ADB forecasts Philippine economy to grow 6% in 2013

The Asian Development Bank (ADB) expects the Philippine economy to sustain strong growth in 2013 and 2014, with inflation within the policy target, but the challenge is to make growth more inclusive by stimulating employment.
 
“Governance reforms and prudent macroeconomic management have laid the foundation for strong growth. The recent investment grade rating affirms the improved macroeconomic fundamentals and investment environment,” said Neeraj Jain, ADB’s Country Director for the Philippines. “A stronger industrial base is vital for increasing jobs, and will help make growth more inclusive and sustainable.”
 
In its flagship annual economic publication, Asian Development Outlook 2013, ADB projects annual gross domestic product (GDP) growth for the Philippines of 6% for 2013 and 2014, down slightly from 6.6% in 2012.
 
Upbeat business and consumer sentiment will boost growth. Fiscal spending will remain robust, along with construction activity, driven by the still strong demand for housing and office space.
 
The 2012 expansion was driven by robust private consumption, a rebound in government spending, and increased investment. Exports also picked up.
 
The services sector was a key growth area. Inflation eased to a five-year low of 3.2%, but is likely to edge up to 3.6% in 2013 on increased consumption and a rise in excise taxes on alcohol and tobacco.
 
Persistently high levels of unemployment and underemployment, with the latter at 20% of the labor force in 2012, remain a key concern. Continuous deployment of oversea workers masks the severity of the unemployment problem, the ADB report said.
 
Reviving the manufacturing sector, where the Philippines has lagged most other larger countries in Southeast Asia, is critical, the report says. This will require a stronger push by policymakers to improve infrastructure and the business environment to encourage manufacturers to locate in the country, the report added. 

Philippines gets P189-M EU grants for clean energy projects

The Philippines has secured P189 million in grants from the European Union (EU) under its SWITCH-Asia Program to fund projects aimed at promoting cleaner and more energy efficient industrial production in one of Asia’s rapidly transforming economies.
Environment and Natural Resources Undersecretary Manuel Gerochi said the financial aid will formally put into implementation the EU’s environment program to help accelerate the country’s shift toward sustainable consumption and production (SCP).
The DENR chairs the steering committee for the implementation of SWITCH-Asia in the Philippines, while the Department of Energy (DOE), the Department of Trade and Industry (DTI), the Climate Change Commission (CCC) and the National Economic Development Authority (NEDA) are key partners.
SWITCH-Asia Program is a regional grant facility funded by the EU. Its goal is to “contribute to green growth, poverty reduction and climate change mitigation in Asia,” specifically by promoting sustainable modes of consumption and production.
According to Gerochi, the program serves as “an opportunity to reverse the trend of economic development at the cost of the environment through better practices in production and consumption, especially by shifting to producing goods and offering services in an environmentally sustainable manner and patronizing those with less adverse environmental impact.”
The EU noted that the Philippines was recognized for having adopted a comprehensive SCP legal framework, but it is challenged with curbing existing practices and shifting towards new modes of production and consumption.
It added that the country also had several key laws, but their full and effective implementation were hampered with structural and budgetary constraints.
Under SWITCH-Asia, technical assistance and training will be provided to concerned government agencies for the effective enforcement of relevant SCP-based laws.
Focus will be on the Renewable Energy and Biofuel Acts for clean energy, in partnership with the DOE; green procurement and eco-labeling in selected government agencies and local government units; and the Clean Air Act, in partnership with the DENR.
The program started in July 2012 and will remain operational until December 2016. To date, the project has already seen preparatory activities such as coordination and consultation meetings with officials and stakeholders, data collection, identification of training activities, and review of related project framework and activities.
Results of the project will be regularly monitored and evaluated by the EU, which will then make the necessary adjustments in the implementation.
The program aims to promote good governance in the implementation of existing environmental laws, contribute to climate change mitigation, and reduce other negative impacts of industrial production on the environment.
The Philippines is one of four pilot countries receiving financial assistance under the program, along with Indonesia, Malaysia, and Thailand.

JICA extends 50-billion ODA to Philippine PPP projects

The Philippine public-private partnership (PPP) projects got a big boost following the recent signing of a 50.03 billion yen official development assistance (ODA) loans with Japan International Cooperation Agency (JICA).
 
The Japanese ODA loans are intended to support the infrastructure development through PPP with the objective of forming industrial spaces in the Philippines and supporting overseas deployment of Japanese business. 
 
JICA said the Special Terms for Economic Partnership (STEP) will apply to both of the Japanese ODA loan financed projects and is expected that Japanese railway and environmental conservation technologies will be utilized.
 
Due to the severe traffic congestion in Metro Manila, promoting a modal shift to a rail mass transportation system is a priority to alleviate overcrowding on the roads. 
 
LRT Line 1 will be extended to the south to the northern part of Cavite province and LRT Line 2 will be extended to the east to the cities of Marikina and Antipolo in order to enhance the transportation capacity on both lines, which serve the central area of the capital and the suburbs, where the population has increased markedly in recent years. 
 
JICA said this will alleviate road congestion and reduce air pollution and mitigate climate change effects. This project will apply advanced Japanese technology such as highly efficient inverters, on rolling stock to be procured by the project, which will contribute to energy efficiency and reducing maintenance costs.
 
In order to meet the rapidly increasing demand for air travel, JICA will provide assistance in improving the convenience and safety through construction of a new airport in Bohol, compliant with international safety standards and with adequate handling capacity, replacing the current airport. 
 
Under the concept of “an eco airport,” the project will involve a new environmentally friendly airport using advanced Japanese technology, including a photovoltaic power generation system and geotextile sheets in the soaking yard to prevent airport drainage water from polluting the surrounding environment during construction.
 
When completed, technical assistance will be provided for environmental protection to avoid a negative impact to the natural environment caused by the increase in tourists.
 
JICA will continue to support the development in the country by utilizing all modalities of ODA technical cooperation, Japanese ODA loans and grant aid to support nation-building.
 
Despite the deceleration of the global economy, firm household consumption and the service sector have kept the domestic economy steady with a 6.6 percent growth in real gross domestic product (GDP) in 2012.
 
Under the leadership of the Aquino administration, progress has been made in enhancing the investment climate, and foreign direct investment from Japan has become vigorous in the Philippines. 
 
JICA said these factors have drawn attention to the Philippines as a new investment destination with an ample labor force particularly for manufacturers.

Philippine economy seen to grow at 7% in first quarter

The Philippine economy  is projected to expand close to 7 percent in the first quarter of  2013r on the back of election spending, booming construction, strong government, a manageable inflation and a modest rebound in exports.
 
In its latest market report, FMIC & UA&P Capital Market Research expects inflation rate in March at 3.3% but a quick reversal is expected in the second quarter to below 3% as crude oil prices are expected to soften significantly after the winter season.
The fiscal sector is expected to continue its deficit spending spree in the first quarter but would likely ease in the second quarter.
 
FMIC & UA&P noted that above target deficits may be expected in the first half but this will be brought down in the second half with full year targets to be achieved.
The report said that Bangko Sentral and other government officials have become wary of the peso appreciation and appear ready to apply stronger measures to curb the negative impact of large portfolio capital inflows.
 
“We expect the BSP to further cut the SDA rate by another 50 bps to signal its determination to the market,” said FMIC & UA&P.
 
The fruits of the efforts of President Aquino in forging the country’s relations with Australia, Italy, United Kingdom, and other countries could be reaped in 2013 reviving the exports industry especially the exports of electronic products.
 
The revival of China’s economy and the expected stimulation of Japanese exports would most likely contribute as they are the major markets of the country’s exports.
 
The bias by a number of foreign investors towards Philippine peso would most likely continue especially that the US decided to use sequestration, while France and Germany have low first quarter GDP growth forecasts.
 
The appreciation of the peso is also supported by the rise in both the foreign portfolio and foreign direct investment (FDI) as Japanese and other multinational companies are firming up their operations in the Philippines. 

First Filipina doctor to win Emirates Skywards competition

Melanie Estolas, a Filipina doctor is the first lucky winner of the “Meet Me There” competition of Emirates Skywards, the award-winning frequent flyer program of Emirates.
 
Melanie’s prize includes six return flights to the destination of her choice anywhere on Emirates’ global network, via its hub at Dubai International Airport.  
 
She has chosen to meet five close relatives for a family reunion in Barcelona, Spain, in October, including her mother and younger sister who also lives in Manila, her sister who lives in Dubai, her brother-in-law who lives in Delhi, India and her cousin who lives in Birmingham, UK.
 
Melanie chose Barcelona out of all of the 130 destinations on Emirates’ global network because it is a city she has always wanted to visit and experience the interesting architecture and delicious local cuisine. It will be Melanie’s first trip to Europe and she is hoping to fit in a stopover in Dubai on the way to Barcelona.   This is the first time Melanie has entered a competition so it is truly a case of beginner’s luck!
 
Emirates Skywards is offering aspiring globetrotters the opportunity to win the trip of a lifetime for themselves and five friends or family members. 
 
The prize includes six return flights to the destination of the winner’s choice anywhere on Emirates’ global network, via its hub at Dubai International Airport. 
 
One lucky winner will be announced every week for the next three weeks.  To enter the competition, go to Emirates’ Facebook page at http://www.facebook.com/emirates.   
 
“Emirates Skywards is all about rewarding our loyal customers and enhancing their travel experiences.  Now we are offering members the ultimate reward – flights to the destination of their choice anywhere on the Emirates network with their friends or family members,” said Thierry Antinori, Emirates’ Executive Vice President, Passenger Sales Worldwide. 
 
“It is said that a journey is best measured in friends, rather than miles.  With the chance to take five friends to one of 132 destinations in 77 countries on the Emirates’ network, the winners of our Meet Me There competition can look forward to experiencing a once-in-a-lifetime adventure.”
 
“It is free to join Emirates Skywards and members receive benefits every time they fly.  There are four membership tiers – Blue, Silver, Gold and Platinum – a new tier which has been introduced to offer additional benefits to reward the most frequent travellers.”
 
Benefits for Skywards members include travel and lifestyle rewards, priority check-in, lounge access, extra baggage allowance and bonus Miles, depending on the membership tier. Members earn Skywards Miles when they fly on Emirates and partner airlines and through a wide range of leisure and lifestyle partners.
 
Skywards Miles can be redeemed for a range of rewards such as flights on Emirates and other partner airlines including easyJet, TAP, JetBlue and Alaska Airlines, and for flight upgrades, hotel accommodation, excursions with Arabian Adventures, car rentals and shopping on The Emirates High Street.

PhilMech extends P421 milion for rice processing centers

 
The Philippine Center for Postharvest Development and Mechanization (PhilMech) will provide P421 million in technical assistance for the  establishment of rice processing centers (RPC) to help farmers reduce post-harvest losses and become less dependent on private millers.
 
PhilMech executive director Rex Bingabing said that the project, called “RPC 1-2-3,” aims to establish milling facilities in farming clusters devoted to palay so farmers do not have to transport their produce over long distances for milling.
 
The regional offices of the Department of Agriculture (DA) will implement the project at the field, with PhilMech providing the technical assistance through the provision of post-harvest technology and training of the farmer organizations that will operate, manage and maintain the rice centers.
 
“The project aims to establish rice milling centers of which the size will be determined by DA regional offices and PhilMech field personnel,” Bingabing said.
 
Transporting palay over long distances to have them milled by private operators is also a cost burden to small farmers.
 
A small scale rice center will cost P6 million each; a medium-sized rice center, called RPC-2, will cost P15 million; and a large rice center, called RPC-3, will cost P31 million.
 
The Department of Agriculture (DA) will establish 13 RPC-1 costing P78 million; seven RPC-2 costing P105 million; and eight RPC-3 costing P248 million, for a total cost of P421 million.
 
Based on the field surveys of PhilMech, the 13 RPC-1 will be distributed as follows: Region 4A (Calabarzon), one; Region 4B (Mimaropa), two; Region 8 (Eastern Visayas), four; Region 10 (Northern Mindanao), two; Region 13 (Caraga), two; and Autonomous Region of Muslim Mindanao, two.
 
For the RPC-2, the distribution is as follows: Region 4A, one; Region 5 (Bicol), three; Region 10 (Northern Mindanao), one; and Region 13 (Caraga), two. For the RPC-3, the distribution is as follows: Region 1 (Ilocos Region), one; Region 3 (Central Luzon), two; Region 6 (Western Visayas), two; and Region 12 (SOCCKSARGEN), one.
 
Bingabing said that the government will shoulder 85% of the cost of an RPC and the recipient or beneficiary the remaining 15%. Only qualified farmer associations (FAs) or irrigation associations (IAs) can qualify to become recipients of the RPC and other farm machinery that PhilMech is coordinating for distribution nationwide under the Rice Mechanization Program of the DA.
 
PhilMech will also train farmer and irrigation associations on how to maintain the facilities, especially the large types.
 
Based on PhilMech’s experience, farmer organizations can be trained to operate and maintain various farm machinery like mechanical driers and tramline systems.
 
                                       

Inefficient infrastructure hinders agricultural productivity

The major constraint to productivity growth of agriculture in the developing world is the absence of efficient infrastructure system particularly transport, power supply, and communication infrastructure.
 
This was stressed by Socio-economic Planning Sec. Arsenio Balisacan during the Asia Pacific agricultural policy roundtable in Japan on Monday.
 
The immediate consequence is the high transaction costs of doing business in rural areas, effectively inhibiting farmers from taking advantage of opportunities in rapidly growing areas and urbanizing centers, including foreign markets for exports, said Balisacan.
 
“With the more prevalent changes in average weather conditions nowadays, and given the sector’s vulnerability to climate-related risks, the need for infrastructure that would help farmers cope with the effects of climate change is more urgent now than ever before.”
 
Balisacan said the second set of binding constraints relates to the regulatory and policy regime for agriculture.
 
High tariffs and quantitative restrictions set up to achieve food self-sufficiency goals induce inefficiency in production and consumption choices, dampen competitiveness and productivity, encourage rent-seeking behavior, and ultimately hurt the poor who are usually net buyers of food, said Balisacan.
 
“Partly because of high transaction costs and the high co-variance of production risks in agriculture, access to finance is far more limited for small and medium farmers, especially in developing countries, compared to their counterparts in manufacturing sector or urban areas.”
 
Balisacan noted that the inadequacy of working capital holds back the adoption of modern technologies embodied in new plant varieties, farm equipment or  post-harvest facilities.
 
“Even in cases where productivity-enhancing technologies are available, farmers too remote and too poor to purchase the inputs to use the technologies do not benefit from these innovations.”
 
“Considering the numerous development priorities and programs that governments of developing countries attend to in order to address the binding constraints to economic growth and poverty reduction, including those for agriculture, investment partnership with stakeholders particularly the private sector, is deemed crucial,” said Balisacan.
 
Balisacan stressed that public-private partnership (PPP) PPP schemes are increasingly being utilized to implement certain public sector programs and projects. 
 
“In a PPP arrangement, it is recognized that the public sector and the private sector have strengths and advantages that they could bring together to deliver a project and/or service of mutual interest, through the sharing of funds, technologies, skills, and other assets,” he added.