On The Edge Of A Credit Boom, Philippines Must Be Cautious Of Dangers According To Fitch Rating

Economists define credit boom, in contrast to healthy level of credit growth, as characterized by lending spree that could lead to asset price bubbles and overheating of an economy.

Fitch Ratings said the Philippines might be at an early stage of a credit boom which cites the enormous liquidity enjoyed by the banking sector that has given it ability to maintain over the medium term the strong pace of lending growth seen recently.

Fitch said the substantial resources of banks in the country would be favorable given the significant financing requirement of the public sector to support costly infrastructure projects according to the latest news in the Philippines. However, the international credit ombudsman also warned of conflicting consequences if lending and investment activities would not come along with strict monitoring by the country’s monetary officials. “[The pace of credit growth] suggests the Philippines could be in the midst of a nascent credit boom,” Fitch said in the report. “In the near term, this [robust pace of credit growth registered since 2011] could prove highly favorable… Over the longer term, however, it is likely to test the BSP’s macroeconomic management abilities after so many years of sustained onshore de-leveraging,” Fitch said.

Fitch expounded that following the 1997 Asian financial crisis to 2010, credit growth in the Philippines may be described as weak to moderate. There is risk the BSP may not be fully on guard in threat of a credit boom over the medium term, according to Fitch.

Credit extended by private firms in the country fell from 67 percent of gross domestic product in 1997 to only 28.9 percent in 2007, Fitch noted. But the figure sharply bounced to 70 percent by the end of 2011, it added.

Fitch suggested that the Bangko Sentral ng Pilipinas be prepared to implement measures that could prevent a potentially full-blown credit boom in the future. For example, the BSP could increase the reserve requirement—the proportion of deposits that banks must keep as reserves and, therefore, must not lend out—to levels that would keep lending growth at a prudent pace. The reserve requirement currently stands at 18 percent.

Since the start of 2011, credit growth has sustained a double-digit pace of growth on the back of rising resources of banks. These resources are being driven largely by increasing deposits from the public and partly by bank profits.

Fitch noted that banks in the Philippines could sustain the double-digit pace of lending growth in the next couple of years given available liquidity. It cited the P1.6 trillion in cash currently parked by banks at the special deposit account facility of the BSP. Fitch said this money could be tapped anytime for lending activities.

“The potential economic and social positives that may stem from an investment-led boom in the Philippines are substantial. That said, Fitch is wary of the potential consequences a credit boom could engender in light of ample onshore liquidity,” Fitch Ratings said.

‘Butchoy’ Moves Closer To Phl

Tropical storm “Guchol” moved closer to the Philippines yesterday but state weather forecasters said it is not expected to directly hit any part of the country.

Guchol, which will be given the local name “Butchoy” once it enters Philippine territory, was unlikely to make landfall, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said yesterday.

However, PAGASA said Butchoy may enhance the southwest monsoon and bring rains over Luzon and Western Visayas until early next week.

PAGASA administrator Nathaniel Servando in a text message to The STAR said the storm was expected to enter the Philippine area of responsibility today or tomorrow.

As of 5 p.m. yesterday, the storm was spotted at 1,390 kilometers east of northern Mindanao, packing winds of 65 kilometers per hour near the center and gustiness of up to 80 kph. It was forecast to move west-northwest at 15 kph.

Meanwhile, PAGASA said the southwest monsoon and a shallow low pressure area off Mindanao will continue to bring rains over some parts of Luzon and Mindanao in the next few days.

The shallow low pressure area was located at 210 km east of Northern Mindanao as of 8 a.m. yesterday.

The weather bureau also reiterated its warning to fishing vessels and small sea craft in Luzon and Visayas not to venture out to sea due to strong winds.

It said strong to gale force wind is expected to affect the seaboards of Luzon and the western seaboard of Visayas.

Phl Seeks Win-Win Situation In Shoal Row With China

President Benigno Aquino III said that the country will pursue a win-win situation with China within the claims with both countries regarding Panatag (Scarborough) Shoal.

Aquino told the business forum of the Joint Alumni Clubs of US Universities last Wednesday that, “We have not stopped having communication with them in trying to look for a win-win situation.”

However, while the country intends to look for a win-win scenario for both parties, Aquino mentioned that he would still keep track of upholding and enforcing the laws.

“If it’s clear that we have a 200-mile exclusive economic zone designated by the United Nations Convention on the Law of the Sea (UNCLOS), and both of us are parties to it, is it too much to ask that our rights are respected by our neighbors, in the same token that we respect their rights?” he asked.

With determination, Aquino also claimed that he is not going to give up any areas that belong to the country.

“I am not empowered to give up any of our territory,” he said.

Aquino added that the authority intends to handle the matter diplomatically.

“We do not want to present a threat to them in any shape, manner, or form in terms of military action,” he added.

On the other hand, Albert del Rosario the Secretary of Foreign Affairs, revealed that the Philippines has more investments in China than China has in the Philippines.

He stated that the Philippine investments in China amounts to nearly $3 billion as against to China’s investments in the Philippines which is approximately less than a billion and a half ($1.5).

Last Wednesday, Del Rosario told the Makati Business Club and the Management Association of the Philippines that, “We benefit from our relations with China just as China benefits from its relationships with us.”

Del Rosario also mentioned that China, in which is considered the Philippines’ 3rd largest trading partner, signed a memorandum of agreement during President Aquino’s state visit last year that both countries would work towards accomplishing $60 billion in 2-way trade within a 5-year period and 2 million inward visitors within 5 years.

“It was also agreed upon that the bilateral agenda would be moved forward in the most positive way, while the areas of contention such as the West Philippine Sea would be abstracted and dealt with separately,” he added.

Having the fact that Chinese investments in the country is only half of Philippine investments in China, Del Rosario then said that Filipino businessmen will not be discouraged from investing in their country despite the recent activities and happenings taken by the Chinese travel agencies suspending tour packages to the Philippines as tensions over the borderline of the islands in the West Philippine Sea (South China Sea) increased.

Also, China possessed Philippine fruit exports suspected of carrying pests amid a tense argument between the two countries over Panatag Shoal.

“I don’t think that we should be discouraging our businessmen from investing in China. It’s a good thing if they see how we do it here but what we’re trying to do is at least equalize the amount of investments that go out and we’re hoping that more Chinese investors will take an interest in the Philippines,” Del Rosario said.

“We’d like to believe it’s not,” Del Rosario replied when he was asked if the suspension of tour packages to the Philippines, the reduction in flights, and the possession of Philippine bananas are forms of pressure by China among the maritime argument between Philippines.

“We’d like to believe it’s a technical issue,” he added.

Economic pressure

If China continues to exert economic pressure to the Philippines such as blocking bananas and canceling tour packages, then, the lawmakers said and warned that the economy of the Philippines would be in danger.

Ang Kasangga party-list Rep. Teodorico Haresco and Iloilo Rep. Jerry Treñas said the suspension of tour packages and the controls on fruit importations is “China’s subtle warning versus Philippine on its vast economic arsenal.”

Also, they urged that the Department of Foreign Affairs (DFA) should step up efforts in paving the way for the creation of a joint Philippine-China study commission, which would focus on finding mutually acceptable solutions to end the dispute in the Spratlys.

“The decision of Chinese travel agencies to suspend travel to the Philippines could be China’s subtle warning that it does not even need its military to bring widespread economic destruction in the country,” Haresco said.

He warned the suspension of tour packages to the country by Chinese travel agencies “could be the beginning of a larger and more sustained campaign to remind the Philippines and even the US that its economic arsenal is as devastating as its three-million strong People’s Liberation Army.”

Also, he added that the effect of the travel suspension would already deny the economy millions of dollars in potential tourism revenues and warned that Beijing might even go further by obliging a ban on Filipino overseas workers, including those working in Hong Kong and Macau.

Haresco said that the only way to fix the problem in the Spratlys is through direct mutual dialogue with China without discounting the possibility of entering into a joint exploration arrangement in the areas claimed by the Philippines.

While the United States will always remain a valuable supporter to the Philippines, bragging Washington into the Spratlys argument “will do more harm than good” as this is being viewed as an indirect needling by Beijing.

Tactical support

On the other hand, Malacañang, restated that the presence of a US submarine in Subic had nothing to do with the Philippines’ disagreement with China over the disputed Panatag shoal.

Edwin Lacierda, Presidential spokesman, illiterates that the US government made a request last April 3, 2012, days before the April 10 standoff saying that they be allowed to dock their submarine in the area.

“And so it (US request) was addressed to the Department of National Defense and the DND gave its approval on April 24. So, I don’t need to answer or respond to the statements made by the Left,” Lacierda explicated.

Earlier, security officials revealed the visit of submarine USS North Carolina (SSN-777) in Subic was a routine port call scheduled last April 3, before the standoff between Philippine and Chinese vessels in Panatag shoal started. The US attack submarine rose last Sunday in Subic Bay.

The Communist Party of the Philippines (CPP) said the visit of a US submarine in Subic violated the country’s sovereignty.

In a statement, the CPP said the US is using the entire Philippines as a vast military base where it could dock its ships, land its fighter jets, fly its drones, conduct repairs and replenish supplies.

Filipino protesters led by former military rebel Nicanor Faeldon said they are planning to sail to Panatag as a show of support.

“They want to protest against the aggression being committed by China against our country, Faeldon’s spokesman kit guerrero said.

He said at least two fishing vessels carrying faeldon’s group were expected to arrive at the shoal later on Friday.

“They are intending to stay there at least three days and fish, if they are not prevented from doing so, Guerrero said, adding that planting a Philippine flag on the rock was also an option.

Fishermen from Batanes, Faeldon’s home province, along with fishermen from Masinloc, Zambales would be joining Faeldon to fish in Panatag that China has included in its declared fishing holiday.

The Philippines has reminded China that the West Philippine Sea is not the sum total of their bilateral relations.

The Philippines remains a safe and a welcoming country even as tensions over the disputed islands escalated.

Stay on the line

China has demanded manila not take measures in the political and legal aspects, saying it will worsen and complicate the situation.

Chinese foreign ministry spokesperson Hong Lei said last Monday in a press conference in Beijing that the Philippines should adhere to “diplomatic negotiations” to resolve the standoff.

“In particular, diplomatic negotiations should be adhered to in resolving the current situation, rather than continuing to incite public opinion and send contradictory messages,” Hong said.

Philippines Ignores China Demand To Quit Shoal

Declaring “that’s our territory” and giving a warning to Chinese vessels to back off, the Philippine officials last Wednesday disregarded China’s demand to remove Filipino vessels from Panatag Shoal.

BRP Edsa, a Philippine Coast Guard search and rescue vessel, along with an archaeological survey mission aboard the MY Sarangani and a fishing boat was remained in the area, facing off two Chinese maritime surveillance vessels and a fishing boat.

Last Monday an order was demanded by China that all Filipino vessels should be out or clear the area, which then calls Huangyan Island and which is known internationally as Scarborough Shoal, and also sent an aircraft to buzz a Philippine fishing boat in the second, such incident happened since Saturday.

According to Communications Secretary Ricky Carandang, “We’re also telling their ships to do the same,” he told the reporters.  “That’s our territory and we’re also saying the same thing to their ships.”

Carandang said talks between the Philippines and China were continuing. “Tensions have not degenerated,” he said, and the fact “that not a shot has been fired is already a sign that the situation is not deteriorating.”

Arbitration call ignored

Philippines and China have decided to settle the argument diplomatically but have both asserted on their ownership of the shoal, extending an eight-day deadlock on the high seas.

Last Tuesday, Foreign Secretary Albert Del Rosario, asked China to bring the debate to the International Tribunal on the Law of the Sea for negotiation. The Chinese embassy, though, disregarded the proposal and asked the Philippines to extract its vessels from the shoal “and restore peace and stability there.”

The latest standoff between Manila and Beijing over disputed islands in the West Philippine Sea (South China Sea) began on April 8 when a Philippine Navy plane spotted eight Chinese fishing boats in Panatag, a cluster of reefs and islands around a lagoon.

BRP Gregorio Del Pilar, the Philippine Navy flagship was transmitted to the area on April 10 and its officials boarded the fishing boats, but Chinese maritime surveillance vessel interposed. The fishing boats glided last Friday night.

The argument is just one of a countless claims over islands, reefs and shoals in the South China Sea that quarry china against the Philippines, Vietnam, Brunei, Malaysia and Taiwan.

Conflict has increased in the past 2 years over worries that China is becoming more aggressive in its claims to the sea that overlaps shipping lanes between East Asia and Europe also the Middle East.

Even though supplicant countries have vowed to fix the territorial gaps peacefully, the arguments have vented in violence in the past which includes the 1988 when China and Vietnam collided in the Spratly Islands in a defiance that killed 64 Vietnamese soldiers. Many fear the disagreements that became Asia’s next flash point for armed conflict.

Vietnam held a maritime ceremony last Monday near the area where the event happened to remember the dead soldiers, state-controlled media reported.

Numerous rounds of talks have failed to end the impasse at Panatag, which is 872 kilometer from Hainan province, China’s next-door territory to the shoal.

Ancient Chinese shipwreck

Zhang Hua, Chinese embassy spokesperson, acknowledged that the UN Convention on the Law of the Sea, or Unclos, permits countries to claim an exclusive economic zone but was then reported that Philippines could not exercise sovereignty on areas within those waters that are owned by other countries.

One ancient Chinese shipwreck could be found at Panatag, but the Philippine research ship has no right to rescue it, Zhang said. “We urge the archaeological vessel to leave the area immediately,” Zhang said in a statement.

‘We will not leave’

In an interview with the reporters last Wednesday, Defense Secretary Voltaire De Gazmin called on Filipinos to come together and let the world know that ”we are being bullied” by China.

Also on Wednesday, Bayan Muna Representatives Teodoro Casiño and Neri Colmenares filed a resolution condemning China and calling for an inquiry into the government’s failure to assert sovereignty over the shoal.

“We also do not want to go to war, but we must assert our sovereignty, through whatever means we can,” Casiño said.

On Tuesday, Gazmin said, “We will fight for what is ours. We are in the area and we will not leave while we continue the talks” between the DFA and Chinese authorities.

No Spitting Bill, Soon In PH

Aliance of Volunteer Educators party-list Rep. Eulogio Magsaysay filed that there will be no spitting here in the Philippines under House Bill 5901. This act of spitting will not just be a dirty little act anymore instead, it will be a crime soon. This bill carries a penalty of six months in jail and a fine.

First offense amounts to P500,  and it increases up to P2,000 based on the offenses that have made and it is until third offense. They are also required to attend seminar spearheaded by the Department of Health.

“While anti-spitting laws have been in existence in a number of jurisdictions like Singapore, India, Malaysia, and China, only Davao City has vigorously implemented a similar law in the country since 2010,” said by Rep. Magsaysay.

In 2003, when there is a Severe Acute Respiratory Syndrome (SARS) scare, this policy was implemented in Metro Manila by the Metro Manila Development Authority (MMDA) but the public insist and it stayed as a practice.

This policy aims to prevent the spread of tuberculosis, hepatitis, and other diseases.

Based on World Health Organization report, the lawmaker said around 75 Filipinos die of tuberculosis each day. “Mycobacterism tubercolosis, the bacteria which causes TB, can survive in a dried state for weeks up to eight months. Spitting has been identified as one of the factors in the spread of TB,” Rep. Magsaysay said.

According to the DOH, TB is the sixth leading cause of illness and the sixth leading cause of death in the Philippines. A National TB Program is trying to detect at least 70 percent of active TB cases and cure at least 85 percent of those cases.  The program “will eventually result to the decline of the TB problem in the Philippines,” DOH said.

There will be a counterpart bill that has to  be filed in the Senate.

Sendong’s deathtoll still rises up to thousand.

As the wrath of Typhoon Sendong is still with us Filipino’s especially on the CDO people, the death toll is now reached at 1,080 while 1,079 others remained missing, as per the National Disaster Risk Reduction and Management Council (NDRRMC) said today.

In its 6 a.m. update, the disaster agency computed a total of 1,979 injuries and 28,049 damaged housing structures. Seven regions in Mindanao and Visayas were affected in the devastation, comprising 13 provinces, eighth cities, 52 towns and 766 barangays, with over 600,000 affected populations, the NDRRMC added.

The Armed Forces of the Philippines, Philippine National Police, Department of Health, Philippine Coast Guard, and Philippine Red Cross deployed over 1,000 personnel in the badly-hit cities of Cagayan de Oro and Iligan.

Estimating over P1.03 billion cost of damages in infrastructure and agriculture. Thousands of residents in CDO and Iligan are still have to homes to shelter this coming Christmas.

According to Edgardo Ollet, Chief of NDRRMC-Office of Civil Defense, over 276,400 persons are staying in evacuation centers as of this morning. He also said that a cluster was formed composing of Department of Social Welfare and Development, National Housing Authority, Housing and Urban Development Coordinating Council, Department of Environment and Natural Resources (DENR), and local government units (LGUs) to take in charge of the relocation procedures to ensure that survivors will have a humane living condition after the incident.

World record of “Longest line of coins” set by PH

With a donation of 3.5 million 25 centavo coins from different sectors including the private sector, a 73.02 kilometer line was made along the grounds of the Quirino Grandstand and made the Philippines the unofficial title holder of the “longest line of coins” in the world.

The attempt was spearheaded by Bangko Sentral ng Pilipinas (BSP) Officers’ Club and Employees Association and the Kabayanihan Foundation in an event called “Barya ng mga Bayani: The Power of Small Change.” The said event encourages the recirculation of coins and to raise funds for building classrooms for public schools.

The official title holder for the longest line of coins is currently held by a community in Fort Scott, Kansan with a total of 64.88 kilometers and used 3.4 million pieces of 1 cent coins.

Geodetic engineer Erick Medrano, one of the engineers that inspected the line of coins, confirmed that the long line of coins at the Quirino Grandstand grounds measured 73.02 kilometers. He, together with other auditors, will then submit a certification and documents to the Guinness World Records for official confirmation of the world record.

The event started on Wednesday morning, with BSP employees, students, families and other volunteers helping out in lying of the coins. But the process of placing the 25-centavo coins on strips of scotch tape and rain showers by Wednesday took the event longer to accomplish. This prompted organizers to extend the event to Thursday. The line of coins was finally finished by Thursday afternoon.

BSP officials said the event was successful in getting coins back in circulation amid a coin shortage. They estimate the event would save the government some P3 million to P5 million, since it would not have to produce new coins.   The collected coins will also be used to construct several classrooms for public elementary schools around the country.

China to execute Filipino on December 8


Manila, Philippines- An OFW faces once again a death sentence in China on December 8, after being arrested at Guilin International Airport while trying to smuggle 1.495 kilos of heroin into Guangxi province from Malaysia back in September 13, 2008.

The High People’s Court (HPC) of Guangxi Zhuang Autonomous Region informed the Philippine Consulate-General in Guangzhou Wednesday that the Supreme People’s Court (SPC) in Beijing affirmed the lower court’s decision on the carrying out of the death penalty on the Filipino.

President Aquino has asked Chinese President Hu Jintao, that the 35 year old Filipino National be given a less severe sentence.

We have exhausted all legal efforts. We have exhausted all efforts and the sentence would be carried out on Dec. 8,” Presidential Spokesman Edwin Lacierda said.

We recognize the decision of the judicial authorities in China. It was made based on the evidence that the Filipino national was carrying heroin and, therefore, based on their law, it was subject to the death penalty. Again, it was done in compliance with their legal processes, we respect that. And I believe that in the same manner that the three Filipinos who were previously executed, this should not cause a hiccup in Filipino-Chinese relations,” he added.

President Benigno S. Aquino III instructed Vice President Jejomar C. Binay to go to Beijing and appeal the scheduled execution of the Filipino.

Vice President Jejomar Binay is set to leave for China to personally hand over the letter appeal of President Aquino to Chinese President Hu Jintao.

Binay’s spokesman Joey Salgado said the Department of Foreign Affairs (DFA) is now making the necessary arrangements for Binay’s trip to China “at the earliest time possible.”

US envoy apologizes to DFA ; Palace says no need to apologize to the President

US Ambassador Harry Thomas Jr.

US Ambassador Harry Thomas Jr.

After stating that 40% of male tourists visiting the Philippines come only for sex tourism, US ambassador Harry Thomas Jr. sent an aplogy text message to Foreign Affairs Secretary Albert del Rosario.

Del Rosario said that he received the text message from Thomas last Friday, October 6, 2011, stating that the US Ambassador is sorry for not backing up with statistics and figures about his statement.

Thomas’ also extended his apologies to Justice Secretary Leila de Lima whose department was tagged as the source of the statistics regarding the sex tourism.

“There are two things involved here: Having no statistics to back it up, we believe that we have confronted… we don’t have a policy of inviting tourists here for sex purposes. Number two, notwithstanding that, we recognize that there are certain people who come here and engage in those services and that’s the reason why we continue to prosecute these people.” Pres. spokesperson Lacierda said.

Sec. Lacierda also pointed out the removal of the Philippines from the Tier 2 watch list in the 2011 State Department Trafficking in Persons (TIP) Report released by the US government last June.

“The fact that we were able to remove ourselves from the list shows the effort of this present government to combat all these nefarious acts,” he said.

Malacañang also accepted the apology of Thomas and declared the issue closed.

“I think the statement of Ambassador Thomas clearly showed that he was not able to back up the statistics and hence he apologized to Secretary Del Rosario and to our government.” Lacierda said.

“We, in fact, thanked the ambassador for his statement.” Lacierda said.

Lacierda also said the Ambassador’s remarks did not affect the strong relations between close allies Philippines and the US.

Richest people in the Philippines

The Families that Own Asia

The Families that Own Asia

With the help of different business tycoons Philippines’ economy continue to stay positive even with the presence of negatives issues regarding political, social and environmental.

Overall, the number of billionaires has more than doubled this year to 11. Among the newly imprinted billionaires is port operator Enrique Razon Jr., who saw his net worth jump to $1.6 billion from $975 million last year.

Among the four newcomers in the top 40 list are Jose Antonio, founder of high-end property developer Century Properties; Jacinto Ng Sr., founder of biscuit-maker Rebisco; and 34-year-old Edgar Sia II, the youngest on the list, who sold his barbecue chain to Tony Tan Caktiong’s Jollibee Foods.

The Philippines’ top 25 richest are:

1. Henry Sy, $7.2 billion/diversified

2. Lucio Tan, $2.8 billion/diversified

3. John Gokongwei Jr., $2.4 billion/diversified

4. Andrew Tan, $2 billion/diversified

5. David Consunji, $1.9 billion/construction

6. Jaime Zobel de Ayala $1.7 billion/diversified

7. Enrique Razon Jr., $1.6 billion/ports

8. Eduardo Cojuangco Jr., $1.4 billion/food & drinks

9. Roberto Ongpin, $1.3 billion/diversified

10. George Ty, $1.1 billion/banking

11. Tony Tan Caktiong, $1 billion/fast food

12. Inigo & Mercedes Zobel, $980 million/diversified

13. Emilio T. Yap, $930 million/diversified

14. Andrew Gotianun, $795 million/real estate

15. Jon Ramon Aboitiz, $760 million/diversified

16. Beatrice Campos, $685 million/pharma

17. Manuel Villar, $620 million/real estate

18. Vivian Que Azcona, $555 million/retail

19. Robert Coyiuto Jr., $400 million/power

20. Mariano Tan, $375 million/pharma

21. Alfonso Yuchengco, $370 million/diversified

22. Enrique Aboitiz, $310 million/diversified

23. Oscar Lopez, $280 million/media

24. Jose Antonio, $245 million/real estate

25. Eric Recto, $200 million/diversified

Source: Manila Bulletin