DTI, even if the things they are doing are apparently in stealth mode.

But as in everything else, DTI and BOI will have to deliver on a lot of hopes and dreams by 2016. Hopefully, they don’t run out of time.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Gov’t debt burden seen nearing P6T

Finance Secretary Cesar V. Purisima: Positive moves from credit raters. INQUIRER FILE PHOTO

Philippine Daily Inquirer -Economic execs expect decline in borrowing cost
 
Economic officials of the Aquino administration said Wednesday the national government’s outstanding debt was expected to approach the P6-trillion mark by the end of 2013 after breaching P5 trillion just recently.

Finance Secretary Cesar V. Purisima and Budget Secretary Florencio B. Abad, representing the Development and Budget Coordination Committee in a briefing for the House committee on appropriations, said the debt stock would hover at P5.78 trillion to P5.91 trillion within a year and a half.

As of last May, the debt stock reached P5.15 trillion and, based on the 2012 fiscal program, this will reach P5.52 trillion by year’s end.

In his presentation, Abad said that under the proposed national expenditures program for 2013, the debt stock would continue to rise although this would represent an even smaller part of the domestic economy.

Abad said P5.91 trillion would account for 49.5 percent of gross domestic product in 2013, a lower ratio than the expected 50 percent this year and the recorded 50.9 percent in 2011.

On the other hand, Purisima put the expected debt stock at P5.78 trillion, noting that international credit-rating agencies have given the Philippine positive moves eight times since the Aquino administration came into power in mid-2010.

Malacañang officials have bandied about this, saying that improving credit standing would mean less financing costs for the country.

According to the Bureau of the Treasury, the government spent P362.19 billion in the first semester to pay its debt, down 11 percent from the P408.77 billion settled in the same period last year.

The government continued to spend less for debt servicing compared with the previous year as principal payments fell during the period.

From January to June, the government settled P212.18 billion in principal, including P181.38 billion in domestic debt and P30.8 billion in foreign loans. Total principal payment in those six months was 23 percent lower than the P274.27 billion posted in the year-ago period.

The government paid P150.01 billion in interest, covering P96.8 billion in domestic debt and P53.21 billion in foreign borrowings.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

BIR seeks to hike estate tax take

Businessworld - CONSTANT and more detailed monitoring has been pledged by the Bureau of Internal Revenue (BIR) in a bid to improve estate tax collections, which Finance Secretary Cesar V. Purisima wants raised to P10 billion from the meager P1 billion netted in previous years.
"The only way to plug the leaks in estate tax collections is for the BIR to be vigilant at the regional and district levels," BIR Deputy Commissioner Estela V. Sales yesterday said.

The most common way that taxpayers evade estate taxes is by not reporting deaths to authorities, she explained. The National Internal Revenue Code (NIRC) mandates that the estate tax return be filed within six months from the decedent’s death.

Estate taxes can be hefty, ranging from a minimum of P10,000 to more than a million pesos depending on the size of the inheritance. Only estates worth less than P200,000 are exempted.

The NIRC allows for extensions should the payment "impose undue hardship upon the estate or any of the heirs." This isn’t availed often, Ms. Sales claimed, since some taxpayers intentionally want to evade the levy.

Estate taxes have long yielded weak collections for the BIR. Mr. Purisima on Wednesday said these had brought in only some P1 billion annually.

"It has remained stagnant through the years. With inflation, the wealth of rich Filipinos should surely be increasing, as evidenced by the continued record highs in the stock exchange," he said during the BIR’s 108th anniversary celebrations.

"This should be brought up to a more respectable level of about P10 billion," he stressed.

In order to hit the target, Ms. Sales said the BIR would have to monitor civil registries, hospitals and even obituaries to track the deaths of registered taxpayers.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

PRA properties exempted from tax

Businessworld - ALL RECLAIMED properties of the Philippine Reclamation Authority (PRA) are exempted from real estate taxes, the Supreme Court (SC) has declared, saying the agency is a non-commercial, government-owned entity that is non-taxable.

In a decision dated July 18, the high court’s Third Division granted the PRA’s petition to overturn the January 2010 ruling of the Parañaque City Regional Trial Court (RTC) Branch 195, which favored the city government’s claim for real property taxes on the agency’s reclaimed properties in Parañaque City.

The case stemmed from the city treasurer’s issuance in 2003 of warrants of levy on the PRA’s properties in Central Business Park and Barangay San Dionisio for years 2001-2002.

The agency asked the RTC for a stay order against the city government, but was denied, allowing the latter to sell the properties in a public auction in April 2003.

In its January 2010 decision, the RTC further denied the PRA’s August 2009 motion to nullify the real property tax assessments issued against it, the public auction, and the certificates of sale issued to the winning bidders during the auction.

It said that PRA was not exempt from real estate taxes since it was a government-owned and -controlled corporation (GOCC), which is taxable according Republic Act 7160 or the Local Government Code.

The SC, however, sided with the PRA’s argument that it is not a GOCC but an incorporated instrumentality of the national government, which is property tax-exempt based on the same law.

The high tribunal cited the Introductory Provisions of the Administrative Code of 1987, which defines a GOCC as an “agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the government…”

On the other hand, it defines a government instrumentality as an “agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter.”

With such definitions, the SC pointed out that PRA is not a GOCC because “it cannot be considered a stock corporation because although it has a capital stock divided into no par value shares as provided in [its charter], it is not authorized to distribute dividends, surplus allotments or profits to stakeholders.”

The PRA cannot also be a non-stock corporation “because it does not have members,” the court added.

The SC further cited the 1987 Constitution, which provides that Congress may create GOCCs “in the interest of the common good and subject to the test of economic viability.”

“PRA may have passed the first condition of common good but failed the second one -- economic viability,” the SC stated, explaining that the agency’s creation “was not for economic or commercial activities” but for the administration and reclamation of government lands to hasten their development.

Thus, the high court declared as void “all real estate tax assessments, including the final notices of real estate tax delinquencies, issued by the City of Parañaque on the subject reclaimed properties; the assailed auction sale, dated April 7, 2003; and the Certificates of Sale subsequently issued by the Parañaque City Treasurer.” 


For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.