Businessmirror january 17, 2016

Page 1

BusinessMirror

Out soon | Free to BusinessMirror subscribers

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror

www.businessmirror.com.ph

A broader look at today’s business

n Sunday, January 17, 2016 Vol. 11 No. 101

P25.00 nationwide | 4 sections 20 pages | 7 days a week

‘Strong inflation recovery unlikely despite global drop in crude price’

E

By Bianca Cuaresma

CONOMISTS still see subdued inflation for this year, despite climbing back within target territory as oil prices continue to fall, economists polled by the central bank said.

week ahead

ECONOMIC DATA PREVIEW Local currency

n Previous week: Despite starting off the week with a strong start, the peso followed regional trends and posted a significant depreciation toward the end of the week, as the strong dollar sentiment continued to drive the peso’s value downward. Data from the PDS showed that the local currency started the week at a strong 47.27 close on Monday. The peso ended the week, however, at 47.64 to a dollar, losing about half a peso on the week’s trade. n Week ahead: In its latest research note on the Philippines, the Citi Research said recent favorable macroeconomic developments could provide temporary relief to local financial markets. It also said the region’s vulnerability to terrorist attacks following the events in Jakarta is now factored in by traders as one of the emerging market risk-off sentiments in Asia. n BOP November: The balance of payments (BOP) position of the country as of end-November this year, as reported by the central bank, sits at $2.136 billion. This started as the country posted a BOP deficit in November at $141 million, reversing the surplus seen in the previous month. Bangko Sentral Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the deficit was largely due to the continued debt servicing by the national government, as well as the uncertainty about the interest-rate hike from the US. n BOP December: The weakness in the overall monthly BOP is expected to continue in December this year, as the 11-month total of BOP already surpassed the newest government assumption for the year by $136 million. In terms of the BOP print total for the whole year, economic managers

See “Outlook,” A2

In its recently published highlights of the latest monetary-policy meeting, the Bangko Sentral said the results of survey of private-sector economists yielded lower inflation forecast for 2016. In particular, the November 2015 survey showed that most economists see lower-than-earlierexpected inflation for this year, at 2.5 percent—from the 2.6 percent, as earlier forecast for the country. The central bank said that, while the forecast is higher for 2016, the increase in the projected path is partly offset by the decline in global crude-oil prices. Crude-oil prices hit below $30 per barrel just recently owing to supply concerns, offsetting expectations that oil prices will rise due

A.I.I.B. to boost infrastructure investment in Asia–Xi Jinping

T

HE $100-billion Asian Infrastructure Investment Bank (AIIB) will boost investment for infrastructure in Asia, improve connectivity and integration, Chinese President Xi Jinping said on Saturday at the opening ceremony for the new China-backed lender.

to the tension in the Middle East. In a recent economic bulletin, Finance Undersecretary Gil S. Beltran said the continued decline in oil prices allows local companies to produce more goods at lower cost of production. The central bank said that, according to authorities, global oil production is expected to continue to outpace consumption, although the projected gap has narrowed for 2016, owing to the lower expected production. The inflation is still expected to outpace its level in 2015, owing to the depreciation of the peso; the impact of stronger-than-expected El Niño conditions; and the potential adjustments in electricity rates given pending petitions. See “Inflation,” A2

The AIIB will provide impetus for economic growth in Asia and the rest of the world, Xi said on Saturday at the event in Beijing to mark the emergence of the world’s first major new multilateral development bank in a generation. The Beijing-based AIIB, which will compete and cooperate with the Washingtonbased World Bank and Japan-led Asian

Ayala seeks ‘right-sized’ projects By Lorenz S. Marasigan

T

HE country’s oldest conglomerate will surpass its five-year target of spending over $1 billion in both the energy and infrastructure sectors by end2016, thanks to the robust economic growth that the Philippines has been enjoying in the last few years. Ayala Corp. Managing Director John Eric T. Francia said his group will end 2016 with over $1.25 billion in investments in the two flourishing sectors in the Philippines, with the bulk of the amount already spent on developing power generation. “Five years ago, from an energy and infrastructure point of view, we have a plan to deploy $1 billion in our equity,” he said. “We will reach our billion-dollar target by 2016; we will actually reach or even surpass our target of committing that equity.” Broken down, the equity in-

PESO exchange rates n US 47.6790

$1.25B Ayala Corp.’s total investments in the energy and infrastructure sectors

fusion in the energy sector will reach $1 billion by year-end, and roughly $250 million in the infrastructure sector. “As things progressed, we quickly saw or realized that power projects are faster in terms of getting to real project, financial close and construction start. Because it is private sector-driven, we don’t have to wait for the government to bid this out. We might have to wait for feed-in tariffs, bidding of certain utilities. Yes, it takes some time, but these are relatively simpler than one full infrastructure project,” Francia explained. See “Ayala,” A2

See “AIIB,” A2

Low fuel prices disadvantageous in long run–DOE What we want to see is increased productive usage of fuel, and not fuel gone to waste.”— Shell Philippines Country Chairman Edgar O. Chua

By Lenie Lectura

W

HILE the plu n g i n g price of oil continues to benefit consumers at the gas pump, the Department of Energy (DOE) enumerated disadvantages that the low oil prices bring. In the Philippine Energy Plan (PEP) 2015-2030, the agency’s policy and planning bureau pointed out the effects of current low oil prices, which settled below $30 a barrel on Friday for the first time in 12 years.

Lower oil prices, it said, stimulates oil consumption in the transportation sector. When this happens, an increase in greenhouse-gas emission follows, thus contributing to global warming. Thus, the DOE said, there is a “need to accelerate additional requirement for biofuels.” The Biofuels Act of 2006 requires the use of clean alternative fuels, such as ethanol mixed with gasoline, that is expected to save the country P35 billion in annual oil imports. Oil companies are mandated to sell unleaded, premium Continued on A3

n japan 0.4039 n UK 68.7054 n HK 6.1242 n CHINA 7.2361 n singapore 33.1795 n australia 33.2027 n EU 51.8366 n SAUDI arabia 12.7117

Source: BSP (15 January 2016 )


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.