Thursday, August 30, 2012

Southeast Asia remains resilient, for now

PHILIPPINE GROWTH cooled much more sharply than expected in the second quarter but strong domestic demand and an ability to increase state spending are still expected to cushion much of Southeast Asia from the worst of the global downturn in coming months.

Fixed-asset investment has also been strong in the region so far this year, while investors have been pouring into its equity markets and bonds, further shoring up economies as the global crisis drags on.

While not immune to a sharp or prolonged global downdraft -- Indonesian exports in June fell 16% from a year earlier -- the region has two considerable advantages over its more developed counterparts in the West: growing ranks of increasingly affluent consumers and governments with healthy finances and relatively low debt levels willing and able to spend. 

The economic planning secretary of the Philippines was the latest official in the region to stress that policy flexibility yesterday after data showed the economy grew by a surprisingly weak 0.2% in the second quarter. 

Manila will continue to accelerate public spending, particularly on infrastructure, to ensure full-year growth will be close to the high end of its 2012 target of 5-6%, Arsenio M. Balisacan told reporters. 

While exports weakened in the quarter, along with those of the rest of Asia, Philippine consumer spending actually accelerated, thanks in part to legions of Filipinos working overseas, dutifully sending money home. 

Banks’ loan growth leaped around 15% in June from a year earlier, indicating little softness in business or consumer confidence despite newspaper headlines warning of risks from slowdowns in Europe, the US and China.

From a year earlier, the Philippine economy grew a better-than expected 5.9% in the second quarter, weaker than the first quarter’s surge of 6.3% but still far stronger than most developed countries and some much larger emerging economies such as Brazil and Russia.

Riding a wave of strong domestic consumption, higher public spending and investment inflows, much of Southeast Asia was strikingly buoyant in the second quarter, with Indonesia, Malaysia and Thailand all posting stronger-than-expected economic expansions. 

Tiny, trade-reliant Singapore, with no large domestic consumer base, has been the only outlier, struggling to avoid slipping back into recession. 

While export data may not be pretty in coming months, economists say longer-term fundamentals remain strong enough in the region to continue attracting foreign investors, barring a further deterioration in global conditions or sudden capital flight. 

"There is a re-rating going on in Indonesia and the Philippines, with Indonesia recently upgraded to investment-grade [credit] status and the Philippines right behind. Things have really clicked in those economies," said ING economist Tim Condon. 

"Unless you get a September 2008-style global panic, there is enough resilience in these countries’ domestic demand to offset export weakness," Mr. Condon added.

Indonesia and the Philippines have been rare bright spots on international investors’ radar over the past year, with Jakarta regaining coveted investment grade credit status and Manila expected to follow in coming years. Thailand, meanwhile, has been steadily recovering from last year’s devastating floods.

Thailand’s benchmark stock index has gained nearly 20% this year, with Manila’s not far behind, while Indonesian shares are up 7% in 2012.

All those factors are giving Southeast Asian policy makers far more room to maneuver than those in the United States, Japan or Europe, though many remain wary of easing too quickly, risking a possible flare-up in inflation. 

"In our book, deterioration in global conditions do argue for more monetary policy easing," said Vishnu Varathan, economist at Mizuho Corporate Bank in Singapore.

"Government stimulus will be crucial to pick up [any] slack in the private sector. Ability and willingness to spend are fortunately not a big issue; but getting the approved spending to work its way through the economy may still pose some challenges." 

In the Philippines, government spending in the first seven months of 2012 -- excluding interest payments -- surged 15.2% from a year earlier, helping offset the impact of faltering exports and weaker farm output.

In Indonesia and Malaysia, the story is much the same: there are jumps in consumption as well as surging public and private investment.

Mr. Condon at ING expects Indonesia’s economy to grow by around 6% this year and the Philippines by 4.5-5%, with solid outlooks for 2013, but added that Malaysia’s trajectory may be more uncertain if the government ratchets back spending after coming elections, which are due by April.

Indonesia’s growth has been so robust, in fact, that the central bank recently publicly rejected concerns among some market watchers that the economy is overheating. 

Some economists say the central bank will need to tighten policy by the end of the year to dampen surging demand for imports that created a record trade deficit in June. But most see pro-growth Bank Indonesia keeping record-low interest rates into 2013, to allow local consumption to keep the economy buoyant. 

The government expects spending by a burgeoning middle class and foreign investment interest to keep growth at between 6.3-6.5% this year and to drive it higher to 6.8% next year. 

Thailand is more of an enigma, with weak global demand biting deeper just as industry looks to fully recover from devastating floods in late 2011. The government reported on Wednesday that exports fell 4.46% in July from a year before as Europe’s debt crisis stifles demand. Even so, unless there is a sharp deterioration in the euro zone, Thai GDP is likely to see solid growth of 5.7% this year, according to the central bank. -- Reuters 

Phl economy grows 6.1% in H1

MANILA, Philippines - With increased government spending and investments spurring economic activities in the second quarter, the country’s gross domestic product (GDP) sustained its growth track as it expanded 6.1 percent in the first semester, the government’s chief economist said yesterday.

In a press briefing, Socioeconomic Planning Secretary Arsenio Balisacan said aided by a strong second quarter, the Philippine economy remained among the fastest-growing in Asia, outperforming most of its neighbors.

He reported that the domestic economy accelerated in the second quarter to 5.9 percent – well above the average market forecast of 5.3 percent – from a moderate 3.6 percent recorded the previous year, boosting the first semester growth to 6.1 percent from 4.2 percent. 

He said the second quarter performance validates the strong 6.3 percent growth recorded in the first quarter. The firm domestic demand and an improving export sector is expected to stimulate the economy’s production sectors, particularly agriculture and industry, in the next two quarters, he added.

“The brighter economic outlook supported by increased business confidence, strong employment creation, and accelerated government spending all contributed to the continued resurgence in economic activities,” he said.

Balisacan pointed out that the strong growth was in large part due to the “accelerated public investment, as well as a recovery in capital formation.”

He noted that government spending on public construction, which was a main culprit in the growth slowdown last year, grew by 45.7 percent in the second quarter, while capital formation grew 2.3 percent, a turnaround from a decline of 10.5 percent in the same period last year.

“The capital formation figures strongly suggest that investments, which had been negative in previous quarters, has bottomed out, and that growth in capital formation is resuming,” he added.

Balisacan also stressed that growth for the quarter was buoyed by government’s conditional cash transfer (CCT) spending which supported consumption, low inflation which kept household consumption stable, better exports performance, continued credit expansion, buoyant tourism sector, sustained overseas Filipino remittances, increased business and consumer confidence, and an overall positive domestic outlook.

Within the ASEAN, the Philippine economic growth performance was above the preliminary average growth (4.7 percent) of the region, growing faster than Malaysia (5.4 percent), Thailand (4.2 percent), Vietnam (4.4 percent), Singapore (two percent), but lower than Indonesia (6.4 percent). All of these, however, was overshadowed by China’s robust GDP growth (7.8 percent).

Balisacan, who is also director general of the National Economic and Development Authority (NEDA), said with the 6.1 percent first semester growth and inflation kept close to the lower bound of the Bangko Sentral ng Pilipinas’ target of three to five percent, “we maintain our view that the full-year 2012 real GDP growth rate projection of five to six percent; perhaps the higher end of the target is well within reach.”

In Malacanang, the government vowed to continue accelerating spending and improve other sectors to further boost economic growth amid global uncertainties.

“We continue to diversify our exports to different countries. But we know that, in the case of Europe, there are certain things that could happen that might make things difficult,” Presidential Communications Development and Strategic Planning Office Secretary Ricky Carandang said.

Balisacan said the government remains vigilant about risks to growth, citing further weakness of a struggling global economic recovery to remain a strong challenge in the near-term, particularly with the slowdown of China reining in on global growth.

“In the light of these prevailing global economic conditions, risks to the external trade of the country have increased, although these could be cushioned partly by the increased diversification of our exports. Worth noting is the strong performance of agricultural exports and other intermediate goods exports. The intensification of the euro zone problem and the geopolitical uncertainty are also external risks which can cause spikes in the world price of oil,” he said.

He cited another downside risk is the El Niño phenomenon, which, according to experts, will commence on the third quarter of the current year until the first quarter of 2013.

“Notwithstanding these challenges, the government stands ready to support growth. For one, our economy remains cushioned and resilient with sound macroeconomic fundamentals. In addition, government will continue to accelerate spending particularly on critical infrastructure projects,” Balisacan pointed out. - – With Aurea Calica

Philippine economy grew 5.9% in 2nd quarter

The Philippine economy expanded 5.9 percent in the second quarter of the year, weaker than the revised 6.3 percent recorded in the first three months, as exports slumped and agriculture slowed.

The growth rate was the weakest since the first quarter of 2009, highlighting the tremendous pressure building on export-reliant Asian economies from China and Japan to Southeast Asia to ramp up public spending or further ease monetary policy to shore up activity as the global malaise drags on.

Still, the growth rate was among the highest in the region. Compared with neighboring economies, the second-quarter growth was higher than Malaysia’s 5.4 percent, Thailand’s 4.2 percent, Vietnam’s 4.7 percent and Singapore’s 2 percent, but lower than Indonesia’s 6.4 percent and China’s 7.6 percent.

“It’s clear that something really bad happened in the global economy in the second quarter and we’re seeing poor June and July numbers, especially for regional exports,” said ING economist Tim Condon.

Consumption-driven

“But if we look at first-half growth it was pretty solid … I don’t think this (the Q2 number alone) indicates a structural hit to the Philippine growth story,” Condon said, adding it was difficult at first glance to determine a clear reason for the quarter’s marked weakness.

Malacañang raved about the growth in the second quarter.

“We’re very happy with the 5.9-percent economic growth. Number one, it exceeded the market expectations. The consensus says it was about 5.3 percent,” Communication Secretary Ricky Carandang said at a briefing in Malacañang.

The economy could have contracted if not for a pick-up in consumer spending. Household consumption grew 1.4 percent in the quarter, accelerating from 0.9 percent in the first quarter thanks to strong remittances from Filipinos working overseas.

Economic Planning Secretary Arsenio Balisacan said the second-quarter growth was mainly due to accelerated public investment and a recovery in capital formation.

“The brighter economic outlook supported by increased confidence, strong employment creation and accelerated government spending all contributed to the continued resurgence in economic activities from a moderate growth of 3.6 percent in the same period in 2011,” Balisacan said.

Government spending on public construction from April to June grew 45.7 percent year on year while capital formation rose 2.3 percent from a decline of 10.5 percent in the same period last year, he said.

Key driver

The services sector remained the key driver of growth in the second quarter, contributing 4.3 percentage points, the National Statistical Coordination Board (NSCB) said.

It was followed by industry with 1.5 points and agriculture, hunting, forestry and fishery with 0.1 point, Lina Castro, officer in charge of the NSCB Office of the Secretary General, said at a briefing.

The farm sector accounts for about one-fifth of the economy, and a series of severe storms which lashed the country in July and August could put further pressure on farm output.

Indicators supporting economic growth in the second quarter included employment which increased 2.8 percent, tourist arrivals which rose 7 percent and overseas Filipino workers’ remittances which climbed 4.8 percent.

On a quarterly basis, the economy expanded just 0.2 percent in the second quarter from the first three months of the year, dragged down by a slump in electronics exports and a related drop in industrial output, along with weaker growth in the agriculture and service sectors.

In June, exports slowed sharply from a year earlier, as global demand sputtered, with electronics shipments declining for a third consecutive month.

That weighed heavily on industrial output, which fell a sharp 2.4 percent in the second quarter from the first, when it grew 3.8 percent.

The mining sector posted a negative growth in the second quarter.

Higher than forecast

Balisacan said the second-quarter growth was an acceleration from the 3.6 percent posted in the same period last year and above the average market forecast of 5.3 percent.

The second-quarter figure brought the gross domestic product (GDP) growth for the first semester to 6.1 percent, slightly above the government’s 5 to 6 percent GDP growth target for the year.

The GDP, a measure of the country’s economic health, is the value of goods produced and services rendered in a given period.

The higher end of the government’s GDP growth target is well-within reach, said Balisacan, who is also director general of the National Economic and Development Authority.

“We are not revising. We are not changing the growth target for the year of 5 to 6 percent,” he said.

A threat to growth, according to Balisacan, is the further weakness of a struggling world economy, with the slowdown in China dragging global growth.

He said the lingering Euro crisis and geopolitical uncertainties were also external risks which could result in surging oil prices.

Most resilient economy

Despite the growing chill from the global slowdown, analysts still believe that much of Southeast Asia is better positioned to ride out global turmoil due to their large populations’ spending power, relatively low public and private sector debt and recent efforts to strengthen their financial systems.

In particular, analysts single out Indonesia and the Philippines as perhaps the most resilient economies in the region, followed by Malaysia and possibly Thailand.

“For the rest of (Southeast Asia), especially for the open economies, they would probably be seeing a bit of a slowdown in the second half because exports have been increasingly weak,” said Euben Paracuelles, an economist at Nomura in Singapore.

“For the Philippines, this will also be the case but there’s a bigger offset from domestic demand because investments will hold up.” With reports from Michelle V. Remo, Doris C. Dumlao, and Riza T. Olchondra

PH outperforms Asian neighbors, but not China

Philippines is among the fastest-growing Asian economies for the first half of the year, so far topped only by China and Indonesia, the country's chief state economist claimed Thursday.

Socioeconomic Planning Secretary Arsenio Balisacan said the announced gross domestic product (GDP) growth of 5.9 percent from April to June showed the Philippines' "continued resurgence in economic activities from a moderate growth of 3.6 percent in the same period in 2011."

With its strong second quarter result, the Philippine economy posted growth of 6.1 percent January to June, outperforming most its neighbors, Balisacan said.

"Within the ASEAN (Association of Southeast Asian Nations), the Philippine economic growth performance was above the preliminary average growth (4.7%) of the region..." he noted.

The Philippine economy grew faster compared to Malaysia, which posted an expansion of 5.4 percent in the first half; Thailand, 4.2 percent; Vietnam, 4.4 percent; and Singapore, 2 percent.

However, its GDP growth was lower than that of China at 7.8 percent and Indonesia at 6.4 percent.

Bulk of the country's economic growth in the second quarter was due to expansion in the services sector, including the continuously growing business process outsourcing industry, official data showed.

The sector grew by 7.6 percent from April to June, and contributed 4.3 percentage points to the 5.9-percent total GDP growth.

The top contributors to growth in this sector were increased economic activities in transportation, storage and communication; real estate and renting; as well as trade and financial services, among others.

Industry, meanwhile, contributed 1.5 percentage points to the total, growing by 4.6 percent.

This was due to a boom in construction; electricity, gas and water supply; as well as manufacturing. These offset a contraction in mining and quarrying.

Agriculture posted the slowest growth of 0.7 percent in the three-month period, contributing only 0.1 percentage points to the GDP growth.

Balisacan noted that the government expects the Philippine economy to continue growing over the next two quarters.

"We are optimistic that the resiliency of our economy, as reflected by the strong real GDP performance in the two quarters of 2012, will not dissipate in the succeeding quarters despite the uncertainties," the Cabinet official said.

He added that the government is maintaining its full-year growth target of 5 to 6 percent.

This, as he noted that external and internal risks continue to pose threats to the local economy.

"Further weakness of a struggling global economic recovery will remain a strong challenge in the near-term, with the slowdown of China reining in on global growth," Balisacan said.

He also cited the potential impact of an intensification of the euro area problem.

"Another downside risk is the El Niño phenomenon, which, according to experts, will commence on the third quarter of the current year until the first quarter of 2013," Balisacan said.

He added, however, that its impact onthe GDP will be weak to moderate.

Recent weather disturbances which hit the country will also have very small impact, which Balisacan estimated at only 0.5 percent of GDP.

Saturday, August 25, 2012

Tetangco again cited as among world’s best central bankers

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. was again recognized as one of the world’s best central bankers by an international business magazine.
It was Mr. Tetangco’s fourth citation by the publication.The Global Finance magazine released its Central Banker Report Card 2012 on Friday, giving an “A” grade to Mr. Tetangco, as well as Glenn Stevens of Australia, Mark Carney of Canada, Stanley Fischer of Israel, Zeti Akhtar Aziz of Malaysia and Fai-Nan Perng of Taiwan.
The Central Banker Report Card, published since 1994, grades central bank governors in 50 countries on a scale of “A” to “F” based on areas such as inflation, economic growth, currency stability and interest rate management.
“During one of the toughest years on record, the world’s central bankers were tested as never before. Every year, we assess the determination of central bankers to stand up to political interference, and their efforts at influencing their governments on such issues as spending and economic openness to foreign investment and financial services,” Joseph Giarraputo, Global Finance publisher, said in the magazine’s Web site.
Other notable figures in the list included the United States’ Ben Bernanke, who got a “B”, one notch better than the “C” he got last year. The United Kingdom’s Mervyn King and China’s Zhou Xiaochuan both saw their assessment worsen to “B-” from “B”.
Under the leadership of Mr. Tetangco, inflation has been low and stable. It averaged 4.6% in 2011, falling within the target of 3-5%. As of July, it averaged 3.1%, at the low end of the 3-5% target for this year.
Banks’ asset quality has improved with universal and commercial banks’ non-performing loan ratio falling to 2.18% as of May from 15% in 2002 or after the Asian financial crisis.
Banks are also well-capitalized, with system-wide capital adequacy ratio at 16.65% on solo basis and at 17.64% on consolidated basis as of December 2011, exceeding the BSP’s requirement of 10%.
Noting the likely impact a global economic slump will have on the Philippines, the BSP cut its policy rates by 25 basis points last month to new lows of 3.75% for overnight borrowing and 5.75% for overnight lending.
The Philippines was among the region’s best performers in the first quarter, posting growth of 6.4%. The government targets 5-6% expansion this year. -- Diane Claire J. Jiao, Business World 

Tetangco keeps 'A' rating, named one of world's six top central bankers

Bangko Sentral ng Pilipinas Governor Amado Tetangco Jr. was listed by an international finance magazine one of the world's six best Central Bankers for 2012.

Global Finance magazine, which publishes the "Central Banker Report Card," said the six performed well as the world's central banks were severely tested.

"During one of the toughest years on record, the World's Central Bankers were tested as never before. Every year, we assess the determination of Central Bankers to stand up to political interference, and their efforts at influencing their governments on such issues as spending and economic openness to foreign investment and financial services," said Global Finance publisher Joseph Giarraputo.

The Central Banker Report Card grades Central Bank governors of 50 key countries (and the European Central Bank) on an "A" to "F" scale for success in areas such as inflation control, economic growth goals, currency stability and interest rate management.

Tetangco got an "A" along with:
- Australia's Glenn Stevens
- Canada's Mark Carney
- Israel's Stanley Fischer
- Malaysia's Zeti Akhtar Aziz
- Taiwan's Fai-Nan Perng

The BSP noted Tetangco also received an “A” rating last year. — ELR, GMA News

Thursday, August 23, 2012

BSP issues new rules that further limits banks’ 'real estate exposure'

The Bangko Sentral ng Pilipinas decided to put limits on individual housing loans as well as on corporate loans intended to fund construction of socialized and low-cost housing. In addition, the BSP has agreed to put limits on banks’ ability to purchase of bonds and stocks sold by property firms. 

The BSP currently requires banks to keep their “real estate exposure” to a maximum of 20 percent of their total loan portfolio. 

BSP Governor Amando Tetangco Jr. explained that under the new rules approved by the BSP’s Monetary Board, the following shall be included in the computation of “real estate exposure”: investments by banks in bonds and stocks issued by property firms, housing loans extended to individual borrowers, and loans extended to corporate borrowers and that are intended to fund development of low-cost and socialized houses. 

Previously, only loans to property developers are included in the computation of real estate exposure. 

The limitations are intended to guard against a potential asset price bubble in the real estate sector. Threats of such a bubble have been raised amid significant growth in bank lending supportive of purchases of residential and commercial real properties.  

Tetangco told reporters in an ambush interview on Thursday that, so far, there are no clear indications that an asset price bubble could happen soon. However, he said, putting additional limits to banks’ real estate exposure will help ensure an asset price bubble is prevented. 

An asset price bubble is a phenomenon where significant demand for assets, such as real properties, leads to a sudden and steep rise in prices. Economists said “bubbles” must be avoided because it is normally followed by “bursting” of bubbles that could destabilize an economy. 

When a bubble bursts a sharp increase in asset prices significantly dampens demand, which then causes a steep drop in prices. A sharp drop in real estate asset prices, such as what happened in the late 1990s, could hurt not only property owners but also banks, which hold real properties as collateral to loans they extend. A decline in property prices reduces the ability of banks to recover losses from loan defaults. — DVM, GMA News

Wednesday, August 22, 2012

Phl makes Top 10 list of fastest growing economies


MANILA, Philippines - The Philippines will be one of the fastest growing economies in the world in the next 40 years as developing markets in the region become prime sources of global growth by 2050, a new report showed.

Once tagged as Asia’s laggard, the Philippines is expected to post an average of 7.3 percent growth until 2050, making it the 6th fastest economy in the world, Knight Frank and Citi Private Wealth’s 2012 Wealth Report showed.

Among the top 10 economies, the country’s growth rate will be faster than that of Mongolia (6.9 percent), Indonesia (6.8 percent), Sri Lanka (6.6 percent) and Egypt (6.4 percent).

Nigeria tops the list with growth expected to hit 8.5 percent in the next four decades.

While Asian economies except two occupy top 10 countries by 2050, developed nations in debt-stricken Europe are predicted to post significantly slower growth during the period.

“Many poor economies have opened up and reached the modicum of institutional quality and political stability that are needed for fast growth and rapid catch-up,” Citi chief economist Willem Buiter was quoted as saying in the report.

“This, in turn, will mean an end to Western hegemony in terms of output,” he added.

Developing Asia’s share of total economic output, in particular, is expected to reach 49 percent by 2050 from the present 27 percent, the report showed.

This, as the combined share of North America and Europe dips to just 18 percent from 41 percent currently.

Buiter said Philippines will be one of the “global growth generators” or “future drivers of growth and investment potential” around the globe.

“Citi research shows that while China and India are likely to grow rapidly over the next 40 years, there are other key countries with promising chances for growth that do not necessarily match the traditional assumptions about where future growth will emanate from,” the report said.

“For example, Russia and Brazil, which make up the so-called BRIC nations alongside China and India, do not make it to Citi’s list of Global Growth Generators or ‘3G’ countries. Instead, Citi includes countries such as Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, the Philippines, Sri Lanka and Vietnam on this list,” it added.

The report added that India is expected to become the world’s largest economy by 2050, overtaking China at No. 2 and the United States at No. 3.

Singapore, on the other hand, will remain as host to the wealthiest people on Earth by 2050, the report said.

The Philippines, which is batting for a six to seven percent growth rate this year, is off to a good start when it posted 6.4 percent expansion in the first quarter, the third fastest in the region next only to China and Sri Lanka.

Second quarter growth figures will be released by Aug. 31 and officials are hoping it would exceed the first quarter result.

The Aquino administration has targeted a growth of up to 8.5 percent at the end of its term by 2016.

By Prinz Magtulis (The Philippine Star) 

Tuesday, August 21, 2012

PHL to be 6th fastest growing economy in next 40 years – wealth report

The Philippines is projected to have the world’s sixth fastest growing economy in the next 40 years, according to Knight-Frank and Citi Private Bank’s 2012 Wealth Report. The report predicted that the Philippines will have an average yearly gross domestic product growth of 7.3 percent from 2010 to 2050.

The country will surpass Mongolia at 6.9 percent, Indonesia’s 6.8 percent, Sri Lanka’s 6.6 percent and Egypt’s 6.4 percent.

Nigeria topped the Wealth Report ranking with a GDP growth of 8.5 percent, followed by India at 8 percent, Iraq at 7.7 percent, Bangladesh at 7.5 percent and Vietnam at 7.5 percent.

“Citi research shows that while China and India are likely to grow rapidly over the next 40 years, there are other key countries with promising chances for growth that do not necessarily match the traditional assumptions about where future growth will emanate from,” said Grainne Gilmore, Knight Frank’s head of UK Residential Research.

Thus, instead of including Brazil and Russia on its list of Global Growth Generators (3G), “Citi include[d] countries such as Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam on this list,” the head researcher said.

Willem Buiter, Citi’s chief economist, defined 3G as the “countries, regions, cities, trade corridors, sectors, industries, firms, technologies, products and asset classes that over the next five, 10, 20 and 40 years are expected to deliver high growth and profitable investment opportunities.”

“All of these countries are poor today and have decades of catch-up growth to look forward to,” Gilmore added.

Meanwhile, Europen countries dominated the bottom 10 of the Wealth Report as they have the lowest projected GDP growth. Spain and France were ranked at the bottom at 2 percent; Sweden, Belgium and Switzerland at 1.9 percent; Austria at 1.8 percent; the Netherlands and Italy at 1.7 percent; Germany at 1.6 percent; and Japan at 1 percent.

End to Western hegemony

Consistent with the region’s growth, Knight-Frank and Citi Private Bank also noted a “shifting emphasis to the East” when it comes to a majority share in global GDP.

This would signal an “end to Western hegemony” in terms of economic growth, Gilmore said.

Developing Asia – which accounted for 27 percent of global GDP in 2010 – is predicted to have a 44 percent share of the total world economic growth in 2030. This could even grow further to 49 percent in 2050, the report said.

Meanwhile, North America – currently at 22 percent in 2010 – is predicted to contract to 15 percent in 2030 and 11 percent in 2050. Western Europe's share of 19 percent in 2010, will decline to 11 percent in 2030 and 7 percent in 2050.

“China will overtake the US to become the world’s largest economy by 2020, which in turn will be overtaken by India in 2050,” Gilmore noted.
The report thus called countries in the Asia Pacific region as the “new world players” in global growth.

“Many poor economies have opened up and reached the modicum of institutional quality and political stability that are needed for fast growth and rapid catchup,” Buiter explained.

Meanwhile, in terms of wealth distribution, the report noted that the region covering South East Asia, China and Japan currently has 18,000 centa-millionaires (or those who are worth $100 million or more), more than North America's 17,000, and Western Europe's 14,000.

London-based Ledbury Research foresees that in 2016 “the region will have extended its lead with 26,000 centa-millionaires, compared with 21,000 in North America and 15,000 in Western Europe.”

“We believe the number and concentration of centa-millionaires accentuates the trajectory of current global wealth flows,” said James Lawson, director at Ledbury Research, a company partner of the Market Research Society. “Trends seen in this wealth bracket are likely to be replicated in lower wealth tiers in years to come.”

Progress shift to the east
The report cited London School of Economics professor Danny Quah, who “calculated that the world’s economic centre of gravity – the average location of economic activity by GDP – is on the move.”

Quah calculated that in 1980, the world’s economic center of gravity – “a theoretical measure of the focal point of global economic activity based on GDP” – was in the middle of the Atlantic. By 2050, however, the “steady rise of emerging economies in Asia will have pushed the theoretical centre of gravity … to somewhere between China and India by 2050,” Knight Frank and Citi said.

Quah predicted that “political influence will follow a similar trajectory eastwards.” — DVM, GMA News

Saturday, August 18, 2012

4 factors that drive PH property sector


Like other Asian markets, the Philippines continues to defy the downward pull of developed economies which are still reeling from the debilitating effects of the global financial crisis.

It has also maintained its own capital flow and among emerging markets in the Asia-Pacific region. It exhibited the highest annual growth rate so far.

With improved economic prospects, both foreign and local investors have begun to find economic value for their investments. And one sector that is benefiting from this is the real estate industry.

In the 6th Philippine Real Estate Festival with the theme “Philippine Real Estate Opportunities for Foreign and Local Investors” held recently at the World Trade Center in Pasay City, the event’s opening plenary session discussed the Philippines as a prime real estate haven for both local and foreign investors. Panelists included Vice President Jejomar C. Binay, also concurrent chairman of the Housing and Urban Development Coordinating Council, Representative Rodolfo Valencia and lawyer Miguel Varela, president of the Philippine Chamber of Commerce and Industry. The session touched on key factors why the country has become a real estate haven.

Emerging realty trends

Price Waterhouse Coopers and the Urban Land Institute (PWC-ULI) recognize the Philippines as a fast-emerging market. Under the new administration, the Philippines has become more politically stable and more pro-business than in the past. It has been removed from the “do not touch list” and there is now a growing interest in engaging in the real estate business in the Philippines.

Binay, who was also the fair’s keynote speaker, said investors started to see the Philippines as “viable and with minimum risks.” Based on the Prudential Real Estate Investors research in February of this year, the growth came from a combination of factors: first, economic growth is projected to increase at a faster rate in Asia than in other regions, and second, the relative wealth of Asian countries will improve.

“As the country’s population approaches 100 million, a consumer-based economy is emerging with all the needs and wants of the real estate market that is expected to grow each year. As long as the demand outpaces the supply, the real estate industry will continue to experience growth,” Binay said.

Here are the four factors that drive the property sector in the country:

1.) Political stability. This is a basic ingredient in promoting investor confidence. And foreign direct investment (FDI) has started to flow inward again as companies discover attractive investment options in the country.

The commercial real-estate market (particularly Philippine Economic Zone Authority or Peza-accredited buildings) has seen increased demand in response to this. Key locations like the Subic-Clark Economic Corridor, Bonifacio Global City, Quezon City, Ortigas, Bay Area, Alabang, Cebu, Davao, Iloilo, Bacolod and major tourist destinations like Boracay and Palawan will see major development because of the influx of investments.

2.) Growth in the BPO sector. The latest PWC-ULI report declared that the Philippines has overtaken India as the largest supplier of call center services in the world. This sector now employs about 600,000 and is expected to hit the 1-million mark by 2016. According to investment bank CLSA, the BPO sector is currently responsible for 90 percent of office take-up in the country. The take-up continues to be strong in I.T. Parks where BPO facilities locate.

With BPO employees almost doubling in four years, property investors can further expect good growth prospects in office and residential spaces for BPO businesses.

3.) Overseas Filipino workers. They not only help keep the country’s economy afloat, they also continue to play a major role in fueling the growth of the real estate market. Last year, our country was considered a hot spot for real estate due to the growth in the market brought about by the influx of OFW remittances and their desire to acquire real estate in their home country. The increase in the country’s population and the migration from rural to urban areas has also allowed for more real estate development both for residential and commercial purposes.

4.) Housing. The biggest opportunity for growth in the property sector is in housing. At the end of 2010, it is saddled with a backlog of about 3.6-million units, and as a direct effect of population growth, this number is projected to rise to 5.7 million by 2016.

Though a total of 200,140 units were provided by various government shelter agencies and the private sector from July 2010 up to May 2012 of which 63 percent, or about 127,450, belong to the low-income group, it’s still a long way to go to meet the backlog.

To help members to pursue home ownership that would spur development in the sector, the Home Development Mutual Fund (Pag-Ibig Fund) recently decided to lower its interest rates for the low-income group from 6 to 4.5 percent.

The housing agency also intensified its campaign on the registration of employers and employees as fund members. And as more OFWs were brought into the fund, membership dramatically increased from 8.8 million in 2011 to 10.725 million as of the first quarter of 2012.

In 2011, the Pag-ibig Fund extended P31.5 billion in end-user financing, or the construction or acquisition of 46,300 housing units by members. Since July 2010, it provided a total of P67.2 billion to fund the construction or purchase of 99,172 housing units.

The National Housing Authority (NHA), meanwhile, has provided housing and secure tenure to almost 80,000 families. One of its programs, the AFP/PNP housing program, has built 21,800 housing units in less than a year. It is now on its second phase and is expected to generate 31,200 house and lot packages not only for soldiers and policemen nationwide but also firemen and jail guards. The NHA is also embarking on a P10-billion program annually to provide primarily medium-rise housing for informal settlers living in danger areas in Metro Manila.

The Social Housing Finance Corp., which implements the community mortgage program (CMP), has released P1.29 billion in CMP loans that gave tenure security to 20,975 informal settler families (ISFs) during the period of July 2010 to May 2012. Since the program’s implementation in 1989, CMP’s highest annual number of ISF-beneficiaries at 15,875 was achieved in 2011.


Robinsons Magnolia: More than a scoop of fun awaits shoppers

A single scoop from this ice cream haven decades ago was enough to put a twinkle on every child’s eyes. It was a habit too hard to break then and yet too sinful to indulge in.

From the many peach melbas, banana split, shakes and ice cream cakes it served, the Magnolia Ice Cream House in Quezon City no doubt brought smiles and priceless memories to all its patrons.

And while the old Magnolia Ice Cream House is no longer there for this generation to experience, a new structure promises to continue bringing picture perfect moments, to make those eyes twinkle again.

Relaxing ambiance

Located in the bustling corner of Aurora Boulevard and Hemady Street near New Manila, the recently opened Robinsons Mall Magnolia provides mall goers the relaxing ambience of an outdoor setting and the cool comforts of sleek interior spaces.

Inside, the mall boasts a grand entrance lobby and spacious hallways that lead to a four-level al fresco area that overlooks The Plaza, a lushly landscaped open space dotted with water features and an area for live entertainment.

The Plaza is also where the new Ice Cream House can be found, serving the same old concoctions that we so love.

Frederick Go, president and chief operating officer of Robinsons Land Corp., pointed out as well that Robinsons Mall Magnolia is a “very environmentally friendly mall and a green building.”

Go explained: “We have many firsts in our building [Robinsons Magnolia]. We actually collect rainwater here and recycle it. We also recycle treated water from our STP (sewage treatment plant) and as you can see, we have incorporated many features that make it a green building such as skylights. We have curtains that roll down to block out the heat.”

The 42,000-square-meter multistory Robinsons Mall Magnolia is the 32nd shopping mall of the Gokongwei-led RLC. It is Wi-Fi enabled and PWD-friendly (people with disability); and has babycare facilities, a customer pay lounge, valet service, and monitored taxi service. A concierge facility is also on hand to provide the best customer service.


ROBINSONS Magnolia will have three floors of al fresco dining
It also houses a distinct variety of shops and dining places.

“We have a wonderful tenant mix,” Go said.

True enough, the mall has international brands on the house including Topshop/Topman, Mango, Miss Selfridge, Dorothy Perkins, Muji, Warehouse, Anne Klein, Tommy Hilfiger, Fred Perry, Lacoste, Penguin, Perry Ellis, Ecco, Nine West, Promod and Miss Sixty. High street staples such as Gap, Cotton On, Aeropostale, Springfield, Cache Cache, Superga and Steve Madden can also be found in the Robinsons Mall Magnolia.

Dining experience

Gastronomic dining experience also awaits mall goers as Robinsons Magnolia will have some of the country’s best restaurants such as Tao Yuan, Thai Bistro, Conti’s, UCC, Sumosam, Clawdaddy, New Orleans, Elias, Uncle Cheffy, and Buffet 101, while shops such as Patchi, Red Mango, Happy Lemon, Mary Grace and Jamba Juice will surely satisfy the craving of every dessert lover.

What may be the most remarkable in the four-story Robinsons Magnolia is that it features what RLC claims to be the “fanciest food court in the metro that features island-type food stalls with open kitchens.”

Hobbyists, meanwhile, may find what they need from the different shops like True Value, Gourdo’s, Bow and Wow, Power Mac Center. For entertainment, there’s a Tom’s World and Gymboree for kids, and four digital cinemas that are easily accessible from the mall’s al fresco area.

The mall also has Robinsons Supermarket, Robinsons Department Store and Robinsons Appliance.

Following the opening of the Robinsons Magnolia, Go said RLC is set to open a few more malls in other key areas such as Butuan, Malolos, Antipolo, Las Piñas and Malabon.

By: Theresa S. Samaniego
Philippine Daily Inquirer


Megacities have no other way to go but ‘green’

The massive floods that recently devastated parts of Metro Manila and its neighboring provinces will not be the last of its kind.

In fact, a  report released recently by the Asian Development Bank titled “Key Indicators for Asia and the Pacific 2012,” has warned that some 3.7 million of the urban population in the Philippines remained vulnerable to inland flooding, while some 6.8 million people are vulnerable to coastal flooding.

The report likewise cited Quezon City as among the Top 40 Asian Cities at risk to inland flooding, putting in a potential peril some 2.9 million of its residents.

Unfortunately, this vulnerability to flooding is expected to further intensify not only in the Philippines but also in a number of countries in the Asia-Pacific region due to rapid urbanization—millions of people migrating into the cities and further increasing the already high population densities in these areas.

Challenge

“Asia has seen unprecedented urban population growth but this has been accompanied by immense stress on the environment. The challenge now is to put in place policies which will reverse that trend and facilitate the development of green technology and green urbanization,” ADB chief economist Changyong Rhee said in a statement.

Since the ’80s, Asia has been urbanizing at a faster rate than anywhere else, with the region already home to almost half of all the world’s city dwellers. In just over a decade, it will have 21 of 37 megacities worldwide, and over the next 30 years another 1.1 billion people are expected to join Asia’s already swollen urban ranks, the report said.

The report showed that Manila is also expected to become one of these so-called megacities by 2025.


THE BGC underground drainage detention structure is what truly going green means.
However, this breakneck expansion came at a price: a sharp rise in pollution, slums, rising crime rates and widening economic and social inequalities which are causing rapid environmental degradation.

Disturbing

Particularly disturbing are urban carbon dioxide emissions, which if left unchecked under a business-as-usual scenario, could reach 10.2 metric tons per capita by 2050, a level which would have disastrous consequences for both Asia and the rest of the world.

The Philippines and its neighbors in the Asia-Pacific region must therefore act now to pave the way for green, resource-friendly cities, or otherwise face a “bleak and environmentally degraded future.”

This time, it is no longer enough for the people to implement the concept of “going green” within its own structures alone.

As the ADB had put it, going green now “means building houses in safe areas, investing in drainage and flood barrier infrastructure.”

This premise was similar to some of the 83 recommendations that world-renowned urban planner and architect Felino “Jun” Palafox Jr. had put forward to the national government years ago, when he had sought to make Metro Manila and other cities in the country less vulnerable to disasters.

In his letter to President Aquino in 2010, Palafox stressed the need not only to make the buildings safer, earthquake resistant, flood-proof and fire-proof, but also to improve the roads, open spaces and parks.

Green urbanization path

Despite the frightening challenges that urbanization poses to governments, there is “hope,” according to the ADB.

“Asia must follow a green urbanization path by instituting policies that help improve efficiency and conservation of resources and promote the use of new technologies and renewable energy,” the report stated.

Many countries have already begun diversifying their energy sources to include renewable energy and have been investing in energy-efficient buildings, like in the Philippines.

Much however, needs to be done, including the development and mainstreaming of new green technologies.

Early examples are waste-to-energy conversion plants, as in the Philippines and Thailand, or “smart” electric grids.

“Green urban policy must be adapted to Asia’s new and unique settlement patterns, which will be driven by more mega and satellite cities. In addition, the green urbanization process must protect the urban poor to ensure that the growth is inclusive and sustainable,” the ADB added. 

By: Theresa S. Samaniego
Philippine Daily Inquirer