TERM OF THE DAY and sellers from a particular market sector.


Source: Bureau of Micro, Small and Medium Enterprise Development- Department of Trade and Industry


Trade fair A commercial exhibition designed to bring together buyers


business The Manila Times TUESDAY BY DARWIN G. AMOJELAR SENIOR REPORTER


HE National Economic and Development Authority (NEDA) said it may ask President Benigno


Aquino 3rd to extend the deadline for the draft of the country’s new six-year economic blueprint because of the government’s new “thrusts.”


“We’re still discussing it [new deadlines]. Actually, the President has instructions, so we cannot just change. It has to be discussed with him,” Socioeconomic Planning Sec- retary and NEDA Director-General Cayetano Paderanga told reporters. Based on the original target, the draft Medium-Term Philippine De-


velopment Plan (MTPDP) for 2011 to 2016 should be presented to the NEDA Board and Legislative Execu- tive Development Advisory Council (LEDAC) by December 16. On January 6, the MTPDP for


2011 to 2016 should be submitted to the President.


“The President has instructed that


Low interest rates seen to stay in the near-term


BY LAILANY P. GOMEZ AND KATRINA MENNEN A. VALDEZ REPORTERS


PHILIPPINE interest rates are likely to stay low at least until the end of next year, according to two separate forecasts. In its report titled “2011: The Year Ahead,” Standard Chartered Bank said the Bangko Sentral ng Pilipinas (BSP) will likely raise policy rates by end-2011 amid overheating concerns. Standard Chartered said the BSP will raise its overnight borrowing rate to 5.25 percent toward the end of next year, as the economy’s strong come- back this year will carry over into 2011, “eventually confront[ing] authorities with overheating concerns.” The BSP has kept its overnight


borrowing and lending rates at record lows of four percent and six percent, respectively, since July 2009. “Inflation has remained benign throughout 2010 and has been little affected by the rise in global food prices since mid-year. However, we think the biggest threat to medium- term price stability arises not from external shocks but from the narrow- ing output gap in the domestic economy—especially if the central bank is forced to delay meaningful tightening for fear of encouraging further capital inflows into the coun- try,” Simon Wong, regional econo- mist at Standard Chartered, said. “The authorities are confronted with surging capital inflows that have pushed the Philippine peso to decade highs on a real effective ex- change rate basis,” he said. The central bank has refrained from imposing capital controls, but eased restrictions on capital out- flows in late October in an attempt to lessen the appreciation pressure on the peso. The government is also considering ways to steer further inflows to more productive and last- ing uses, including a change in its debt profile. Wong said there is considerable uncertainty as to whether the govern- ment can secure sufficient and sta- ble funding to finance the so-called public-private partnership (PPP) for infrastructure projects, which it said could amount to P718.8 billion over the next two years. “Failure would not only under- mine the government’s goal of fis- cal consolidation, but would also prevent the economy from closing the infrastructure gap with the rest of the region,” he said. Separately, GlobalSource Partners


»OVERNIGHT


6 4 0


4


Current rate


StanChart forecast


said the Philippines’ low interest rate environment would likely ex- tend until investments in key infra- structure projects under the PPP program completely take off. “While we see an eventual up-


ward correction, we believe domes- tic interest rates will likely stay in a low-level zone for the near term, even likely below five percent for the next couple of years, drifting up- wards only when public and private investment activity kick in to high gear,” GlobalSource said.


“This should be additionally con-


ducive for growth, which we now ex- pect at around 5 to 5.5 percent in the New Year given continued ro- bust remittance growth, still strong corporate earnings, and high busi- ness confidence and trust in the new administration,” the group said. Yield on Treasury bills fell drasti- cally to record lows during the gov- ernment’s final auction for this year, something that GlobalSource attrib- uted to Standard & Poor’s upgrade on the country’s long-term foreign currency debt. “This time, an additional impe- tus reportedly has been greater for- eign demand for emerging market assets, including relatively high- yielding short-term debt. The sharp adjustments in the last couple of auctions—the last two announced for the year—have also been attrib- uted to yearend positioning of mar- ket players,” the group said. GlobalSource said the low T-bill yields are good for economic growth as they fuel loan demand as net in- terest income from loans, which ac- counts for three-fifths of total in- come on average, could be squeezed at a time when banks may have al- ready realized most of the mark-to market gains from tradable securi- ties holdings.


“The [BSP] sees an eventual cor- rection given that the bottoming seems to be an end-of-the-year phe-


➤StanchartB2


BORROWING RATE (in percent)


5.25


the MTPDP will be geared towards the implementation of his 16-point agenda in the social con- tract (with the Filipino people) and in fact the workshop on the imple- mentation of the social contract . . . most of the agencies already have their preliminary contribu- tions,” Paderanga said. “So, they are looking at it again in light of the discussions in the work- shop and some agencies in a way may require a little more time since they said there are new thrusts in govern- ment that they will have to incor- porate into their program.” The agencies had until November 26 to submit their inputs for the


new MTPDP.


manila times@gmail.com D ecember 7, 2010


B 1


New economic blueprint faces delay T


The new economic blueprint will focus on attaining a sustained and high eco- nomic growth that pro- vides productive em- ployment opportunities and effective social safety nets.


The new MTPDP has


■ Cayetano Paderanga


five pillars of growth, namely, macroeconomic policy framework, infra- structure for develop- ment, strengthening the financial sector and capi- tal mobilization, enhancing peace and security for development, and protecting the integrity of the envi- ronment and natural resources. Under the new MTPDP, Paderanga said priority shall be


Business sector offers economic agenda


BY BEN ARNOLD O. DE VERA REPORTER


AS the Aquino administration grapples with its new medium- term plan, business groups are launching initiatives aimed at complementing the government’s governance agenda. Raul Concepcion, chairman of newly formed “Gov’t Watch,” told reporters that they would present to President Benigno Aquino 3rd early next year a shortlist of sug- gestions aimed at enhancing the


operations of four key agencies, namely the Department of Energy, state-run Power Sector Assets and Liabilities Management Corp., and the Bureaus of Customs, and of Internal Revenue. “The economy and revenue de- pend on these agencies,” Concepcion said, adding that, “We’re closely watching [the four agencies] to ensure transparency in government.” Separately, the European Cham- ber of Commerce of the Philippines (ECCP) said it has teamed up with


the American Chamber of Com- merce of the Philippines, Asian In- stitute of Management, Makati Busi- ness Club and Management Associa- tion of the Philippines to launch a nationwide anti-corruption cam- paign on Thursday. “Currently, the campaign has gathered the support of more than 300 companies from a wide range of industries. The campaign aims to help companies fight corrup- tion and operate businesses ethi- cally and with integrity,” ECCP said in a statement.


DENR seeks royalty from mining firms


BY JAMES KONSTANTIN GALVEZ REPORTER


THE Department of Environment and Natural Resources (DENR) on Monday said it will require mining companies to pay royalty to the government. Secretary Ramon Paje said the agency will re- quire mining firms to pay five percent of gross profit —over and above the two percent excise tax imposed on all mining operations in the country. “I have already submit- ted that [recommendation] to the economic team. I told them we are selling our resources short, and we have to optimize our benefits from mining,” Paje told reporters on the sidelines of the 2nd National Conver- gence Agri-Investment Forum in Makati City.


Under Sec. 80 of the Philippine Mining Act, the government can charge companies a maximum of five percent royalty on all mineral reservation areas should the state


declare the minerals as strategic. “The problem is that we are not implementing our laws correctly. We can now utilize the minerals reservation provision in our Min- ing Law. Is gold, copper, nickel, and other minerals not strategic at this time?” Paje said.


“I will not get out of ■ Ramon Paje


the law. I will not ask for additional provision of the law. I will not even ask for an amendment of the law or an executive order. I was only asking the government for its full implementation of


the minerals reservation provision, which is already stated in the law. The question now is why we are not doing it?” he said.


The DENR chief said Australia requires its mining firms to pay eight percent royalty, while Indo- nesia charges seven percent. In Mongolia, companies are levied 40 percent of the bonanza from min- ing operations.


“In the Philippines, what do we


get? If we really believe that excise tax is a tax, then what is our share from the minerals . . . zero?” Paje said. “Mining companies are willing


to pay. The problem is that we are not implementing the provision,” he added. Paje said he also proposed to President Benigno “Noynoy” Aquino 3rd the declaration of all mining areas as mineral reservations as soon as they start operations, al- lowing the government to automati- cally collect the royalty.


The DENR chief said the mining sector could more than double its contribution to the country’s gross domestic product by next year should the proposal push through. He said the agency is pushing for the industrialization of the mining sector to minimize the shipping of ore resources overseas. “We want to have all mineral resources processed here in the country. This would also bring additional income to the govern- ment because this could also be declared as mineral reservation areas,” he added.


given on meeting the targets on pov- erty reduction, nutrition, dietary energy requirement, primary educa- tion, maternal mortality and access to reproductive health services. He said the plan should also con- sider regional dimensions and dy- namics so that the successor Re- gional Development Plans shall contain localized targets and strate- gies that will address specific con- cerns in those areas.


The old MTPDP 2004 to 2010 fo- cused on then President Arroyo’s 10 point agenda, which included the creation of six million jobs in six years, education, balancing the budget, transportation, development of logistics centers in the regions, decongesting Metro Manila, electric- ity and water for all, automation of the electoral process, among others.


Stocks, peso firm up


on US data


BY KRISTA ANGELA M. MONTEALEGRE REPORTER


PHILIPPINE share prices and the peso rose on Monday after modest gains in Wall Street following better-than- expected US economic data. At the Philippine Stock Exchange,


the composite index rose 46.64 points, or 1.12 percent to 4,223.12, while the broader all-shares index added 28.92 points, or 1.01 percent to 2,893.68. Gainers beat losers, 73 to 52, while


40 stocks were unchanged. A total of 739.66 million shares worth P6.3 billion were traded “Europe’s debt troubles [are] still a cause of concern but economic woes in the US are becoming less painful,” said Maria Arlysa Narciso of AB Capital Securities Inc. “Employment is still weak but it is seen as a potential reason for the US Federal Reserve to take another round of quantitative easing and purchase more bonds,” Narciso added. On Friday, the Dow Jones industrial


average gained 19.68 points, or 0.17 percent to 11,382.09 despite a disappointing jobs report. While US market futures are in the


red, Federal Reserve chairman Ben Bernanke’s hints of buying more than $600 billion in Treasury bonds in light of a poor jobs market could cause some ripple tonight, said Jun Calaycay of Accord Capital Equities Corp. After succumbing to profit taking in


November, the main index has finally showed signs of strength after breaking out of the falling wedge at 4,076 last Thursday, said Bonner Dytoc of Absolute Traders.


“Not only is this a possible continua- tion of the previous trend but it has shown that the index may still have some resilience towards achieving a new all-time high,” said Dytoc. At the Philippine Dealing System, the peso gained 13 centavos to finish at 43.75 from Friday’s finish at 43.88 against the dollar. The peso-dollar exchange rate opened at 43.83, or five centavos stronger, with the pair moving to a high of 43.93 and a low of 43.75. Total trading volume eased to $894.12 million from $948.61 million. The pair is expected to trade within a daily range of 43.60 to 43.90 and weekly range of 43.60 to 44.20. WITH LAILANY P. GOMEZ


DTI showcases agro-processor tapping Japan trade deal


THE Department of Trade and Industry (DTI) said a bilateral trade agreement between the Philippines and Japan has opened doors for small food- processing firms. In a statement, DTI Secretary


Gregory Domingo cited Prime Fruits International Inc., a local manufac- turer of banana chips, dried fruits and nata de coco, as among the firms benefiting from the Philippines- Japan Economic Partnership Agreement (PJEPA).


“[W]ith the PJEPA in place, we


were able to compete better against Ecuador and other Central American countries that do not enjoy the same preferential benefits,” said Simeon Laguna Jr., Prime Fruits International sales associate.


Laguna said their increased exports


to Japan helped grow company sales by 41 percent last year. Under PJEPA, agricultural products


from the Philippines enjoy duty-free entry to Japan or reduced tariffs.


The ethics of layoffs


HILIPPINE Airlines (PAL) has announced its plan to lay off 2,600 ground employees as part of its cost-cutting program. PAL presi- dent, Jaime Bautista, has argued for the necessity of this step to ensure the survival of the company. The De- partment of Labor and Employment (DOLE) has ruled the move legal as management’s prerogative to do what it takes to keep the company afloat. The PAL Employees’ Associa- tion (PALEA) has questioned the move, labelling it as mainly profit motivated a preparation for massive contractualization in the airline. Whichever side one takes on the


P BENITO L. TEEHANKEE


issue, the PAL-PALEA conflict has called attention to one of the most painful events in the life of a com- pany—restructuring. Ensuring that the company stays viable and com- petitive is clearly a legitimate busi-


ness goal. What needs closer scru- tiny, especially from the ethical standpoint, is whether laying off thousands of workers is a legitimate means for the airline to achieve this goal at this time. Anayzing the ethics of layoffs be- gins with applicable core principles. The Constitution provides two such principles. First is the principle that “the use of property bears a social function, and all economic agents


shall contribute to the common good.” Second is “the principle of shared responsibility between work- ers and employers and the preferen- tial use of voluntary modes in set- tling disputes.”


The common good principle re- minds capital owners that their de- cisions must properly respect the dignity of those affected as well as their need for human development. Corporate decisions involving live- lihood have the greatest impact on the common good since these affect the employees’ survival and per- sonal growth, while indirectly im- pacting these employees’ families and other dependents.


The shared responsibility princi- ple reminds both capital owners and employees that they are essentially “partners” in ensuring the health of the business. Partners are responsi-


ble for each other and commit to support each other. Business chal- lenges should be met through col- laborative and creative approaches which manage costs, on the one hand, and enhance business value, on the other. Thus, the sacrifices that come with turning around a busi- ness situation, as well as the fruits of its successful outcome, must be shared by the partners.


It is important to ask whether


the PAL management (as influ- enced by capital owners) and the employee union observed these two principles in their approach to the business challenges facing the airline. Both sides may use legal ar- guments to support their respec- tive positions but these do not suf- fice to make their behaviors ethi- cal. More importantly, a legalistic approach does not build the high-


trust situation crucial for a creative business turnaround. Perhaps PAL and PALEA can learn from the experience of Universal Motors Corporation (manufacturer and distributor of Nissan vehicles) some years ago. Faced with a slump in demand, the company had the option to lay off employees. Eliza- beth Lee, then chief operating of- ficer, found the resulting loss of jobs and negative impact on families morally unacceptable. Instead, she rallied the management team and employees to create the “UrVan, UrBusiness” program. The program provided buyers with easy-payment terms and entrepreneurial ideas for using Nissan vehicles. The program has saved jobs, increased the com- pany’s revenues and market share, and improved the lives of thousands of families.


A business downturn is a chal- lenge to the creative partnership between capital and labor.


The


company’s problem is not merely managing its costs but inspiring the shared vision to pull everyone to- gether for the good of the company and all those who depend on it. Does PAL management and PALEA have what it takes to turn a “We vs. Them” situation into an “Us” situa- tion? I certainly hope so—for the common good.


Dr. Ben Teehankee is the Aquino as- sociate professor for business and gov- ernance at De La Salle University. He may be emailed at teehankeeb@yahoo.com. The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University and its faculty and administrators.


Japan has a population of about 126 million—a huge market that can be tapped by Filipino exporters, Domingo said. The DTI chief said the


free trade agreements (FTAs) that the Philip- pines has entered into present growth potentials to exporters. “Encouraging more companies to utilize our existing FTAs will further


■ Gregory Domingo


boost the country’s competitiveness, generate jobs and strengthen our good standing in the global market,” he said. Besides its FTA with


Japan, the Philippines, through Asean, has trade accords with


Australia, China, Japan, New Zealand and South Korea.


BEN ARNOLD O. DE VERA


MANAGING FOR SOCIETY


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16