061609: Mutual fund AUMs hit P62 billion in April

By Tep P. Torres Updated June 16, 2009 12:00 AM

MANILA, Philippines – The mutual fund industry has reported that its assets under management (AUM) amounted to P61.8 billion end April 2009, or up slightly by three percent from the P60 billion end 2008.

The Investment Company Association of the Philippines (ICAP), the trade organization of the country’s mutual fund industry, said that they are looking at a double-digit growth rate this year.

The first three months of 2009 is all driven by market value, and sales is picking up.

However, ICAP president Karen Roa does not see the mutual fund’s performance reaching the boom 2007 levels of P86 billion.

“For the Philam Asset Management Inc. (PAMI) alone, we were hitting P1-billion sales a month,” Roa, who is also the PAMI chief executive, said.

She, however, stressed that the backdrop of the record levels of 2007 was an active 20-percent growth in 2006.

“If there are not major disruptions, we could spring forward this year as strong as 2006,” she added.

Roa said that the country’s fundamentals remain positive with domestic investments picking up. The Philippine Stock Exchange index (PSEi) alone is already up roughly 30 percent.

The country’s gross domestic product (GDP) grew by a mere 0.4 percent in the first three months of 2009, but the rest of the region was experiencing a contraction in their economies.

But the remittance business continued to register positive gains, which in turn was feeding consumption, savings and more investments.

The Trust Officers Association of the Philippines (TOAP) was likewise looking at a double digits growth, or roughly the same rate of 15.44 percent realized in the first three months of 2009.

TOAP is the umbrella organization of 44 bank and non-bank financial institutions with trust licenses in the country and more than 250 individual trust practitioners.

The first quarter volume of AUMs, held by 37 bank-based trust licensees, amounted to P1.545 trillion or 15.44 percent higher from the P1.338 trillion in end December 2008.

Roa said that large individual and institutional investors have been forced to migrate back to the country’s capital and investment markets. These can be seen from the steady growth in various deposit and trust products in the banking system, strong securities and secondary markets, and mutual funds.

The mutual fund industry manages bond or fixed income funds, equity or stock funds, balanced funds, and money market funds.

Net assets of the bond or fixed income funds (both the peso and foreign currency denominated funds) amounted to P39.4 billion.

Peso-denominated bond funds amounted to P29.2 billion while the foreign currency bond funds (mainly US dollar and the euro) amounted to P10.2 billion.

Balanced funds, or a mix of bond and equity funds, amounted to P13 billion.

Equity funds meanwhile reached P8.7 billion while the money market funds amounted to P610 million.

The number of accounts stood at 88,741 as of end April this year. It reached an impressive 148,388 end 2007.

There are 13 fund or asset managers take care of the different mutual funds.

They are BPI Asset Management Group (BPI AMG), Philam Asset Management Inc. (PAMI), Sunlife Asset Management Co. (SLAMC), Philequity Asset Management, First Metro Asset Management, Grepalife Asset Management, MFMCP, Prudential Asset Management, UCPB Trust, Ekklesia Asset Management, DWS Deutsche, MAA Asset Management, and First Galleon Asset Management.

The three biggest asset groups are BPI AMG, which controls over 45-percent market share, followed by PAMI (22.12 percent) and SLAMC (20.38 percent).

There are 41 mutual funds managed by the 13 asset managers.

PAMI and SLAMC manages seven funds each while BPI AMG handles five. Philequity looks over four mutual funds while First Metro Asset Management takes care of three funds.

The two newest members of the mutual fund industry are DWS Deutsche and UCPB Trust.

The single biggest fund is the ALFM Peso Bond Fund managed by BPI AMG amounting to P22 billion in end April 2009.

The Sun Life Prosperity Balanced Fund came in second largest amounting to P6.5 billion. It is overseen by SLAMC.

The ALFM Dollar Bond Fund expanded to P5.2 billion followed by the Philam Bond Fund with AUMs worth P3.1 billion.

In terms of managing the largest number of accounts, PAMI loomed it over the field with 34,418 followed by SLAMC with nearly 22,000 accounts.

A sweeping glance at the net asset values (NAV) of the various mutual funds show that practically all reflected positive gains versus the previous year.

http://www.philstar.com/Article.aspx?articleid=477980

062309: Sun Life launches dollar balanced fund

Updated June 23, 2009 12:00 AM

MANILA, Philippines – The Sun Life Asset Management Co. Inc. (SLAMC) has re-launched its Sun Life Prosperity Dollar Abundance Fund (SLP DAF) from a dollar-denominated fixed income or bond fund to a balanced fund as more and more domestic mutual funds increase their focus on the foreign-currency funds.

The net asset of the SLP DAF stood at $17.2 million (approximately P846 million) yesterday. It is targeted to grow to $30 million or roughly P1.5 billion end 2009.

"The value of dollar savings in the Philippines reportedly amounts to some $20 billion, and it is fair to say that we want a piece of that," Ben Thomas P. Pañares, chief operating officer of SLAMC said.

Total value of all foreign-currency denominated mutual funds managed by various fund managers as of April 2009 was P10.2 billion. Total value of all assets under management (AUM) within the mutual fund industry stood at P61.8 billion end April.

Presently, six fund managers operate 10 foreign currency-denominated mutual funds. Of the 10 funds, two are euro-denominated funds and the rest in US dollars.

All foreign currency-denominated funds are bond funds except SLF DAF.

Fixed income or bond funds are low-risk, lower-return investments while balanced funds are a mix of bond funds and equity funds (high returns, high risk investments).

Foreign-currency mutual funds, managed by domestic asset management firms like SLAMC, are invested mostly in dollar-denominated ROPs.

The SLF DAF is the first local foreign currency mutual fund that is a balanced fund. That means at any given time, 60 percent of the fund is invested in dollar-denominated bond funds and 40 percent in dollar-denominated equity funds.

"The US dollar is expected ultimately to perform better than the peso," Pañares said.

All forecasts point to an exchange rate of between P51 to P53 versus the dollar by yearend. Historically, the peso has fallen to a low P56 to the dollar.

Pañares added that the SLF DAF is likewise an option for local investors to diversify their dollar-denominated portfolios from ROPs to dollar-denominated investments from foreign mutual funds.

Fund managers revealed that majority of the investors of foreign currency-denominated funds are corporates. They likewise admitted that they are targeting the high networth individuals that withdrew their investments overseas, and are looking for opportunities domestically.

The SLF DAF will be invested in overseas mutual funds that are rated five-star by Morningstar, a Chicago-based research firm.

SLAMC is ranked third largest fund manager in the country's mutual fund industry. Its AUMs stood at P13.7 billion end May this year. – TPT 

http://www.philstar.com/Article.aspx?articleId=480100&publicationSubCategoryId=74

062609: Manulife to offer mutual funds

Friday, June 26, 2009 | MANILA, PHILIPPINES

Finance

 

CANADA-BASED insurer Manulife Financial will set up a fund management company in the Philippines to pave its entry into the mutual funds business.

Philip H. Smith, executive vice-president and general manager for Manulife's Southeast Asia operations, said the company will enable it to offer mutual funds to its Philippine clients.

The Manufacturers Life Insurance Co. (Philippines), Inc., Manulife's local unit, currently offers life insurance and investment-linked insurance products, the latter allowing policyholders to earn dividends from investments in stocks or bonds.

The company is also into the pre-need business through its subsidiary, Manulife Financial Plans, Inc.

"We feel that our customers need them [mutual funds]. [This will enable us] to offer more financial solutions to our customers," Mr. Smith told a briefing yesterday.

Mutual funds are pools of funds that allow small-scale or retail investors to have access to investments such as stocks or bonds, which are normally reserved for high net worth investors.

Minimum investments in mutual funds can go to as low as P5,000.

Manulife has already established asset management units in other Asian markets such as in Taiwan, Thailand, Hong Kong, Indonesia, among others.

Mr. Smith said the relatively small market for mutual funds in the Philippines provides Manulife space for growth.

Manulife, however, has not yet filed for an application at the Securities and Exchange Commission as the plan is still being finalized.

The planned fund management firm is expected to commence operations in the first quarter of 2010.

"We want to make sure that we do this properly. We do this not out of whim," Mr. Smith said.

"We are not expecting great things to happen overnight but we feel we have that opportunity right now."

He said the planned fund management company is part of Manulife's efforts to expand its business in the country.

Other moves the company is taking to expand its presence is the Philippines is venturing into the provincial market as well as strengthening its bancassurance partnership with China Banking Corp. for the sale of its products at the bank's branches.

About 80-85% of the company's sales can be attributed to its 1,200-strong agency force and 10-15% to bancassurance. A small portion of its sales is generated from direct sales.

Manulife is the fifth largest insurer in the country with assets amounting to P19.87 billion as of end-2007. Officials did not provide performance results for 2008, but said the combined sales of its units grew by 3-4% last year. — Gerard S. dela Peña

http://www.bworldonline.com/BW062609/content.php?id=021

060509: PDEx to launch Internet-based trading platform

Friday, June 5, 2009 | MANILA, PHILIPPINES

Today's Headlines

 

INVESTORS LOOKING to place their funds in fixed-income securities can turn to the Web as the Philippine Dealing Exchange Corp. (PDEx) officially launches its Internet-based trading platform today.

PDEx, which operates the central trade reporting system for the market, will be unveiling its Fixed Income Broker Internet Order System (FI-BIOS) at the Marriott Hotel in Cebu City.

The platform will enable brokers to provide investors with real-time price access and transactions.

"With the platform, brokers nationwide can react to the provincial customers in real time. Their access to the settlement process and the best price will be the same as those based in Manila," Vicente B. Castillo, PDEx chairman, said in an interview.

The move followed training for 16 Cebu-based brokers from 10 banks. Similar programs will be staged in other cities in the coming months, Mr. Castillo said.

Investor access, he added, will depend on banks' interest in sending personnel for training at PDEx.

The move is the latest in a series of PDEx initiatives following the grant of self-regulatory organization status (SRO) early last year. SRO status effectively gave it the powers to create and enforce industry regulations and standards. — Gerard S. dela Peña

http://www.bworldonline.com/BW060509/content.php?src=1&id=004

052809: Use of remittances in community development up for discussion

Thursday, May 28, 2009 | MANILA, PHILIPPINES

 

GLOBAL MONEY transfer firm Western Union Company will spearhead talks on improving the contribution of remittances to community and economic development in the country.

It said that while there is growing interest among migrant workers on how their earnings can support, not just the basic needs of family members, but also community development, much still needs to be done to maximize the benefits of their remittances.

The company will hold today the first "Western Union Conversation: Building a Future Back Home" that will gather key officials from government, business, nongovernment organizations, the academe, among others.

The initiative stems from a white paper done by the Economist Intelligence Unit last year, which showed many migrant workers are actually interested in investing back home, only they lack the organizational capability to do so.

The white paper also questioned the capacity of recipients to implement and operate projects, as well as the need to improve coordination between migrants and recipients.

Angela M. Heng, Western Union vice-president, said the Philippines has a higher level of understanding of how to harness remittances for development, given that one out of 10 Filipinos is a migrant worker.

The Philippines is the world's fourth largest recipient of remittances — next only to Mexico, India and China — with receipts amounting to $16.4 billion as of end-2008.

But even if Filipinos compare well to other nationalities in terms of efforts to pool remittances for community development, much work needs to be done, she said.

"We have many challenges, one of which is in terms of government policies that would help promote this," Ms. Heng told a briefing yesterday.

"We also need to devise strategies on how remittances could help provide [sustainable] economic benefits, and not just one-off purchases of street lamps or ambulances," she added.

The event is expected to generate a "tool kit' that will encourage collective remittance initiatives, and how best practices from the country can be replicated by other countries.

Western Union is one of the country's largest non-bank money transfer firms with 6,300 agent locations nationwide.

Ms. Heng said the Philippines is an important market for the company for having been a key driver of Western Union's growth in the region.

The Asia Pacific region contributed 8% of Western Union's $1.2 billion consolidated revenues in the first quarter. — Gerard S. dela Peña

http://www.bworldonline.com/BW052809/content.php?src=1&id=025

052809: Central bank padlocks another rural bank

Thursday, May 28, 2009 | MANILA, PHILIPPINES

 

ANOTHER RURAL bank has been placed under receivership after mismanagement led to insolvency.

In a memorandum dated May 14 but publicized only yesterday, the Bangko Sentral ng Pilipinas (BSP) said it had placed the Rural Bank of Sapang Dalaga in Misamis Occidental under the receivership of the state deposit insurer.

"Notice is hereby given that the Monetary Board, in its Resolution No. 710 dated 14 May 2009 decided to prohibit the Rural Bank of Sapang Dalaga (Misamis Occidental), Inc. from doing business in the Philippines and to place its assets and affairs under receivership," Memorandum NO. M-2009-014 read.

The BSP said the bank had long had financial and management problems, which eventually led to its declaration of a "bank holiday." A holiday essentially means withdrawals by depositors can no longer be served.

"Mismanagement and poor oversight ultimately led to insolvency problems and the bank’s eventual closure," BSP Deputy Governor Nestor A. Espenilla, Jr. said in a text message yesterday.

The rural bank’s officials were not immediately available for comment.

The Rural Bank of Sapang Dalaga was the 11^th bank closed by the BSP this year.

BSP officials have said the closures were just part of its "house cleaning," to rid the otherwise healthy rural banking system of weak banks. — P. L. G. Montecillo

http://www.bworldonline.com/BW052809/content.php?src=1&id=024

052809: Bills boosting capital market OK'd

Thursday, May 28, 2009 | MANILA, PHILIPPINES

 

TWO BILLS intended to invigorate the country’s capital market were approved on second reading at the House of Representatives on Tuesday night.

House Bill (HB) 6017 seeks to scrap the premium and documentary stamp taxes slapped on life insurance, while HB 6379 allows individuals to co-own real estate assets through real estate investment trusts or REITs.

The first would lower the cost of life insurance, encourage more people to buy policies and thereby mobilize savings, while the second would create an alternative investment vehicle.

The two bills were approved without any amendments by House members when these were presented to the plenary for deliberation.

"The imposition of premium and documentary stamp taxes at the first stage of insurance sales raises the average price to consumers as it simultaneously lowers the revenues of the producers," Camarines Norte Rep. Liwayway P. Vinzons-Chato, HB 6017’s author, said in an interview.

"When higher market prices discourage potential buyers from consummating the purchase, the loss in market volume means a loss in the welfare of both buyers and sellers. This loss in total welfare and efficiency affects government adversely as well because the taxable pie has shrunk."

Life insurance premiums are slapped a 5% premium tax as well as a documentary stamp tax equivalent to 0.25% of 1% of the premiums. Insurance firms also pay a 30% corporate income tax.

The Finance department is opposed to the measure, citing forgone revenues of some P2.6 billion annually.

Ma. Teresa S. Habitan, Finance director for fiscal policy and planning, yesterday said the bill, if signed into law, would give life insurance players an advantage over banks and pre-need companies which shoulder a gross receipts tax and a value-added tax, respectively. A wiser move would have been to lower the premium tax to 2%, she said.

HB 6379, meanwhile, allows investors to co-own income-generating real estate assets through a REIT, a stock corporation that pools investors’ funds and invests these in real estate ventures.

Investors may take equity stakes in a REIT, unlike at present where they may only buy the shares of listed property firms if they want to dabble in the property market. Property developers, for their part, get access to capital through the REIT.

The counterpart of HB 6379, Senate Bill (SB) 2639, authored by Senator Edgardo J. Angara, former chairman of the banks, financial institutions and currencies committee, has already hurdled third and final reading at the Senate.

Under the House version, a REIT company must have a minimum paid-up capital of P1 billion, while the approved Senate version requires capital of only P100 million.

Like SB 2639, HB 6379 requires a REIT to be publicly listed with at least 1,000 shareholders.

Allowable investments under the bill are income-producing real properties, real estate-related assets, managed funds, and debt securities and shares. Most of the property investments must be located in the Philippines.

The bill designates the Securities and Exchange Commission as regulator of REITs.

To make a REIT more attractive to investors, congressmen provided exemptions from a slew of taxes, including: the corporate income tax; creditable withholding tax; documentary stamp and creditable withholding taxes on the transfer of real properties; documentary stamp tax on the disposition of securities though the stock exchange, including block sales or cross sales, for five years; and tax on initial public offering and secondary offering of securities.

REITs will have to pay the documentary stamp tax on the original issuance of investor securities; stock transaction tax on the disposition of securities through the stock market; and a final tax of 10% on cash or property dividends.

The Senate bill only exempts a REIT from the documentary stamp tax and creditable withholding tax on the transfer of real property, and subjects it to a corporate income tax rate of 25% for a period of seven years.

Aurora Rep. Juan Edgardo M. Angara, author of HB 6379, said the bill could be approved by the lower chamber Monday next week.

"As to the bicameral conference committee meeting, I’m not yet sure if we could squeeze that in next week or we will have to wait until July to come up with one version of the bill," he said in a telephone interview.

Congress will end its second regular session on June 5. The third regular session is scheduled to open on July 27. — Jhoanna Frances S. Valdez

http://www.bworldonline.com/BW052809/content.php?src=1&id=002

052809: SEC transferred to Trade dep't

Thursday, May 28, 2009 | MANILA, PHILIPPINES

 

PRESIDENT Gloria Macapagal-Arroyo has transferred supervision of the Securities and Exchange Commission (SEC) to the Department of Trade and Industry (DTI) from the Department of Finance.

The move, Executive Secretary Eduardo R. Ermita said, can be traced to concerns involving the pre-need industry, which is currently under the ambit of the corporate regulator.

"The pre-need (issue) is among those problems that came up and it is being investigated by SEC ... that being the subject matter being more or less within the purview of the functions of the DTI at this particular moment, the President thought it would be good to transfer supervision to the DTI," he said.

It is not the first time that the SEC has been placed under the Trade department. The corporate regulator's chief, Fe B. Barin, said Malacañang's decision was "not without precedent."

Trade and Finance department officials were not immediately available for comment. SEC Secretary Gerard M. Lukban, in a telephone interview, said the agency had yet to coordinate with the DTI on how the transfer would be effected.

The SEC recently came under fire for its supposedly lax supervision of the pre-need sector, spurred primarily by the closure of the Legacy Group of financial and pre-need companies earlier this year. Blame was also assigned to the agency when the pre-need industry warned that it was suffering a cash crunch due to the global downturn.

The criticism has led to legislative proposals that its power over the industry be handed over to the Insurance Commission.

Executive Order 800, signed by the President early this month, described the DTI as the "primary coordinative, promotive, facilitative, and regulatory arm of the Executive branch of government in the area of trade, industry and investment."

"In order to facilitate coordination of policies and programs in the field of trade, industry, and investment, it is necessary and practical to transfer the administrative supervision over the (SEC) from the Department of Finance to the DTI," the order states.

The local pre-need sector is no stranger to controversy: thousands of planholders lost their money in the wake of the College Assurance Plans collapse, which was soon followed by the Pacific Plans debacle, all of which occurred in 2004 and 2005.

The controversy was traced to so-called "open-ended" plans promised by the firms, which were scuppered when the government lifted controls on tuition fee increases.

The issue of inadequately funded operations — which the industry claims is due to the current global downturn — led to Permanent Plans, Inc. and Prudentialife Plans, Inc. losing their licences last month.

The SEC, which had given pre-need firms until April 15 to submit their yearly financial reports with an option to include a capital and trust fund buildup plan, has since declared the rest to be financially stable and capable of delivering on their obligations to planholders.

"Industry players, backed by P62 billion in trust funds, are ready to service their about 1.5 million plan holders, especially educational plan holders, in time for the opening of the coming school year," it said.

The pre-need industry is said to have incurred a P46.83-billion trust fund deficiency at the end of June 2008 due to shrinking returns. The figure was expected to have worsened at the end of last year.

Sales of pre-need plans continued to fall in 2008 for the third straight year, to P15.31 billion from P18.87 billion in 2007. Education plans took a significant beating, dwindling by over half to P1.73 billion from P3.85 billion in the previous year.

Initial collections, or the first payments made by plan holders upon purchase of a plan, slipped by almost a quarter to P1.51 billion from P2.01 billion in 2007. — from a report by Bernardette S. Sto. Domingo, with Don Gil K. Carreon

http://www.bworldonline.com/BW052809/content.php?src=1&id=001

050809: eVoting for Filipino Expats

By Tony Lopez

The Manila Times

A certain A. M. Quedi, from an engineering and design division of a company in Saudi Arabia, sent a reaction to my column of April 21, 2009 on the behavior of the middle class.

I said in my column that the Filipino is now middle-class having at least a daily per capita income of $5.64. Middle-class according to the World Bank is having a per capita income of between $2 and $10.

The emergence of the Filipino middle-class came with the surge in number of OFWs�now 10-million-strong�and in the amount of their remittances, now averaging $16 billion per year. The $16 billion is more than the net value added we get from our annual exports. So in effect OFW remittances are the Philippines� biggest dollar earners.

The new Filipino middle class is bad news for our traditional politicians in 2010. These trad�pols are what President Obama has called those who use corruption and deceit and the silencing of dissent to keep themselves in power. �They are on the wrong side of history,� said Obama in his inaugural address.

History will be made, therefore, in 2010 when corrupt and incompetent tradpols will be voted out of office or denied public office. The campaign period for 2010 begins in December although a number of presidential candidates have already covered plenty of territory, ahead of their rivals. In this regard, former President Joseph Estrada and former Senate President Manny Villar have built a huge headstart.

A recent study of 13 countries by Pew Research, in tandem with The Economist, has found characteristics common to middle class people. They are more liberal-minded, embrace democratic values, don�t consider religion central to their lives, and put a premium on fair elections, a fair judicial system, free speech, free press and freedom of religion. They are also more satisfied with their lives than the poor people. They would rather have a good democracy than a strong economy.

Quedi doubts that OFWs can bring about a competent and honest government in the Philippines despite the large number of Filipino OFW families.

�How can the new middle-class [OFW] bring about these changes in government if we the OFWs are unable to vote in every election?� he asks in his e-mail to me. He says �I have been an OFW since 1985 and never had a chance to cast my vote simply because of my absence.�

Here unedited is the rest of Quedi�s e-mail:

�The OAV [overseas absentee voting] law is only palliative and not the real solution. Among the 10 million OFWs, how many would participate? Perhaps one million would be a good number.

It is impractical. To register, I have to go to the embassy [Riyadh] or the nearest Consular Offices [Jeddah and Dammam]. Since my place of work and residence is in Abha/Khamis Mushayt, approximately 1000km from Riyadh, 900km from Jeddah and 1200km from Dammam, I have to fly and be absent from work for at least one day to get there and finished the registration. On voting day, I have to do the same. This is assuming that my manager will allow me to excuse from work.

I have to spend for the airplane ticket, stay in a hotel overnight and all other expenses trying to locate the Embassy or the Consular office in a big city that I am not familiar. It is not surprising that registration for OAV was disappointing from the start. We all have the patriotism but not the circumstance to make it.

�How will the OFW be able to vote? My suggestion is to provide us the means to vote through the Internet. Technology enable us to manage our finances through e-Banking, why not voting through e-Vote?�

Incidentally, I showed Sen. Manny Villar my BizNewsAsia article on the new Filipino middle-class. I told him he is the champion of this middle-class because he is the one who built the most number of houses for the Filipino expats and the one who has espoused their causes with great earnestness.
biznewsasia@gmail.com

050709: Why is the Philippines poor?

 

Banking & Finance

Written by Free Enterprise / Zoilo ‘Bingo’ Dejaresco III

THURSDAY, 07 MAY 2009 20:30

THE proud claim of Philippine Airlines of being Asia’s first airline is not an empty boast. For, after all, it was just a few decades ago when the Philippines was the second-biggest economic might after colossus Japan. What has happened since then? Today, the Philippines is almost the basket case of Asia, with war-torn Vietnam eclipsing our growth rate, and we are now in the league of Bangladesh. It is a source of monumental sadness. Given our +2-percent population annual growth, it was the Arroyo government that frankly said that only after a seven-percent GDP growth rate for 7 consecutive years will the Filipinos feel economic relief. But the Philippine economy grew past 7 percent only once during GMA’s long term (2001-2008)—in an election year yet—in 2007,when it posted a 7.3-percent growth rate. Why indeed has the country remained poor? This is what we found out from sources. The age of the country does not determine whether a nation become rich or poor, it would seem. For instance, Egypt and India are more than 2,000 years old but are still considered poor, based on per-capita income. On the other hand, countries like Canada, Australia and New Zealand were unimpressive back 150 years ago. Today, they are rich and well-developed nations. The availability of rich, natural resources is not a determinant, either. Japan, for instance, has a limited territory—80 percent of it is considered mountainous and even unfit for agriculture. Yet, today, despite being destroyed in World War II, it is one of the four major economic powers in the world alongside the US, India and China. Japan, it is said, is considered a “floating factory importing raw materials from the whole world and exporting them as finished products,” with profits retained at the Land of the Rising Sun. Singapore is also a tiny island whose economy is rich enough to lend billions to the US. Another example is Switzerland, a nation that does not plant cocoa but produces the best chocolates in the world. It is a small country but transmits an image of security, peace and order, and is among the strongest havens for financial security in the so-called Swiss banks. New Zealand is a tiny island that produces world-class dairy products. Meantime, in comparing the communication and business skills between the executives of the rich countries and the poor ones, researches found that there are no marked differences. Race and skin is also not important—for how can a colored Kenyan-American named Barack Obama be elected president of the most powerful nation in the world? Looking at the behavior of people and government in the successful countries, we noticed a certain preponderance of attitudes and culture that could explain some of the puzzles we posed. Ethics and integrity are cherished benchmarks that everyone respects. Public officials suspected or convicted of graft resign or commit suicide in remorse. In the Philippines, corruption is a way of life, justified by words like S.O.P., et al. Projects have project tongpats ranging between 20 percent to 50 percent on average. In rich nations, people are largely responsible, governed by mottos such as “Duty first before pleasure.” They have respect for law (and order) because they know they will be implemented. In our country, the police and the Judiciary do not ensure a level playing field but are instead becoming instruments of making a mockery of justice by bribe-taking and coercion. In other nations, they are work-loving with strong work ethics, while many Filipinos rely on extended families and a rich habitat where one can fish in rivers and the sea to survive. No ambition is forged, except for daily survival. Perhaps the problem is really attitudinal—because in many countries, the most dedicated, skilled and hard-working people are our overseas Filipino workers, many of them would rather loaf around if they had stayed in the country. In other countries, their citizens strive to save for investments, but Filipinos have been brainwashed (by advertising) to be profligate-spending consumers, but will blow out six months of savings to have a grandiose fiesta to show off. The fiesta mentality, you know. There, they have willpower to do action while many Filipinos daydream and procrastinate as they contemplate their navels over tuba, the Philippine Basketball Association and Manny Pacman. Punctuality there is observed like it is one of the Ten Commandments, whereas this country has been infamous for our “Filipino time.” There is no sense of urgency, in anything, it seems. The bahala na and fatalistic attitude also pervade, like leaving one’s fortune and the entire future entirely in the hands of God, psychics, feng shui and superstition, without helping themselves. That is tragic. Would we alter the course of the nation by changing our attitude and behavior. Can we be the change we want to see? How about it, Juan de la Cruz?

http://www.businessmirror.com.ph/home/banking-a-finance/9959-why-is-the-philippines-poor.html 

050509: Central bank tightens rules on pawnshop ownership

http://www.manilatimes.net/national/2009/may/05/yehey/business/20090505bus5.html

THE policy-making body of the Bangko Sentral ng Pilipinas (BSP) has imposed a tighter set of rules on pawnshops similar to what the regulator requires of banks.

In a statement, the BSP said the Monetary Board last week approved the application of the "fit and proper" rule on pawnshops, thus requiring proprietors, partners, incorporators, directors and officers of these establishments to have no derogatory records.

The policy-making body of the BSP also raised the minimum level of capital or net worth in relation to a pawnshop's portfolio. The board said the current P100,000 statutory capital is too small and opens the industry to "fly-by-night" operators.

Under the law, pawners have 90 days after maturity to redeem their pawned articles. Pawnshops in turn must notify their clients within the 90-day period before they put the pawned items up for auction.
The new rules require pawners to indicate in the pawn ticket their preferred mode of receiving the notice, whether by mail or courier to a given address or by short messaging system to a specified mobile phone number.

Pawnshop owners, however, must comply with "Know Your Partner" procedures consistent with requirements of the Anti-Money Laundering Act and the Anti-Fencing Law.

To minimize malpractices, pawnshops must post on their premises the acknowledgement of registration or authority to operate issued by the central bank, their interest rates and charges, business days and operating hours, among others.

The new rules are effective 15 days after publication in the Official Gazette or a newspaper of national circulation.

As pawnshops increased in number over the years, the central bank drafted new rules to support Presidential Decree 114, or the Pawnshop Regulation Act of 1973.

As of February 2008 there were 6,220 BSP-registered pawnshops.

The new rules came on the heels of a memorandum of agreement the BSP signed with the Department of the Interior and Local Government on information-sharing to ensure only those that have business permits and BSP registrations can operate as pawnshops

011706: Editorial: Dollar remittances and social paralysis

Business Mirror

January 17, 2006
http://www.businessmirror.com.ph/2006/0117/17%20oped%20editorial.php

 

EDITORIAL Dollar remittances and social paralysis LAST Friday, the Bangko Sentral ng Pilipinas (BSP) happily announced that remittances from overseas Filipino workers (OFW) coursed through commercial banks from January to November last year reached US$9.7 billion, a 26-percent rise from last year's US$7.7-billion inflows. The BSP attributed this double-digit growth in dollar remittances to two factors: the rising demand for Filipino workers abroad, particularly of skilled ones including nurses, doctors, teachers, engineers; and the continuing efforts by banks to capture these remittances through the formal financial channels. "Remittances. coursed through commercial banks remained robust," the BSP said, stressing that the total amount of dollars sent home by Filipino workers abroad in 2005 would reach almost US$11 billion. Nice news, except that the BSP does not necessarily tell us the entire picture, particularly the social cost that the Philippine society is paying for those dollars. Majority of those who left the country's shores in search for a dollar pay are women, leaving in their wake families devoid of motherly care and guidance. In many cases, the husbands who are left to care for the entire family proved to be lousy parents, giving rise to drug use, high dropout rates in school and juvenile delinquency among the children. The experience of Mabini, a small remittance-dependent town 92 kilometers south of Manila , as reported by Carlos Conde, the local correspondent of the International Herald Tribune, highlights this tragically high social cost. The report noted that once their wives started sending dollars from abroad, most of the husbands stopped working, thus creating a culture of dependency within their households. The town is awash with cash from abroad but the money often ends up wasted on lavish parties, Manila shopping malls, binge drinking and conspicuous consumption. Unemployment in the community is high since people would rather wait for their chance to work abroad than do something productive locally. Many children are not able to finish college since a diploma is not necessary to land a domestic help's job in Italy . What is alarming is that Mabini could, from all indications, prove to be a microcosm of Philippine society. In the last five years, the country's economy-propped up by the remittance dollar-has shown to be capable to growing within the 5 percent to 6 percent range. Malls are rising at every corner to capture those remittance dollars, yet the larger picture seems to reflect a continuously weak economy incapable of soaking up joblessness. In fairness, dollar remittances have given a lot of purchasing power that is propping up a significant part of the country's manufacturing sector. Do you ever wonder why the average capacity utilization is at a four-year high of 81.4 percent? That's because people are buying a lot of goods and services, thus creating a lot of employment. Nevertheless, dollar remittances alone have proven to be inadequate to propel the economy beyond the low-level equilibrium that it is trapped in right now-while creating a lot of social problems. The signs of low-level equilibrium, nay social paralysis, are clear. On one hand, survey after survey from both the Pulse Asia and the Social Weather Stations show the continuing poverty and hopelessness of many Filipinos, particularly in the lower social strata. On the other, we often hear some people in the middle and the richer classes saying that "the Philippine economy has been growing quite decently in the last few years despite the country's political problems." And true enough, the property markets have been sizzling lately, an indication that the country's richer classes whose wealth are largely based on ownership and control of real-estate properties are starting to make a killing off those dollar remittances. These contrasting perspectives appear to be producing some sort of social paralysis, a kind of social complacency that takes away the urgency of pursuing painful but crucial economic and political reforms. The remittance dollars seem to have become manna from heaven that has taken away our ambition to rise from the heap and join the rest of the Asia-Pacific community in the race for development and real progress. The main point here is that overseas employment is not the real solution to this country's failure to achieve development. We acknowledge the importance of this sector-once upon a time it was truly necessary-but it can never be a substitute for internally generated growth. And this one could only be achieved if we have the courage to address corruption in government, remove all barriers to entrepreneurial activities, collect the taxes finance infrastructure development, and ensure transparency and predictability in the country's regulatory environment. And while doing this, we need to address with greater urgency the growing social problem engendered by the dollar remittance mentality in our midst. Economist and former planning secretary Cielito Habito's story a few years ago should serve as a warning to all us. Habito's wife runs a school in Los Baños and noticed that the most problematic kids are those whose parents are working abroad. Many of these kids, he said, are underachievers, lack motivation for school work, lack focus and can't seem to get along well with other students. To put a face to this observation, one need only recall that a few months ago, the Laguna police arrested the three young sons of OFW icon Flor Contemplacion for drug dealing, right from their home. Habito said the experience in the Los Baños school is alarming, considering that about 10 percent of Filipinos are working abroad. If that situation in Laguna reflects the national trend, then we have a social time bomb waiting to explode.

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052507: New rural development program signed for Mindanao

By Manuel T. Cayon

Reporter

DAVAO CITY—The World Bank and the country’s Department of Agriculture hoped to reduce poverty incidence by about 15 percent at the end of a two-phase rural development program that began in 1998. Agriculture Secretary Arthur Yap said the Mindanao Rural Development Program has targeted 15 percent of rural poor of this Southern Philippine island to improve their economic survival at the end of its program in 2012. A second phase of the MRDP was launched here Wednesday with a fresh fund of $123 million for a five-year spread. Many provinces in Mindanao, especially in the Autonomous Region in Muslim Mindanao (ARMM), the Zamboanga Peninsula, Central Mindanao and the Caraga Region belong to the country’s poorest provinces. Mindanao has a current population estimated to be at 22 million. Carolina V. Figueroa Geron, the WB senior operations officer and country sector coordinator for rural development, natural resources and environment sector, said the MRDP-2 would pick up from where the MRDP left, with targets being surpassed by the recipients in five provinces, which covered 53 municipalities. Although a World Bank officer, mission representative Rajul Raturi, earlier threatened to pull out the Bank’s funding back then in 2002 for a dismal implementation of the project, described as “far from ideal” in Compostela Valley, Geron said that evaluation of the first MRDP indicated that communities continued to pursue their projects “surpassing the targets of the communities [in poverty alleviation].” The first MRDP covered Compostela Valley, Agusan del Sur, North Cotabato, Maguindanao and Sultan Kudarat. Geron said that Maguindanao, among the poorest and with many of its communities suffering the brunt of the armed conflict, “was one of the top performers and has never been a laggard.” The second phase would cover 27 provinces and 225 municipalities. The original program was began in 1998 with a life span of 12 years supposed to end in 2010. The current MRDP-2 was started this year, however, and would end in the next five years, or in 2012. Geron said that the exemplary performance of the poor areas would be replicated in the expanded scope of the MRDP-2, “with adequate anti-corruption and transparent governance mechanism to ensure that the money actually goes to the communities and their beneficiaries.” The World Bank has lent $84 million, with the rest of the $23 million shouldered by the Philippine government. The government counterpart would be taken care of by the local governments “on a 50-50 percent sharing arrangement with the national government.” The innovation of the MRDP-2 is the participation of the local government officials, where in the first phase MRDP money was given directly to the partner private sector and business groups. The local governments were factored into the second phase due to the volume of infrastructure that was allotted into the program. Geron said that 70 percent of the $123 million five-year fund would be used to construct farm-to-market roads, but which would also include irrigation facilities and transport terminal ports. This year alone, P128 million would be spent to construct an aggregate length of 71 kilometers of farm roads. This length of road, though, is only four percent of the targeted 2,150 kilometers of dilapidated roads.

 

http://www.businessmirror.com.ph/0525&262007/economy05.html

052407: Shares close mixed on profit-taking, PLDT gains

May 24, 2007
Updated 13:07:36 (Mla time)

Xinhua Financial News Service

MANILA, Philippines – (UPDATE) Share prices closed mixed as profit-taking hit banking, property and mining stocks, but investors resumed buying select blue chips including Philippine Long Distance Telephone Co. (PLDT) and San Miguel Corp. after Wednesday’s pullback, dealers said.

The 30-company composite index ended 4.21 points or 0.12 percent higher at 3,470.77, after moving between 3,450.78 and 3,474.54.

The broader all-share index rose 6.30 points or 0.28 percent to 2,227.42.

However, the market's breadth was negative with 55 decliners and 49 advancers, while 67 stocks were unchanged.

A total of 4.38 billion shares worth P5.28 billion were traded.

Dealers noted support for the market was intact at the 3,450 level.

However, they said investors traded cautiously after US stocks fell overnight following former US Federal Reserve chairman Alan Greenspan's reported comments that China's stock market could eventually see a sharp decline after its recent record run.

"There was continued profit-taking as investors keep an eye on the US and China markets," DA Market Securities president Nestor Aguila said.

Top-traded PLDT rose P20 to 2,490.00, tracking the gains in its American Depositary Receipts overnight.

Metropolitan Bank and Trust Co. was down P1 at P67, and Ayala Land fell P0.25 to P15.50.

Food and beverage group San Miguel Corp.'s A-shares rose P2 to 69, while its B-shares advanced P3.50 to P78.50.

($1 = P46.10)

http://services.inquirer.net/express/07/05/24/html_output/xmlhtml/20070524-67763-xml.html

052407: RP stocks resume climb with modest gains

BUSINESS

05/24/2007 | 01:03 PM

 

Philippine share prices resumed their climb on Thursday, boosted by the confidence of investors on the Philippine economy, analysts said.

The 30-company Philippine Stock Exchange index gained 4.21 points or 0.1214 percent to end at 3,470.77.

The all share index jumped 6.30 points to 2,227.42.

The local bourse's gains defied the trend in the region as most of Asian markets were down, on mid-trading, on forecast that the Chinese stock market will do a correction.

Ron Rodrigo, Unicapital Securities reaseach chief, said good corporate earnings and solid economic fundamentals spared the Philippine stock market from falling.

"We are seeing a shift of alignment here. Some investors might have favored the Philippine market over the Chinese because of our strong economic fundamentals," he said in a telephone interview.

Volume traded reached 4.379 billion valued at P5.278 billion.

Losers, however, dominated gainers 55 to 49 while 67 stocks were flat.

Philippine Long Distance Telephone Co., the market's most heavily-weighed stock, gained P20 or 0.81 percent at P2,490.

Developer Ayala Land Inc. fell P0.25 or 1.59 percent to P15.50.

Another Ayala unit, Globe Telecom Inc. was steady at P1,350.

Metropolitan Bank & Trust Company, the Philippines biggest bank in terms of assets, lost P1 or at P67.

Gokongwei-led developer Robinsons Land Corp. was flat at P20. - Cheryl Arcibal, GMANews.TV

 

http://www.gmanews.tv/story/43680/RP-stocks-resume-climb-with-modest-gains

052507: Balanced '08 budget: who will sacrifice?

WHO will bear the burden of balancing the budget in 2008? This is the question posed by civil society organizations led by Social Watch Philippines with the release of National Memorandum Order 100, better known as the Budget Call by the Department of Budget and Management (DBM). Aside from providing policy guidelines and procedures to heads of government agencies in the preparation of their respective budget proposals for 2008, the Budget Call contains the overall macroeconomic and fiscal policy framework and thrust for 2008-2010 within the context of the Medium Term Development Plan (MTDP).            The Development Budget Coordination Committee (DBCC) projected revenues and disbursements at P1.236 trillion for 2008. Though the fiscal program for 2008 increases the proposed expenditure level nominally, the rate of growth percentage-wise drastically declines from 13.1 in 2007, to 4.6 next year. “What worries us is that the government has already been underspending in education, health, agriculture and environment. Take education, for example” its share of the budget has been shrinking through the years. If we further cut expenditures we may indeed have zero deficit by 2008. However, there will also be fewer teachers, more students dropping out and no new classrooms,“ explain Prof. Leonor Briones, coconvenor of Social Watch at the second workshop of the project, “Crafting the Alternative Budget: The Journey Continues.” The task of crafting an alternative budget was initiated by civil society groups last year and was borne out of the necessity to have a national budget that responds to the needs of the people and to achieve the Millenium Development Goals (MDGs). The MDGs, contained in the Millennium Declaration signed by nearly 200 UN members, including the Philippines in 2000, are specific targets in eliminating poverty worldwide by 2015. The goals include eliminating extreme poverty and hunger, achieving universal primary education, reducing infant and maternal mortality rates and ensuring environmental sustainability, among others. “We in civil society are keeping close watch of the budget process. Inspired by our gains last year in crafting an alternative budget, we will continue engaging agencies and legislators to see to it that the national budget is not merely aimed at economic growth, but more importantly, at the welfare and development of every Filipino,” Briones said.

 

http://www.businessmirror.com.ph/0525&262007/headlines04.html