PHILIPPINE
Vol. 22, No. 8 August 2010
FACTSHEET The Month’s Highlights
Political
So-called ‘midnight’ appointments by former President Arroyo – claimed as having violated a constitutional provision – have been revoked by President Aquino, excluding the appointment of Chief Justice Corona. This decision is challenged in the Supreme Court. The Supreme Court temporarily blocked the government from levying the 12% VAT on all road tolls and from implementing a plan to raise by more than 250% the toll at the South Luzon Expressway. Eight hostages from Hong Kong were killed while seven survived the bloody end of an 11-hour hostage drama at the Rizal Park in Manila. This comes as a major blow to the Philippine tourism industry, compounded by the incompetence of the Philippine National Police in resolving the standoff.
Economic
The economy grew at a surprising rate of 7.9% in the second quarter following an equally strong first quarter growth of 7.8%. Industry expanded by 15.8%, services grew by 6.4% and agriculture contracted by 3% in the second quarter. Imports grew for the eighth month in a row but at a much weaker pace of 1.4% year-on-year to US$ 4.17 billion in June. Exports in June rose 33.4% to US$ 4.56 billion, creating the first trade surplus in seven months. Imports for the Jan – June period grew by 28.5% to US$ 26.185 billion while exports expanded by 37.7% to US$ 23.721 billion. The trade deficit in the first semester stood at US$ 2.47 billion, which was better than the US$ 3.16 billion shortfall registered in the same period of 2009.
Malacanang submitted to the House the P1.645 trillion 2011 ‘reform’ budget, which is giving more emphasis on education, social services and protection, public health, housing and land distribution for the poor. The Philippines will soon sign with the US Millennium Challenge Corp. an agreement for a grant of US$ 433 million which would be used to finance crucial revenue and infrastructure projects, Finance Sec. Purisima said. Energy Sec. Almendras has urged the National Grid Corp. to go public as part of its concession agreement with the government. South Cotabato’s provincial government will review a ban on open pit mining that could hamper the US$ 5.2 billion Tampakan coppergold project in Mindanao and other existing quarrying operations. OFWs sent a record US$ 1.6 billion in June, bringing the first half remittances to US$ 9.1 billion, 6.9% higher than the amount remitted in the first half of last year. The Dept. of Finance wants to stop the creation of new Freeport zones as part of government’s bid to plug loopholes in the grant of income tax holidays. The Balance of Payments surplus stood at US$ 3.326 billion as of end-July, up 22% from the previous year. The government incurred a budget deficit of P32.7 billion in July. In the first seven months, the deficit widened by 22% to P229.4 billion, from P188 billion in the same period last year.
Double-digit manufacturing growth was sustained in June, up 23.4%
The Dept. of Public Works and Highways has returned to government coffers about P17 billion worth of excess funds it has unearthed from its budget for the year.
The Dept. of Energy will review all service contracts located near the disputed areas in the South China Sea.
DOTC Sec. de Jesus disclosed that the Commission on Information and Communications Technology (CICT) and the
National Telecommunications Commission (NTC) are not under his department but under the Office of the President. The government timeline to raise the tax effort to 15% of total economic output has been extended by a year to 2012. PEZA reported that investments registered in January to July surged by 57.5% to P68.61 billion as a number of semiconductors and tourism companies continue to increase their presence in the country. The country’s inflation rate remained steady at 3.9% in July. This brought the average inflation for the 7-month period to 4.2%. Gross international reserves declined by US$ 1 billion to US$ 49 billion in July due to revaluation losses in the central bank’s gold holdings. The DOF expects P18.4 billion in royalties from Malampaya in 2010 and 2011. Government decided not to sell its 10% stake in the Malampaya project. The auto industry registered an all time high in vehicle sales in July, reaching 98,119 units for the 7-month period, up 37.2% from a year ago. Foreign direct investments reversed to a net outflow of US$ 35 million in May; for the period Jan to May, FDI grew by US$ 446 million, down 68% from the US$ 1.4 billion recorded a year earlier. The average bank lending rate dropped in June to 7.07%, a slight decline from the 7.2% registered in December last year.
Business
Ayala Land Inc. posted a 34% increase in net profits to P2.51 billion in the first semester. Ayala Corp.’s profits grew by 9% to P4.4 billion in the first half. Manila Water’s profit rose 34% to P1.96 billion in the first 6 months, based on