New shining trademark of the Philippines (Scrapping old tags)

By: Juan Mercado

What are chances of scrapping, for good, the derisive tag of the Philippines as the region's never-do-well?" Manuel de la Torre e-mailed. His query stemmed from the economy's 6.4 percent surge in the first quarter.

That growth, tracked by analysts from Standard & Poor to Hongkong Shanghai Bank trounced the earlier market consensus : "GDP growth is forecast to recover to 4.8 percent in 2012."

That ranked the Philippines "Asia's second fastest-growing economy after China". Once Asean's perennial "laggard", the Philippines grew faster than Indonesia (6.3 percent), Vietnam (4 percent), Singapore (1.6 percent) and Thailand (0.3 percent), the National Statistical Coordination Board said.

Is this smoke and mirrors? Does the feel-good mood stem from what people call a "halo effect", asked the column "Banyan" in the Economist?

"In a country fond of nicknames…the unlikely saint is ( Benigno Aquino III ) known as Noynoy, or P-Noy," Banyan adds.

'He swept to power in 2010, partly on a wave of affection… for Corazon Aquino, the first president after the dictatorship of Ferdinand Marcos. An undistinguished record as a senator did little to build ( P-Noy's) hopes of a bold presidency."

P-Noy is an aberration in a country where politicians salivate to take over Malacañang. Like his mother, he was prodded into running. Once elected, P-Noy crosses off on a calendar the days until his term ends, just as his mother did." That's another of those unverifiable yarns.

Aquino went on record, early on that he'd step down in 2016. This heeds the constitutional ban on president reelection. That stance buttresses P-Noy's clout for reform. He has not been dogged by the corruption charges that shackled predecessor Marcos, Joseph Estrada and Gloria Macapagal Arroyo.

The Philippines was once the basket case of Southeast Asia, David Pilling of Financial Times recalled. It's gross domestic product of US$2,200 per capita bracketed it with Bolivia. Manila was way behind Bangkok with a GDP per capita of US$5,400.

"But there are definite signs that the country – with its young population of nearly 100 million people, the world's 12th largest – has turned a corner." In its study of the world in 2050, Hong Kong Shanghai Bank highlights "the striking rise of the Philippines, which is set to become the world's 16th-largest economy, up 27 places."'

"There are three reasons to be hopeful, if not yet exactly cheerful," the Financial Times says:

First:  the external position of the Philippines improved dramatically". Manila is a net creditor to the International Monetary Fund. Overseas remittances from the roughly eight million Filipinos working abroad held steady despite Middle East turmoil.

Second: the country is getting its fiscal house in order'. The deficit has narrowed to a manageable 2 per cent…. Subsidies on fuel and power, the bane of many Asian Finance Ministers, were scrapped several years ago."

Third: the political situation of the Philippines is vastly improved." The conviction of a Supreme Court chief justice Renato Corona is about big fish." Tax evaders are being tracked down. "The tax take has edged up even without necessary tax reform. That a sitting President can be stripped of land (like Hacienda Luisita) is a hopeful sign that the separation of powers enshrined in the constitution is being honored."

After the nine-year presidency of Gloria Macapagal Arroyo, which in its final years was widely seen as corrupt, Aquino is "liked as a welcome change," the Economist states. "He has gained kudos for trying to bring Gloria Macapagal Arroyo, presently detained, to account." That includes fresh tenders for "suspicious contracts awarded by Mrs. Arroyo's government …and clean-ups in the tax and customs authorities.

(A Pulse Asia survey conducted nationwide from May 20 to 26 said Mr. Aquino scored an approval rating of 67 percent, down 70 percent in March. Parallel surveys by the Social Weather Station find the President holding unprecedented "good" ratings over the last two years).

Can these reforms be sustained? The Philippines is a country where "giving things a sleek appearance sometimes seems to matter more than fixing sordid reality."

The economic prospects are good. The stock market has been one of the world's rare performers this year. The population is young, the banking sector strong, mineral wealth still abundant. The economic potential of Mindanao may further be unlocked by the arrests of ARRM warlords and election reforms.

Efforts to jack up raise revenues—a paltry 12 percent of GDP— by sin taxes on alcohol and tobacco could be hijacked by embedded lobbies. It won't be the first time. Despite an aging leadership, the communist insurgency simmers. China's intrusion into waters of Southeast Asian countries exclusive economic zone bugs the region.

"A first step is to resolve pervasive constraints," says Asian Development. For the Philippines, these calls for three steps:

(a) Good governance;

(b) Improving the business environment; and

(c) Accelerating development of the physical, institutional and social infrastructure.

Indeed, "we must unclog the bottleneck in infrastructure," the mint-new Economic and Planning Secretary Arsenio Balisacan states. "The 7 percent to 8 percent GDP growth target is doable.

"The President's instruction is to speed it up, especially the infrastructure," Balisacan said.

"It's a tedious process that bureaucracy often find difficult to speed up. We need to declog the bottleneck in private investment."

Undoing decades of corruption won't come overnight. But those derisive old tags may yet be scrapped – finally.

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$1 Billion Dollars investment in the Philippines from Shell & Nestle signed

Oil industry giant Pilipinas Shell Petroleum Corp. may increase its investments in the Philippines by as much as $1 billion, Finance Secretary Cesar Purisima said.

In a statement, Shell said it signed a deal with the Philippine government for a joint technical feasibility study of the planned Liquefied Natural Gas (LNG) terminal to be put up in Batangas.

President Aquino told reporters both Shell and Nestle discussed with him their plans to expand their operations that could provide more jobs.

 "If you remember, we went to Batangas a while back, they were talking about their expansion. They'll be awarding the contract for the construction of the expansion for Malampaya by July 2012. It is projected to produce about 7,000 jobs," the President said.

"You will witness the signing of the study for the regasification plant. That seems to be a very good prospect. We discussed a little about the resources that are off Recto Bank," Aquino said.

Purisima said in his Twitter account that Shell would invest over $1 billion in various facilities.

As regards Nestle, the President said the company indicated it would want to reverse the balance of "sourcing from the Philippines versus sourcing from abroad."

"When we initially talked about it, it seems they were doing about 25 percent of their coffee needs from the Philippines. They want to get that by 2020, to between 75 to 80 percent of their needs. So currently, it's about 30 to 35 percent of their coffee needs are already sourced in the Philippines," Aquino said.

The President said Nestle invited Filipino officials to visit Nestle headquarters in Switzerland and their agriculture research facility. They also talked about their business process outsourcing operations already in the Philippines.

"They started out 60 then now they number... but there are 3,000 more or less direct employees already," Aquino said, adding he would also be inaugurating the Nestle plant that broke ground in October.

The President and Simon Henry, chief financial officer of Royal Dutch Shell Plc, witnessed the signing ceremony of the Memorandum of Understanding between Edgar Chua, Pilipinas Shell country chairman and Energy Secretary Jose Rene Almendras.

Henry said "this Memorandum of Understanding is indicative of our support to the Philippine government's aspiration to diversify its energy sources as embodied in its natural gas master plan."

The MOU calls for cooperation and coordination efforts between the Philippine government and Shell for a technical feasibility study which shall determine the viability for the development, construction and operation by Shell of an import and regasification terminal adjacent to its refinery facility located in Tabangao, Batangas.

Chua, for his part, said "we believe this feasibility study for an LNG terminal is a timely activity as it firmly supports the government's thrust of achieving energy security and promoting cleaner energy."

The proposed site of the LNG import and regasification terminal is adjacent to Shell's refinery facility in Tabangao, Batangas. The feasibility study is expected to be completed by 2012 with a "first gas" target date in 2016.

The Philippine government, through the DOE, is developing a natural gas master plan in order to diversify the country's energy sources to address the increasing demand for power and support the economic growth of the country.

Shell has a long-term relationship with the Philippines and continuously looks for opportunities to contribute to nation-building, it said in a statement.

Chua also informed the President that a technical study to evaluate possible modifications in the design and refining processes of Shells' refinery facility in Tabangao, Batangas was close to completion.

He explained the study aimed to determine the necessary changes in the facility that would allow Shell to meet the new Philippine National Standards (PNS) for 'Euro IV (PH)' grade diesel and gasoline set to take effect in 2016.

The signing of the deal was part of Aquino's two-day investment mission here.

On 5^th June 2012, the President witnessed the signing of $1.03 billion in business agreements between British and Filipino companies.

Shell said Chua also had the opportunity to present to President Aquino an overview of the investment program that includes the next phases of exploration in the Malampaya natural gas field in northern Palawan.

Some 40 to 50 percent of fuel for Luzon's gas-fired power plants come from Malampaya natural gas, according to the Shell Philippines' website.

"In order to maintain the project's gas production and reliability, the Service Contract 38 consortium is investing an additional $1.04 billion for Malampaya Phase 2, which will entail drilling of additional wells by 2014," Shell Philippines said.

By 2015, Shell expects Phase 3 of its Malampaya operations to get underway. This involves the installation of a new platform.

"These developments are expected to maximize the recovery of gas from the reservoir and to maintain the level of gas production as the reservoir pressure drops and as the gas depletes," the Shell website also said.

Back in January 2012, Shell turned over to President Aquino a check representing $1 billion for the government's share of the earnings of the Malampaya deepwater gas-to-power project, a joint venture between the Philippine government and Shell Philippines Exploration B.V.

From the Malampaya proceeds, President Aquino sourced the funds to finance the Pantawid Pasada program for public utility jeepneys and tricycles, as well as the budget for the acquisition of Philippine Navy patrol ships purchased from the United States Coast Guard.

Shell's investment commitment is in addition to the $1.030 billion worth of investments pledged earlier when President Aquino met the executives of Glencore International Plc and its Philippine partner Philippine Associated Smelting and Refining Corporation (PASAR); Cebu Pacific Air, Rolls-Royce, and Royal Aero, GazAsia Ltd., and its Philippine partner the AsiaGas Corporation.

Nestlé said it would expand its current operations in the country. Nestlé Philippines employs 3,400 people in its manufacturing operations and 400 more in its backroom operations, which handle employee and financial services.

At 10 Downing Street, President Aquino asked British Prime Minister David Cameron to visit the Philippines as he sought more investments including in the Public-Private Partnership program of the country.

President Aquino told Cameron his administration was rolling out projects in the fields of infrastructure, energy, tourism, business process outsourcing and information technology. Read more in ABS-CBN

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