France, Russians, Asians students lured Philippine' English language with white sandy beaches

French student Laura Samzun attends a one-on-one English class at Cebu Pacific International Language school in Cebu city in central Philippines July 6, 2012. Photo by Erik De Castro - Reuters

'It's less expensive to go to the Philippines, to come back (to) France, and to pay school than to stay in France (for that time),' French student says

CEBU, Philippines — In the Philippines, English language courses come with poolside classrooms, field trips to the beach, and instructors doubling as tour guides.

English is widely spoken in the former American colony, and language proficiency schools have mushroomed across the country, catering to an expanding market of Asian and European students looking to combine English learning with tropical tourism.

French student Laura Samzun will soon be taking a test to enter a public college in the United Kingdom, and is under pressure to perfect her English. She chose to take classes in the Philippines due to lower costs.

"It's less expensive to go to the Philippines, to come back (to) France, and to pay school than to stay in France (for that time)," Samzun said.

Fresh from a backpacking trip in Indonesia, she kick-started her courses in June at the Cebu Pacific International Language School on the sunny central island of Cebu.

"I really wanted to see Asia, to travel. So I can travel and study (at) the same time. It's a good thing," the 22-year-old Toulouse native said.

There are some 500 schools offering language proficiency programs around the country, and one-fifth are in Cebu. The island's proximity to white sand beaches and its laid-back provincial lifestyle are a big draw for foreign students, who mostly come from big industrial cities.

The schools boast high quality education, with small student-teacher ratios that allow for more focused instruction.

In four months of English proficiency courses, Chinese nurse Flora Wang has progressed from near-zero comprehension to carrying a conversation with ease.

"Actually really getting better. When I came here, I can't speak and understand anything. But during the four months, I improved a lot," said the 25-year old Beijing native who plans to move to the U.S. to study health care.

Wang recently finished her course at Cebu Pacific International Language School (CPILS), one of the pioneers of English language education in the Philippines.

CPILS accommodates around 450 students per course period, mostly from South Korea. The student population has ballooned from 60 students when the school opened 11 years ago, and their pool has expanded to include enrollees from Japan, China, Taiwan, and European countries like France and Russia.

Park Yoon Jae, a university student from Seoul, wants to land a job back home in a multi-national company, where English is a primary requirement.

"Especially these days, (in) Korea, we have to speak English very well. Because almost all company want very high level English skills," Park said.

The intensive English course work in CPILS runs an average of four months, in which students can take up to seven hours of lessons each day. A one-month course can cost around $1,000 a month, including accommodation and food.

Value-for-money

In Cebu, campuses are equipped with a pool and a fitness gym, with some offering yoga classes and dance workshops. The beach is just a half-hour ride from the city, and schools arrange island-hopping trips or diving lessons on weekends.

The success of English-proficiency schools around the country has prompted the Philippines' tourism department to launch the English-as-a-Second-Language (ESL) Tour Program, tapping key markets like South Korea, Japan, and Russia where the demand for English-learning is high.

South Korean students of Cebu Pacific International Language school prepare to snorkel during a beach outing in Cebu city in central Philippines July 7, 2012.. Photo by Erik De Castro - Reuters

"This is where the Philippines can be very competitive. We have World Heritage sites, white sand beaches, you have spas, you have dining and shopping," Benito Bengzon, assistant secretary for international tourism promotions, told Reuters.

The Philippines aims to hit 4.5 million international tourist arrivals this year, a fraction compared to neighboring Thailand or Malaysia. But English learning-tourism is unique to the Philippines, and Bengzon said the sector can grow by 10 to 15 percent among Asians, and up to 25 percent among Europeans.

The pitch is that the Philippines is a good alternative to Australia, the United States or the United Kingdom because it is closer to Asian countries and also because the whole experience, from education to extra-curriculars, is value-for-money.

"The message here, apart from the tourism component is that it shows to the world our proficiency in English, our competitive advantage, and of course you can already mix it with the fun and enjoyable and memorable part of it," Bengzon said.

The famed Filipino hospitality, inside and outside the school, is another plus for the students.

"There are 200 or 300 teachers. So I have many chances to go out with them. And while I'm enjoying my time, I can study English with them at the same time," said Yu Kitaoka from Japan.

MSNBC.com

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Cambodia's "ASEAN Way" founders in South China Sea storm

Dimming of ASEAN after the betrayal of Cambodia

As Philippine Foreign Minister Albert del Rosario began to raise the sensitive issue of the South China Sea at one of last week's Asian summit meetings, his microphone went dead.

A technical glitch, said the Cambodian hosts. Perhaps something more sinister, hinted some diplomats who were frustrated by Chinese ally Cambodia's dogged efforts to keep the subject off the agenda.

That account and others, described to Reuters by diplomats with direct knowledge of the talks and who asked not to be identified, reveals how deeply Southeast Asian nations have been polarized by China's rapidly expanding influence in the region.

The fast-growing 10-nation Association of Southeast Asian Nations (ASEAN), which aims to form an EU-style economic bloc by 2015, insists it remains united despite its failure for the first time in 45 years to agree a concluding summit statement.

But Reuters' interviews reveal deep discord and frayed tempers at last week's summit that are sharply at odds with the group's self-styled reputation for harmony and polite debate.

"It was one of the most heated meetings in the history of ASEAN," one diplomat said. Another described Cambodia, which holds the revolving ASEAN chairmanship this year, as "the worst chair", and said China had effectively bought its loyalty and that of some other states with economic largesse.

The breakdown has left attempts to craft a maritime "code of conduct" this year between ASEAN and China in tatters, raising the risk that growing incidents of naval brinkmanship over the oil-rich waters will spill over into conflict.

It also underlines the huge challenge facing the United States as it refocuses its military and economic attention on Asia in response to China's rise. The South China Sea has become Asia's biggest potential military flashpoint as Beijing's sovereignty claims set it against Vietnam and the Philippines racing to tap possibly huge oil reserves.

CHINA BREACHES INNER SANCTUM

The failure touched on a long-standing ASEAN fear, says Carlyle Thayer, an emeritus professor at the University of New South Wales at the Australian Defense Force Academy -- that lack of unity would allow foreign powers to exploit its differences.

"This is the first major breach of the dyke of regional autonomy," he said. "China has now reached into ASEAN's inner sanctum and played on intra-ASEAN divisions."

Cambodian Prime Minister Hun Sen has angrily rejected suggestions that China has "bought" Cambodia's support over the South China Sea dispute. China's foreign direct investment in Cambodia was $1.2 billion in 2011, almost 10 times that of the United States, according to an estimate by the government's Council for the Development of Cambodia. Chinese investment and trade has also surged in neighboring Myanmar and Laos.

Cambodia batted away repeated attempts to raise the issue about the disputed waters during the ASEAN meeting last week as well as the ASEAN Regional Forum, which includes Japan and the United States, according to diplomats present.

ASEAN Secretary-General Surin Pitsuwan was cut off in mid-address by Cambodia's foreign minister as he tried to bring up the topic, said several Southeast Asia diplomats.

Del Rosario's microphone malfunction occurred at a Thursday morning ministerial meeting, diplomats said, as he raised the issue despite Cambodia's insistence that it should not be discussed. A Cambodian foreign ministry spokesman said it was "craziness" to suggest that it was switched off deliberately.

On Friday, the last day of the summit, diplomats scrambled to avoid humiliation and agree an 11th-hour text for a joint statement. Regional giant Indonesia took the lead.

Foreign Minister Marty Natalegawa even called his Singapore counterpart back from the airport to help draft a deal, the first ASEAN diplomat said.

Natalegawa drafted 18 different versions of the statement in a desperate effort to appease both Cambodia and claimant states the Philippines and Vietnam, the diplomat said. Natalegawa's staff scurried long distances through Phnom Penh's cavernous Peace Palace to get the latest drafts to printer machines.

But the attempts finally stalled over Cambodia's unwillingness to accept any mention of the Scarborough Shoal - the site of a recent naval stand-off between China and the Philippines - even after Manila accepted an Indonesian suggestion to change the wording to "affected shoal".

"The host should have played a bigger role, but he didn't," the ASEAN diplomat said.

Then came the fallout. The Philippines said it deplored the outcome and Del Rosario held a news conference in Manila to condemn an unidentified state's "increasing assertion" in disputed waters, warning it was raising the risk of conflict.

It was shockingly blunt language for a group that has long waved off criticism of its bland statements and lack of strong joint policies by citing the "ASEAN Way" -- its method of discrete, non-conflictual cooperation.

CODE OF CONDUCT IN DOUBT

China claims all of the South China Sea within a huge, looping "nine-dashed" line, and has rejected any "internationalization" of the dispute or direct bilateral negotiations. It has used the dotted line on maps dating back to the Nationalist government of the 1940s.

Last month Beijing said it had begun "combat-ready" patrols around waters claimed by Vietnam after voicing strong opposition to a Vietnamese law asserting sovereignty over the Paracel and Spratly islands.

Now, the Philippines and Vietnam, which have both seen a sharp rise in naval stand-offs with China, want ASEAN's backing to help them stand up to the regional giant.

Without a strong ASEAN stance, those countries could push harder to expand alliances with the United States. In doing so, they must also be wary of losing out on closer trade and investment ties with China, Asia's dominant economy.

ASEAN and China were due to start formal negotiations on a code of conduct to help manage the dispute in September, hoping to finalize a deal by the next ASEAN summit in November. Last week's acrimonious breakdown puts that in doubt at a time when naval tensions are rising sharply.

"How can ASEAN play a central role if it doesn't have a common position?" Indonesian Foreign Minister Marty Natalegawa said on Monday, announcing he would tour ASEAN countries this week to try to salvage a joint statement.

A hardening of positions on all sides, encouraged by growing nationalist sentiment over the dispute in several claimant states, is reducing the chance of a meaningful code of conduct being signed and increasing the chance of a naval clash.

Adding to the pessimism over a code of conduct is the slate of ASEAN chair nations for the next two years - low-profile Brunei next year followed by China-dependant Myanmar in 2014.

A binding set of rules would go some way toward making up for Asia's lack of security mechanisms to prevent naval tensions escalating into a full-blown conflict.

"NATO and the Soviet Union had those kind of mechanisms in place. If anything happened there were the rules of the game in place," said Ian Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore.

"There's no rules of the game in place here."

(Additional reporting by Olivia Rondonuwu in Jakarta, Prak Chan Thul in Phnom Penh and Ben Blanchard in Beijing. Writing by Stuart Grudgings. Editing by Jason Szep and Jeremy Laurence)

Reuters 

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PHL Navy & Coast Guard Standby – ready for Deployment to Spratlys Island

The military is ready to assist the Philippine Coast Guard (PCG) in enforcing the country's maritime laws, but will only do so if ordered by higher authorities.

Armed Forces spokesman Col. Arnulfo Burgos Jr. stressed Tuesday (July 17, 2012) that the PCG is the agency tasked to ensure that the country's laws are being followed.

"The maritime laws there (in the West Philippine Sea) are being enforced by the Philippine Coast Guard and whenever told to do so, we will be in the area," Burgos said in a press briefing.

"But as far as our constitutional mandate to protect the people and the state, we will continue to do that," he added.

Burgos was asked to react to reports that China has sent a big fleet of fishing vessels in the Paracel Islands which contested between Vietnam and China. Paracel is a separate group of Island closer to the shore of Vietnam.

Burgos said they would only comply with the directives issued to them by higher authorities.

"We are implementers. We just execute whatever order is handed down to us," Burgos said.

"Coordination between the Philippine Coast Guard and the Armed Forces of the Philippines is very critical," he added.

On Sunday (July 15, 2012) , a huge fleet of Chinese fishing vessels arrived at the contested parts of the West Philippine Sea, in what observers view as an effort to assert Beijing's claim over the area.

China's state-owned news agency Xinhua said the fleet of 30 fishing vessels from Hainan province arrived near Yongshu Reef on Monday afternoon (July 16, 2012).

The fleet reportedly includes a 3,000 ton supply ship and a patrol vessel and is said to be the largest ever launched from the province.

The fishing expedition in the area will last for five to 10 days, reports said.

The arrival of the fishing fleet in the Paracels Islands near the Spratlys came on the same day a Chinese warship that ran aground on a shoal off Palawan was successfully refloated after being assisted by vessels sent by Beijing.

The grounded ship - a Jianghu-class, Chinese guided-missile frigate – was removed from the Hasa Hasa (Half Moon) Shoal on Sunday and left the area on the same day.

Hasa Hasa Shoal, where the Chinese warship got stuck, is located about 60 nautical miles off Rizal town in Palawan Province.

The warship got stuck on the shoal last July 11, 2012 while conducting a routine patrol.

The Philippine media knew about the incident through a report released by Australian paper Sydney Morning Herald last Friday.

Philippine officials did not inform the public about the incident before the Sydney Morning Herald report was published.

The warship reportedly pinned itself to a reef at Hasa Hasa Shoal, on the southeastern edge of the hotly-contested Spratlys Islands.

The ship got stuck within the Philippines' 200-nautical mile exclusive economic zone, as determined by exclusive economic zone as provided by international law.

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QC Police relieved from post after blocking the President Convoy heading - La Mesa Dam

A Quezon City policeman was relieved from duty after he allegedly refused to give way to the convoy of President Aquino on Tuesday (July 17, 2012).

SPO2 Ricardo Pascua, on board his Mitsubishi Adventure, allegedly refused to give way to the president's convoy along Commonwealth Avenue even as several Presidential Security Group (PSG) personnel asked him.

The PSG said Pascua told them that he was a policeman, prompting them to bring the matter to Pascua's superiors.

Aquino was reportedly on his way to attend a program at the La Mesa Dam near Batasan.

Quezon City Police District (QCPD) Director Mario Dela Vega said Pascua has been relieved from his post at the QCPD Station 4.

Pascua, who has been working as a policeman for about 30 years, was also disarmed. He will be deployed to Camp Karingal where he will serve as a gate guard.

Pascua said he did not intend to disrespect Aquino and his security men and claimed he did not notice that he was blocking the president's convoy.

He extended his apologies to Aquino and members of the PSG.

Dela Vega said Pascua will also face summary dismissal proceedings.

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Philippines Targets $10 Billion in Foreign Investments

Gregory Domingo, Philippine trade secretary. Photographer: Edwin Tuyay/Bloomberg

The Philippines said it aims to boost foreign direct investments in call centers, factories and shipyards to more than $10 billion a year, as President Benigno Aquino strives to create jobs and bolster growth.

The Philippines received 24 business teams in the first half of the year from countries including Russia, Turkey and Japan, Trade Secretary Gregory Domingo said. Investors are keen on shipbuilding, agriculture, energy, steel, garments, and business process outsourcing, he said.

"The biggest thing that has improved our standing in the investment community globally has been President Aquino's governance," Domingo said in an interview in his office in Manila (July 15, 2012).

Aquino is winning confidence from investors and rating companies as he fights corruption and boosts infrastructure spending to transform the nation into a manufacturing hub in the region. Moody's Investors Service boosted its outlook on the Philippines to positive in May, when the country's top judge was impeached for illegally concealing his wealth, while Standard & Poor's this month raised the long-term foreign currency- denominated debt rating to the highest level since 2003.

The $225 billion economy expanded 6.4 percent in the first quarter, the fastest pace since 2010, and the peso is the best performer against the U.S. dollar among Asia's 11 most-traded currencies this year, having gained about 5 percent. The Philippine Stock Exchange Index (PCOMP) surged to a record this month.

The peso rose a third day today to 41.732 per dollar as of 9:27 a.m. in Manila. Benchmark bonds due March 2021 gained, with the yield falling to the lowest level since February, according to Tradition Financial Services.

'Tremendous Interest'

"When he first assumed office, there were still a lot of people who doubted he will really pursue" good governance, Domingo said. "But now, he has convinced everybody that he is sincere. We've seen tremendous interest in investment."

From 1970 to 2010, the Philippines drew $33.98 billion in foreign direct investment compared to $322.13 billion for Singapore and $108.87 billion for Thailand, according to the United Nations Conference on Trade and Development.

The Philippines lured about $6 billion in pledged foreign investments last year, and has drawn commitments from companies including Glencore International Plc and Gazasia Ltd. this year. Business groups from Mexico and Argentina are due to visit the country, Domingo said.

Bloomberg Business Week (Bloomberg News)

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PLDT will buy majority Stake and Take over GMA7 TV for $1.3 Billion US Dollars

Philippine Long Distance Telephone Co. (PLDT) groups widely expected takeover of television station GMA Network Inc. may be delayed to next year due to the need to seek congressional approval for the deal, executive Manuel V. Pangilinan said.

Nevertheless, Pangilinan, who chairs PLDT, said preparations are ongoing to raise cash to pay for the majority stake in GMA, if and when both camps agree on a price.

"We're already talking to our banks," Pangilinan said.

But he added that the company would rely mostly on cash to pay for a majority stake in GMA. Loans would only fund a small portion of the transaction, he said.

He explained that the PLDT group and the Duavit, Gozon, and Jimenez families that control GMA 7 would both work to have an agreement before the year ends.

Whether PLDT can take over the company in 2012, however, was still unsure.

"That deadline is beyond our control because we still need to get approval from both houses of Congress and the NTC (National Telecommunications Commission)," Pangilinan told reporters, speaking at the sidelines of the contract signing for PLDT's co-branding deal for Henry Sy's Mall of Asia Arena.

Either camp has been mum on details of the negotiations, but the Inquirer reported this week that both sides have agreed on a price of ₱52.5 Billion Pesos (1.3 $ Billion USD) for about 80 percent shares of GMA 7.

Pangilinan said PLDT's affiliate, MediaQuest Holdings, would most likely acquire GMA's common shares, while PLDT would pick up Philippine Depository Receipts, a form of equity reserved for foreigners.

Under the Constitution, foreigners are not allowed to have voting shares in media companies.

PLDT is controlled by Hong Kong's First Pacific Co. Ltd. and Japan's NTT DoCoMo. But MediaQuest is owned by PLDT's Beneficial Trust Fund, which would allow the group to skirt restrictions on foreigners.

MediaQuest Holdings controls other key media assets, most notably, Associated Broadcasting Corp., operator of GMA's rival television network TV5

Inquirer 

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Indonesian President disappointed to Cambodia’s One sided to China in ASEAN SUMMIT

President Susilo Bambang Yudhoyono expressed his disappointment over Indonesia's failure to help settle disputes in the South China Sea during the recent Association of Southeast Asian Nations (ASEAN) Ministerial Meeting (AMM).

Yudhoyono held an impromptu press conference at the Presidential Office on Monday, only to express his concerns over the failure of ASEAN members to come up with a communiqué during the AMM in Phnom Penh, Cambodia — the first in the organization's 45-year history.

"This has never happened since the ASEAN was established. I am disappointed and really concerned; this could lead to misperceptions or false representation of ASEAN. The media has said ASEAN has broken apart and there was no longer unity in the region," he said.

"I disagree. ASEAN has not broken up and it remains in unity in spite of the ongoing problems that need to be resolved."

The Presidential Office convened the press conference after Foreign Minister Marty Natalegawa briefed Yudhoyono on the fallout from the failed ASEAN meeting.

Indonesia is one of ASEAN's founding members and handed over the 2012 chairmanship to Cambodia. Yudhoyono had repeatedly expressed his confidence about Indonesia's growing international influence, including helping to resolve conflicts in the region.

Indonesia has been considered as having significant clout in the region, particularly during its last chairmanship period in 2011.

The country has been seen as one of key players in the democratization process in Myanmar as well as in the settlement of the conflicts on the Cambodia-Thailand border.

When it comes to South China Sea disputes, however, Indonesia, which appears to be playing a mediator role, has faced insurmountable obstacles in trying to reconcile differences among many ASEAN member states.

The 2012 AMM, which wrapped up on July 13, was the first occasion when ASEAN failed to produce a joint communiqué.

"Last year, we managed to help settle Myanmar and Thailand-Cambodia issues and all worked well. This time, the portfolio to handle [the South China Sea] issue has not been managed as expected," Marty said.

"We had tried to bridge views of different interests. Since the beginning, we realize this would not be without risk. The possibility of not resulting in an immediate outcome was always on the table. Yet staying idle and doing nothing would create much greater risk," he said.

Although Indonesia is no longer the ASEAN chair, Yudhoyono has made an initiative to play a greater role in the region.

"The absence of mutual views on the South China Sea poses potential disturbances for the region. We can't be left like this for too long," he said.

Marty also said that Yudhoyono has instructed him to travel to all ASEAN countries and try to build consensus.

"I was told by the President to continue seeking consensus by meeting and communicating with my ASEAN counterparts one by one in their respective home countries. Tomorrow I will fly to Manila to meet the Philippine foreign minister, then to Hanoi [Vietnam], Phnom Penh [Cambodia], Kuala Lumpur [Malaysia] and Singapore," he added.

Marty said that conditions could still improve.

"I hope we still can reach a form of mutual understanding on the South China Sea, at least before the upcoming ASEAN Summit in November," he said.

ASEAN countries, which had been involved in the South China Sea row, including the Philippines, Vietnam and ASEAN chair Cambodia.

The Philippines and Vietnam insisted that their recent clashes with China should be mentioned and included in the final communiqué.

Last April, Chinese and Philippine government ships were in a confrontational mode over the Scarborough Shoal. Chinese maps refer to this string of sandbanks as Huayang.

Cambodia, meanwhile, was considered to be backing China's interests.

Marty refused to comment when queried about the row and said that the dispute was over details in the communiqué.

"There were indeed some countries which insisted to include details of the disputed bloc in the communiqué while other countries refused to do so," he said.

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Philippines among hottest emerging markets in the World

The Philippine stock market is no longer the playground for those hunting for bargains.

Yet there is still a lot of money flowing in, driving stock prices to unprecedented heights as the country—with its much-improved economic fundamentals and resilient corporate sector—has turned into a sort of a "safe haven" for large funds diversifying out of Europe. With record-low interest rates, cash-awash local investors are also turning more to equities in search of better yield.

In the first half of the year, the main-share Philippine Stock Exchange (PSE) index recorded new all-time highs 19 times, rising a total of 20 percent to finish at 5,246.41 by the end of June. On July 4, the index breached 5,400 in intra-day trade.

Phillip Hagedorn, ATR KimEng Asset Management director for investments, said the big picture was that local interest rates would remain low and might go even lower when the government gets a much-coveted investment-grade rating. As such, he said investors have no choice but to channel more funds to equities even if valuations have crept higher than historical levels. Also, he said the market was willing to pay a premium for high-quality corporations.

Hagedorn said that in the second half of the year, it was possible for the main index to gain another 12 percent to hit the 6,000 mark. However, he said the 5,000 and 5,100 support levels would likely be tested. "I don't expect a breakout or search for a new high sometime in the early to mid-third quarter," he said. "Second-quarter earnings and GDP [gross domestic product] growth will confirm whether we make that move or not."

"At current levels, the market is not cheap," said Erico Claudio, strategist at Pentacapital Investment. "Many investors are already sort of into the market and they are just hoping to see more positive news to come out to sustain this."

But Claudio sees more room for the market to climb in the next two years. In trying to gauge market psychology, which includes "irrational expectations," he said the next target could be around 5,800.

Based on a Bloomberg consensus as of last week, the market was trading at a price-to-earnings (P/E) ratio of 15.8x. Historically, investors in the local stock market paid about 15 times the amount of money a company made in a given year. Before the Asian crisis of 1997, the local market's P/E ratio hit a high of 20x.

Hagedorn said the challenge with P/E ratios was that many analysts were "way off the mark" compared to what Philippine companies were delivering. Analysts tended to be conservative, which meant there was room for the P/E multiples to go down, if earnings forecasts rise.

"Is it fair to compare the last 10 years' average versus what the future may hold for the country considering that fundamentally, we're in a different place altogether? Maybe there's an argument to say that we deserve a bit of a premium compared to our historical average," Hagedorn said.

But the equity fund manager said it might still require two or three more quarters of earnings data to confirm that the Philippines has been upgraded not just in terms of sovereign credit but in terms of stock market prospects.

Claudio said one important theme arising from the current environment was that investors might look at companies with above-average revenue growth compared to their peers. However, he said revenues were more difficult to forecast than bottom line. "That's the critical part—if these revenues don't continue to grow, at least in the high teens, the market may be disappointed because what investors really want to see is topline growth," he said.

Moving forward, Claudio said: "This market will be driven by the weight of money and expectation of expanding revenues."

Michael Ferrer, president of ATR KimEng Asset Management, said the Philippine asset management industry was growing as savings rise on the back of increasing wealth. Ferrer, who is also president of the Fund Managers Association of the Philippines (FMAP), said that across the member-organizations of FMAP, his estimate was that less than 20 percent of assets under management were invested in equities. As the trust industry has about P4 trillion in assets under management, he said that even just a 1-percent reallocation of funds to equities would mean P40 billion of inflows to the local stock market from domestic institutions.

"We really have to allocate more to growth assets if you're going to hope even for high single-digit returns," Ferrer said, noting that desired returns would not be met if institutional investors would only keep most of their assets in bonds or special deposit accounts (SDAs) with the central bank.

"The other good thing is that the market distinguishes now between the good corporations and the pretenders, whereas in 2008-2009, everything was just moving in the same direction," Ferrer said.

Foreign portfolio inflows into the stock market are also keeping local stocks buoyant.

Based on PSE data, net foreign buying in the local stock market surged 382.3 percent year on year to ₱71.12 billion. This was nearly five times bigger than the ₱14.75-billion level in the same period last year.

"Fund managers, while they were waiting for some positive developments or getting out of the so-called economic quagmire in EU, they'd like to put some bets in some markets like ours, to more or less have an idea of what the Philippine market is all about," Claudio said. "But because they are so huge, it affects us significantly despite the rather poor performances of other markets."

Whether or not the US Dow Jones industrial index goes up or down sharply, for instance, Claudio said "the attention of foreign fund markers are drawn back to their major markets."

But for now, the Philippines is deemed one of the hottest emerging markets in the region, having outperformed other Asian bourses since the start of the year. At the same time, it also reaps the benefits of Southeast Asia as a whole new being on the radar screen of global investors.

"I think the theme that we're thinking about for the next two or three or four quarters is that the Philippines stands out as a safe haven with what we're seeing globally," Melvyn Boey, Southeast Asian equity strategist at BofA Merrill Lynch Global Research said in a recent briefing in Manila.

There is also an increasing expectation on Wall Street that the US Federal Reserve will embark on a third round of quantitative easing—a strategy of buying back bonds to infuse additional liquidity into the system—by the second half of this year. "Under that scenario, Southeast Asian assets will appreciate, especially commodities," Boey said. "ASEAN (Association of Southeast Asian Nations) is a beneficiary, especially those who are commodity exporters, a bit less so in Philippines but more for the likes of Thailand and Malaysia that are more reliant on commodities."

Given the strong balance sheet of ASEAN governments, Boey said they have more scope to use monetary and fiscal stimulus to counter a global slowdown. In particular, he said the Philippines was a play on the "structural growth story."

"It is one of the markets that we like for Southeast Asia and as a result of that, we think that in terms the sectors that we like to play would be some of the domestic sector, infrastructure, property as well as indirectly the banks," Boey said.

In the first six months, cyclical stocks banking and property led the PSEi's rise even as all indices were on the green.

The financials index emerged as the best performer in the first half after surging 34.6 percent to 1,304.42. The financial index was likewise the best performer in terms of bottom line based on first-quarter earnings resulted culled by the PSE.

The next-best performer was the property index, which jumped 30.1 percent to finish at 1,927.48. The holding firms index also rose 28.1 percent to 4,488.80. The industrial index rallied 10.8 percent to finish at 7,839.57; The services index also climbed 8.8 percent to 1,759.02, and the mining and oil index crept higher by 4.8 percent to 24,629.48.

"Just like our main index, investor confidence in Philippines Inc. is at an all-time high. What's remarkable is that we have been able to achieve unprecedented growth even in the midst of ongoing uncertainties in the Western hemisphere and a cooling Chinese economy. This is a testament to the effectiveness of the reforms that the country has undertaken, which further contributed to the stable macroeconomic environment," PSE president Hans Sicat said.

The combined market capitalization of listed issues in the PSE during the January-to-June period stood at ₱10.05 trillion, up 12.8 percent from the level in the same period last year. Total value turnover for the first half reached ₱947.73 billion, or 43.2 percent higher than the ₱661.81 billion in the previous year. Average daily value turnover stood at ₱7.64 billion, an increase of 45.5 percent year on year.

"The market's run in the first half has been nothing short of historic, and there's a good chance that we will be able to extend this forward momentum as we anticipate better first-half earnings from our listed firms. The latest sovereign credit-rating upgrade also provides additional support for future growth so overall, I think we are in a terrific position to keep on improving," Sicat said.

Inquirer Business News 

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The fuel for the Philippines as the Shining pearl to global investors

Taking a look of the millions of Filipino Professionals who are not hesitant to accept jobs lower from their level of educational attainment, or other Filipinos who landed the match job of their profession makes the Philippines as a funnel from hard working people overseas to build the Economy. They are the legion of  Philippine Economy Army; the Overseas Filipino Workers (OFW)

Eileen Alcala, cashier in the Upper Crust sandwich shop in Singapore, is a member of the legion of Philippine Economy Army and one reason the Philippines is suddenly looking like a rare investment bright spot after years as one of Asia's persistent laggards.

Put off by tough competition for jobs in Manila, the 24-year-old graduate in hotel and restaurant management left the Philippine capital for Singapore two months ago and now sends over half her monthly pay – about S$500 ($394) – back home.

Taking a look at a professional who landed a job abroad match to his educational discipline; Denis Somoso, an International Taxation Specialist and Accountant of a World Leading Design and Engineering & Construction Firm in South Korea, 32 year old bachelor graduate of Bachelor of Science in Accountancy in MTIM Iligan City left the Philippines for South Korea, given a good benefits from the company rented studio type apartment, free transportation,  food and cost of living allowance,  two and a half year ago and for the past 2 years sending 95% of his monthly pay – about Krw 2,550,000 ($ 2,200.00 USD) – back home.

Numbers like these highlight steady growth in remittances from the Philippine diaspora – and help explain why the, Standard & Poor's became the latest rating agency to upgrade the Philippines, to BB+. That is the country's highest grade for nine years and one notch below investment grade.

The move reflected the Philippines' strengthening external position, with OFW remittances and an expanding service export sector continuing to drive current account surpluses", S&P said.

Foreign reserves of $76 Billion as of May exceed the country's external debt of $63 Billion. Inflation is below 3.5 per cent and gross domestic product growth, driven by robust electronic exports, is forecast by the government at 5-6 per cent this year.

At a time when many economies are struggling, the Philippines is among only 10 sovereigns in the world with positive outlooks, notes Barclays.

Investors are taking note. Philippine share prices are up a quarter since the start of the year, making Manila the world's fourth-best performing equities market on expectations that the country will win investment-grade credit status by next year.

Indeed, since January 2012 foreign investors have pumped $1.8 Billion into the market, according to Bloomberg, a 265 per cent increase on the same month a year ago.

A "public-private partnership program" (PPP) launched six months ago to overcome infrastructure bottlenecks has not only attracted foreign interest but is boosting the shares of companies seen likely to benefit from government contracts, such as Ayala and Metro Pacific Investment.

"The government is much focused on accelerating the PPP program," said Prakriti Sofat, regional economist at Barclays in Singapore.

Laggards on the exchange have been companies with broader exposure to the economy, such as Philippine Airlines and Manila Electric. Still, constituents in the stock market index are trading on an average price/earnings multiple of 18 times. That compares with 20 times for the Jakarta index and 15.6 times for the Kuala Lumpur index.

The yield on the country's benchmark 10-year government bond, meanwhile, is at 5.8 per cent, down from 6.5 per cent this time a year ago. That compares with a yield on comparable Indonesian debt of 6.1 per cent, against 7.3 per cent a year ago.

Hans Sicat, chief executive of the Philippine Stock Exchange, predicts funds raised through company listings and secondary activity will hit ₱107 Billion Pesos ($2.6 Billion US Dollars) this year.

Yet investors may be glossing over the risk that the two-year-old administration of President Benigno "Noynoy" Aquino may take time to deliver.

"Investors are so bullish, they are forgiving many of the country's structural sins," says Luz Lorenzo, economist at Maybank ATR Kim Eng group.

The Aquino administration's gains in lowering the budget deficit were achieved mainly through lower government spending, which fell as a proportion of GDP to 16 per cent last year, from 17.7 per cent in 2009.

A clampdown on tax evasion has resulted in the filing of scores of complaints against suspected tax evaders. Yet, actual tax collection as a proportion of GDP has barely moved, up from 12.1 per cent in 2010 to 12.3 per cent last year, according to the central bank.

The government's tax take is being eroded by a series of exemptions approved by the former president but Mr. Aquino does get credit for a planned new tax on cigarettes and liquor – so-called "sin taxes". Rogier van den Brink, a World Bank economist, says: "They are closing the net on tax collection."

Poor implementation has plagued previous reform efforts, and analysts warn this is still an issue. "I remind [clients] how it went with power privatization. The law was passed in 2001 but the first assets were sold in 2004, and it was only in 2007 that the process really took off," Ms Lorenzo said.

Still, investing has become easier after exchange trading hours were extended in January from a previous lunchtime close to 3.30pm.

A rule forcing listed companies to have a minimum 10 per cent float by the end of this year has prompted a flurry of secondary market activity. That has spurred foreign participation, which accounts for 38 per cent of the market, says Mr. Sicat. "What we're seeing is a very strong local bid, which is helping improve confidence for anyone who is coming in from the outside."

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Top US military executive now in Philippines over maritime, security issues

Navy Adm. Samuel J. Locklear III, commander of U.S. Pacific Command, arrives in the Philippines to meet with senior military officials in Manila, Sunday. The United States and the Philippines share a Mutual Defense Treaty, and the two nations work closely together through bi-lateral and multi-lateral training to enhance interoperability. U.S. NAVY PHOTO

The senior United States commander in the Pacific region is in the Philippines and is scheduled to meet with President Benigno S. Aquino and other top defense officials to discuss maritime and security issues.

Navy Admiral Samuel J. Locklear III, commander of US Pacific Command, arrived Sunday (July 15, 2012) "to reaffirm the strength of the U.S.-Philippines Mutual Defense Treaty and to explore how the US can support efforts to boost Philippine military capacity," the US Department of Defense said in a statement.

The pact between the US and the Philippines says that both countries will support each other when attacked by an external party.

"Now, as the security environment changes, many countries recognize that there has got to be more maritime domain awareness [and] more understanding of what is happening around them rather than [just] what is happening internally," Locklear said.

"So what we are looking for is to try to provide [the Philippines] assistance that builds the interoperability of our defense forces over time," he said.

"This is a reaffirmation that the Mutual Defense Treaty is still in place and still strong. And it is an opportunity for us to find places and missions were we can partner and exercise together in a way that will increase our overall security cooperation and increase security in this critical part of the Asia-Pacific."

Locklear's visit came amid tense maritime dispute among Asian countries in the South China Sea (West Philippine Sea).

He made it clear in an earlier statement, however that the United States does not take sides in territorial disputes and encourages peaceful resolution through international legal processes.

Unresolved "excessive maritime claims that cause friction among neighbors," he said, could lead to "miscalculation" that threatens stability.

Locklear, who will also meet with Defense Secretary Voltaire Gazmin and military chief General Jessie Dellosa, said he will "seek ways to expand the U.S.-Philippine military-to-military relationship in ways that promote regional stability and security."

"On the military side, a productive alliance requires us to be able to work together, to have connectivity with each other, to be able to share information, and to be able to bring our military systems together in a meaningful way across all aspects of military power – whether it's humanitarian assistance and disaster relief or a contingency or otherwise," he said.

"I'm looking forward to giving the message to the Filipino military and to the leaders there that the United States is a very reliable ally," he said. "We want the Filipinos to be a reliable ally to us as well."

General Martin Dempsey, chairman of the Joint Chiefs of Staff, also visited the country in June.

Inquirer Global Nation 

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Goldfield operator blows the budget Up $220 Million USD on Philippines Mining project

The Didipio FTAA-001 straddles a mountainous region between the provinces of Nueva Vizcaya and Quirino in Northern Luzon ~270km north of Manila. Approximately 30 gold-copper prospects are known within the FTAA which have had varying levels of exploration over past years.

 

Employment

The company abides by the rules and regulations of the Labour Code as well as those set by Government Regulatory Agencies in the Philippines. Preference is given to local community members for employment opportunities at the project.

Australian and New Zealand Macraes goldfield operator OceanaGold said its Didipio gold and copper project in the Northern Luzon of the Philippines is now estimated to cost US$220 million, US$35 million more than the company announced in June 2011.

OceanaGold also said it has credit approvals from a group of large multi-national banks for a three-year US$220 credit facility, subject to final documentation.

The main reasons for the Didipio cost blow-out are "associated with increases in engineering design and procurement services, the Tailings Storage Facility (TSF) and infrastructure construction and site support costs," OceanaGold said.

"Working capital requirements on start-up are expected to be an additional US$27 million."

At June 30, the company had spent US$161 million on the project with a further US$24 million committed in contracts. Cash on hand was US$73 million.

"The Didipio project is going extremely well. We remain on track to achieve our goal set out in June last year to commence commissioning," in the December quarter 2012, said managing director Mick Wilkes.

"The increased capital cost for the project is consistent with industry cost pressures today, particularly for engineering design services," Wilkes said.

"We also made the very deliberate decision to engage with high-quality contractors in the Philippines which cost more money to ensure the project was built to a high standard and on time."

In June last year, Wilkes said Didipio had a "very robust" capital payback of one to two years, based on the then estimated capital costs of US$185 million.

Now Wilkes said construction at the Didipio project is more than 70% complete and is fully financed.

"Recruitment for Didipio permanent operations team and operations readiness plans are well advanced" with about 60% of the required positions already filled, it said.

Gold bars on display - Source: Reuters

Key outstanding items are the delivery of seven power generators and electrical switch rooms but all power equipment should be at the site over the next four to six weeks.

"Mining of the Didipio orebody has commenced on schedule this month in readiness for commissioning in the fourth quarter and to build ore stockpiles for production in 2013."

The credit facility will provide additional liquidity if necessary to repay the A$57.8 million of OceanaGold's convertible bonds maturing December 2012, repay the A$110 million of convertible bonds maturing December 2013 and provide US$50 million in working capital, Wilkes said.

Securing the facility is "a vote of confidence in OceanaGold and allows us to focus on successfully commissioning Didipio and generating strong cash flows from our operations in 2013," he said.

In June 2011, Wilkes said the December 2012 bonds would be repaid from cash flow.

OceanaGold shares, which are dual-listed on both the ASX and NZX, are up 3 cents at $2.40. While that's up from the year-low at $2.18 in May, the shares have been trending down from $5.20 in December 2010.

TVNZ News

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