| Strong growth for 2010 AN INDUSTRY-LED fourth-quarter acceleration allowed the economy to grow by 7.3% last year, a pace well over target and the fastest in more than two decades. Gross domestic product (GDP) growth, which had slipped to 6.3% in the third quarter from 8% in the first half, strengthened to 7.1% in the last three months of the year, at the high end of the government’s 6.2-7.2% forecast. The full-year result topped the official 5-6% target and the National Statistical Coordination Board (NSCB) said it was the highest since democracy was restored in 1986. Economic managers expressed optimism the momentum would be sustained this year, although analysts said a slowdown was likely as planned infrastructure projects still had to materialize. Analysts also said the better-than-expected result could prompt the Bangko Sentral ng Pilipinas (BSP) to start raising rates as early as this quarter, but central bank governor Amando M. Tetangco, Jr. said a stronger uptick had been factored into inflation expectations. Economists polled by BusinessWorld had supported the government’s fourth-quarter outlook but other forecasts said growth could have slipped below 6%. The industry sector led economic expansion for the year, growing by 12.1% and followed by services’ 7.1%. Agriculture ended 2010 down 0.5%, hit by a first-half dry spell.
Regulators yesterday said they had approved a provisional P1 increase in jeepney fares -- which would bring the minimum rate for Metro Manila commuters to P8 -- while water concessionares said they would this month implement the latest phase of previously approved adjustments. The Land Transportation Franchising and Regulatory Board (LTFRB) said it was allowing jeepney fares to go back up, but not to levels hit in 2008 when oil prices spiked. "[We] took judicial notice that prices of goods have been going up as well as the cost of maintaining jeepney operations, affecting the livelihood of operators," LTFRB member Manuel Iway said. "However, the rate of increase for provinces will vary. For example, the existing minimum rate in Cebu and Tacloban in Leyte is P6.50; with the additional P1, it will be P7.50," he added. The new rate will still be lower than the P8.50 the LTFRB provisionally approved in 2008, Mr. Iway said. Regulators gradually reduced the fare -- the last adjustment was in February 2009 -- as fuel prices came down. Mr. Iway said the decision was made following petitions by jeepney groups such as Pasang Masda and the Federation of Jeepney Operators and Drivers Association of the Philippines. "The militant Pagkakaisa ng Tsuper at Operator Nationwide also supported the requests but did not submit a formal position paper for itself," he claimed. Mr. Iway said the fare increase could be implemented once the LTFRB formally issues its decision. "There is no need to issue new fare matrix for jeepney operators. They can ask passengers to pay the additional P1 after they secure a copy of the decision," he said. As this developed, east zone concessionaire Manila Water Co., Inc. and west zone concessionaire Maynilad Water Services, Inc. yesterday also announced that higher water rates would be implemented starting Feb. 16, with the adjustments to be reflected in March billing statements. Manila Water customers consuming 30 cubic meters per month will have to shell out around P58 extra for an average bill of P543, while those being serviced by Maynilad will have to add P60.88 for an average monthly bill of P744. "The increase to our lower-income customers (lifeline customers) is less than P2 per month -- less than the price of two text messages," Maynilad said in a statement. Manila Water spokesperson Jeric T. Sevilla told BusinessWorld the higher water tariffs would mean better service from the company. "The exchange for higher water rates is 24/7 water. We are also going to be expanding our reach ... and we will even be building more wastewater treatment plants," he claimed. The increases are part of an agreement with the Metropolitan Waterworks and Sewerage System, which in 2007 approved a rate rebasing to be implemented over a five-year period. -- from reports by A. M. P. Dagcutan and E. N. J. David
By Ronnel Domingo
Abad said an emerging consensus in the Cabinet was that the program of providing subsidized rice to the poor would be transferred to the Department of Social Welfare and Development through its conditional cash transfer program. The budget chief said the DSWD, with its National Household Targeting System, was better positioned to identify and directly reach indigent households. Citing documents from the World Bank, Abad said only 31 percent of NFA rice went to the poorest 20 percent of households and that it cost the agency as much as P8.60 to deliver P1 of low-priced rice. At the same time, Abad said the function of regulating trade staples such as rice would be transferred to the Department of Agriculture. He said the DA was the more appropriate institution to regulate rice and that it was a folly to think that NFA, which he described as a virtual monopoly, could function both as a regulator and a trader. He said the transfer of these functions would allow the NFA to focus on its core food security functions, which was buying rice from poor farmers and managing a buffer stock. He added that the NFA would be conducting domestic rice procurement involving small farmers and within an inventory of 15 days during harvest season and 30 days during lean months. Through such function, Abad said the NFA would serve as a “buyer of last resort.” The budget chief said President Aquino had directed that the private sector be allowed to play a major role in the importation of rice. “Discussions are ongoing as to the reduction of the current 40-percent tariff on rice,” he said. “Rice procurement anomalies that have been unearthed exhibit the urgent need of reforming NFA,” Abad said. “Not only is it saddled with a gargantuan debt, it has also disadvantaged poor farmers and poor consumers,” he said. The NFA is expected to breach its debt cap of P120 billion in March, rising from P171 billion in July last year. |
| Stocks in U.S. Rally on Consumer Spending Data, Exxon Profit; Massey Jumps U.S. stocks rose, extending the second straight monthly gain for the Standard & Poor’s 500 Index, as businesses expanded at the fastest pace since 1988 and consumer spending and Exxon Mobil Corp.’s profit beat estimates. An index of energy shares in the S&P 500 rallied 2.6 percent, led by Exxon, the world’s largest company by market value, as Brent crude exceeded $100 a barrel for the first time since 2008. Massey Energy Co. jumped 9.8 percent after Alpha Natural Resources Inc. agreed to buy the coal producer for $7.1 billion. Intel Corp., the world’s largest chipmaker, ended unchanged after saying a design error will cut sales and margins. Rival Advanced Micro Devices Inc. rose 4.5 percent. The S&P 500 rose 0.8 percent to 1,286.12 at 4 p.m. in New York, after sliding 1.8 percent on Jan. 28 amid protests demanding the ouster of Egyptian President Hosni Mubarak. The index gained 2.3 percent in January. The Dow Jones Industrial Average added 68.23 points, or 0.6 percent, to 11,891.93. “It’s economic momentum versus geopolitical risk,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh,North Carolina, which manages $5 billion. “In my view, the economy wins. There’s been steady improvement in earnings reports. There’s M&A activity going on, which is a sign of confidence in the economy. I don’t see the market as being stretched, and I believe we should continue to grind higher.”
Government securities erased earlier gains as concern eased that protests in Egypt would disrupt global trade and the Federal Reservebought a lower percentage of Treasuries submitted for sale during today’s central bank purchase than at the previous 10 transactions. Stocks rose. “The markets do appear to be signaling there’s less concern about what’s going on in Egypt,” said Michael Pond, co- head of interest-rate strategy in New York at Barclays Plc, one of the 18 primary dealers that trade with the U.S. central bank. The yield on the benchmark 10-year Treasury note rose six basis points, or 0.06 percentage point, to 3.37 percent at 5:36 p.m. in New York, according to BGCantor Market Data. It increased for a fifth month, marking the note’s longest losing streak since 2006. The 2.625 percent security due in November 2020 fell 14/32, or $4.38 per $1,000 face amount, to 93 25/32. Thirty-year bond yields increased four basis points to 4.57 percent. They also had a fifth monthly increase in January, marking their longest run of losses since 1999. Treasuries returned 0.17 percent this month through Jan. 28 before today’s losses, according to the Bank of America Merrill Lynch Treasury Master index. The last full month in which they didn’t lose money was September, when they rose 0.003 percent, the index showed. Treasuries gained 2.1 percent in August. |
Crude Oil Rises to Two-Year High in New York on Egypt Unrest, Brent Gain Oil surged to the highest price in more than two years in New York and Brent crude topped $100 a barrel as a seventh day of unrest in Egypt raised concern that supplies may be disrupted. Oil capped a five-month increase as opposition groups demanding President Hosni Mubarak’s ouster urged more people onto the streets. Egypt’s Suez Canal, which links the Mediterranean and Red seas, is one of seven “world oil transit chokepoints,” according to the U.S. Energy Department. “This is all Egypt,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Upwards of 3 to 4 million barrels a day of flow could be disrupted” by a shutdown of the Suez Canal. That would add 6,000 miles (9,700 kilometers), two weeks and assorted costs to tankers’ journeys from the Persian Gulf to Europe and the U.S., he said. Oil for March delivery climbed $2.85 or 3.2 percent, to $92.19 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 3, 2008. Futures rose 0.9 percent in January and 26 percent in the past year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
