Perspectivas en Filipinas
The Philippines is one of the current “darlings” of global investors seeking better returns in emerging market economies and offers even bigger potential returns in the future, according to a ranking official of foreign investment firm Religare Capital Markets Ltd.
The company, which specializes in equities investments in India and the Asean region, has decided to set up operations in the country within the year to better take advantage of the nascent Philippine economic boom.
“The Philippines is a market where people want to put money into,” Religare’s global head of equity capital markets John Sturmey said in an interview with the Inquirer. “The story here is certainly better than how it was a few years ago. Everyone is saying good things about the Philippines.”
The appetite of local corporations for more capital on both the equity and debt sides jibes with the massive amount of liquidity found offshore as central banks in the United States and Europe try to revive their economies with cheap funds, leaving investors awash with cash and few options for better returns in their home markets.
“Investors are looking for places where they can make money,” Sturmey said, pointing out that Philippinecompanies used to have initial public offerings worth only $60 million. “Now we see $300-400 million deals,” he said.
Religare’s equities head also said that ongoing challenges being faced by China and Hong Kong—the twin darlings of foreign investors over the past decade—also bode well for alternative investment sites like the Philippines.
“Hong Kong and China are offering less opportunities,” he said. “They’re ‘over-banked’ since there are a lot more financial institutions chasing after fewer and fewer deals.” This has made it less attractive for firms like Religare, which would have to contend with thinning profit margins.
MANILA, Philippines – Sixty-three new information-technology (IT) parks are now being developed nationwide designed to further strengthen the country’s business process outsourcing (BPO) industry, House Deputy Majority Leader and Pasig City Rep. Roman Romulo said yesterday.
Romulo, vice chairman of the House committee on information and communications technology, is a key backer of the labor-intensive, IT-enabled BPO industry. BPO firms are the predominant locators in tax-advantaged IT parks registered with the Philippine Economic Zone Authority.
“In terms of human resources, we have several cities outside Metro Manila that produce thousands of college-educated, fluent English-speaking professionals every year,” he said.
The booming IT-enabled services industry encompasses contact center services; back offices; medical, legal and other data transcription; animation; software development; engineering design; and digital content, Romulo said.
The industry is projected to produce $27 billion in revenues and directly engage some 1.3 million Filipino workers by 2016.
This year, the Business Processing Association of the Philippines sees the industry generating $13 billion in revenues on a labor force of 764,000.
MANILA, Philippines – Bank deposits rose by almost eight percent in the first semester as more and more people entrust their money to banks, according to a report from the Bangko Sentral ng Pilipinas (BSP) released over the weekend.
As of June, total bank deposits rose 7.9 percent to P4.1 trillion from P3.8 trillion a year ago, the BSP’s said.
“The continued growth in deposits reflected depositors’ sustained confidence in the banking system,” the report stated.
The bulk of deposits was recorded as savings, which increased 8.5 percent to P2.038 trillion during the same period.
The country’s outstanding external debt as of end-June amounted to $62.5 billion, up 1.7 percent year-on-year but compared to the previous quarter, it dipped 0.6 percent, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said Friday in a statement.
The total foreign debt is equivalent to 26.6 percent of gross domestic product, an improvement from end-March’s 27.4 percent and 28.8 percent in June 2011.
Tetangco noted that at this level, and with the Philippines dollar reserves now passed the $80-billion mark, the government and private sector can sustain debt payments.
The external debt ratio or outstanding external debt as a percentage of aggregate output or gross national income still reflects the country’s capacity to repay foreign obligations over a long-term horizon. BSP said that the ratio has improved to 20.1 percent from 20.7 percent last March.
The central bank also reported that the external debt service ratio or DSR, also improved to 7.9 percent from eight percent during the last quarter due to higher exports which continued to grow despite concerns of destination economies.
The currency composition of external debt remained predominantly US dollar-denominated or 49.3 percent of total, while Japanese yen loans accounted for 25.5 percent. About 11.7 percent of total external debt are in multi-currency loans from the Asian Development Bank and the World Bank. The rest of the accounts or 13.5 percent were denominated in 18 other currencies.
After decades of reliance on remittances and the business process outsourcing sector, the Philippines may be on the brink of a manufacturing “renaissance” that can add a leg to its structural growth story, according to German financial giant Deutsche Bank.
In a report titled “Manufacturing: A New Growth Driver” issued last week, the bank said it remained “structurally bullish” on the Philippine economy specially as the investment cycle “seems to have turned sustainably upward.” While most bets are on the government’s public-private partnership (PPP) infrastructure to be the linchpin of an investment-led growth, the research paper raised the possibility that manufacturing—which remained “under the radar” despite an evidence of a surge since 2010—could be a key driver as well.
As a share of gross domestic product, industry peaked at 43 percent in the early 1980s falling to 31 percent in the first semester of 2012—a low level not seen since the 1950s, the report noted. On the other hand, services fueled by remittances and BPOs contributed nearly 60 percent, in turn driving consumption higher.
“But evidence points to a nascent surge in the manufacturing sector—a renaissance of sorts. More startling, the growth seems to be coming from the export sector. In fact, an objective reading of the data suggests the rebound has been happening for at least two years now,” said the September 24 research authored by analysts Rafael Garchitorena, Carissa Manhubat and Iza Fernandez.
Deutsche Bank pointed out that loan growth, electricity and water usage and even exports have consistently shown strong industrial growths since 2010. It also favorably noted that investment commitments in export zones hit new all-time highs in 2011, suggesting further demand growth as the plants are completed.
“And the breadth of industries is impressive. Makers of everything from tires, chemicals, capacitors, printers, toys, lenses, boats, ignition wire harnesses and airline galleys are expanding capacity,” the research said.
It was often argued in the past that high labor and power costs and poor infrastructure were making the country uncompetitive in manufacturing, thus skewing the economy toward services.
According to Deutsche Bank, labor costs have been “remarkably stable” in the Philippines, with minimum wage growth of just 5 percent annually in the last decade compared to the sharp increases in Thailand and China wages, making the English-speaking Filipino worker “much more competitive by default.” It said the recent 40-percent increase in Thai wages, for example, had brought the premium of Metro Manila wages (at about $10.68 a day) over Bangkok (at about $9.72 a day) to just 10 percent. Bangkok and Shanghai minimum wages are now about the same as, or more expensive than, in areas just outside Manila.
On power costs, the research said while these remained the highest in the region, some firms operated during off-peak hours when rates were lower. It also pointed out that companies operating in Philippine Economic Zone Authority-accredited zones were exempt from a variety of taxes, which could lower their electricity costs by another 10 percent and further narrow the price differential. Finally, it argued that with the upcoming implementation of “open access”—wherein large electricity users could negotiate supply contracts directly with power generators and aggregators—electricity rates could go down further.
On infrastructure, the research said that while it was true that the Philippines was suffering from poor internal infrastructure, it is an archipelago and, as such, had many sea ports across the country. It also noted the incentives offered by Peza for manufacturing, including duty-free importation of capital equipment and raw materials, three- to eight-year corporate income tax holidays and value-added tax exemption for local purchases.
Meanwhile, the research noted that the key downside risk to the manufacturing sector’s competitiveness was the strong peso.
Overall, the study said a prospective manufacturing “renaissance” could add another leg to the Philippine stock market’s bull story and benefit banks, power, property and consumption the most.
Desde Western Asset Management, boutique perteneciente al grupo Legg Mason Global AM, indican que países como Filipinas podrían alcanzar el grado de inversión en los próximos dos años, de igual forma que Indonesia lo consiguiera a principios de 2012 por parte de Moody’s y Fitch.
Y que nos indica su indice? 22% de revalorizacion anual, casi nada!ImageUploadedByTapatalk1350235704.266431.jpg
Remittances by overseas Filipinos last August posted their highest year-on-year growth in eight months since December 2011, First Metro Securities Brokerage Corp. noted in its daily Trading Signals on Tuesday.
“This favorable development brought the cumulative personal remittances during the first eight months of the year to $15.3 billion, higher by 5.6 percent compared to the level registered in the same period last year,” Bangko Sentral ng Pilipinas officer-in-charge Juan D. De Zuñiga Jr. announced on Monday.
Remittances for the month of August surged by 7.6% year-on-year, beating estimates of a 5.0% gain and the previous month’s 5.4% increase, according to First Metro Securities, saying, “This is also the highest [year-on-year) growth since December 2011’s 6.2 percent.”
“What this means for the economy are two things:
“One, that conditions for personal consumption will continue to improve and that our remittances remain resilient in the face of recent reports by the World Bank of a slowdown in the global economy,” Jonathan Ravelas, BDO Unibank market strategist, told GMA News Online.
Ravelas noted the significance of remittances for the economy. “Their indirect results are consumer spending, and consumer spending is a primary driver of our economy which is consumer driven.
“This means we can see real GDP growth of 5 to 6 percent… that the economy can continue to grow 5 to 6 percent… and that the outlook remains buoyant,” he added.
In a statement, Bangko Sentral said in the face of sustained demand for skilled Filipino workers, remittances are projected to continue to boost economic activity and provide a steady supply of foreign exchange.
Algunos se pueden permitir pagar menos intereses!
Data from the Bangko Sentral ng Pilipinas (BSP) showed that as of end-June, debt service burden dropped to $3.279 billion from $3.798 billion the same period last year, partly from prepayments and adjustments to foreign exchange rates.
The principal debt service in the first six months totaled $1.932 billion, 24 percent lower compared to $2.543 billion in 2011. As for interest payments, this increased by 7.33 percent to $1.347 billion from $1.255 billion in end-June last year.
In 2011, debt service for Philippine foreign debt amounted to $7.47 billion, lower than the projected $8.5 billion. The projection is usually higher because the BSP has to consider worst-case scenarios especially for the yen-denominated loans. Last year’s debt service burden is however 2.16 percent higher than 2010’s $7.32 billion.
The country’s total outstanding external debt as of end-June stood at $62.5 billion, a slight 1.7 percent increase over last year. This amount vis-à-vis the GDP is equivalent to 26.6 percent which was an improvement from end-March’s 27.4 percent and 28.8 percent in June 2011.
The currency composition of external debt remained predominantly US dollar-denominated or 49.3 percent of total, while Japanese yen loans accounted for 25.5 percent. About 11.7 percent of total external debt is in multi-currency loans from the Asian Development Bank and the World Bank. The rest of the accounts or 13.5 percent were denominated in 18 other currencies.
Boom sustentado por fundamentales?
Business channel CNBC ranked the Philippines in the top spot in its roster of countries for long-term economic growth prospects due to rapid population growth, beating India and China.
Citing consistent economic performance, population growth and high birth rates, Goldman Sachs included the Philippines in its N-11 list of countries expected to emerge as economic powers in the near future. The list includes Mexico, Indonesia, South Korea, Turkey, Iran, Bangladesh, Egypt, Nigeria, Pakistan and Vietnam.
In 2011, amid the US economic slowdown, Eurozone crisis and massive investment outflow, the N-11 had beaten 93 percent of US-based emerging market equity funds while BRICS, another group of developing economies comprised of Brazil, Russia, India, China and South Africa, lagged by almost 89 percent. For the first half of the year, N-11s equity funds rose by almost 12 percent compared with the 3.2 percent increase of BRICS.
Upscale office space in demand
As office rents in Manila continue to be very competitive in contrast to its Asian counterparts, the Philippines continues to attract global businesses that set up operations in the country to take advantage of cost efficiencies and labor competitiveness.
The offshoring and outsourcing sector, in particular, continues to demand grade A office space. The consistent year-on-year increase in office space take-up comes in spite of country risk issues in the past decade.
According to Leechiu, Makati remains as the prime business capital in the country, with almost half or 46.2 percent of companies taking up office space in the area.
The entry and expansion of international retailers, mostly mid to high-end luxury brands, is also contributing to the spike in customer traffic in the countrys central business district.