PHILIPPINE
Vol. 22, No. 11 November 2010
FACTSHEET The Month’s Highlights Political
The Supreme Court, in an unprecedented move, ordered First Philippines Industrial Corp. to stop operating a 117-km pipeline after an oil leakage disrupted fuel supply to Manila, polluted deep wells, caused traffic jams and dislodged more than a hundred families from their homes. The court issued a temporary environment protection order against the firm after granting the petition for a ‘writ of kalikasan’ sought by residents in Makati. The Philippines and the EU signed a three-year development cooperation agreement worth 69 million Euros (P4.12 billion), the bulk of which will go to health programs.
Economic
The Philippine economy expanded at a slower pace in the third quarter mainly because of the weak agriculture sector and lower government spending. GDP grew by 6.5% in the third quarter. Services expanded by 7.7%; industry by 9.2% and agriculture shrank by 2.5%. The third quarter performance brought the average GDP growth for the first nine months of the year to 7.5%, well above the government’s full-year target of 5-6%. Imports climbed 24.6% to US$ 4.57 billion in September from a year earlier. Strong demand for semiconductor and electronics drove Philippine exports to a 46.1% increase to US$5.31 billion in September. Exports for the nine-month period reached US$ 38.3 billion, up 38.5% from last year. The Finance and Trade departments will come up with a common position aimed at giving out the least possible tax incentives and other perks to investors. ‘Incentives are necessary, but only insofar as big ticket investments are concerned and would not otherwise come without the incentives’, DOF Sec. Purisima said. The DTI will block requests to lower tariffs on cars imported from Japan when officials meet for a scheduled review of the bilateral trade pact (JEPEPA) next year. Factory output in volume rose 15.9% in September, the weakest growth since December 2009. Continued belt-tightening kept the budget deficit
under control in October. The country recorded a P10.5 billion deficit last month, bringing the 10-month tally to P270.3 billion, well under the P325 billion ceiling set for 2010 and comfortably below the P292.8 billion deficit programmed for the period. Placements in the special deposit account (SDA) facility of the central bank have reached the P1 trillion mark as of end-October, manifesting the sharply growing liquidity in the country’s banking sector. The Philippines, one of the few countries identified as facing the highest risk of natural disasters, will get US$ 1 billion worth of loans over the medium term to fund programs aimed at improving the country’s ability to cope with climate change.
the agency can already approve PPP projects in only six months. The BSP has approved a separate 25% single borrower’s limit on loans, credit accommodations and guarantees by banks to infrastructure projects certified by the NEDA under the PPP initiative. For the first nine months, the combined approved investment pledges of foreign and local investors amounted to P320.2 billion, almost three times the P117.5 billion committed a year ago. The BSP kept interest rates unchanged but cut its inflation forecast up to 2012: full-year inflation 3.6% in 2010, 2.4% in 2011 and 2.8% in 2012.
The BSP has issued a regulatory prohibiting spouses and relatives of key banking officers from occupying sensitive positions in a bank.
The country’s balance of payments surplus surged 75% in the first 10 months this year to hit a new record level of US$ 9.276 billion.
Guarantees, easier access to bank loans and speedier processing were dangled by the government at the rollout of key infrastructure projects that include US$ 3.3 billion worth of rail, road and airport ventures up for bidding next year. The President said that his administration would compensate investors prevented by the courts or Congress from collecting contractually agreed toll or user fees. Meanwhile, the Dept. of Interior and Local Government will come out with policies to reconcile local and national government laws and regulations to make it easier for participants in the government’s PPP program to do business in the Philippines.
PNOC’s intends to sell part of P14 billion ‘banked gas’ that it purchased from the DOE while waiting for the Batangas-Manila (BatMan1) natural gas pipeline project to be completed.
Multilateral institutions are planning to pool funds to support the government’s infrastructure drive, with Manila-based officials expressing willingness to finance PPP projects directly or back government guarantees.
Foreign tourist arrivals in 2010 up to October reached 2.56 million, up 17% compared to the same period of last year. Remittances of Filipinos abroad reached US$ 1.6 billion (+10.6) in September, bringing total remittances for the 9-month period to US$ 13.8 billion, up 7.8% from the same period of last year. The Board of Investments is targeting US$ 5 billion in investments next year, with the bulk to come from the government’s PPP program.
The government will further liberalize the civil aviation industry to increase tourist arrivals, the President said. The full implementation of E.O. 219 (the liberalization of the air travel industry) will be done gradually.
Top government officials, lawmakers and domestic industry leaders are forging alliances to identify immediate and long-term solutions to curb smuggling, which has been robbing the national government some P127 billion in revenues a year.
Amid ongoing changes to the government’s joint venture guidelines and issues surrounding the build-operate-transfer implementing rules and regulations, the NEDA gave assurances that
Foreign direct investments net inflows totaled US$ 80 million in August, bringing total FDI in the first eight months to US$ 1.027 billion, 38% less than in the same period of last year.