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PHP5.8-Bn Windfall Tax On Telcos, Oil Firms To Follow

Thu, 14 Aug 2008 09:49:56 EST

PHP5.8-Bn Windfall Tax On Telcos, Oil Firms To Follow - by lovephileo

RP government stands to earn P5.8 billion windfall tax from the P58.1 billion in cash dividends of three telcos service providers to be paid out to their shareholders next month. Windfall profit tax is a tax on profits that ensure from a sudden windfal gain. This tax will, in addition to the normal corporate tax, be payable by the business/industry on its profits.

PLDT, Globe and Piltel announced one after the other that they would pay a total of P29.8 billion in cash dividends to their shareholders. That is on top of the combined P28.3 billion paid by PLDT and Globe to their shareholders last summer. PLDT gave out a total of P23.4 billion in dividends at a rate of P124 per share on Aril 21. Globe paid a total of P4.9 billion in dividends at a rate of P37.50 per share on March 13. PLDT is the parent firm of both Smart Communications Inc. and Piltel, which have 32.2 million in combined cellular subscribers as of end June 2008. Globe is the country's second largest cellular operator. with a total of 22.7 million subscribers as of end June 2008.

PLDT, Globe and Piltel are all publicly traded companies whose common shares maybe freely bought and sold through the Philippine Stock Exchange. Good to know that this solid gains of the telcos industry will flow through government and then back to the people and this extra revenues can be used to support vital social programs or subsidized impoverished families.

The only other major telecommunication service provider that has not been paying dividends is Digital Telecommunications Philippines Inc., which has not been generating a profit. Digitel has more than six million cellular subscribers.

Meanwhile, the government is seeking the imposition of a windfall profit tax on oil companies which continues to make excessive earnings at the expense of consumers. The two biggest oil firms - Petron and Shell made nearly P70 billion in commulative net profits in the first 10 years of oil deregulation.

This way, consumers won't pay for the tax and thus protects the poorest families from rising fuel bills.

Back In 1980, the U.S. Congress imposed a temporary windfall profit tax on the sky-high earnings of oil producers that gained in a big way from the sharp increase in oil prices during the embargo imposed by the Organization of Petroleum Exporting Countries. The Crude Oil Windfall Profit Tax Act in the U.S. lasted for eight years, until it was repealed in 1988, amid the fall in oil prices. However, steep pump prices and record-high profits generated by American oil firms have prompted several members of the US Congress to seek the revival of the windfall profit tax.

Global Positive Outlook On Broadband Industry

Wed, 13 Aug 2008 21:55:17 EST

Global Positive Outlook On Broadband Industry - by lovephileo

You have heard the BRIC countries, and now the "Next Eleven" - Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, south Korea, Turkey and Vietnam which they will be bringing the next wave of radical growth in emerging markets.

One of the darling developing economies is the philippines. And one of the best game to play in its growing market is through the RP broadband industry where broadband subscribers was around 945,000 in 2007 and is expected to grow to just under 4 million by 2012, the internet sector is well positioned for growth, with a deregulated market, strong government support for IT development and an increasing internet savvy population.

The wireless broadband market is growing rapidly worldwide and this means that there is a lot of potential for new revenue from this busines.

In the Philippines, PLDT - the wireless broadband subscribers surpass DSL subscribers . The company's DSL services generated P1.3 billion in revenues during the first quarter of 2008, and now accounts for 51% of the PLDT Group broadband and internet revenues for the same period. Total broadband revenues increased 51% to P2.5 billion. This figure represents about 7% of the total services revenues of the company. PLDT currently controls about 70% of the local broadband market,which includes households, small and medium enterprises and corporate acounts. The company is using its third generation (3G) mobile network as a vehicle to offer wireless broadband services in the country. It is the leading telecommunications service provider in the Philippines. It has common shares listed on the Philippine Stock Exchange and ADRs listed in the New York Stock Exchange. It has one of the largest market capitalizations among Philippines listed companies. It has developed the country's most extensive fiber optic backbone, cellular, fixed line and satellite networks.

Globe Telecom Inc, the Philippines second largest mobile operator/provider of digital wireless communication service in the Philippines using a full digital network based on the Global System services. Broadband services continued to be a growth driver for the company, with revenues going up by more than half to PHP 777 million in the first six months. It plans to make further investments in its woreless broadband services, based mainly on its 3G network. Following the completion of its technical trials for WIMAX, the operator is studying the various vendor alternatives with the intention of commercially deploying service by the end of 2008. This could see the operator become the first in the country to offer such services.

Meanwhile, the global wireless broadband industry revenues is predicted to hit $784 billion, a whopping 24 times (2400%) by the year 2015 where 50% of that growth will be in developing countries. The report predicted the number of wireless broadband customers will hit 2.1 billion by then, with developing nations expected to make up 57% of that.

Cellular technologies will dominate wireless broadband services, with 20 times as many users as WiMaX by the end of 2015. WiMax will be squeezed from developed markets by fixed and cellular broadband services and will serve just 98 million customers worldwide, of which 92% will be in developing regions.

In Asia, demand for fixed broadband is surging. Broadband subscriptions will cross 171 million by the end of 2008. The expected growth represents a year-on-year growth of 31.5% and a household broadband penetration rate of 19.7% across all the countries in the region. Of the 13 Asia-Pacific countries, Philippines is ranked 11th with a household penetration rate of 3.57% in 2007. The number of subscribers in the country is expected to reach close to one million at the end of this year, for a year-on-year growth of about 46%. Frost & Sullivan survey expects the broadband subscriber base in the country to grow at a CAGR (compound annual growth rate) of 19% from 2008 to 2013.

The top five Asia-Pacific countries with the highest household broadband penetration rates in 2007 are South korea (90%), Hong Kong (83.8%), Taiwan (76.8%), Singapore (73.1%) and Australia (63.2%). Japan has a 57.8% penetration rate, while the remaining seven markets have household broadband penetration rates of less than 50%. India and Indonesia registered the lowest penetration rates at 1.4% and 0.57%, respectively.

The surge in demand for broadband in Asia-pacific is driven by the growing popularity of video-on-demand, multi-player online games, video content sharing and social networking sevices such as You Tube and facebook, as well as the aggressive push by operators to offer innovative bundled tripple-and quadruple-play services.

The ecosystem is growing - in developed countries, there are pockets where coverage is not good. operators are geared to provide standard broadband and invest in this emerging industry. This is the good time to invest. A good field to invest in or to any technology funds that use this market. This wireless technology will be a nice market at the ground level for a long term.

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge

Tue, 12 Aug 2008 18:32:31 EST

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge - by lovephileo

The 118-year old group, San Miguel Corporation, Southeast Asia's largest food and drinks group and the maker of SE Asia's oldest beer brand, arrived its net profit tripled in the first half, boosted mainly by gains from asset sales. Faced with challenging economic conditions affecting consumer spending behavior and scalating input costs, SMC booked net income of P19.7 billion ($444mn) in January to June, topping the P6.6 billion of a year earlier and its full-year 2007 net profit of P8.63 billion.

Financial Business Description :

The company has five breweries strategically located across the Philippines and a developed distribution system serving approximately 471,000 retail outlets. SMC employs over 26,000 people through-out the Asia Pacific. The company's beer brands include San Miguel Pale Pilsen, Red Horse, San Mig Lite and Gold Eagle. Other beers are marketed under the brand names Cerveza Negra. The company also sells Cali, the malt-based, non-alcoholic drink. Cali is available in three variants: Cali, Cali Ice and Cali Light. The company's product can be categorized into three classes based on the target market: Upper Popular, Broad Popular and Economy. Upper Popular products cater to upscale markets especially in urbanized areas, while the Broad Popular segments serves the majority of the population or the mass market.

The Group's principal activities are operating poultry, processing and marketing refrigerated and canned meat products, manufacturing and wholeseling flour and feeds products and manufacturing and marketing of butter, margarine, cheese, dairy and other related products. The Group is organized into three primary segments. Foods includes the breeding, hatching, processing and marketing of chicken. This segment also produces and markets feeds and flour, dairy products and processed meats. Beverage produces and markets alcoholic and non-alcoholic beverages. Packaging produces and markets metal closures, two-piece aluminum cans, plastic crates, pallets, corrugated cartoons, omposites, glass containers, glass molds and polyethylene terephthalate plastic bottles. Brands include Bake Best, B-meg, Pureblend, PBxcellent, Jumbo, Emperor Hard Flour, Queen Soft Flour, Baron all-Purpose Flour and Prince Noodle Flour. SMC also has real estate and agricultural subsuduaries. The conglomerate is in the process of shedding various operations as part of an effort to diversify into heavy industry, looking to invest in mining, infrastructure and energy.

Revenue as of September 2007

Operating Income

Annual Revenue (in billion pesos)

San Miguel has a long term strategy for growth, based on two key parts:

* Strengthening its core businesses of beverages, food and packaging and

* Pursuing new avenues of growth

The Group's first half revenues rose 9.0% to P79.8 billion, with San Miguel Brewery revenues also rising by 9.0 percent to P23.8 billion. In January, San Miguel sold a 35% stake in its packaging unit for $130 million to Japan's Nihon Yamamura glass. It also sold its 29.4% stake in unlisted property firm KSA Realty for P1.8 billion to Shang Properties Inc.

IPO Line-up

The Philippines' San Miguel surprised investors with plans for a new drastic reorganization by selling part of its core food unit and more of its finest chain beer operations but to retain controling interest of at least 51%. SMC was preparing for a secondary offering of its food businesses and its newly listed beer unit, San Miguel Brewery and an IPO for its packaging unit . It hopes to sell at least 20% of its packaging businesses. The intention is to list all of San Miguel's operating companies to make their operations more efficient and transparent.

The IPO values the beer business, considered the company crown jewel, at $2.9 billion and is the only big listing scheduled for this year. The parent group has a market value of around $3.45 billion. SMC would also consolidate all its food assets under listed unit San Miguel Purefoods, which may do a follow-on stock offering. The company's liquor business, Ginebra San Miguel Inc., and property development San Miguel Properties Inc. are already listed.

Tough Market Conditions

San Miguel faces a difficult operating environment in the second half due to high raw material costs and a rising fuel and food costs restrain consumer spending. The move into heavy industry has been criticized by some analysts who say San Miguel, which dominates its home market for beer, poultry and processed meats, does not have the expertise to run such business. However, SMC rest assuring its interest into making businesses that could give it at least 15% return on equity.

The company has so far been unsuccesful in bids to buy power assets at government aunctions. A San Miguel-led consortium lost in December to a Filipino-Chinese group in bidding for the 25-year concession to operate the Philippines' national power grid. SMC also lost in last year's bidding for a 60% stake in geothermal power producer PNOC Energy Development Corporation.

Feeding The Future Venture

SMC will spend up to $1.0 billion in a joint venture with Hong Kong's Kuok group to develop farm land. The project, in collaboration with the philippine government, would develop one million hectares of land. SMC with KH Kuok will offer financial assistance, technical expertise and a guarantee to buy all agricultural produce. The land may include logged-over aeas, idle portions of military camps and reservations, idle portions of lands granted to state universities or colleges and idle portions of ancestral lands. The goal is to help the government in any way possible, whether it is providing seed money to help farmers pay for shallow wells, basic agricultural inputs such as hybrid seeds and fertilizers and extending technical expertise.

Just recently both companies donated $500,000 each to the victims of typhoon Frank. This kind of partnership is what this country longs for. It offers a signal of sustainable, adequate supply of grains and other basic staples.

But the question was? Will its IPO/offerings turn to be productive as SMC makes an almost 180 degrees turn for a change? Will investors keep on its line up? The writing on its wall is plain to see: Despite economic pressures, SMC has sales momentum coming from both internal and external customers. They tapped customers in overseas markets. The company was not affected by the huge challenge and weakening economy.

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge

Tue, 12 Aug 2008 18:30:52 EST

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge - by lovephileo

Financial Business Description :

Revenue as of September 2007

Operating Income

Annual Revenue (in billion pesos)

San Miguel has a long term strategy for growth, based on two key parts:

* Strengthening its core businesses of beverages, food and packaging and

* Pursuing new avenues of growth

IPO Line-up

Tough Market Conditions

Feeding The Future Venture

RP Microelectronics Industry - Lagging behind Its Neighboors

Tue, 12 Aug 2008 06:11:59 EST

RP Microelectronics Industry - Lagging behind Its Neighboors - by lovephileo

Over the years, the philippines has served as a backend operation site for many semi-conductor companies has posted growth as microelectronics assembly center in the Asia Pacific-region. RP is regarded as a stable microelectronics assembly hub with the presence of several global technology companies such as Motorola, Fairchild, Intel, Texas Instrument and Amkor Technologies, among others. Working to its advantae are the country's abundance workforce, low labor costs and wide use of English language.

There are roughly 600-700 chip design engineers in the Philippines. Around 6-7 companies are engaged in IC design - Intel, Rohm (Japan), Canon, Lexmark, Sanyo, BitMicro and Tsukiden. The locals like EAZIX (AYALA IMI), Blue Chip (Ateneo) and Symphony are also going there. These chip design engineers were trained mostly in UP Diliman, though La Salle. Ateneo, San Carlos, St Louis, among others - are trying to develop their own chip design programs. Many of the large companies also trained their staff-in-house. The Department of Science and Technology (DoST) Adavanced Science and Technology Institute (ASTI) is also a source of chip designers.

The University of the Philipines Electrical Engineering department has a chip design laboratory where students take turns on the workstation round the clock, and send their designs to a wafer fab in Taiwan for actual fabrication. Other local universities like De La Salle, Ateneo, USC and Mapua are also introducing chip design program for their electronic engineering departments.

True,the common perception is that Philippines is the place where silicon players do the back-end assembly and test. But another truth that emerged over the course of last five years is that a lot of design pockets have mushroomed around these back-end production hubs. And a number of silicon vendors have established low-key design houses for cost and competitive reasons. It could be worthwhile to dig into the level and scope of these activities and see where does Philippines actually stand in the electronics design value chain.

Indeed, though there is a lot of unreported design works in the Philippines, the country is still behind its neighboors. But at least we are seeing good movements. Noting that higher education and scientific innovations were the keys to riches for Japan, South Korea and Taiwan, Vietnam is courting foreign high-tech firms and inviting rich countries to set up universities and training facilities on its soil. An Australian university, the Royal Melbourne Institute of Technology, has already opened state-of-the-art campuses in Ho Chi Minh City and Hanoi. Thus, a shift from assembly line to design in microelectronics through responsive education is the focus of joint programs by the DoST and UP Diliman.

I believe to make our local microelectronics education grow is to be able to produce a good number of engineers, to develop engineers with globally competitive skills in microelectronics and it will have to start in the classrooms. This is now the perfect time for our country to get the much-needed lift from assembly into design and development. The current administration has declared IT along with Communications as two of the three flagship industries that government would focus on, the other being tourism. The government therefore is to focus its attention now to improve the country's technical and human capabilities.

Meanwhile, BMI expects the Philippines to be one of the region's high growth IT markets over the next few years with annual spending increasing from US$1.46bn in 2007 to around $2.6bn in 2012. Export data from the Semiconductor Industry Association indicate that semiconductors export grew 6.8% to $1.55 billion in May, up from the $1.456 billion in sales registered during the same period last year. The country's export of semiconductor device in May also outpacedglobal sales that expanded by 4.1%. This growth was driven mainly by demand for personal computers and wireless handsets.

The potential for further growth is illustrated by the fact that only 23% of the Philippines more than 1mn small businesses have even a single computer in their businesses. BMI expects total 2008 hardware spending of around $841 mn , up from an estimated $752mn in 2007. Affordability remains a key criterion for PC purchase especially among call centre companies which are a major source of demand. Prices for branded PCs in the Philippines are now below $800 per unit. Much growth will of course come from increasing PC penetration, which is still less than 5% currently. However, even in the Southern Philippines consumers are now showing a greater appreciation of the enhanced features and legal software tht comes with branded computers.

Low price PC initiatives will play a role in driving growth. and in 2007 the CITC (Commission for Information and Communication Technology) launched a new PC4AII programme. The programme aims to increase the PC to user ratio by making available more affordable computers, through installation of open source software. The target price for the PC is around PHP10,000. In addition to the PC4AII programme, likely computer sale drivers over the forecast period include education, lower prices, IP telephony, cheaper processors and entertainment and wireless networking features.

Industry analysts state that one of the missing links in the Philippines electronics industry is integration. The country has technologically fragmented business units need to be consolidated to achieve greater buying power. That is, many buyers getting together to get the best prices.

fyi:
http://www.youtube.com/watch?v=EvCrOMtCyFo&feature=related

RP Microelectronics Industry - Lagging behind Its Neighboors

Tue, 12 Aug 2008 06:10:54 EST

RP Microelectronics Industry - Lagging behind Its Neighboors - by lovephileo

fyi:
http://www.youtube.com/watch?v=EvCrOMtCyFo&feature=related

RP - Keeping Up As e-Services HUb of Asia

Mon, 11 Aug 2008 16:19:40 EST

RP - Keeping Up As e-Services HUb of Asia - by lovephileo

Philippines - Oxford Business Group (OBG), the highly acclaimed global publishing, research and consultancy firm, has launched its first annual authoritative guide on the Filipino economy. The report for 2008 rated the country as the premier guide for foreign direct investment into the country's vibrant economy.

The government over the past few years has made efforts to position the country as the e-services hub of Asia. As such, the Philippines is one of the most aggressive country players in targeting the outsourcing market in the U.S., Europe and neighboring countries. The country as the e-services hub of Asia still focus on building up an IT-enabled economy. The country is an excellent option for those who want to hire an online marketer, programmer, web developer or link builder. Asian countries like India and Philippines are now providing excellent services to online businesses all over the world. It is only a matter of time before other Asian nations become reliable onlime marketing service providers.

Why major companies choose the Philippines?

When it comes to the availability of knowledge-based jobs and workers worlwide, RP is ranked first. According to a survey conducted by the U.S. based Meta Group, the labor quality in the country is ranked 4th among Asian nations. The country is the 3rd largest English-speaking country in the world so Filipino workers have high level of proficiency in English.

The country offers state-of-the-art telecommunications facilities, adequate and uninterrupted power supply. The liberalization of the Philippine telecommunications infrastructures paved the way for affordable cost of internet access and similar facilities. The country has a capacity of 10 million phone lines where 3.5 million of such is in use. To add, the country was dubbed as the SMS messaging capital of the world whose volume of messages remains one of the highest in the world.

There are ready-to-ocupy offices and production facilities, computer security and building monitoring systems, as well as complete office services in specialized IT zones. Wages are typically less than a fifth of that in the U.S. Local communications, electricity and housing cost are also 50% lower compared to the U.S. rates. Foreign companies that are now outsourcing programming and business processes to the Philippines estimate 30%-40% business cost savings, 15%-30% call center services and application systems and 35% to 50% software development.

Located right in the heart of Asia, whose economic growth is among the fastest today. It is a critical entry point to over 500 million people in the ASEAN market and a gateway of international shipping and air lanes suited for European and American busineses. The economy has opened up and now allows 100% foreign ownership in almost all sectors of the economy. Its capital markets have become strong and the banking, insurance and telecommunications sectors have also been deregulated. This means that almost all the monopoly structures in the Philippine market economy have been removed.

RP is a location of choice for back office operations or shared services. There are now more than 8000 global companies outsourcing their ICT or ICT-enabled businesses in the Philippines. America Online (AOL) established its technical and billing support at the Clark Special Economic Zone in Pampanga. Likewise, companies like Citibank and caltex,which have shared-service centers in the country handling finance and accounting transactions of their respective groups in Asia, have established international call centers in the country's business districts and ICT zones. It also includes Barnes and Nobel, Flour daniel, Bechtel, Sealand and Convergys.

RP is the second among Asian countries in terms of having the largest number of training facilities for computer programming and computer-related courses. By working closely with the private sector to develop IT training centers all over the country, the government expects to meet the high demand for IT professionals especially in the developed countries. The country produces 380,000 college graduates a year. Around 70,000 thousandare in the informations and communications technology field and around 105,000 in IT-enabled accounting and finance field. The educational institutions in the country are striving to remain updated with the latest technology in order to produce competent workforce.

E-service is the Philippines' market niche because of its high potential for growth and contribution to employment. In the Philippines, e-service are classified into two types: ICT professional and technical services (requires technical knowledge and skills) and ICT-enabled services (requires skills on the application of the information technology but which is not technology heavy). Qualified enterprises in the country's numerous SEZ and Industrial Estates can avail of attractive incentive packages. The government is nurturing SEZ to become balanced agricultural, industrial, commercial and recreational hubs of activity.

I believe, this country must increase so that poverty will decrease. Investment must increase for the nation's quest for rapid growth and development in the land. But the preliminary task to welcome those investors and gain their confidence lies in our socio-political system. Cutting the red tape and corruption elimination were the constant battle cry of the investment sectors local and abroad. It was there and then, that this country and the people will gain greater momentum towards the greatness of the Orient Pearl.

For sure, the government is up to its continuing goals to build greater physical infrastructure to ensure wider, faster and reliable access at low-cost to information and other ICT resouces. Even the policy and legal environment to promote ICT development. These move will certainly improve our modern business environment. The government should even tap the social services more such as health insurance and school nutrition programs and boost educational support by investing better school buildings - text books, teaching materials, training for teachers and administrators for the development of the country's human potential to enable Filipinos to compete in the digital age.

fyi: http://www.youtube.com/watch?v=OG_FzG2sLeI&eurl=http://www.squidoo.com/hireanonlinemarketer

RP - Becoming A HUb For Regional And Trans-Pacific Connectivity

Sat, 09 Aug 2008 14:39:46 EST

RP - Becoming A HUb For Regional And Trans-Pacific Connectivity - by lovephileo

The country offers state-of-the-art tecommunications facilities, adequate and uninterrupted power supply. A well-developed communication, transportation, business and economic infrastructure links the three major islands (Luzon, Visayas, Mindanao). All are easily accessible by air, sea, inter-island shipping and cyberspace. Container terminals are suited to handle cargo traffic at the highest levels of efficiency. Communication provides international connectivity 24/7 with fiber optic cables as the primary backbone, with satellite facilities as backup.

Fiber optic lines have been the main conduit for telecommunications since the '80. In the late '90s, cable companies upgraded their networks to draw fiber closer to homes, which allowed them to offer broadband, video on demand and other services. The fiber line ends at neighborhood nodes, where the signal is transferred to a coaxial network and its susceptibility to electrical noise limits its capacity.

Philippines' goal is to become a hub for regional and trans-pacific connectivity. For now, only few companies employ such cutting edge technology via a fully redundant fiber optic network. Telecommunication companies have been shifting to fiber optic cables over traditional copper-based communications or telephone lines because it carries and tranfers more data in a matter of seconds due to its greater bandwidth than copper-based cables.

FYI:Fiber optic's advancement in data transmissions

Fiber - speed up to 100mbps

ADSL2 - speed varies from 8-12 mbps (depends on distance, line sync rate, etc)

ADSL2+ - speed can reach up to 24-25 mbps (again depends on distance, line sync rate , etc)

VDSL - can reach up to 50 mbps (again depends on distance, line sync rate etc)

Digital subscriber line (DSL), which is still copper-based, covers 1-3 kilometers of radius with maximum speeds of up to 25 megabits per second to end-users. Fiber optic technology, on the other hand, can cover a radius of 20 kilometers (which means less equipment) and provide up to 2.5 gigabits per second of bandwidth to end-users.

Those fiber optic cables are amazing. When you look at parts of the world, hundreds of millions of people are connected by one or two cables. A cable which is about as thick as human hair can carry hundreds of phone conversations at once. It all works because we can focus lasers precisely and switch them on and off very finely. You can squeeze a lot of informations into just turning the laser on and off like that. Everything moves at the speed of light and the signal is going only halfway around the world about 11,000 miles, which takes less than a tenth of a second at the speed of light.

Philippine operators are making headway in fiber optic infrastructure investment, paving the way for faster broadband services, flexible, more reliable and cost-effective telecommunications systems. Investment in high speed internet and fiber optic cable technology have led to an explosion in the outsourcing industry in the Philippines.

Asia has the biggest number of internet users.

Alcatel Lucent, one of the two contractors tapped to undertake the $550 million Asia-America Gateway project. About 75-80 percent of internet traffic in the Philippines is Trans-Pacific. Alcatel Lucent was tapped to work on the connection from the Philippines to California in the United States while NEC of Japan received the contract for the extension of the project from the Philippines to other Asian countries. The project will meet the expected explosive growth in the country's international bandwidth requirements to support cutting edge broadband applications such as IP based data, video and other multi-media services. PLDT, Phil. Long Distance Telephone Co. into which contributed $50 million for the project will bring down the internet capacity usage of PLDT from 60% to 30%, allowing faster connectivity. The domestic fiber optic network (DFON) of PLDT is expected to reach the terabit capacity by the end of 2008. It would also be complementing the DSL capacity by doubling its Internet Gateway to 50 terabits per second capacity, providing more Filipinos and business with high quality access to the infinite wealth of information in the worldwide web.

A state-of-the-art fiber optic cable network is already in place that could serve as a backbone structure for dial-up networking and internet connection. And the coming of Internet Protocol TV (IPTV) services, changing end-user behavior on the net, and richer multimedia content are driving the need to invest in faster broadband network technology.

RP's $1 Trillion Mineral Deposits Sets To Be The World's Mining Country By 2010

Fri, 08 Aug 2008 15:38:01 EST

RP's $1 Trillion Mineral Deposits Sets To Be The World's Mining Country By 2010 - by lovephileo

Philippines is blessed as the 5th mineralized country in the world with $1 Trillion untapped mineral deposits once fully developed, would be ten times our annual gross domestic product (GDP). The country has overwhelming trillion-dollar worth of untapped mineral resources. RP ranks No.3 in gold, No.4 in copper, No.5 in nickel, No.6 in chromite. The country's mineral potentials can easily wipe out foreign debts, and yet leave more for future generations.

RP could be elevated to a "mining country" by 2010 if the country's mettalic producing mines could sustain its output growth at its current pace. Based on a 2002 World Bank Study, a country can be called a "mining country" if it has a large domestic sector and its mining industry contributres at least 6% to the total exports. The Department of Energy and Narural Resources (DENR) had initially projected that mining's contribution to exports would be on upward trend beginning next year at about 2.8% and at 2.9% in 2009. A big jump in exports contribution is projected in 2010 at 8.6% with all of the priority mining projects already on stream. The projection were based on the production and exports data of current producing mines and the schedule set by the 23 priority minerals development projects.

Since the start of the revitalization program, around 6,500 new job have been generated with an additional 3,000 plus jobs are projected for 2007. Another 30,000 plus is projected in 2008 and 2010. Employmenty in mining is currently pegged at 141,000 up from 2002's 101,000.

The government remains bullish on the prospects of the mining industry, which it expects to generate as much as $10 billion in mineral sales by 2011. The projected sales revenue translate to 58.9% average annual growth from 2004 to 2011. Accordingly, mineral sales are expected to reach $3.62 billion this year; $4.51 billion in 2009; and $5.379 billion in 2010. Last year, mineral sales hit $3.078 billion. Sales are seen jumping to $10 billion in 2011 as the government expects strong production performance from new and existing mineral development projects.

It expects mining to generate between $5 billion and $7 billion annually in foreign exchange and to create as many as a quarter of a million jobs over the next 6 years. As mining investments pour in, the rural areas will experience a significant boost in jobs and productivity, plus a strong surge in infrastructure development. While Philippines has an estimated $1 Trillion (533 Billion pounds) worth of untapped gold, copper and nickel resources, only 2% of about 9 million hectares of land, identifies as having rich mineral deposits, have been explored and covered by mining permits.

The drive to mine is powerful in RP. However, it confirms that we are still largely incapacitated when it comes to protecting our environment. This was the constant contention of some oppositions from indegenous groups and influential catholics bishops trying to ban mining projects of the government nationwide.

From a geological standpoint, the Philippines is A-1. But RP ranks 125th in international envioronmental protection index. The Philippines has only around 150 scientists per one million people. Its rank 125th among 146 countries rated by the 2005 Yale Environmental Sustainability Index (ESI), indicating the country's poor ability to ensure sustainable development of its natural resources. The country, one of the 17 megadiverse countries in the world which together account for up to 80% of Earth's biodiversity, only ranked higher than countries like Haiti, Pakistan, Iran, Sudan, Iraq and North Korea.

Nevertheless the Supreme Court (SC) ruling allows foreign companies to conduct mining operations in the country which is expected to boost economic activity in the rural areas and ensure foreign investments needed to to attain fiscal stability. The Philippine Supreme Court had ruled as early as 2003 that a mining operation in the country could be 100% foreign-owned. Accordingly, interested mining investors should gain the acceptance of the local community where they intend to undertake mining operations. The need for the go-signal of the concerned community is contained in the social acceptability clause of the DENR before any enterprise could stake its claim on a mining site anywhere in the Philippines. Those intending to dig for part of the Philippine-trillion dollars should start negotiating with the concerned communities early on, especially on the issue of environment preservation.

I believe, ban on mining is not the answer but the standards and safeguards already in place and existing law must be strictly enforced. What really brought this country down was governance. We have rich biodiversity but we don't unite together instead we always divide. So how can we put the money where our mouth is, when greed and gluttony surrounds?

The Filipino people represented by the state are the owners of the country's mineral deposits. Since the state does not have the financial and technical capabilities to extract its mineral deposits, it enters into agreement with mining contractors to help extract its own wealth. Opening the windows of opportunity to international groups will certainly bring vital investments. It would be unfair to our people if our mineral potential is not realized as this is clearly a source of employment and development.

We are aware that there had been environmental degradation left by previous mining operations in the past resulting in environmental accidents. Some have caused irreparable damaged to the country's environment and the massive displacement of indegenous peoples, farmers and fisher folk.

The government must learn the lessons well. I hope there are proper regulations in place to protect the sites and the communities around them from the negative effects of mining.

Merchant Cash Advance - A Practical Key To Succesful SMEs Trading And Financing

Fri, 08 Aug 2008 07:25:20 EST

Merchant Cash Advance - A Practical Key To Succesful SMEs Trading And Financing - by lovephileo

For SMEs, let me discuss some guidelines and tips for your effective financial management.

I have several friends who already quit their professional careers and gone through putting their own small business. Most of their small businesses require additional working capital to expand their operations and most of them go through loan applications. But finding the best lender that gives the most reasonable terms can be hard and oftentimes strict requirements and a good credit standing is a major factor for loans approval. This is a common difficulty. It is often a standard operating procedure from these lenders to ask for collaterals, a good credit status and even a third-party guarantor in order to qualify for a loan. Non-compliance often resulted to denial of loans. With merchant cash advance or business cash advance, working capital to small and medium-sized entrepreneurs is now a simple and an easy thing to get it done.

Working capital, refers to a business organization's total current assets (short-term ones), marketable securities, accounts receivables, inventory and cash. Access to capital is important for businesses to advance to the next level or to sustain through a rough time. Traditionally, when a business needed additional cash, a trip to the bank for a business loan would solve the problem. But a traditional bank or financial institutions such as in business loan would require a minimum credit score for the business owners, tax returns, financial statements and takes weeks or even longer to secure . With the state of today's economy, businesses are looking for alternatives to the traditional business lending of the past.

A merchant or business cash advance is a very good alternative. A cash advance pays a business for its future credit card sales up front (before those sales are actually made). The amount of the advance is determined by the merchant's average monthly credit card sales. As future credit card sales occur, the cash advance is paid back with a small fixed percentage of the daily credit card sales. The merchant is charged a fee for the advance and that fee is included in the payback amount.

Cash advances are a safe and reliable means to acquiring capital for your business. But when acquiring additional capital, an entrepreneur must be sure to secure plan of action for the funds, to use the money wisely and let it help you advance your business to the next level. Business cash advance is a great way for small business owners get the funding they need, with a fast and simple process, merchants can be funded with up to $500,000.00 in as little as 10 days.

How merchant cash advance works?

A lender will purchase a small percentage of your future credit card sales, until the payback is completed and will give you upfront the money your business needs. Oftentimes, the business owner will be approved even with a less than great credit history record, making a merchant cash advance a top funding choice, although the approval is much easier than it is with most bank loans, few cash advance lenders will lend to new merchants or start-ups without a history of credit card statements. Even less lenders will approve amounts larger than what the business can predict to earn from credit card sales in a year. The lenders takes all of the risk, but since it is paid out of projected future sales, it is typically a risk worth-taking. Seasonal businesses that need cash flow to move them through slow seasons or merchants who have an unexpected low seasons, may find a need for a cash advance until business picks up.

There are many times when owners of healthy small businesses could use cash flow or working capital to help build their businesses but don't qualify for the traditional bank loans. These include franchise owners who have exhausted their personal savings to purchase their franchise and would like to open another one; merchants who can buy bulk inventory at discount rates or move into a new more efficient locations; expansions; new equipment or simply the desire to move forward on a great new opportunity would definitely avail cash advance.

Strategies to finance short-term working capital needs much greater attentions than are usually practiced. Precisely speaking, there are two short-term working capital financing options; business cash advance program and short-term commercial mortgage loan programs that have been often overlooked. But these two working capital funding options are excellent for small and new business ventures toward initial financial obstructions off their way. Business cash advance is one of the best financing options for businesses accepting credit cards as mode of payment.

For more clarifications - to acquire merchant cash advance:

A-B is not required

No tax return or financial statements are required

Business owner is not personally liable for the cash advance amount

No application fees or closing costs

A simple application process

Approve within 24 hours

Now, it is easy to understand why cash advances are widely accepted in the business community and steadily increasing in popularity. In the Philippines, many straight lending institutions are also playing with it; however, they used to convert customer's postdated checks into cash which is eligible to those whose business normally accept postdated check payments.

Philippine Banking Industry - Rated Low

Tue, 05 Aug 2008 06:54:59 EST

Philippine Banking Industry - Rated Low - by lovephileo

The Philippine banking system is made up of four types of banks - commercial banks (further subdivided into universal and regular commercial banks), thrift banks, rural banks and cooperative banks. These banks are differentiated according to size of capitalization and types of activities that they may undertake. In terms of capitalization, universal and regular commercial banks have a minimum required capital of P4.9 billion and P2.4 billion, respectively, thriftbanks with head office in Metro Manila, P325 million and thrift banks with head offices outside MM, P52 million. Rural and cooperative banks range from 2.6 million to P20 million depending on the type of municipality. Aside from the minimum capital, banks are also required to satisfy a minimum risk-based capital adequacy ratio of 10 percent.

Technology providers are ready with the technologies for e-banking.

Many rural banks function similarly to major banks the world over, offering personal, business and corporate banking services through a wide variety of means. There are currently 38 universal and commercial banks, 80 thrift banks and 727 rural banks now regulated by the Banko Sentral ng Pilipinas (BSP). The BSP enjoys fiscal administrative autonomy from the National Government in the pursuit of its mandated responsibilities. It exercises supervision over the operations of banking institutions and quaci-banks including their subsidiaries and affiliates engage in allied activities.

The number of banking institutions in thge Philippines dropped as industry players in the banking sector fell to 845 as of March 30 from 861 lat year. The decline reflected the continues consolidation of larger banks as well as the exit of weaker players in the banking system.

Commercial Banking Business Environment Rating (CBBER) has rated Philippines overall 45.3. The country has a lower CBBER than most countries in the Asia Pacific region surveyed by BMI. The Philippines CBBER compares poorly to HongKong's regionleading score 79.5 and is closer to the lowest score attained in the region. Sri Lanka's 28.4. The Philippines earns low to moderate scores for each of the four banking elements of the limit to potential returns. In relation to other countries surveyed by BMI, the country's total asset are moderate, the likely growth in total assets is moderate, the expected growth in client loans is very small and there is little potential for banks to earn fees from distribution of insurance products and other activities.

Following Q107's 17 year high growth rate of 6.9% year-on-year (y-o-y). the Philippine government remains optimistic about hitting its full-year target of 6.1-6%. However, with exports expected to moderate in H207 and capital inflows anticipated to slow, we remain more cautious about the growth prospects, forecasting economic growth of 6.0% in 2007.

The Philipines enjoyed its fastest growth rate in 17 years in Q107, as healthy domestic consumption, sustained export growth and increased government spending combined to boost growth to 6.9% y-o-y. Government officials have said that the full year target is well-within reach and could even be revised up after the Philippines recorded the third-best first quarter performance of all Asian countries, trailing behind only Vietnam (7.7%) and China (11.1%).

In RP, the government was able to improve banks' asset quality through the implementation of special purpose vehicle (SPV). SPV is central bank's initial move to encourage banks in disposing bad assets that piled up after the Asian economic crisis, specifically by providing tax incentives. Local banks are estimated to dispose about P150 billion of bad asets in the four-year implementation of the SPV law since 2002. More banks are expected to consolidate over the medium term as inadequately capitalized medium-sized banks seek higher profits and better efficiences under basel 2, an international framework imposing stricter capital requirements.

Indeed, the Philippine banking industry in general has made a lot of progress.The Metropolitan Bank and Trust co., Metrobank, is the country's largest bank - a position it has held for the past eleven years.

There is still work to be done, especially in terms of consolidation, supervision and innovation. I guess the BSP should not only devise reforms but geared for financial innovations to achieve more greater performance. Instill greater market discipline and opened up competition.

http://technorati.com/videos/youtube.com%2Fwatch%3Fv%3DphuSWiDwCB8

RP Microfinance Industry - A Radical Encounter

Sat, 02 Aug 2008 16:13:33 EST

RP Microfinance Industry - A Radical Encounter - by lovephileo

All over the developing world people are waking up and learning the dynamism in microfinance industry - to engaged with, to merge with and to partner with, aiming at a world without poverty. An unprecedented positive global response to micro finance is now underway. It's high time to take a quantum leap of change from the world of the rich down to the Bottom of the Pyramid, the 4Bn poverty-stricken micro-poor entrepreneurs and make microfinance the mainstream for economic growth and eradicate worldwide poverty.

Poverty in the Philippines is largely a rural phenomenon. Study on the poverty situation in the country, 77% of poor households reside in the rural areas, mostly dependent on agricultural-related activities. This is the reason why most MFIs in the country prefer to rule over the rural communities and radically makes the legend of micro finance move on and on.

In November 2005, it was reported that the United Nations cited the Philippines as having the best implementation of microfinance among 160 countries during the launch of the International Year of Microfinance. One year after, the World Bank estimates that there are more than 7,000 microfinance institutions now operating around the world.

Today, microfinance institutions are encountering rapid growth in the Philippines. To date, 1,200 MFIs are operating in the country since its inception in 1980s. It became the sed-bed of the Filipino micro-entrepreneurs, investors, institutions abd even christian organizations who impacted the lives of SME clients with values transformation programs. Currently, MFI reaches about 30% of poor Filipinos. In 1995, its phenomenal growth inspired the Philippine government thus made this industry an official tool in poverty reduction through the Social Reform and Poverty Alleviation Act (Republic Act 8425). Five million families or rather 2.2 million poor Filipinos were benefited bythe micro finance players since 2005. One survey estimated an increment of micro clients to 1 million per year.

Just a couple of months, the much-awaited law of micro and small traders was signed - The Magna Carta for Micro, Small and Medium Enterprises, made into law by the President Macapagal Arroyo, the Republic Act 9501. With this law, it is expected that the MSMES economic contribution will increase from its 30% gross value added, upon the government's commitment to reinforce financial support to small businesses by addressing the problem of capitalization and access to credit avoiding such burdensome collateral requirements, access to modern technologies and entrepreneurship training program for workers and a comprehensive plan that would ensure its viability and growth.

Every year, the government allots certain fund for micro financing made available through local partners, microfinance institutions (private, public, NGO) with an aim to bring it right to the doorstep of the poor micro-clients. The government has P80 Billion available for micro finance program this year. The administration was committed to provide three million entrepreneurs with sufficient credit to contribute to the generation of six to ten million jobs by jobs. The repayment rate of micro loans has been impressive - up to 98%. Its loans grew 12% to P6 Billion last year. And to make the program more attractive, the President has ordered interest rates lowered from 12 to 10 percent per annum.

Microfinance Explosion And Innovation SMEs in the Philippines are more than 90% of the country's business and employs 70% of the workforce. if SMEs suffer, the country will suffer. About 229 banks are microfinancing, with a total client base 0f 780,000. The Banko Sentral Ng Pilipinas (BSP) has been encouraging banks to engage in microfinance, a flagship program for poverty alleviation. But despite BSP push for commercially large banks to tap microfinancing, members of the Bankers of the Philippines rejected the call. They tend to ignore SME services for they believe it were small and not very profitable for the bank. Nevertheless, HSBC has proven a big success where their SME clients have grown from retailing to trading companies and small manufacturers.

Unfortunately, for the SMEs - rejection of loan applications has been high either because they could not submit all the documents required by the banks or they do not have the collateral to secure their loans. Further, most banks are delaying plans to extend credit for the SMEs. Yet in the heart of many MFIs such as NGOs, rural banks and cooperatives are well motivated to serve the un-served and under-served poor farmers, fishermen, households, enterprises and communities in remote areas.

The MFI will still be growing even when the economy is hanging in the balance. Micro businesses need additional capital especially this time of crisis. If they need it, they will resort to MFI. Why? because loan processing is not as strict as in conventional or commercial banking also in any financial institutions. Most micro clients are even not qualified when it comes to documentations. This is why the Grameen Bank uses simpler documents for loan applications and accept collateral substitutes in the absence of a land title. Lately, government has launched housing microfinancing which allows poor households to avail of housing affordable and less documentation requirements. A maximum loanable amount of P150,000.00 for home improvement and repair and Php 300,000.00 for house and lot acquisition.

PLDT, the largest and diversified telecommunication company in the Philippines made a radical microfinance breakthrough among private companies in the country or rather around the world where casual, contractual and temporary employees gain access on micro financing. The funds were made available to janitors, waiters, drivers and guards who would have otherwise found it hard to apply for loans from regular banks or financial institutions.

Further, a breakthrough in mobile banking is a matter of great development as it accelerates the outreach of financial services of the poor. Roughly, 84% of the lower-income population in rural areas of the Philippines finds it difficult to access a telephone. The increasing use and diffusion rate of mobile telephony in developing countries is creating low cost alternatives for people to make deposits, remittances and payments (Smart Money and Globe G-Cash in the Philippines). The rapid growth of branchless banking including mobile phone banking is reducing the cost and expanding the availability of such services. In the Philippines, people would rather pay one percent to remit money via their mobile phone network than the 3-18 percent they are often charged by others.

Microfinance Motivation and Challenge
Yet, despite the successes of Philippine microfinance industry majority of MFIs are still institutionally weak to spread the "manna from heaven" and saturate the poorest provinces or the frontier areas. The challenge in Philippine micro financing is whether MFI could operate on rural areas where main economic and business activities are farm-based and farm-related enterprises.

I believe it takes a heart to face the challenge to invest this time to the poor. Bill Gates called it "social capitalism", we often call it "social responsibility" and then God called it "The Great Commission". That makes MFI more radical when it enables God and man meet together through a holistic ministry of financial working capital to finally bring man into its ultimate source of financial freedom ( Matthew 6:33, Bible). There is a need to reach these unreached and need of social passion and humility. Giving them self-determination, self-respect and dignity. But there is a need for us to sacrifice, to leave behind an old self-ego and to press toward into something worthy than silver and gold, something that would transform this world.

Let me challenge my Filipino brothers - explore all our resources and efforts to encourage developed countries to invest with our micro entre"pinoy" who said to be unbankables yet willing and able to pay amortizations. They toil day and night because they are bound to pay daily emergency lending communities or individuals who serve an excessive interest rates and let them pay their loan for a period of weeks or only a month. why? because MFIs are nowhere to be found.

I personally motivated by the Great Commission - to touch the life of the poor, change their way of living and transform their lives from the clutches of poverty and usher them into what God wants them to be. A life of freedom and abundance.This is the purpose of my journey in microfinance for 6 years. True, it's kind a difficult to invest and win the business with the poor. You must have the mind of the company's day-to-day operation, the heart that transform the character of the clients into faithfulness of loan repayment at the same time, and an elbow that protects the investment of the institution. As far as my experiences is concerned, collection is a thing of good deal of thought but creating a culture or values in them through moral education and transformation programs, a values formation orientation and constant investment of relationship - that would assure a certain MFI's sustainability, efficiency and viability.

Both profit financial and gain moral and spiritual uplifting especially in Christian MFI where I spent most of my microfinance experience as loan officer. The industry is spiced-up not only with social responsibility and acoountability but aims for life transformation. In fact, MFI changes life and life style of the poor entrepreneurs. The poor learns to pay more, to pay back, to fear God and go against bad debts, to work harder and smarter through social development program like livelihood, entrepreneurial skills developmental training, exhibits and spiritual encounter. We assist women in developing micro-finance projects, basically home-based to make them financially empowered. It worked with me - when crisis strikes, the company or the loan officer and the clients are working out together for the good. Changes and challenges are easily overcome due to constant social communion existing between the staff and the clientelle.

Indeed, this industry is not just a matter of weekly amortization from P5,000 initial credit, weekly savings, insurance and livelihood where 92% of the borrowers are women - rather, a ministry that would usher the 4Bn lies at the Bottom of the Pyramid (BoP) into a good and godly life.

FYI:http://www.microfinancecouncil.org/dload/MCPI%20Performance%20Report%20-%20December%202006.pdf

///Any comments and questions are appreciated and am willing to reply.

RP Aviation Industry - 3rd Fastest Growing Air Travel Market In The World

Fri, 01 Aug 2008 17:01:23 EST

RP Aviation Industry - 3rd Fastest Growing Air Travel Market In The World - by lovephileo

Industry data revealed that Philippines is the third fastest growing air travel market in the world, after India and Mexico. India's domestic market grew by 33%, followed by Mexico at 27%, Philippines at 23% and China at 16% last year. The domestic air travel in the Philippines boast of a growth rate of 47% in terms of passengers carried in 2007. It grew by 23%, with almost 10.4 million travellers in 2007, compared to almost 8.5 million pasengers in 2006. The launch of low cost airlines in Philippines has provided a boost for the industry. Airlines that has been part of this trend are Asian Spirit and Southeast Asian Air, offering affordable fares to local and even international destinations. The public seems to have embraced this, as the rate of flying passemgers has increased. This increased not only accounts for new fliers but also regular flying passengers who were on a budget and now have a choice to choosing budget over luxury.

Cebu Pacific (CEB) now has the fastest growing domestic and international operations in the country, serving 32 destinations with a total of 44 routes, and with 906 flights a week to both domestic and international destinations. In 2007, CEB had a 43% share of the domestic market while rival Philippine Airlines had 39% and Air Philippines, 11%.

However, the airline industry is facing testing times. The price of fuel has soared. The credit crunch has made it tougher to raise funds and the economy has worsened. And nobody can blame the airlines companies for raising their fuel costs rather than closing their entire operations. Since high oil prices are partly a response to normal market forces, the airline industry needs to focus on increased flight efficiency and competency.

Recently, the Diosdado Macapagal International Airport (DMIA) here has been designated as the Philippine port of entry in the proposed open skies agreement to be signed by t he Association of Southeast Asian Nation (ASEAN) in December. The 2,500 hectare DMIA is fitted with two runways that are3.2 kilometers long each. The runways are enough to accomodate even the largest aircraft in the world. The move is a major step in making the airport at Clark the Philippines' premier gateway, replacing the Manila airport. Asian Transport Ministerial Meeting, said that Asian countries - the Philippines, Malaysia, Laos, Cambodia, Vietnam, Thailand, Singapore, Burma, Brunei and Indonesia would be declared an open skies. China, South Korea, Japan and India have also expressed interest in the proposal that is likely to spark growth in the airline industry in the region, especially the Philippines with its strategic location and to benefit some 500 million tourists.

Under the open skies policy, national carrier would have the right to fly over a country without landing, to stop in a country for refueling or maintenance without transferring pasengers or cargo, and to carry it fromone country to another and vice-versa. There was no limitationon airline designation, that even non-flag carriers can fly there from multiple designations. Traffic would also get a boost if Cebu Pacific Air opened a hub in Clark.

Clark International Airport corp. (CIAC) reported that in 2007, the DMIA served 533,619 passengers through the 37 weekly flight by Tioger airways of singapore, Air Asia of Malaysia, Asiana Airlines of South Korea and China Southern Airlines.

Singapore Engineering Airline Co. has signed up for a $100 million investment project involving the maintenance, repair and overhaul facilities at the DMIA. Kuwait Gulf and Links will develop a $25 million Global Gateway Logistic Park. Singapore's Changi airports International and Kuwait's Al-Kharafi Group have signified intentions to develop the civil aviation complex.

In addition, President Gloria Macapagal Arroyo signed into law the Civil Aviation Authority Act of 2008 that stands to update and strengthen the international framework of the country's civil aviation industry and meet the standards set by the International Civil Aviation Organization (ICAO). The government has capitalized on project improvement, expansion and rehabilitation of the aviation industry. It covers the upgrading and modernization of air navigation facilities through the replacement of old equipment and installation of new facilities at selected 25 airports and sites nationwide. With new law in place, you can always fly safety and expect the tourism industry to continue its bullishness, and more investments will come pouring in which will translate into more new jobs for our people.

Philippines - World's Biggest Coconut Oil Exporter

Thu, 31 Jul 2008 17:43:20 EST

Philippines - World's Biggest Coconut Oil Exporter - by lovephileo

The Philippines ships an average of 1 million tons a year, typically selling 70-80 percent of its coconut oil on the international market, being used in food, cosmetics and biodiesel. It has been tested for use as a feedstock for biodiesel to be used as a diesel engine fuel. In this manner it can be applied to power generators and transport using diesel engines. Coconut oil constitutes seven percent of the total export income of the Philippines.

The Philippines produces most of the world's dried coconut products and has had a reputation of producing a very high quality product for many years. United Coconut Association of the Philippines Inc (UCAP) showed its exports grew 23% in June from a year earlier. Coconut oil prices in the global market climbed 4.6% in June from May and 60.8 % from a year earlier.

The average price was $800 per tonne in November 2007 compared with just $536 at the same time the prior year. The highest CIF price offered for a nearby position on coconut oil recently reached $1620 per tonne. Indonesian output, the second biggest exporter, was higher last year but global stocks still remain low.

Global demand for coconut oil will exceed exports in the second half, boosting prices, as restaurant companies including Mc Donalds Corp. shift to trans-fat-free oils. China's imports may rise 89% to 122,500 tons in the second half. But with the rising prices of palm oil, the country has kept more of its coconut oil to use domestically in cooking rather than importing high price palm oil from Malaysia or Indonesia.

University of the Philippines Los Baños (UPLB) studied how coconut trees and their products were transported from the farmers to the traders, processors and finally to the consumers and looked at the costs incurred with each transaction and factors affecting the market of coconut products. Coconut farmers have low income because they only sell the raw materials which is not readily marketable. There are also other constraints for the farmers to link with markets. Poor farm-to-market road system, lack of capital and lack of information among others stand as blocks to profitable coconut industry. Of course, the government must move into something that would tap the industry's technology services, information, market, credit and entrepreneurship.

Meanwhile, surging prices of copra could prompt coconut oil mills in the Philippines to slow production. The recent surge in the prices of copra, the dried coconut meat from which oil is extracted is likely to wipe out profits from recently-contracted export deals. Current copra prices, hovering between 37 to 38.50 pesos ($1=PHP45) a kilogram, a 30% higher from prices. It could further limit the supply of coconut oil available for exports and thus keep export prices high in the near term.

CIIF Oil Mills Group, the country's largest exporter of coconut oil, accounts for about 40% of the country's overall coconut oil exports, now operating only two of its five oil mills. The prevailing tightness in copra supply has reduced Philippine exports of coconut oil in February to 78,980 metric tons, down 30% from 112,680 tons exported in January.

Coconut farmers here are demanding the release of the accrued coconut levy fund earning to a fund they're setting up to develop and protect the country's ailing coconut industry. Decades of controversy has hounded the coconut levy funds, originally set up by former President Ferdinand Marcos to stabilize the domestic copra prices and as a subsidy to protect the industry. Hope that the government will resolve this long over-due coconut levy fund controversy in favor of the coconut farmers.

Philippine Software Industry - Hub Of Choice In The Region

Thu, 31 Jul 2008 15:35:12 EST

Philippine Software Industry - Hub Of Choice In The Region - by lovephileo

The software industry is rapidly transforming all walks of life from home, office, business, government to the ways individuals communicate. Today, the Philippine software industry is finally taking center stage as the software development hub of choice in the region.

The Philippine Software Association (PSA) was organized in 1988. Its main purpose then was to organize PSA and help member organizations achieve their business objectives. Since its organization, it has been involved in several missions to sell the Philippines as the preferred choice for software development services. PSA now (PSIA) has worked with the government in developing policies to make the Philippines competitive in the software development services market world-wide. It has more than 110 members ranging from leading multinational firms to small-to-medium local enterprises which make up roughly 90% of the country's software sector.

2007 was the year when the software industry has boomed in the country and nearly 400 software companies were established. There are almost 21,000 software developers in the Philippines that has a skill set that range from the most current and widely-used technologies such as c#, VB, NET, Ruby, C/++, SQL, DBA Embedded Mobile and Wireless System to legacy and mid ware languages such as COBOL and RPG/400.

2008 revenues are expected to reach $7 Billion - a 30% increase from $5 Billion in 2007, expecting the Philippines to capture 10% of the outsourcing and offshoring (O&O) market by 2010 acccording to the report.

For over two decades, Filipinos have been providing cost-efficient and quality-driven software services for companies all over the world. The Philippines offers a great balance of quality and cost-effectiveness as evidenced by its top ranking in various global studies:

#1 in the availability of knowledge-based jobs and workers worlwide, according to a survey conducted by the U.S. based Meta Group.

#1 in terms of financial attractiveness in the 2006 at Kearney Global Competitiveness Index

Swiss International Institute for Management Development (IIMD) study of 60 countries in Asia Pacific:

#1 in the availability of skilled workers

#3 in the availability of senior managers

#4 in the availability of IT professionals

The global market for software is huge. The country already has its foot in the door and have every opportunity to win projects in this area. A Philippine software industry group is hoping to get a bigger slice of the lucrative U.S. software market through a series of roadshows that the group will undertrake in the United States. The forum is considered the largest offshoring and outsourcing summit in the world. Major outsourcing service providers will attend the forum to network and to discuss emerging trends and issues affecting the sector.

True, the Philippines may hava a long way to go in becoming the leading software development player in the world. But if we will just be connected and committed in a common vision, our spontaneous creative interest and cooperation will ushert us into our great destiny.

It is a known fact that our software industry is way behind compared to India than how it was 10 years ago. We must move together if we will still long to grapple with the big players, take an extra-mile more than just maintenance and small-scale software development projects. Getting government supports is an option but it is something that can't depend on this time of crisis with so many programs struggling for prioritization in the government's budget, getting the nescessary resources is not easy. It should be the domestic resources supply the country's IT needs.

Thirty-eight percent of the world's software is pirated. The international software industry says software piracy is worsening in the Asia-Pacific region and the trend shows no sign of subsidence. The "pinoy" should think for himself on the utilization of technology. Building our technology in-house allows us to develop our own expertise. We should start solving our own IT concerns with solutions that arise from ingenuity that is distinctly "pinoy", so that software companies here can compete more effectively and to stand a better chance to get business in the international market.

Philippine Automotive Industry - A P90 Billion Market

Sun, 27 Jul 2008 10:04:17 EST

Philippine Automotive Industry - A P90 Billion Market - by lovephileo

In South East Asia, the Philippines is one of the seats of automotive history. In a land once called the Pearl of the Orient, where jeepneys and calesas where once the king of the road, Manila is now positioning to be an automotive force to reckon with. With production figures inching closely to pre-Asian crisis volumes, the automotive industry appears to be shifting to a higher gear.

The Philippine car industry is in the game in 2007 after selling 117,903 units. This marks the first time breaking the 100,000 - unit barrier since the 1997 Asian economic crisis nearly crippled car business in the region. T'was a big congratulatory handshake for the tens of thousands who work in the various car manufacturers, their dealers and their suppliers. New vehicles sales surpassed the forecast of both BMI and the Chamber of Automotive Manufacturers of the Philippines (CAMPI), with growth of 18.3% to 117,903 units. The Philippine auto industry is now a P90 Billion market. It has also generated 74,000 jobs and contributed P18.9 billion in revenues to the government in 2007 alone. This is a reflection of the dynamism and resiliency of the Philippine car industry - that despite a global downtrend on vehicle sales, local car-makers continue to register growth.

However, local assembly is under threat from moves to reduce imports tariffs, which would erode the competitive advantage of manufacturers producing locally. The Philippine should make its car production industry more competitive to avoid losing out to its Southeast Asian neighboors. The country lags behind Thailand and Malaysia in car manufacturing. Unfortunately, there's not too much car production in the Philippines. Thailand manufactures about 1.5 million vehicles a year, while Malaysia makes close to 500,000 cars compared with about 100,000 in the Philippines.

The industry is expecting 20% growth in Philippines sales this year, driven by strong regional economy and high demand for power tools and automotive products. The Philippines vehicle market expanded by 12.5% year-on-year in May to 10,900 units, according to data released by the Chamber of automotive Manufacturers of the Philippines.

Toyota Motors Philippines, the country's leading automobile distributor, as one of the firms using the highest level of local content in its vehicles, would be particularly hard hit and has revealed that it is considering the future of its production operations. Newcomers have not been deterred; however, with Chinese car-maker Geely making its debut via imported completely build units (CBUS), to be followed by domestic assembly of kits. The carmaker has revealed plans to build a plant in the Subic Bay Freeport Zone to produce low-cost cars for what it labels the B, C and D income brackets, which accounts for around 75% of its sales.

The Toyota group plans to build on its market share through the launch of the Lexus premium brand later in 2008. Meanwhile, Toyota will lower the price of its fuel efficient vehicles. It will offer discounts to make its fuel efficient vehicles more affordable. Its nearest rival is second-placed Honda with 14% of the market from sales of 17,321 units. HCPI reaches a new milestone as it hits the 200,000 units sales mark since it started operation in 1990. For over 17 years now, Honda has been one of the key manufacturers that have stirred the entire Philippine automotive industry.

Mitsubishi was a close third with 12% from sales of 15,000 units. The Japanese giant became the first foreign car-maker to sell over 500,000 units in the Philippines and is now aiming for the 1mn mark by 2017.

Filipino's thirst for new cars isn't quenched by rising fuel and food prices. The last strip of confetti from the Manila International Auto Show, making it the biggest motoring event this country has ever seen.

But one of the customer's struggle now is to find more affordable and environment-friendly modes of transportation a a result of high fuel prices and global warming as a result of carbon dioxide emissions.

Philippine Pharmaceutical Industry - Medicines Cost Second Highest In Asia

Sun, 27 Jul 2008 06:40:26 EST

Philippine Pharmaceutical Industry - Medicines Cost Second Highest In Asia - by lovephileo

In BMI's Q2 08 Business Environment Ranking of 14 key markets in the Asia Pacific region, the Philippines is regarded as only the tenth most attractive pharmaceutical market. While BMI expects the country to improve this position over the next five-year period as the market matures, with more people being able to afford healthcare and with 68 percent of medicines and pharmaceutical products coming from multinational companies.

Forecasts for the Philippines' pharmaceutical market, is expected to top us$4bn in 2012, up from an estimated us$2.61bn in 2007. Double-digit year-on-year (y-o-y) growth over the next five years is also a major encouragement for foreign pharmaceutical players,

It was because The cost of medicines in the Philippines is second highest in Asia next to Japan. The world Health organization has documented that medicines are sold in the Philippines at 4 to 18 times higher than international comparator prices.For example, over-the-counter pills sold in the Thailand and in India at p2 to p4 are sold in Manila at p20 to p40 each. Based on statistics, as many as eight or nine out of 10 filipinos to date have not been able to buy medicines and more and more Filipinos have died access to essential medicines.

Now, the increase in the prices of oil has a direct impact on the prices of medicines. The decrease in buying power is high due to high cost of basic commodities such as rice and gasoline. Filipinos buy the basic commodities first before medicines. They don't really get a budget for their health. They only buy when they almost need it. This time, many people put it as none priority. That is why small and medium sized retail drug stores in the country are changing their stores layout to bring in more customers and increase revenues. Drug stores were reconfiguring their stores to sell a combination of convenience and pharmaceutical products to cope with low revenues brought about by the decrease in public's purchasing power. They are forced to do that. They have to find other means to earn profit from consumer products.

Good, the anticipated cheaper medicines bill will result in lower prices, thus ioncrease consumption as those on the lowest incomes will be able to afford some pharmaceuticals. The public will have access to quality yet affordable medicines. It will also provide pressure competition for multinational corporation so that eventually they will lower prices. The new law allows small pharmaceutical companies to maximize their potential in supplying cheap medicines.

The government has been actively promoting the use of generics in recent years, as branded pharmaceuticals are expensive in a country with low GDP per capita. There is a large potential market for generics but sales have been low. The government has been criticized in the past for not doing enough to promote generics, now they are doing the work double time by pushing the controversial cheaper medicine bill which will impact the Philippines pharmaceutical market in a number of areas, including IP laws, competition and drug price control mechanisms. The market is expected to be specially volatile in the 2008-2010 period. There is only one thing that the Bureau of Food and Drugs needs to strengthen - their pursuit of counterfeit medicines. For sure, a mass influx of fake generic medicines are expected.

The Philippines is a relatively poor country where only a small majority of the country has access to adequate healthcare provisions and even fewer can afford the high drug price. Filipino patients are dying enmasse because they cannot afford the medicines they need. If we truly have the interest of the Filipino patient at heart, then we should make medicines affordable in this country.

Philippine Insurance Industry - Negative Rating

Fri, 25 Jul 2008 20:58:51 EST

Philippine Insurance Industry - Negative Rating - by lovephileo

It was in 1898 that life insurance was introduced in the Philippines, when Sun Life Assurance of Canada began doing business. The first domestic non-life insurance company was the Yek Tong Lin Fire & Marine Insurance Company (Now Philippine First Insurance Company) established in June 8,1906. In 1910, the first domestic life insurance company, the Insular Life Assurance Company, Ltd was organized.

The insurance business in the Philippines has made great strides, and credit could be given to the various organizations that have dedicated time, effort and resources, to uplift the standards of the insurance industry. These associations include the Insurance and Surety Association of the Philippines )ISAP), the Philippine Life Insurance Association (PLIA), the Philippine Life Insurance Rating Association (PIRA) and the Insurance Institute of Asia and the Pacific.

However, in the Asia-Pacific insurance outlook 2006-2007 report, Standard and Poor's Rating services has given the Philippine insurance sector a negative rating, the lowest in the region due to the weak capitalization and constant strain on profitability caused by the heavy tax burden on the sector. In terms of economic and industry risk, the life insurance market is ranked high in both categories. The non-life insurance sector is also rated negative by S&P.

Insurance Business Environment Rating (IBER) makes it easier for the insurance sector business environment in a particular country to be compared with the business environment for any other BMI-monitored industry in that country. The IBER also allows an objective and meaningful comparison of the insurance sector business environment between countries. The Philippines IBER is 51.4. Still a Negative rating.

The Philippine insurance market is small. It is estimated that a little over 20 percent of the country’s population have one type of life or personal accident insurance coverage.And yet, the government still lost P800 million in potential collection of premium tax last year due to the delinquency of certain insurance firms in paying their taxes, according to the Department of Finance. Based on DOF estimates, premium tax collection should have reached P2.6 billion last year based on premiums remitted to insurance firms. However, the government collected only P1.9 billion.

Hence, new taxes was imposed upon the insurance industry.Under the new circular, the gross premium receipts of nonlife insurers are subject to the 12-percent value-added tax, and the compulsory third-party liability insurance for motor vehicles must pay P15 in documentary-stamp tax. The provision would have also covered the documentary-stamp t ax for group personal-accident insurance and marine-cargo insurance.Traditional life-insurance policy holders that pay premium for the protection they get would have also been subjected to a 5-percent premium tax, plus 50 centavos for every P200 worth of premium and the 35-percent corporate income tax.

The Philippine Life Insurance Association, the Philippine Insurers and Reinsurers Association and other organizations earlier protested the imposition of new taxes on an industry they claim is one of the most heavily taxed in the country. Life insurance companies are against the imposition of new taxes as it would hurt the industry and the insuring public. New taxes will only hurt the already-burdened insurance industry, and it will also have a negative impact on Filipinos without insurance.

Perhaps the most significant obstacle the industry faces is the heavy tax burden put on premiums, as it erodes corporate profit margins and discourages new customers.Compounding this difficulty was the increase in EVAT and taxes from local government such as Manila and Makati. Taxes now go as high as P.28 centavos for every one peso of premium in the case of fire insurance alone.

The government must take into account the costs that are beyond the reach of the countrymen. In fact, the market is incredibly large.the low-penetration rates indicate that there is a great room for growth. and it is just a matter of affordability.an improvements to the tax regime.