Daily Archives: January 3, 2012

Impressive 0.6% growth in foreign investments

US$ 21.322 Billion in foreign investments made in the Philippines. Big as it sounds its was only 0.6% more than the previous year. Compare that to 80 other countries which enjoyed a 7% annual growth. We have to do better if we are to catch up with them. Read this article to find what may be done to make the country attract more.

From Businessworld  Philippines

2 January 2012

Country lags behind peers in securing foreign investments

THE PHILIPPINES remains a laggard in attracting foreign direct investments compared with its Southeast Asian neighbors and more so with Asian peers, the International Monetary Fund (IMF) said.

In the 2010 Coordinated Direct Investment Survey, the IMF reported that the Philippines recorded $21.322 billion in inward direct investment positions in 2010, barely up from $21.194 billion in the previous year.

This pales in comparison with emerging economies in Southeast Asia and advanced economies in the continent. For instance, Indonesia posted $154.158 billion in inward direct investment positions in 2010, surging by 41.7% from $108.795 a year ago.

Also in 2010, Singapore, Thailand and Malaysia recorded $461.417 billion, $139.176 billion and $101.63 billion in inflows, respectively.

Direct investment is a category of cross-border investment where a resident in one economy has control or a significant degree of influence on the management of an enterprise resident in another economy.

“This new set of statistics supports old views that the Philippines is not an attractive destination of foreign investors,” Benjamin E. Diokno, economist at the University of the Philippines, said in an e-mail yesterday.

Mr. Diokno tagged poor infrastructure, difficulties in starting business and policy inconsistency as detractors to foreign investments.

“Every year we are among the lowest in attracting foreign direct investments,” Peter Lee U, economist at the University of Asia and the Pacific, said in a phone interview yesterday.

“The usual complaints in surveys are high electricity rates, poor infrastructure, quality uncertainty and inconsistencies in policies,” Mr. Lee U added.

In the continent, China posted the most inward direct investment positions, climbing by roughly 28% to $1.569 trillion in 2010 from $1.232 trillion a year ago.

It was followed by Hong Kong with $985.416 billion, up by 16.52% from $845.721 billion in the previous year.

Globally, inward direct investment positions rose in 2010.

“For the 80 economies that have reported data for 2009 and 2010, inward direct investment positions increased to $20.7 trillion from $19.4 trillion, up by nearly 7%,” the IMF said.

Much needs to be done for the Philippines to be more attractive to foreign investors.

“High power rates is an area we can continuously work on,” Mr. Lee U said. “There are also investments needed in improving infrastructures in the Philippines.”

Furthermore, the Philippines should take advantage of its labor force that are competitive in the service sector and are fluent in English, Mr. Lee U said.

Mr. Diokno said the country needs to invest P500 billion in physical infrastructure annually, reduce bureaucratic red tape in setting up new businesses both at the national and local levels, be more consistent in policies, and improve credibility of the government with respect to honoring contracts.

The survey of the IMF is conducted annually, with revised data released semi-annually, and country participation and geographical detail broadened over time.

Article location : http://www.bworldonline.com/content.php?Section=Economy&title=Country lags behind peers in securing foreign investments&id=44360

Philippine Insurance industry bullish future

 

In a current poor environment created by weak economies and bad weather, the Philippine insurance industry still sees further growth based on this article.

 

From BusinessWorld Philippines

2. January 2012

Insurers bullish on prospects

LOCAL insurers are bullish about industry growth this year despite a gloomy global outlook that could drag down the domestic economy’s momentum.

Life and non-life insurers said a higher gross domestic product (GDP) growth, fueled by remittances and public-private partnership (PPP) projects, would translate to more take-up of insurance policies, and consequently, higher premiums.

“Barring any major negative developments abroad, with GDP growth for 2012 projected slightly higher this year and given the financial system’s liquidity, we aim to sustain the industry’s premium growth at close to 2011 levels,” said Mayo Jose B. Ongsingco, president of the Philippine Life Insurance Association (PLIA) in an e-mail last week.

“Total life insurance premiums were expected to grow by around 20 to 25% in 2011, with growth mainly driven by first-year business that was projected to grow by 40 to 45%,” he said.

Premium data for 2011 would be available later this year. In 2010, life insurers’ premiums rose by 23.56% to P70.727 billion. Their first-year premiums — an indicator of new policies sold — surged by 59.38% to P34.28 billion.

Mr. Ongsingco said the key driver for this year would be the domestic economy’s continued expansion despite the crises in Europe and the United States.

“The main economic growth drivers, OFW remittances and BPO business, will remain strong in 2012,” he said.

Money sent home by Filipinos living and working overseas climbed by 7% to $16.534 billion as of October. Remittances, which fuel consumer spending, are expected to rise by 5% this year.

The business process outsourcing industry, meanwhile, said the number of seats was expected rise to 800,000 this year from 640,000 in 2011.

The continued growth of the high-turnover BPO industry, Mr. Ongsingco also noted, means more group insurance, pointing out that “providing insurance for employees helps companies retain their people.”

The government targets a 5.5-6.5% GDP growth this year, but forecasts 5-6% owing to the economy’s tepid growth in 2011.

The country’s GDP grew by only 3.6% as of September, well below the government’s 5-6% target and its 4.5-5.5% estimate.

Mr. Ongsingco added that the launch of Personal Equity and Retirement Account or PERA products, the proposed expansion of the mandatory migrant workers’ insurance coverage and rollout of microinsurance in the country” would boost life insurance sales.

Non-life insurers, meanwhile, are anticipating the rollout of the government’s PPP projects.

“If the government is able to roll out its infrastructure projects this year, that will have a positive impact on the non-life industry,” said Pedro P. Benedicto, Jr., Philippine Insurers and Reinsurers Association (PIRA) chairman in a phone interview yesterday.

“If the economy gains, there would be more asssets to protect,” he said.

A challenge for the non-life insurance industry, he said, is the government’s paid-up capitalization requirement.

Regulators want insurers to have P250 million in paid-up capital by the end of this year.

Insurers are now planning on consolidating to comply. Mr. Benedicto said some are family-owned and may have a hard time giving up control of their business.

Catastrophes are another challenge, he said.

Mr. Ongsingco said the low-interest environment would put pressure on insurers’ interest income.

“On the investment side, the slide in interest rates is a major challenge… But, substantial secondary sources of income of life companies such as dividends from core stock investments and rentals from real estate can compensate for the decline in interest income,” he said.

Article location : http://www.bworldonline.com/content.php?Section=Finance&title=Insurers bullish on prospects&id=44341

Invest in a property in the Philippines

Looking for an attractive investment property? Read this article and head to the Philippines.

From BusinessWorld Philippines

2 January 2012

Property growth expected to continue

THE PROPERTY SECTOR will continue to grow this year, particularly in terms of commercial office space, with demand expected to remain resilient despite global economic uncertainties, industry consultants and a developer said in separate interviews last week.

Consultancy firm Colliers International Philippines is sticking to its projections in the third quarter last year in which it said new supply of office space for 2012 would reach 385,154 square meters (sq. m.), 8.48% more than the 355,057 sq. m. for 2011.

“So far, we are lucky enough not to feel the effect of several global uncertainties like the Euro zone crisis, Saudization, [and problems in the] US…,” Paul Vincent R. Chua, associate director and head of advisory at Colliers, said via e-mail toBusinessWorld.

Demand will continue to come from business process outsourcing (BPO) firms, which are expected to expand further, Mr. Chua said. “Uncertainties in developed economies make it better for those companies to outsource their back office or call centers to developing economies like the Philippines,” he explained.

Jones Lang LaSalle Leechiu (JLLL) expects growth across the board.

“Considering lower projected Philippine economic growth for 2012 and various unresolved economic problems in the global scene, we forecast, in general, still conservative growth for the property sector (commercial, residential, hotel) driven by sustained growth in the O&O (outsourcing and offshoring) sector and OFW (overseas Filipino workers’) remittances,” said Claro dG. Cordero, head of research and consultancy at JLLL.

“There were no changes in the sources of demand for the commercial office and residential spaces, as compared to the last couple of years.”

Commercial Grade ‘A’ office stock in Metro Manila is expected to grow by around 15%, while residential condominium supply is estimated to increase by 25-30%, Mr. Cordero said.

JLLL, in its November Philippine Property Market Monitor, noted that O&O companies were looking to expand to “next wave cities” and even more urban areas. “The outlook looks good for the local O&O industry in the upcoming years, with the Business Processing Association of the Philippines (BPA/P) projecting a 20% growth rate from 2011-2016,” JLLL said in the report.

BPA/P’s “Philippine IT-BPO Quality Roadmap” had also projected that the industry could earn $25 billion annually by 2016 and employ up to 1.3 million.

This road map could translate to roughly four to five million square meters of potential new office space, Colliers said.

While expecting growth overall, Colliers, however, is projecting slowdown in new supply of residential units.

Projected new residential supply in 2012 would reach 5,870 sq. m, 34.47% less than the 8,958 sq. m. projected last year, data from Colliers showed.

“We would see growth in the residential sector next year [2012], more particularly in the low-cost to low-affordable segment which is still underserved by the supply that is available in the market,” Colliers’ Mr. Chua said.

“At the opposite of that spectrum, there would still be more luxury condominiums that will be available to serve the gap in that particular segment,” he added.

“For the residential condominium, it [will be] primarily driven by a good source of OFW-funded real estate purchases and BPO explosion.”

He noted that there are still not enough houses to plug the backlog, which is estimated at more than 418,000 units.

SM Development Corp. (SMDC), the property arm of the SM Group, said it would continue to tap into the OFW market given strong remittances.

“Considering that housing is part of basic human needs and remittances remain strong, we have sent people abroad to tap into the OFW market,” Jose T. Gabionza, SMDC vice-president for business and development, said.

“Our international market has gone up to 13-15% of an expanded pie from 10-12% and it will continue to be a growing market for us,” Mr. Gabionza added.

Latest available data from the Bangko Sentral ng Pilipinas (BSP) showed that overseas Filipinos sent home $16.53 billion from January to October 2011, 6.97% more than the $15.46 billion recorded a year earlier.

OFW households allotted 11.4% of remittances in purchasing a house, data from BSP’s fourth quarter Consumer Expectations Survey showed. — Judy Dannibelle T. Chua Co and Karen Joyce Q. Ang

Article location : http://www.bworldonline.com/content.php?Section=TopStory&title=Property growth expected to continue&id=44361

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