TERM OF THE DAY


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


Take-home pay The amount of pay an employee receives after all the


deductions, such as income tax, social security, or pension contributions.


business The Manila Times SATURDAY


HE Philippine government would have to pursue fiscal reforms if it were to have a chance of meeting


Earlier, the National Economic and


the United Nations’ Millennium Development Goals (MDGs), a nongovernment organization (NGO) said on the eve of President Benigno Aquino 3rd’s visit to the US.


The President is scheduled to ad- dress the United Nations General As- sembly and report on the Philippines’ progress in meeting the 2015 dead- line for the MDGs. He is also set to sign an agreement with the US Mil- lennium Challenge Corp. for the re- lease of aid meant for efforts to pur- sue the Philippine MDGs. “The passage of fiscal reforms is crucial in financing the MDGs. The government cannot just rely on improving tax administration as a measure to beef up revenue collection,” said Code RED in a statement. “It has to be complemented with


fiscal measures like rationalization of fiscal incentives, fiscal responsibility and excise tax on tobacco and alco- hol and simplified net income taxa- tion scheme [SNITS],” the NGO said. The NGO said the first two reforms entail a streamlining of available re- sources, while the other two tax re- forms would involve merely captur- ing foregone revenues brought about by loopholes in existing tax laws. “It is crucial that the government prioritize the financing of the MDGs through fiscal reforms and other means as achieving the goals can very well be the gauge of progress in ad- dressing poverty,” the NGO said.


Development Authority said the gov- ernment may address the MDGs per- taining to food poverty, gender equal- ity in education, child mortality, ma- laria morbidity, detection and treatment success and cure rates of tuberculosis cases, and access to sanitary facilities. The government however doubts whether it could attain the targets on income poverty; nutrition; dietary energy requirement; access to safe drinking water; participation, cohort survival and completion rates in el- ementary education; maternal mor- tality; access to reproductive services; and prevalence of HIV and AIDS. In a forum held on Thursday, So-


cial Watch Philippines blamed the country’s slow progress in attaining its MDGs on bad governance, inappropri- ate economic policies perpetuated in a massive outflow of resources through debt payments and corruption, lack of commitment and economic supply shocks such as energy and food crises in the past years as among the reasons for the slow progress.


Debt paper yields to remain low despite higher govt borrowing


BY LIKHA CUEVAS-MIEL ASSISTANT BUSINESS EDITOR


INTEREST rates on debt papers would remain low despite the Aquino administration’s plan to increase its borrowing to supplement revenues and plug its budget deficit. “The peso bond market is domestically driven and


the negative developments on the fiscal front clearly have not mattered to yield trends in the market,” the DBS Singapore said in a quarterly research note. The bank said the factors that have been stoking the


low interest rate regime are the ample liquidity, benign inflation and bond-friendly monetary policy outlook. On Tuesday, the yield on 10-year bonds dipped


to an average of 6.149 percent from the previous 7.368 percent and the coupon rate of 6.16 percent because of excess liquidity. “Ten-year benchmark yields will likely stay low during 4Q10, below the 8 percent weighted average fixed coupon on outstanding local currency government debt, as liquidity conditions in the banking system and the supply/demand balance remain highly favorable,” DBS said. Given this, the government would take


advantage of the low longer-term yields and sell long-term debt papers to the market,


the bank said. “If yields trade sideways in 4Q10, total returns


for market representative investments will be positive in the range of 2.0 to 2.5 percent. We expect yields on 2-year and 10-year Philippine government bonds to stay low,” DBS said. But the low interest rate environment could end soon if the Bangko Sentral ng Pilipinas (BSP) would start tightening its monetary police or inflation starts to pick up. In DBS’ view, the BSP would start hiking its key rates in December or in the first quarter of 2011. Another thing to watch out for—amid


government’s plan to increase its leverage to sustain economic expansion—is its external debt position. The country’s external debt has already bottomed at $51.8 billion in the second quarter of 2009 but soon rose to $55.4 billion in the first quarter this year. DBS said the present level is already near its all- time high of $57.4 billion recorded during the fourth quarter of 2003. “[But] for now, this remains comfortably low as a


proportion of GDP [gross domestic product] at 33.1 percent in first quarter 2010 [versus] 72.1 percent in fourth quarter of 2003. It would also be good if the current account maintains its surpluses,” DBS said.


Bangkok redux


REMEMBER when I was last here in Bang- kok in 2005, our own peso stood head to toe with the Thai baht at one is to one. Previ- ously the peso was even higher valued than the baht. Early this week, before I left Manila, I bought some American dollars at $1 to P44.15. And here I am again in Bangkok and I exchanged my dollar to baht at 1:29.50. Wow! What has happened? Why and how did the baht appreciate so fast and high? Bangkok Post quoted their cen- tral bank governor Dr. Tarisa Watanagase, saying that the baht’s appreciation has resulted from both internal and external factors. “Externally, it has stemmed from the strong eco-


I


baht? I do not intend to shop anyway so I wouldn’t know the effect of the appreciation of the baht on prices of consumer goods. I would rather shop in Manila and contribute to the economy of our country.


MOJE RAMOS- AQUINO, FPM


nomic growth of the region in contrast with weak growth in developed countries. Internally, capital inflows have increased after local [po- litical] unrest [in the second quarter] caused markets to underperform. Our foreign exchange policy has remained unchanged,” she said. Bangkok Post reports that the baht’s strength has come as the Stock Exchange of Thailand (SET) has one of the top performing markets in the region this year with a gain of 25 per- cent since January. “In any case,” BP continues, “gains by the currency raised worries among business leaders and policymakers about po- tential impact on exporters, particularly small and medium-sized companies with low import content or resources to hedge their currency risk. Special measures to address the apprecia- tion of the baht were not needed right now as the currency continued to move in line with regional currencies, mitigating any impact on trade competitiveness. Some regional curren- cies, like the Malaysian ringgit and Singaporean dollar have appreciated a quite a bit. Year-to- date, the baht may be stronger, but it was not the best performer last year. The pace of the baht’s appreciation is still reasonable.” M.R. Chatumongol Sonakul, chairman of the Bank of Thailand said, “The central bank should focus on the management of its foreign exchange reserves to minimize losses from bond issuance. Its role should be to aid the private sector do businesses. It should not fix the baht at a particular level. It is better to let baht adjust flexibly. What we should consider is how to manage the official reserves (which stands at an all time high of $157.1 billion as of September 3). Why has our peso lagged so far from the Thai


The reason I am here in Bangkok is to at- tend the ILO/Skills-AP/Korea Regional Training Workshop on Skills Assessment of Returning Migrant /wor- kers. There are three Filipino del- egates namely, Dr. Gabriel Genaro Bordado of Tesda; Isidro Antonio Asper of the Federation of Free Workers and myself, rep- resenting the Employers Confed- eration of the Philippines. The other delegates are from govern- ment, workers group and em- ployers association from of


“sending countries” Cambodia, Indonesia, Mongolia, Sri Lanka, Thailand and Vietnam in- cluding resource persons, “receiving country” Korea and ILO officials from the Regional Of- fice for Asia and the Pacific and observes from United Nations Educational Scientific and Cul- tural Organization and Thailand government. We are tasked with studying, discussing, re- flecting and commenting on the Draft Guide- lines for the Recognition of the Skills of Return- ing Migrant Workers prepared by the Interna- tional Labor Organization. These Guidelines aim to promote recognition and assessment of the skills acquired by the migrant workers while working abroad. A modality is outlined through which returning workers will assemble data from their overseas employment, including any skills training and soft skills acquired into a comprehensive portfolio; map that data against identified national or international competency standards; and, following assessment, achieve recognition for their new skills and work expe- rience, so as to provide a solid platform for pur- poseful employment and self-employment. These guidelines are for use by government agencies for sending and receiving workers, na- tional agencies responsible for recognizing mi- grant worker skills, local agencies and NGOs pro- viding support services to returning workers, na- tional employer and employee organizations, and private and overseas employment services. Key ideas that struck me, which I want to pur- sue subsequently, are: brain circulation instead of brain drain; labor market integration among Asian countries; migration management; and public and private partnership on training services.


Feedback to innovationcamp@yahoo.com


manila times@gmail.com S eptember 18, 2010


Fiscal reforms key to MDGs T


B 1


Stocks give up gains, as peso firms up vs. dollar


“The Philippines is in a worse pov- erty situation in 2010 than when it started on the MDGs in 2000. We are losing the war on poverty. Many would still be left behind, and their numbers are simply staggering by any count,” Isagani Serrano, Social Watch Philippines convenor, said in a sepa- rate statement. “MDGs are severely unfunded,” Leonor Briones, University of the Phil- ippine professor and co-convenor of Social Watch during Thursday’s launch of a book on financing the MDGs. In the book, Social Watch said the


government can look into five possi- ble sources of financing the MDGs, namely domestic financial resources, trade, investments, official develop- ment assistance and debt.


Citing a study by state-run Philip- pine Institute for Development Stud- ies, Code:RED said the government cannot afford to any budget cut in social services as the funding gap from 2007 to 2010 already stands at P395 billion, or 1.2 percent of the country’s economic output.


Prices of canned products climb


BY BEN ARNOLD O. DE VERA REPORTER


THE prices of some canned goods went up due to higher tin can prices, the Department of Trade and Industry said. Trade Undersecretary Zenaida Maglaya said prices of Argentina canned products — such as corned beef and meat loaf— went up between 2 percent and 3 percent, while prices of Ligo sardines rose about 2 percent. Maglaya said the Philippine Association of


Meat Processors Inc. (Pampi) has cited rising prices of tin cans, which are mostly imported, as the main cause of these price adjustments. She said prices of canned milk products are not expected to rise as most local milk manufacturers produce their own cans. Maglaya said the Trade department was


informed that prices of canned goods could rise by up to 7 percent by Christmas time, but she said manufacturers should first justify such adjustments.


BY KRISTA ANGELA M. MONTEALEGRE REPORTER


INVESTORS took their profits on Friday after the local market set a new record high during the previous trading session. At the Philippine Stock Exchange,


the composite index fell 26.11 points, or 0.65 percent to 3,979.35 while the all-shares index lost 1.89 points, or 0.08 percent to 2,495.25. Before succumbing to profit-


taking, the 30-company benchmark index surged to a new intraday high of 4,021.33. Decliners beat advancers, 82 to 77, while 32 stocks were unchanged. A total of 3.81 billion stocks worth P6.63 billion were traded. “Local equities pause for a correction


given the latest gap-up in the last sessions. Some investors will most likely continue to recheck next upside potential, specifically select stocks which have yet to outperform benchmarks,” Juan Carlos Garcia of 2TradeAsia said.


Analysts said this was an


expected correction since the PSEi kept on pushing to new record highs since last week. Year to date, the index has gained a


total of 30.36 percent, or 926.67 points. “The market is taking a rest. This is a good pause before the next run-up by


the end of the year,” Astro del Castillo of First Grade Holdings said, adding that the market could finish at the 4,100 to 4,200 level by end-December. Local stocks bucked the rally in Asian markets on optimism that the region could sustain its growth despite the sluggish recoveries of the US and Europe.


Regional optimism also caused the


peso to firm up against the US dollar. At the Philippine Dealing System, the peso finished at 44.21 from 44.40 the previous trading day. The exchange rate also followed the


strength of its regional peers on the back of good offshore demand, traders said. Total trading volume reached $1.251


billion from $891.37 million the previous trading day. However, continued intervention will


still weigh on the market, possibly putting a floor on any strength in Asian currencies across the board. The imports season, meanwhile, will add pressure to a weaker peso, traders said.


WITH REPORT FROM LAILANY P. GOMEZ Banks’ bad loan ratio dips BY LAILANY P. GOMEZ REPORTER


THE bad loan ratio of the Philippines’ biggest banks improved as their total loan portfolio grew faster than their nonperforming loans (NPL). In a statement, the Bangko Sentral ng Pilipinas (BSP) said the industry’s bad loan ratio eased to 3.37 percent in July from 3.49 per- cent in the same period last year, but was higher by 0.10 percentage points than the 3.27 percent in June. This was the 22nd consecu- tive month that the NPL ratio stayed below 4 percent.


The BSP said the month-on-


month increase was brought about by the 5.08-percent decline in to- tal loan portfolio, outmatching the 2.22-percent reduction in NPL. Net of interbank loans, the NPL ratio rose to 3.78 percent from last month’s 3.71 percent but eased from a year ago’s 3.99 percent. The central bank has at- tributed the increase to the 3.98- percent contraction in regular loans.


The restructured loans climbed to 1.73 percent of banks’ total loan portfolio in July, from last month’s 1.67 percent, but fell from a year ago’s 2 percent ratio.


LEARNING & INNOVATION


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