EU okays Euro 3 million in humanitarian aid

The European Commission has granted €3 million (Php 156.34 million) in humanitarian aid funding to assist people affected both by the aftermath of Typhoon Melor (locally known as Nona) and the prolonged conflict in Mindanao.

Out of the total funding, €1.5 million (Php 78.17 million) will be dedicated to addressing the urgent needs of those impacted by Typhoon Melor/Nona, which swept across central Philippines in mid-December 2015 and resulted in devastating losses for the affected populations.

The fund will provide the most vulnerable families in the storm-stricken areas, particularly in southern Luzon and eastern Visayas islands, with essential support such as food and shelter assistance, livelihood resources, cash as well as other non-food relief items.

A further €1.5 million (Php 78.17 million) will help deliver humanitarian assistance to populations affected by the ‘forgotten crisis’ of Mindanao, where 495 000 people have been displaced since 2012.

The continued violence has destroyed people’s day-to-day livelihoods in the area, whilst triggering an increase in humanitarian needs among the most vulnerable populations. The aid will be used to provide protection and livelihood support to conflict-torn localities through the provision of food, shelter, education, basic health services as well as ensuring access to clean water, sanitation and hygiene.

The latest EU funding, which will be channelled through the Commission’s Humanitarian Aid and Civil Protection department (ECHO), brings the total humanitarian aid contribution in the Philippines to €98.4 million, since the first humanitarian operations in 1997.

Typhoon Melor, locally known as “Nona”, made five landfalls across the Philippines between 14 and 19 December 2015. With maximum sustained winds of 130 kilometers per hour, the tropical system brought heavy downpours, flash floods and landslides, affecting some 3.7 million people, destroying over 280 000 houses and damaging vast tracts of farmland. Melor hit the Philippines as it was already struggling to recover from Typhoon Koppu (Lando), which wreaked havoc across the northern region in mid-October 2015. The European Commission had then provided €500 000 to support the delivery of humanitarian assistance to the affected communities.

The Philippines’ southernmost island of Mindanao is home to several armed groups fighting against the government. For nearly five decades, the region has witnessed sporadic outbursts of violence despite ongoing efforts to bring an end to the protracted conflict.

Last year, renewed violence again displaced tens of thousands of people. The Mindanao conflict has been classified by ECHO as a ‘forgotten crisis’ due to insufficient humanitarian support from the international community, although the needs in the region remain immense.

Philippine economy grows 6.4% in 2nd quarter 2014

The Philippine economy as measured by gross domestic product (GDP) grew by 6.4 percent in the second quarter of 2014.
Socio-economic Planning Sec. Arsenio Balisacan said the higher growth rate, coming from a high base a year ago showed that the economy is back on the higher trajectory registered in 2012 and 2013.
“We remain as one of the bright spots in the region, the second fastest growing economy among major Asian countries for the period, tied with Malaysia’s performance and topping other major ASEAN countries such as Indonesia, which has 5.1 percent, and Thailand with 0.3 percent,” said Balisacan.
On the demand-side, net exports contributed 4.2 percentage points and household consumption contributed 3.6 percentage points. 
“This profile is in line with a more positive global economy, favorable business sentiment, and robust inflows of overseas Filipinos remittances,” said Balisacan.
He noted that most sectors of the economy demonstrated strong growth, except for the construction sector. Agriculture grew by 3.6 percent, a rebound from 0.2 percent contraction in the second quarter last year due to the big turnaround in major crop harvests.
Industry grew by 7.8 percent, partly moderated by the weak performance of the construction industry. Although private construction increased by 12.7 percent during the second quarter compared to last year, public construction reversed last year’s strong growth and recorded a significant reduction in the second quarter, said Balisacan.
The gross value-added in manufacturing accelerated to 10.8 percent, buoyed by strong external demand and household final consumption.
The services sector expanded by 6 percent, mainly due to trade, real estate, renting and business activities, and transport, storage and communication.  This was attributed to the increased demand for business process management and the expansion of economic activities.
Balisacan said that on the demand-side, the strong household spending in the second quarter of 2014 reflected the still upbeat consumer sentiment in the country.
However, the slowdown in disbursements in personal services and maintenance and other operating expenditures (MOOE) led to the nil growth in government consumption.
According to the Department of Budget and Management, the slower spending was partly due to administrative bottlenecks as some government agencies also needed to revise their work programs to increase service delivery in the Yolanda-affected areas. 
For instance, the Department of Health had to prioritize deployment of its personnel to render primary health care in the Yolanda-affected areas. 
Balisacan explained that the decline in public construction was the result of lower spending in infrastructure and other capital outlays particularly in the months of April and May 2014 as major government agencies posted lower-than-programmed disbursements.
“We have already identified the reasons for this under-performance such as the delayed submission of new requirements indicated in the General Appropriations Act (GAA), ongoing validation of proposed programs under the Grassroots Participatory Budgeting and the revision of work programs to respond to the reconstruction needs in the Yolanda-affected areas.”
Balisacan expects the country is likely to achieve the full-year growth target of 6.5 to 7.5 percent.  Expectations survey showed that businesses maintain their positive outlook on the economy. 
“However, we are aware that market players are still looking for more positive signals, in particular the public sector’s key role in infrastructure spending and consumption of non-durables,” said Balisacan.
NEDA has identified the administrative bottlenecks that contributed to the underperformance of the government sector and are being addressed.  “Disbursements in June increased by almost 45 percent and we are confident that government will catch up on its work program for the year,” he added.
“While the optimism in the domestic economy remains, we remain vigilant against factors that could temper our growth prospects.”
Balisacan said the supply-side shocks have pushed headline inflation to the upper bound of the inflation target, prompting the Monetary Board to raise policy rates to temper inflationary pressures. 
Balisacan said the agriculture, fishery and forestry sector is seen to maintain its momentum pasticularly livestock and poultry due to increasing consumer demand as the holiday season approaches.
He expects the industry sector to accelerate in the second half of the year, led by manufacturing and the public construction subsectors.
“The manufacturing sector also remains upbeat as indicated by its double-digit growth. The sector is expected to gain from the positive outlook for exports and the increasing interest of foreign firms to set up operations in the country,” he said.
Balisacan is confident that growth of the construction industry will be supported by the roll-out of public infrastructure projects, including public-private partnership (PPP) projects, the reconstruction assistance in the Visayas region and the demand for more business and residential units.
He also expects services would continue to grow primarily in response to higher demand by households, domestic industries, inbound tourists, and the strong external demand for business process management.
Balisacan reiterated that while underspending in the second quarter was a cause for concern, the government is taking the right steps to address bottlenecks in the implementation of critical programs particularly key infrastructure projects.(EHL)

Improved private sector participation in technical education to boost employment

The Philippines must improve private sector participation in technical and vocational education (TVET) in an effort to increase employability of TVET graduates, according to the Philippine Institute for Development Studies (PIDS).
\PIDS revealed that despite the high labor demand, only 34 percent of technical and vocational institution  graduates found employment and only 26 percent consider their training useful for their job.

“Firms possess information about the skills that they need; therefore, their participation is valuable. Improvement in this regard is not just supplying TVET training services to TESDA (Technical Education and Skills Development Authority) but also in setting priorities,” it noted.
The study said strengthening the role of the private sector in the allocation of TVET resources could be an option.
It cited as an example the arrangement between the Business Processing Association of the Philippines (BPAP) and TESDA.

This allows the former to set scholarship vouchers with higher employment rate requirement for the BPAP in-house trained (80 percent) compared to 50 percent for those trained by other TVIs not affiliated with BPAP.

To improve the performance of the TVET subsector, the study noted that it is time to revive proposals of changing the role of TESDA from a direct service provider to standard regulator and enabler of other more efficient providers.
“The vision is for TESDA’s current responsibility as a training provider to migrate to other institutions, preferably the private sector, in order for TESDA to focus on standard setting and regulation free from distractions and inappropriate entanglements,” it said.

An important reform is the development of an explicit and credible targeting system, maybe an analogous and adapted version of the Department of Social Welfare and Development (DSWD)’s National Household Targeting System for Poverty Reduction (NHTS-PR) program.

“Targeting a good proportion of TESDA subsidies to conditional cash transfer beneficiaries might be a good start -one that would support the administration convergence policy,” it added.

DOTC to introduce eco-friendly jeepneys

The Department of Transportation and Communications (DOTC) is taking steps to  introduce a new breed of jeepneys that runs either on eco-friendly electricity or liquefied petroleum gas (LPG).
DOTC Undersecretary for Project Implementation and Special Concerns Efren Moncupa said  the Land Transportation Franchising and Regulatory Board (LTFRB) has approved the franchises of the first 20 e-jeepneys, which ply three different Makati green routes — Legaspi Village, Salcedo Village, and Heritage Village loops.
The new e-jeepneys run on electricity, which is less costly than diesel and does not contribute to air pollution. The Pinoy jeepney, which has been a boon to the Filipino culture but a bane to the environment for its reputation of being a smoke belcher, is set to get a much-needed reinvention, one that would make it more eco-friendly.
Apart from the franchises the LTFRB has started granting for e-jeepneys, the DOTC have likewise started talks with various transport groups to convince their members to switch to these environmentally-friendly modes of transport.
The jeepney transport group, Pasang Masda, has proposed the adoption of a 21-seater e-jeepney that costs around P450,000 to P500,000, Moncupa said.
The DOTC is also looking to promote jeepneys whose engine will run on efficient and eco-friendly liquefied petroleum gas. He said the DOTC is now in talks with a local supplier of LPG-run engines.
The move to reinvent jeepneys  is part of the DOTC’s initiative to promote clean air in the country by coming up with programs for the transport sector that will significantly reduce air pollution.
Earlier, DOTC Secretary Mar Roxas said the DOTC is also eyeing to steadily reduce the age limits of PUVs over time. Currently, buses have a 15-year old age limit; taxis, 13 years; and AUVs, multicab, and vans, 10 years.
The DOTC also forged a partnership with the University of the Philippines (UP) seeking for assistance in conducting research on environmentally sustainable transport policies.
These initiatives should help the country improve its environmental performance index, said DOTC spokesman Atty. Nic Conti.
The biennial environmental performance index (EPI) prepared by Yale and Columbia Universities ranked the Philippines 42nd among 132 countries categorized as a global “strong performer” in environmental performance.
The EPI, a project of the World Economic Forum in Geneva and the Joint Research Centre of the European Commission in Italy, is a method of quantifying and numerically benchmarking a country’s performance on its environmental policies.
The move to promote e-jeepneys, LPG-engines, and younger fleet age for public utility vehicles should result in improvements in the amount of total suspended particulates, the measurement used to gauge air pollution.
“The country already recorded a 30-percent drop in the amount of total suspended particulates from 166 µg/Ncm (micrograms per normal cubic meter) in June 2010, to 116 µg/Ncm towards as of end of last year,” he said.
“With these initiatives, as well as the LTO’s continued implementation of vehicle emission standards set by the Department of Environment and Natural Resources, we should be on our way to the normal standard set for TSP by the World Health Organization, which is 90 µg/Ncm,” said Atty Conti.

Filipino exporters encouraged to tap Chinese market

A top official of the Business Once Global Trade Center (BOGTC) has encouraged Filipino exporters to tap the huge Chinese market, the world’s second largest economy with over a billion population.
BOGTC chief executive officer Henry Huang said business opportunities abound particularly for manufacturers of furniture, fashion accessories, home decors, processed fruit and seafood.
Chinese consumers prefer to buy imported products particularly something with quality as buyers have issues against their locally-made products, such as problems in safety, credibility and quality.
To effectively tap the Chinese market, Huang advised Filipino exporters to establish good linkage with Chinese traders through participating in shows and conferences specifically designed for imported products such as the Business One GTC.
China is likewise expected to have an increasing demand for imported goods owing to its rapidly growing middle-class market and more affluent lifestyles.
Other Chinese sectors that offer tremendous opportunities are garments and agriculture, particularly farm and fishery exports.
Philippine furniture makers and Christmas décor producers intend to focus on China as well as other countries which are part of the so-called BRICS (Brazil, Russia, India, China and South Africa) emerging markets group.

ICT programs to generate USD50 billion for the Philippine economy

The Philippine government has mapped out various development programs for the information communications technology (ICT) industry, including stepping-up the value chain, designed to enable the sector to achieve the $50-billion target contribution to the economy by 2016.

 Alejandro P. Melchor III, deputy executive director for ICT Industry Development of the Information and Communications Technology Office (ICTO) told the meeting of the American Chamber of Commerce of the Philippine Inc. (AmCham) that under the value-chain program, the Philippines intends to become market leader in the United Kingdom and Australia in voice business process outsourcing (BPO).

“We aim to harness Philippine competitive advantages to attain world leadership in four more fast growing services and double our market share in three others,” he noted.

Melchor identified the four fast growing services as healthcare information management outsourcing, finance and accounting outsourcing, human resource outsourcing and creative process outsourcing.
“Philippine healthcare outsourcing segment grew by 172 percent in 2011 and we can be a global leader in this estimated $65-billion opportunity,” he said.

Melchor is optimistic that the Philippines has a competitive advantage to dominate this offshoring opportunity, with its large talent pool of certified nurses. 

Oher fast growing services which the country aims to double its market share are information technology (IT) outsourcing, engineering services outsourcing and multilingual BPO.

“Filipino IT professionals are becoming a global brand; actively recruited by other countries,” he noted.
Other development programs created for the ICT industry are talent development, Next Wave Cities, domestic ICT industry development, ICT-enabled creative industries development, and ICT marketing and research.

The ICT workforce capability development program aims to augment efforts of the Commission on Higher Education (CHED) and Technical Education and Skills Development Authority (TESDA) and support programs of the Business Processing Association of the Philippines (BPAP).

Such program intends to triple the size of ICT talent pool by 2016, improve the employability by 200 percent and develop the core skills required by the industry, he said.

A public-private partnership for ICT (iPPP) initiative was recently launched to boost the government and private sector collaboration in the development of the ICT sector.

Cebu is booming

This “Queen City” in the Visayas continues to boom particularly tourism, property and retail.

Major real estate developers in Cebu are expanding several retail developments to cater to the growing demand for consumer goods.

These are primarily stand-alone supermarkets or neighborhood centers anchored by a supermarket, according to CBRE Philippines.

 Existing shopping malls are on expansion mode to increase mall patronage. Colonnade Shopping Mall, which has 6,000 square meters of gross leasable area, was reopened after undergoing major improvements amounting to P20 million.

 Retail developments launched during the second half of last year included J Centre situated along A. S. Fortuna. The three-storey mall has 70,000 square meters of gross leasable area and is anchored by a hypermarket.

 Last November, two SM Savemore Markets opened in Mandaue. Set to open in 2012 are SM Consolacion, which will have 40,000 square meters of gross leasable area, and Shopwise in Mambaling.

 Ongoing redevelopment of Ayala Center Cebu will bring in additional 36,300 square meters of gross leasable area upon completion in 2013.

 The retail sector thrives with the proliferation of mixed use office-retail buildings and residential condominium developments. Retail sales growth will be buoyed by the demand coming from residents and employees.

 CBRE noted that the stable domestic economy of Cebu has sustained consumer confidence.

 The growing retail spending is backed up by the unabated inflow of overseas remittances and rising income due to the growing outsourcing industry.

 The steadily increasing number of tourists visiting Cebu significantly contributed to retail sales growth.

 The existing broad consumer base prompted international brands to remain active in the leasing market.

 In the second half of 2011, Forever21 launched a branch in SM City Cebu. It is the first outlet of the US fashion brand outside Metro Manila. Krispy Kreme opened stores at the Ayala Center Cebu and Asiatown IT Park in October.

 Likewise, the leasing market is further strengthened by occupier demand coming from local retailers.

 CBRE said the 10.6-hectare retail development will be developed into a waterfront lifestyle strip that will offer a range of seaside leisure activities is intended to complement the residential-office-commercial space project of Filinvest.

 Filinvest Land, the retail component will offer a variety of retail, food, entertainment, and seaside leisure activities. The land development has started in October last year and its first phase will be completed by the third quarter of 2013.

 CBRE noted that Metro Cebu is maturing into the major retail hub of Southern Philippines and is capturing the opportunities that come from the economic drivers.

 With a population of 1.5 million and a total land area of 408 square kilometres, Metro Cebu can be likened to Singapore given its 694 square kilometer land area and 3.2 million resident nationals.

 With the right push and consistent support from both public and private sectors, Metro Cebu can become the newest retail destination in Asia, said CBRE.

Improving Philippine labor market to boost economy

The improving performance of the Philipine labor market in 2011 is expected to bolster the optimism for a better economy this year.

 Socio-economic Planning Sec. Cayetano Paderanga, Jr. stressed that the country generated more employment in 2011 compared to the previous year.


Employment level rose by 3.2 percent or 1.156 million, largely on the strength of the continued growth in services and the recovery in agriculture, although there was a slowdown in the industry sector,” said Paderanga.


The quality of employment remained positive last year, with strong growth in wage and salary employment (4.6%), modest growth in full-time employment (1.5%), and slight easing of the unemployment rate from 7.3% in 2010 to 7.0% in 2011, despite the increase in the labor force participation rate to  64.6%.


Paderanga said that the figures were taken from the results of the quarterly Labor Force Survey (LFS), which complies with international standards and guidelines prescribed by the United Nation’s International Labour Office.


When asked why the Philippines has a better unemployment figure compared to the United States, which has an unemployment rate of 8.3 percent in January 2012, Paderanga explained that this is because the character of our economy is different from those of developed nations.


“Our problem, however, is that many of the employed are working in the informal sector, where the income levels are really quite low. We would like to produce more work in the formal sector,” said Paderanga.


He noted that while the Philippines may have fewer unemployed persons, the country would compare unfavorably to developed economies in terms of underemployment, which increased from 18.8 percent in 2010 to 19.3 percent in 2011.


The unemployed is internationally defined as persons 15 years old and over without work, seeking work and available for work.


On the other hand, the underemployed are those of the same age bracket that are already employed but want to have additional hours of work in their present job or an additional job, or to have a new job with longer working hours.


“Many of those already employed are finding themselves in jobs that they probably are not satisfied with. They fully employed but wages are low,” said Paderanga in explaining that a high underemployment rate is an indicator that per capita income is low.


He added that the survey’s sample of 51,000 households makes the labor force survey the most comprehensive data set on labor force that can be used for microanalysis on employment.

Philippine stock market hit all-time high

Share prices are likely to consolidate in the near term with some profit taking following last week’s wave of buying that hit the composite index to another record high.

 “After finally breaking the psychological 5,000 resistance level, we may see the market taking a breather with some traders likely to take profits from the current run to record highs,” says AB Capital Securities.

 “The market does look expensive at 17.8X PE, which translates to an earnings yield of 5.6%.  Geopolitical concerns in the Middle East could be used as an excuse by profit takers to be more aggressive,” says AB Capital.

 Despite such concerns, AB Capital believes that the pullback would be minimal as so much liquidity are still on the sidelines, waiting for opportunities to come in.  

 “We recommend accumulating on dips with emphasis on banking issues like Metropolitan Bank and Trust Co. (MBT) and Security Bank Corporation (SECB).  On the more defensive issues, we see opportunities of laggards like First Philippine Holdings (FPH) and Energy Development Corporation (EDC),” says AB Capital.

 BPI Securities noted that the bourse once again landed to its new all-time high closing at above 5,000 level after Monetary Board policy slashed its interest rate by 25 basis points.

 Value turnover slightly declined by P1 billion to P7.1 billion with net foreign buying of P525 million.

 The most active traded stocks were AGI, PLDT, MPI, DIZ, AP, DMC, Ayala Corp. and Metrobank. Advances outnumbered declines 96 to 66 while 38 were unchanged.

 Week on week, the PSEi advanced 123 points (+2.46%) buoyed by better corporate earnings and the entry of more foreign funds.

 The continued upswing of the local market was buoyed by another cut in interest rates locally and hopes of a ratings upgrade.

 Local shares surged with the PSEi moving above the critical 5,000 level for the first time ever. 

 AB Capital noted that investors’ sentiments were also boosted by the release of strong 2011 corporate earnings and anticipation of sustained growth this year. 

 “Another positive driver for the market last week was Moody’s Investors Service comment that the country is now eligible for another credit rating upgrade.”

 “The country’s top finance officials recently provided rating agencies with an update on the country’s economic developments and concluded that the country is underrated.”

 “Among the major area of strengths identified were the government’s improving debt and revenue ratios, which was mainly attained through the Aquino administration’s continuing efforts to enhance tax administration.”

 “Going forward, the rating agencies are upbeat on the government’s aggressive push for reforms in sin taxes as it is seen to pull up the economy by as much as 1.3%,” says AB Capital.

Philippines is optimistic in 2012

The Philippine government is optimistic that prospects for 2012 and the near term are positive, given the current performance and significant developments in the local and global economies.

Socio-economic Planning Sec. Cayetano Paderanga, Jr. stressed that there are several factors for this optimism — holiday season spending, increased business and consumer confidence, a more stable macroeconomy, and steady consumer sentiment.
“We will also experience the full implementation of the P72 billion disbursement acceleration program of the government
in 2012,” said Paderanga.
Public construction and government consumption and services are likely to pick up in the coming quarters due to quick
releases and faster utilization of the program.
As of November 8, 2011, the Department of Budget and Management has already released PP43.4 billion or 60.2 percent of the total program cost.

NEDA has identified measures to boost exports such as diversification of exports and policies for closer integration with
fast-growing ASEAN economies.

“The economic managers have already asked our export promotion people for more complete programs that the cluster can recommend to Malacanang for funding.”

The services sector is expected to support growth, particularly real estate. Production in the agriculture sector will be boosted by the implementation of the Food Staple Self-Sufficiency Roadmap for 2011-2016.

Private consumption will be driven by increased spending of households in the year-end, particularly on items related to food and utilities.

Spending will be supported by broadly stable commodities prices and consumer sentiment indicates more optimism for 2012, said Paderanga.

The domestic economy grew by 3.6 percent in the first three quarters of 2011, lower than the 8.2 percent growth in the same period last year.

Sec. Paderanga noted that the country’s growth in 2011 was affected by the global economic slowdown amid uncertainties in Europe, continuing weakness of the US economy, and disasters in Japan, which led to weak exports.

The domestic growth was weakened by the contraction in the construction sector, which was pulled down by lower government spending, given the process improvements and project reviews for public construction projects.

On the supply-side, the services sector remained the largest contributor to growth in the first three quarters of 2011 with a 4.7 percent expansion.

Agriculture production has been sustained as the sector continued to recover from the El Niño in 2010 and despite the typhoons in the third quarter that caused losses and damages in the sector.

The industry sector decelerated to 1.4 percent as the decline in construction and utilities weighed down the sector’s growth.

On the demand side, growth was driven mainly by household expenditure boosted by consumer confidence, manageable growth in prices of basic commodities and sustained inflow of remittances from overseas Filipinos.

Total exports declined by 3.7 percent due to slow pickup from the supply-chain disruptions caused by disasters in Japan, weaker demand from major trading partners that are currently experiencing economic slowdown,
and currency appreciation.

Signs of recovery
Despite recent relatively slow economic perfor­mance, FMIC and UA&P Capital Market Research said the economy has showed signs of recovery amid the continued appreciation of the peso.
Inflation rate will return to below-5% pace for the rest of the fourth quarter of  2011 as a stable weather condition would normalize food prices on top of the declining fuel pump prices.
The report noted that dollar remittances form overseas Filipino workers (OFWs) would continue to be robust during the Christmas season with a full year remittance growth forecast at 6-8%.
FMIC and UA&P expects the peso-dollar exchange rate to be contained even with the instability of the global market given that the Philippines has a high foreign exchange reserve.
The government would keep its high-spending ways to stimulate the economy as fiscal deficit for 2011 would hit P180 billion.
Key policy rates would likely be reduced in the first quarter of 2012 as inflation rate would decelerate further at the same time that advanced economies continue to hob­ble.
Multinationals trim growth forecast
The Asian Development Bank (ADB) has projected a 4.8 percent growth of the country’s gross domestic product (GDP) in 2012 from the expected 3.7 percent growth in 2011.

The Philippine government has maintained its gross domestic product growth (GDP) forecast of 4.5 to 5.5 percent for 2011 and 5 to 6 percent in 2012.

ADB expects  economic growth to ease this year and remain close to levels in 2012.
Differences will depend on openness to trade and capital investments as well as the capacity of domestic demand to sustain growth.
Economic growth in emerging East Asia will continue to moderate into 2012 as growing sovereign debt problems in Europe and an anemic US economy raise the spectre of a deep global economic downturn.
“In the event that both the eurozone and the US economies contract sharply, the impact on emerging East Asia would be serious yet manageable, the ADB report said.

“The turmoil emanating from Europe poses a growing danger to trade and finance within emerging East Asia; so the region’s policymakers must be prepared to act promptly, decisively, and collectively to counter what could be an extended global economic slowdown,” said Iwan J. Azis, head of ADB’s Office of Regional Economic Integration.

Meanwhile, the World Bank (WB) is expecting  economic growth to moderate at 3.7 percent in 2011, weighed down by weak global demand as well as low public spending in the first three quarters of the year.

“Our projection hinges on the successful implementation of the government’s disbursement acceleration program and an acceleration in private consumption and investment, which have begun to grow faster in the last quarter,” WB country economist Karl Chua.

Growth in 2012 is projected to improve to 4.2 percent in line with regional forecasts. Higher 2012 growth hinges on improvement in exports, acceleration of public-private partnership (PPP) projects and private sector investment, and a full recovery of public spending.

Chua noted that the government is instituting important measures to improve transparency and accountability in public spending. Once these institutional reforms are in place, spending is expected to fully recover at cost-effective levels with more resolute impact on the country’s growth and development, Chua added.

Growth prospects for the Philippines and the Asean region are constrained by global uncertainties and by the impact of natural disasters.
“The slow progress towards the resolution of the debt problems in the Eurozone has intensified investors’ concerns over global growth and stability.”
“As capital flowed out of emerging markets into relatively safer havens, portfolio investments were reversed and stock markets lost value in East Asia,” the WB report said.
However, improving the investment climate in the Philippines through measures such as upgrading infrastructure to attract private investments will help the country ride out the global turbulence brought about by the Eurozone crisis and the fiscal woes of the United States.
The WB report maintains that the Philippines is well-positioned to cope with any new financial shock that might evolve from the current global turmoil.

“The country is well-insulated from the global financial crisis owing to a significant improvement of macroeconomic fundamentals and regulatory reforms already in place following the Asian financial crisis of 1997-98.”

However, the OECD Southeast Asian Economic Outlook predicted a higher growth for the six Southeast Asian economies — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam — at 5 percent for 2011 and 5.6 percent in 2012.

The OECD report noted that global uncertainties and natural disasters shed a negative light on the growth prospects of the region as the overall Southeast Asia will have a solid growth performance through 2016.

As growth in external demand moderates for the region, ASEAN economies are turning towards domestic drivers of growth in the medium term and are beginning to explore ‘green growth’as an alternative strategy for long-term sustainable development.