Business News:
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Government sticks to 7-8% growth target until 2016
By Zinnia B. Dela Peña (The Philippine Star)
Updated July 1, 2015 - 12:00am
MANILA, Philippines - The government has retained its economic growth assumptions of seven to eight percent for this year and next year, but noted that hitting the top-end of its target would be a challenge given some issues on the domestic front.
In a briefing following a meeting of the country’s economic managers yesterday, Budget Secretary Florencio Abad said the inter-agency Development Budget Coordination Committee (DBCC) agreed to keep the country’s economic growth forecasts unchanged despite the uncertainties on both global and domestic fronts.
“The upper target would be a challenge but it still remains to be within range observing many of the problems are mostly domestic in nature and therefore within the control of the government,” Abad said.
The country’s gross domestic product growth (GDP) slowed to 5.2 percent in the first quarter – the lowest in more than three years – mainly due to weak government spending.
“We’re working very had to address the problems that have been identified in order to accelerate state spending,” Abad said.
The government’s economic team, meanwhile, downscaled its growth forecast for net exports of services to 13.6 percent from 15 percent, taking into account what’s going on in the global market place which includes the outbreak of the deadly Middle East Respiratory Syndrome (MERS).
Last year, the economy grew by only 6.1 percent – below the government’s target of 6.5 to 7.5 percent and lower than the all-time high 7.2 percent growth in 2013 – due largely to public underspending.
Economists said the country needs to grow by at least seven percent annually over the medium term to reduce poverty.
Abad said the government has also kept the borrowing mix for 2016 at 85-15 in favor of domestic loans.
He said the proposed P3.005 trillion budget for 2016, equivalent to 19.5 percent of GDP, would be presented to President Aquino next week.
Of the proposed national budget for next year, P768 billion has been earmarked for infrastructure spending.
The DBCC, which sets the government’s macroeconomic targets and policies, expects favorable factors such as a sustained rise in remittances and continued spending for reconstruction to continue boosting growth in GDP or the value of all goods and services produced within the country.
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Government sticks to 7-8% growth target until 2016 | Business, News, The Philippine Star | philstar.com
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Index continues decline amid Greece concerns
By Richmond S. Mercurio (The Philippine Star)
Updated July 1, 2015 - 12:00am
MANILA, Philippines - The benchmark stock index trimmed its losses yesterday but still closed in the negative territory as issues surrounding Greece’s debt crisis lingered.
The Philippine Stock Exchange index (PSEi) dipped 0.03 percent or 2.88 points to finish on the losing end for the second consecutive session at 7,564.50.
The broader All Shares index likewise joined the descent as it fell 0.27 percent or 11.82 points at 4,319.59.
Analysts said players yesterday stayed at bay for sequels on Greece following Monday’s decision to impose capital controls as the country continued with its debt struggles.
“More negative news from Greece will have minimal effect henceforth. In fact, the sensitivity bias shifts to positive – a bigger reaction may be expected is a miracle agreement happens,” said Accord Capital Equities analyst Justino Calaycay Jr.
Most Asian markets suffered a different fate as that of the Philippines yesterday, with the uptrend led by Japan’s Nikkei which rose 0.6 percent.
Local counters were mixed, although those in the red dominated. Only financials and holdings firms posed gains while services companied took the largest drop at 0.88 percent.
Decliners whipped advancers, 118 to 61, while 45 stocks were unchanged.
Turnover value, however, surged to P10.68 billion from a thin P5.9-billion value the previous day.
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Index continues decline amid Greece concerns | Business, News, The Philippine Star | philstar.com
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PCCI bullish on 6.8-7% GDP growth
By Louella D. Desiderio (The Philippine Star)
Updated July 1, 2015 - 12:00am
MANILA, Philippines - The Philippine economy can grow by 6.8 to seven percent this year due to election and infrastructure spending, the country’s largest business organization said.
“I think a 6.8 to seven percent GDP (gross domestic product) growth is possible this year,” Philippine Chamber of Commerce and Industry (PCCI) president Alfredo Yao told reporters.
Among the major drivers of growth expected this year are poll-related expenditures as well as the implementation of infrastructure projects.
While strong economic growth is expected, Yao said the government needs to work on the passage of certain legislative measures which are seen positive for the economy and businesses, before the end of President Aquino’s term.
He said the President should approve the competition law which will create an independent Philippine Competition Commission to prevent businesses from engaging in unfair and anti-competitive acts.
The group is likewise pushing for the passage of the Customs Modernization and Tariff Act to make improvements in the Bureau of Customs.
The Bangsamoro Basic Law also needs to be approved in order to bring peace in Mindanao and enable the region to attract more investments.
As the port congestion negatively affected businesses last year in terms of delays of exports and imports, Yao said the government will have to work on encouraging more improvements to be made in other ports to decongest Manila’s.
“We are relying 100 percent on the Port of Manila. Why not use Batangas and Subic? There should be political will,” he said.
The group is also of the view the government should revisit proposals to make Clark Airport as the country’s main international gateway with Manila already congested.
Yao said he expects to hear about Aquino’s plans on the recommendations made in the upcoming State of the Nation Address.
The government has set a seven to eight percent growth target for this year.
For the first quarter, the Philippine economy grew 5.2 percent.
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PCCI bullish on 6.8-7% GDP growth | Business, News, The Philippine Star | philstar.com
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Public spending for infra, capital outlay up 40% in April
By Zinnia dela Peña (The Philippine Star)
Updated July 1, 2015 - 12:00am
MANILA, Philippines - Public spending for infrastructure and capital outlay surged by more than 40 percent to P23.3 billion in April as the government tried to catch up on disbursements which had been anemic in the past months, the Department of Finance (DOF) reported yesterday.
Budget Secretary Florencio B. Abad earlier said the government would speed up infrastructure spending in the second half to further prop up economic growth, which slowed down to 5.2 percent in the first quarter.
For the first four months of the year, total infrastructure disbursements amounted to P91.9 percent, 1.9 percent lower than last year’s level.
Based on the World Bank’s 2014 Logistics Performance Index, Philippine infrastructure is the worst among the six Southeast Asian nations including Singapore, Vietnam, Indonesia, Malaysia and Thailand.
Overall government expenditures registered a nine percent increase in April to P156.5 billion, bringing cumulative expenditures to P660.6 billion from January to April or 5.5 percent more than the amount spent in the same period a year earlier.
“Although spending for April grew year-on-year, much more needs to be done so that disbursements can move faster. Departments and agencies – particularly those with urgent, big-ticket items – should optimize their allocations so that we can look forward to more efficient spending and the faster delivery of services,” Abad said.
Abad said disbursements from Notices of Cash Allocation (NCAs) grew 17.3 percent in April. Strong performance by the Office of the President and the Department of Education (DepEd), Department of Public Works (DPWH), Department of Social Welfare and Development (DSWD), and Interior and Local Government (DILG), as well as the Autonomous Region of Muslim Mindanao (ARMM) drove performance up and offset contractions in tax expenditure subsidies and net lending.
“As we continue to reduce our debt burden, the government can provide greater budgetary support to key social and economic services. That means more funds for education, health care, and infrastructure development, among others,” Abad said.
Since the start of the year, DBM has implemented measures to clear the bottlenecks and structural weaknesses that contributed to the government’s underspending in 2014.
The majority of agency allotments were released at the start of the year, with 84 percent of the total obligation program released by end-April.
Abad said that while the government has already implemented measures to improve public spending, several institutional weaknesses still need to be addressed to ramp up state spending and support further economic growth.
Among these measures include improving planning capacities in the national and local governments. In this regard, the government has formed a sub-committee of the Development Budget Coordinating Coordination Committee (DBCC) that will be tasked to look into and evaluate project proposals costing less than P1 billion. This sub-committee will be headed by the National Economic Development Authority (NEDA).
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Public spending for infra, capital outlay up 40% in April | Business, News, The Philippine Star | philstar.com
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SCS/West PH Sea News:
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Time for the Philippines to Adjust its South China Sea Approach
By Richard Javad Heydarian
June 30, 2015
Manila should pursue dialogue with Beijing while it still can.
Growing territorial tensions in the South China Sea
are taking a toll on the sizeable Filipino-Chinese community in the Philippines. Recently, one of the most celebrated Filipino writers went so far as to implicitly question the loyalty of the Filipino-Chinese community in an event of war with China,
prompting vigorous rebuttals from leading Filipino-Chinese intellectuals.
Slowly, it is becoming clear that the Philippines’ territorial standoff with China
not only carries the risk of possible conflict in disputed waters and a precipitous decline in Chinese investments. The increasingly toxic diplomatic exchanges between Beijing and Manila has been mirrored by equally – if not more – adversarial language in the public sphere, with some netizens stoking inter-ethnic tensions and undermining the Philippines’ proud legacy of multiculturalism.
Any objective analysis would pin the blame on China for stoking territorial tensions in the region, which in turn means that Beijing’s behavior is key to the resolution of the disputes. Nevertheless, the Philippines can still learn some lessons from its neighbors on how to better manage the ongoing disputes and best deal with the Chinese juggernaut. Diplomacy isn’t only about mobilizing allies and friends against your foes. It is also about keeping your enemies close and peacefully managing differences with even the bitterest foes.
For a long time, the Philippines has maintained considerable harmony between the majority (Christian) Filipino population and the minority (but highly influential) Chinese diaspora in the country, many of whom have converted to Christianity, learned the local language, and integrated themselves fully into the mainstream as full-fledged citizens. While it is common knowledge that the Filipino-Chinese businessmen rank among the richest in the country – overseeing major conglomerates that have powered the Philippine economy in recent years – few have emphasized how many of the Philippines’ most influential political figures have also been from the Filipino-Chinese Mestizo stock.
Jose Rizal, the Philippines’ founding father, has a monument in his ancestral home in Qiongque Village in Jinjiang City. The Philippines’ incumbent president,
Benigno Aquino III – and his late mother, the ex-president (Corazon) – has proudly publicized his Chinese lineage. A testament to post-colonial Philippines’ strong cosmopolitan pedigree is that it has hardly experienced anything that resembles the anti-Chinese protests, which engulfed neighboring countries like Malaysia, Indonesia, and Vietnam in recent decades.
But saber-rattling between the Philippines and China in the South China Sea has rendered long-dormant inter-ethnic tensions more visible in the public discourse. Meanwhile, in autocratic regimes such as China, anti-Filipino sentiments have
gained steam. If things continue at their current pace, biases and adversarial discourses could crystalize into a powerful, popular lobby against any diplomatic compromise in the future, undermining prospects for the peaceful resolution of the South China Sea disputes on a bilateral basis.
In the Philippines, a growing number of people have come to view China as another Soviet Union bent on territorial aggrandizement and committed to spread its tyrannical (communist) ideology. Nowadays, it is common to hear people describing China as a “bully” that should not be negotiated with. In China, a growing number of people have come to see the Philippines as a “
troublemaker”, which often acts at the behest of its former colonial master, the United States. In short, inter-state diplomatic brinkmanship is spilling into the mainstream public discourse, reinforcing longstanding prejudices and feeding zero-sum strategic calculations.
Learning from Others
The Aquino administration, especially Foreign Secretary Albert Del Rosario, has consistently suggested that diplomacy with China is
practically fruitless. The
default policy is to garner maximum international support and rely on an
inherently uncertain legal maneuver against China. But the Philippines is not the only country that has been on the receiving end of China’s territorial assertiveness: Tokyo and Hanoi have been locked in a similar territorial standoff with Beijing.
China has been Japan’s archrival for decades, if not centuries, while Vietnam’s very national identity has been forged through its millennium-old struggle against its powerful northern neighbor. Yet, both countries have been more proactive and creative in engaging China without compromising their territorial interests.
Despite the ugly standoff in the East China Sea, Japan’s nationalist leader, Shinzo Abe, took a huge gamble when he pursued a
formal dialogue with Xi Jinping on the sidelines of APEC in Beijing in 2014. Soon after their awkward handshake, Japan and China resumed
high-level talks among their defense and foreign ministries, paving the way for various confidence-building measures to manage their territorial disputes and avoid accidental clashes in contested areas.
As for Vietnam, at the height of its dispute with China last year, it doubled down on engagement with China. After
hosting China’s leading foreign policy advisor, Yang Jiechi, Vietnam
dispatched a top official, Le Hong Anh, to Beijing to deescalate tensions. This was followed by the setting up of the
third hotline between the two neighbors’ relevant agencies. Earlier this year, Vietnam’s party chief, Nguyen Phu Troung, made a
high-profile visit to Beijing in order to explore additional mechanisms to prevent another ‘oil rig’ crisis and maintain robust economic ties between the two neighbors.
For both Hanoi and Tokyo, it was important to make sure their territorial standoff with China did not lead to conflict and undermine critical economic linkages with Beijing. At the same time, this has not prevented them from
fortifying their position on the ground,
ramping up their presence close to disputed waters, and
enhancing their defensive capabilities.
In contrast, Aquino and Xi are
yet to hold a single formal summit; the two countries are yet to sign a single hotline; and Chinese investments in the Philippines have been
effectively frozen. Obviously, as the more powerful party, Beijing should take the initiative and make necessary compromises to show its good will. But Manila can also pick up a few tactical lessons from Hanoi and Tokyo, who have heeded the advice of the great Italian thinker Niccolo Machiavelli who once said: “Keep your friends close, but your enemies closer.”
Richard Javad Heydarian is an assistant professor in political science at De La Salle University, Manila, and the author of “Asia’s New Battlefield: US, China, and the Struggle for the Western Pacific.”
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Time for the Philippines to Adjust its South China Sea Approach | The Diplomat
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