2nd Front Page BusinessMirror
A8 Saturday, October 18, 2014
Neda Board approves ₧303B worth of infra projects for implementation
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By Butch Fernandez
HE National Economic and Development Authority (Neda) Board, in a marathon meeting at Malacañang on Friday, approved a total of P303-billion assorted infrastructure projects that President Aquino expects to be completed soon to “lay the groundwork for long-term economic development.” Initial scanty details emerging from the closed-door marathon Neda Board meeting at the Palace disclosed that at least five proposals were among the first batch approved by the body, including four airport projects and the “Manila interchange.” It was learned that six other bigticket projects were also to be approved at the meeting chaired by President Aquino, which started just before noon on Friday. Communications Secretar y
Herminio B. Coloma Jr. later sent an e-mail to reporters detailing a list of projects approved by the Neda Board amounting to P303 billion. But Palace sources said the actual total funding approved by the Neda Board would add up to P307 billion, including “socioeconomic livelihood projects” of the Department of Agriculture (P1.86 billion) and the Department of Agrarian Reform (P2.28 billion). Coloma said these include
projects under the Department of Public Works and Highways listed as Flood Risk Management Project for Cagayan de Oro River, P8.55 billion; Sen. Gil Puyat Avenue/Makati Avenue, Paseo de Roxas vehicle underpass project, P1.27 billion; restoration of damaged bridges along the Bohol Circumferential Road, P0.81 billion; Metro Manila Interchange, P4.01 billion; and Laguna Lakeshore Expressway-Dike Project, P122.81 billion. Approved projects for the Department of Transportation and Communications include the Iloilo Airport operations, maintenance and development project, P30.40 billion; Bacolod Airport operations, maintenance and development project, P20.26 billion; Davao Airport operations, maintenance and development project, P40.57 billion; Puerto Princesa Airport operations, maintenance and development project, P5.23 billion; and Davao Sasa Port Modernization project, P18.99 billion. For the Department of Justice, the Neda Board approved a public-private partnership project for regional prison facilities costing P50.18 billion. According to Coloma, President Aquino also directed the Cabinet and Neda Board members “to focus on completing similar ongoing projects and on laying the groundwork for sustainable, long-term economic development and inclusive growth.”
PHL seen to save ₧758 billion from lower auto-import bill By Catherine N. Pillas
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HE country can save over a fiveyear period as much as P757.8 billion ($16.84 billion at P44.92/ dollar in 2013) in its import bill due to reduced vehicle imports if the proposed Comprehensive Automotive Resurgence Strategy (CARS) Program is implemented. The said program envisions the savings from imports to be hinged on an
assumption that domestic production to imports ratio would hit 4:1 by the year 2022. “There will be a huge reduction in foreign-exchange requirements resulting from reduced completely built units [CBU] imports, around P757.8 billion,” Assistant Secretary for the Industry Development Group Rafaelita Aldaba said. But Aldaba said the figures, in her presentation during a briefing on the
trade and industry development (TID) updates, are only an assumption and overly optimistic. While the Department of Trade and Industry (DTI) updates centered on the employment potential of the automotive industry, Aldaba also revealed the projected benefits of the trade office’s auto program in boosting domestic production against vehicle importations from countries with a See “Auto,” A2
BSP: ‘BETTER’INFLATION NUMBERS SEEN AHEAD By Bianca Cuaresma
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NFLATION, or the rate of change in prices, will likely be better behaved in the final three months of the year as risks to higher prices dissipate, according to the Bangko Sentral ng Pilipinas (BSP). BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said inflation likely already peaked some months prior, and that “better” price outcomes are expected in the waning months of the year. “Better compared to the highs. In other words, it looks like inflation has peaked. At least on the basis of our preliminary forecasts,” Guinigundo said. The highest inflation outcome was sustained in the months of July and August, when this averaged 4.9 percent. This was the highest in three years. In September inflation eased to 4.4 percent on the back of lower food and oil prices. This allowed inflation to average 4.4 percent in the first nine months, clearly within the government’s target range of 4 percent to 5 percent and slightly below the central bank’s latest 2014 inflation forecast of 4.5 percent. “At this point, because of the significant improvement, the easing of upside risks like port congestion and oil prices, and all other things being equal, we should be able to see a more favorable impact on the inflation path in the last three months of the year,” Guinigundo said. The central bank, however, remained very vigilant, saying that upside risks to inflation remain, mostly from the proposed upward adjustments in power rates. “I think it is also important that we continue to work on the supply chain, particularly on port congestion. I hope that more significant improvements are seen in that area because there are still a lot of challenges there,” Guinigundo said. He also said that latest assessments do not include the possibility of an intense natural calamity, such as earthquakes and super typhoons with the intensity similar to that of Supertyphoon Yolanda. “That means the unforeseen events are not there but if they are resurrected, then definitely there will be an impact on the inflation outlook,” Guinigundo said. Asked on the impact of this to the upcoming monetary policy decision of the Monetary Board next week, Guinigundo said the Monetary Board (MB) is keeping a good eye trained on the macroeconomic landscape that could alter the year’s carefully calibrated monetary-policy settings. “From now until Thursday there could be more announcements and more data that we will have to monitor to make a better judgment at the appropriateness of the monetary-policy stance,” Guinigundo said. The central bank’s seven-man MB will have its seventh ratesetting meeting on October 23. This will be its penultimate monetary-policy meeting for this year. In its previous meeting in September, the MB took an aggressive stance against rising inflation for this year and the year ahead by hiking both the special deposits account rates and overnight policy rates by 25 basis points each. The central bank said this was meant to rein in inflation expectations for next year, averaging 3.8 percent based on the most recent forecast. This approximated the ceiling of the government target, ranging from 2 percent to 4 percent.
BSP exec sees stronger FDI flow if investors look at fundamentals Continued from A1
The central bank official further explained that in some instances, FDI are influenced by market sentiment similar to the sentiment that is influencing foreign portfolio investors to move out of the country. The central bank earlier this month reported that the FDI— or investments placed by global investors in the Philippines with long- term prospects—breached the $4-billion mark to hit $4.008 billion in the first seven months of the year. This exceeded the target of $1 billion. While the deputy governor admitted that the amount of FDI remains comparatively small compared to counterparts in the region, Guinigundo remained confident of bigger FDI inflows in the years ahead.
“FDI continue to be good. There are more inflows from FDI. It is the portfolio investments that become the problem, because these are the footloose capital. Any small change in market sentiment could drive them out of one emerging market in favor of the so-called safe-haven markets,” Guinigundo said. FPI are investments from nonresidents to the Philippines. These are also called “hot” or “speculative” money, as they are more volatile than direct investments as they are easily pulled in and out of the market due to the change of market sentiment. Just this week the central bank reported that the FPI toward the country snapped its five-month net inflow trend to reach a net outflow of $324.12 million in September alone.
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Falling oil prices shake up global economies
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EW YORK—A sudden plunge in the price of oil is sending economic and political shockwaves around the world. Oil-exporting countries are bracing for potentially crippling budget shortfalls and importing nations are benefiting from the lowest prices in four years. The global price of oil closed at $84.47 per barrel on Thursday, down about $31, or 27 percent, from its high point for the year. Oil consumption globally is 91 million barrels per day. That means the world’s oil producing countries and companies are bringing in as much as $2.8 billion less in revenue every day—and consumers, shippers and airlines are saving a comparable amount on gasoline, diesel and jet fuel. “The problem is that countries get accustomed to a certain level of income, and then spend,” says Edward Chow, a senior fellow at the Center for Strategic and International Studies. “It seems like a windfall at first but when it lasts long enough you get used to it.” The global price of oil was relatively stable for nearly four years, averaging $110 per barrel. Increased production in the US, Canada, Iraq and elsewhere made up for declining supplies in nations such as Iran and Libya and helped meet rising global demand. That delicate balance has been upended by a weaker global economy. Demand is slowing while production, particularly in the US, continues to surge. Consumer-driven economies benefit. For example, drivers in the US are paying $3.16 a gallon on average for gasoline, the lowest average since 2011, giving them more money to spend. “If this drop stays where it is that would effectively be a $600 tax credit to an average American household,” says Ed Morse, global head of commodities research at Citigroup. In general the plunge in prices is good for those who have to buy fuel, and bad for those who sell it. But it has far wider and more complex effects on economies around the globe that are only starting to be felt.
Major exporters
ORGANIZATION of the Petroleum Exporting Countries (Opec) countries and other major exporters will feel the biggest impact. The cashstrapped governments of Russia, Venezuela and Iraq are among the most vulnerable. Oil is cheap to produce in these countries, so they still make money at lower prices. But their government budgets are based on expectations of oil prices of $100 or more. On Tuesday Russian President Vladimir Putin expressed concern that lower oil prices could force the government to cut spending. Researchers at the state-owned Sberbank, Russia’s largest bank, estimate that the country needs an oil price of over $104 per barrel to balance its budget next year. In Venezuela, the government leans heavily on oil revenue to fund spending on housing projects, community organizing and other social programs. Now, oil production is falling at a time when the country desperately needs cash. This month, the analysis firm Stratfor Global estimated that Venezuela needs oil at $110 to continue meeting its obligations. Last week, Venezuelan Foreign Minister Rafael Ramirez called for an emergency Opec meeting to allow member countries cut production to keep prices above $100. Saudi Arabia, the world’s largest exporter and Opec’s most influential member, might not rush to cut production, however, even though it would start running a deficit with oil at $85 per barrel, according to Merrill Lynch. Continued on A2