THE
DAILY NEWS
Phil. Copyright 2002
by
The Wallace Business Forum
Vol. 7 No. 60
April 4, 2006
THE WALLACE BUSINESS FORUM, INC. accepts no liability for the accuracy of the data contained in this report.
The Nation
WEATHER FORECAST
• Opposition warns against verification
METRO MANILA
• Comelec official speaks on ‘04 poll fraud
23°C to 33°C . Light-Moderate
• Admin slammed for P2.1-B funding
Northeast-East
Manila Bay: Slight-Moderate
of Cha-cha pleb
INDICES
The Economy and Business
Stock Market
• Conservative net portfolio flows in
Phisix Composite
’06 seen
• RP may exercise Brady bond buy back
• Increased ODA flows from WB, other
donors
3-Apr-06 31-Mar-06
% change
2189.77
2195.95
-0.28
Financial
699.55
700.74
-0.17
Industrial
3049.95
3058.66
-0.28
Property
Services
913.25
1069.36
913.43
1071.01
-0.02
-0.15
Mining & Oil
3478.67
3566.49
-2.46
51.089
51.158
0.13
• IFC awaits MRT-7 project clearance
Peso-U.S. Dollar (ave)
Corporate Briefs
• Mirant Philippines Corp.
PESO–DOLLAR RATE
(30 trading days to April 3, 2006)
• Manila Water Co.
• National Power Corp.
50.70
Close: P51.080
High: P 51.075
• Power Sector Assets and Liabilities
Management Corp.
Open: P 51.100
51.50
• PeopleSupport, Inc.
Low: P51.105
W.A.: P51.089
52.30
Vol: $311.25 M
COMPOSITE I NDEX
(30 trading days to April 3, 200 6)
1
Open: 2189.22
2250
Close: 2189.77
2150
High: 2197.27
Low:
2183.20
2050
Vol: 1.132 B
1950
Val: P940 M
THE NATION
Opposition warns against verification
Opposition members from the House of Representatives yesterday cautioned provincia l, city, and
municipal election registrars that Congress would not hesitate to file contempt charges if the verification of
signatures from the people’s initiative on Charter-change pushes through. Minority Leader Francis
Escudero asserted that the Commission on Election (Comelec) registrars would be in gross violation of the
1997 Supreme Court (SC) ruling that “permanently enjoined the Comelec from entertaining any initiative
to amend the Constitution” until an enabling law took effect. Administration and Comelec officials, on the
contrary, have insisted that the Comelec may authenticate the signatures backing the people’s initiative
without defying the SC ruling. Comelec Commissioner Resurrection Borra emphasized that Comelec must
validate the signatures before any basis of a petition can be made. He added that the legality issue would
only come “to fore once a petition is filed because it then becomes a judicable issue.” Comelec Chairman
Benjamin Abalos had recently challenged opposition forces to file for an injunction at the High Tribunal if
the verification process itself violated commitments to the previous SC ruling.
Comelec official speaks on ‘04 poll fraud
Commission on Elections (Comelec) Commissioner Resurrection Borra admitted yesterday at a Senate
Committee that “irregularities” did transpire in the much-maligned 2004 presidential elections. Mr. Borra,
who spoke before a hearing on the illegal wiretapped conversations, pointed out that electoral
“shenanigans” was endemic throughout the election process. Mr. Borra, who would be the 1st Comelec
official to admit some indiscretions in the recent elections, also remarked that fresh evidence could be
presented to either the Presidential Electoral Tribunal, or the Senate Electoral Tribunal for further scrutiny.
Similarly, Mr. Hermenegildo Estrella, a management consultant and former special assistant to Mrs.
Arroyo’s camp LAKAS-NUCD, presented that the late opposition presidential Fernando Poe Jr. lost over
300,000 votes just after the controversial “Hello Garci” conversations. He contended that Mrs . Arroyo
padded 365,000 votes, leading to her 1.1-million margin of victory over the late Mr. Poe.
Admin slammed for P2.1-B funding of Cha-cha pleb
Minority Leader Francis Escudero slammed the Administration yesterday for apportioning P2.1 billion in
anticipation of a plebiscite (for parliamentary shift), instead of using the funds of social works and
services. Mr. Escudero questioned the Administration’s previous statement that it suffered from a lack of
“additional funds for education, health and other social services.” He added that he and his [opposition]
allies would seek the Supreme Court’s intervention in questioning the legality of the people’s initiative,
which had prompted Administration forces to suddenly surface with more money. Budget Secretary
Rolando Andaya, Jr., on the other hand, defended the allocation for the reputed plebiscite, saying that
there remained an “ample amount…for other budgetary items and that both Charter-change and social
services were different priorities.” Mr. Andaya gave assurance that no program would be sacrificed for the
Cha-cha plebiscite fund.
THE ECONOMY AND BUSINESS
Conservative net portfolio flows in ’06 seen
The Bangko Sentral ng Pilipinas (BSP) remarked recently that “stiff competition” from Asian peers may
prevent net portfolio investments from surpassing the projected $4 billion for the year. The BSP’s
conservative stand, he added, was accredited to the growth in investor countries and surging competition
from China, Thailand, and Korea, among others. The BSP, however, did not rule out the possibility [that]
actual yearend net inflows could still exceed the target, and would be captured more accurately in the
balance of payments. Out of the $4 billion in expected portfolio flows, the BSP has estimated $1.8 billion
would be invested in stock, bond, or money markets; while $2.2 billion would be sourced from
government securities. Portfolio investments – or hot money – are assets invested by fund managers in
stocks and bonds. In 2005, the country hauled in some $2.1 billion in net portfolio flows.
RP may exercise Brady bond buy back
Depending on market conditions, the government might opt to buy back some of its remaining $774
million of Brady bonds to reduce its foreign debt. National Treasurer Omar Cruz said that the Brady buy
back strategy would be “consistent” to their move of relying less on foreign borrowings, and more on
domestic borrowings. He also added that some of the country’s Brady bonds are maturing up to 2018, and
retiring these debts soon would probably allow the Philippines to “save on interest costs.” However, Mr.
Cruz pointed out that the different maturity dates of the bonds would also make them difficult to retire
simultaneously. Between 1990-1992, the country had sold $4.3 billion-worth of the bonds as part of the
“reorganization of developing country debt,” as supervised by former U.S. Treasury Secretary Nicholas
Brady. Brady bonds are coupon bearing bonds with fixed, step, or floating rate, that mature in 10 to 30
years.
Increased ODA flows from WB, other donors
The expected official development assistance (ODA) inflows to the country for 2006 may double from the
programmed $800 million as investor morale has substantially recovered. Government sources said that
the World Bank (WB) had last week informally committed a $450-million “fiscal strengthening” program
loan – increasing total ODA commitments to $1.55 billion. The WB had also previously committed to $200million and $100-million loans for health and education, respectively. The Department of Finance said that
with significant ODA flows, the national government would revise its plan of drawing over $900-million
worth of fund requirements from the offshore bond market. The optimistic outlook of international donor
agencies over the Philippine market was reinforced in last week’s Philippine Development Forum, where
delegates from the WB, the Japan Bank for International Cooperation, and other lateral institutions lauded
the Administration’s heightened efforts in improving the investment and fiscal climate.
IFC awaits MRT-7 project clearance
The International Finance Corp. (IFC) expressed it would provide funding for the forthcoming Metro Rail
Transit-7 (MRT-7) if “government and project proponents settle their differences.” The project’s approval
has hung on several technical delays due to a pending compliance by [project proponent] Universal LRTCorp. (ULC) to post a $1.899-billion bond every 3 years over its proposed 25-year concession agreement
with the government. The bond was setup by the Investment Coordination Committee to safeguard ULC’s
financial commitments in the event of a shortfall. ULC, however, has declared it could only post a
performance bond of $393.45 billion (or 10% of MRT-7 construction cost), as provided under the buildoperate -transfer law. The MRT-7 is an extensive railway system that would link Bulacan to Edsa, via
Commonwealth Avenue in Quezon City. Operations are expected to save government some $2.53 billion in
oil imports, while granting the local government an incremental $74 million in taxes. IFC had also earlier
committed to lend $50 million for the improvement of the South Luzon Expressway.
CORPORATE BRIEFS
The country’s largest independent power producer, Mirant Philippines Corp., disclaimed rumors that it
is on the verge of abandoning local operations…Mirant officials expressed their commitment to honor and
value their assets in the country, despite news that Metro Pacific Corp. has been eyeing them as part of its
business expansion…Mirant Senior Vice President Paul Flake admitted that the firm is proposing a
“refinancing scheme via an investor” that could infuse an additional $1.2 billion…another utility, Manila
Water Co. said it expects to spend around P4.6 billion in 2006 to improve its services and waste -water
treatment…Manila Water President Antonino Aquino said that a record -high capital expenditure allocation
– set at P4.3 billion – would be raised through “internally generated sources and existing credit lines”…he
added that [part of] the waste -water component would come from $64 million World Bank-Land Bank of
the Philippines loan…state -owned National Power Corp. (Napocor) finally broke through a 7-year loss,
posting a net income of P16 million for 2005…in 2004, Napocor closed with a net loss of -P29.9 billion
from – P117.02 billion (2003)…Power Sector Assets and Liabilities Management Corp. (PSALM), the
government agency tasked over the privatization of Napocor, contended that the generator’s
improvement was brought about by a mix of “improved fuel mix, better pricing for fuels, and rate
adjustment”…PeopleSupport, Inc., a leading business process outsourcing firm, has allocated about $15
million in investments for an additional 2,000 seats expected to be operational within the 1sst semester of
2006…local satellite President Raneiro Borja stated that by April 16, there would be around “4,700
operating seats locally”…PeopleSupport (Phils.) posted a record revenue total of $62.1 million in 2005, a
40% increase from $44.5 million in a previous tally.
WORD-FOR-WORD
The Philippine Daily Inquirer Raul Pangalangan says:
“IN DECEMBER 2005, I wondered aloud in this space: Why the spunk, why the audacity, of the so-called
"people's initiative" to change the Constitution, when the Supreme Court has already twice rejected such
attempts? My answer: because of the magic of the fait accompli.
Charter change proponents will ram through the signature gathering, present the Commission on Elections
(Comelec) with the requisite signatures, and say: Charter change is now initiated, so please call a
plebiscite. From all appearances, that scenario is now emerging. The spokesman for former President Fidel
Ramos says: "If the Sigaw ng Bayan Coalition succeeds in raising the required minimum of 5.6 million
signatures, the principle of vox populi, vox Dei will have to be considered."
Comelec Chair Benjamin Abalos says the Comelec will now verify the signatures and promises results in
one month, a rather clear signal that the Comelec will go along with the fait accompli. After all, the
plebiscite must be on the way before fresh impeachment proceedings against President Gloria MacapagalArroyo roll in by June 2006, i.e., when the one -year ban on impeachment lapses, counting one year from
Oliver Lozano's June 28, 2005 filing of his impeachment complaint.
The next stage of the battle then will be fought before the Supreme Court. Solicitor General-designate
Eduardo Nachura, a constitutional law expert, has already announced, "I think it's time to ask the
Supreme Court to revisit [the Pirma] ruling."
Revisit it then we must. The Constitution expressly says that direct initiative is "subject finally to
implementing legislation by Congress," and the Supreme Court, in Defensor-Santiago v. Comelec (or the
Pirma case), found the Initiative Law that was passed by Congress "incomplete, inadequate and wanting."
Until now, no new Initiative Law has been enacted, and while the House of Representatives seems hellbent on pushing it forward, the Senate is poised to block it. No go. That simple. End of story.”