Philippines to settle more in interest on debt, less in principal next year

THE GOVERNMENT is allotting P763.25 billion to service its debts next year, data from the Budget department showed, lower than the amount earmarked this year.

The amount set for next year is 6.82% less than the P819.19 billion programmed for this year. It includes P593.15 billion for domestic liabilities and P170.1 billion for foreign debt.

Interest payments are programmed to reach P372.86 billion, up 5.73% from the P352.65 billion earmarked for this year. Broken down, the amount includes P95.3 billion to pay off interest on the country’s foreign debts, while the remaining P277.57 billion will be used for domestic liabilities.

Principal payments, on the other hand, are programmed at P390.39 billion, down 12.58% from the P466.542 billion set for 2014.

It includes P315.59 billion for domestic payments and P74.80 billion for foreign debt.

A significant portion of the national budget is earmarked for interest payments on debt. Principal payments, on the other hand, are off-budget items covered by debt refinancing.

Last year, debt payments fell by over a fifth to P559.017 billion from P729.774 billion in 2012, well below the P767.394-billion debt service program for 2013.

As of June, the country’s debt payments totaled P227.508 billion.

This is just 27.77% of this year’s P819.19-billion program.

The national government’s outstanding debt grew by 3.7% to P5.65 trillion at end-June from the P5.45 trillion recorded as of the same month a year ago as its domestic liabilities increased, data from the Bureau of the Treasury showed.

TAX CODE REVIEW BACKED
Meanwhile, a lawmaker has backed the proposal of the Department of Finance (DoF) to conduct a review of the country’s tax code.

Rep. Romero S. Quimbo (Marikina, 2nd district), chairman of the House Committee on Ways and Means, said a review of Republic Act No. 8424 or the National Internal Revenue Code (NIRC) of 1997 is actually “long overdue.” “We’ve been telling them to do so some time ago,” he said

Bills proposing amendments to the Tax Code are pending at the House of Representatives, with several measures seeking to grant additional exemptions for individual taxpayers by raising income ceilings and increasing the provision for qualified dependents.

Last week, DoF Secretary Cesar V. Purisima called for a “holistic” approach to reviewing the NIRC and not to focus on adjusting income tax rates alone.

Mr. Quimbo said such bills are already being tackled at the House of Representatives. --M.F.E. Flores and M.L.T. Lopez

source:  Businessworld

DOST earmarks P2.6-B budget for teachers’ funds, laptops

After a year of delay, the government should be ready to distribute next year over 96,000 laptops and desktops through an allocation of P2.6-billion in the 2015 General Appropriations Act (GAA).

The Department of Science and Technology (DOST) said the P2.6-billion fund is for the 96,000 computers (P1.8 billion) supposed to be distributed March this year and additional units (P800 million) for 2015.

DOST’s Information and Communications Technology Office (ICTO) is implementing the project under the Digital Empowerment Fund (DEF).

As the 2014 distribution was not done, because the allocation of P1.8 billion was from the Disbursement Acceleration Program (DAP), the implementation would be done both for the 2014 and 2015 target dates.

ICTO Director Ali Asum, DEF project director, told the Manila Bulletin the DEF project will continue.

“Government workers do not have to worry,” it will push through in 2015,” he said of DEF’s implementation.

The DEF is a three-year project from 2014 to 2016 that aims to provide laptops to those with Salary Grade 4, including teachers, so they can use the gadget in their teaching.

source:  Manila Bulletin

Beachfront hotels: Phl ranks 5th

BANGKOK – The Philippines ranked fifth in having the most number of beachfront hotels, according to a survey of more than 11,000 hotels in 109 countries released Friday.

Thailand ranked first with more than 1,250 beachfront properties, followed by the US with 1,016, Mexico with 943 and Spain with 736.

In sixth place is Greece, followed by Italy, Turkey, Egypt and Sri Lanka, said the survey by the Beachfront Club, a website that maps and details seaside hotels around the world.

The Bangkok-based website defines true beachfront hotels as those directly on the beach or oceanfront with no road or traffic between the rooms and water.

The Philippines, famed for its beautiful beaches, has noted a steady increase in its tourism arrivals over the past few years.

According to the government, total international tourist arrivals reached 4.7 million in 2013, surpassing the 4.3 million arrival recorded in 2012 by 9.56 percent. The government said it aims to increase foreign visitors to 10 million by 2016.

Meanwhile, Thailand also ranked first for total beachfront accommodations within a single beach destination. Its Samui Island has 270, ahead of Riviera Maya in Mexico with 250, Crete with 194 and Mallorca with 187.

Despite recent political violence, tourist arrivals in Thailand have soared by 88 percent over the past five years to nearly 27 million in 2013, ranking it among the top 10 most visited countries in the world. Its shores face both the Pacific and Indian oceans, with hundreds of islands in each.

source:  Philippine Star

Remittances peak in June

MONEY sent home by Filipinos abroad hit a fresh peak for the year in June, making the year-to-date tally top the level of the first half of 2013, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

Cash remittances which Filipinos sent home through banks went up 5.9% to $2.050 billion in June from the $1.935 billion registered a year earlier. It was the highest monthly volume recorded since December 2013’s $2.173 billion.

"Remittances remained robust on the back of stable demand for skilled Filipinos abroad," the central bank said in a statement.

June’s inflows drove the first-semester tally to $11.422 billion, up 5.8% from the $10.800 billion seen in the comparable 2013 period -- already past the target this year of 5% growth over 2013’s $22.968 billion.

Remittances from land-based workers made up the bulk in the first half at $8.7 billion, up 4.8% annually, while those from sea-borne workers grew 8.8% year-on-year to $2.7 billion.

Major sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Canada, and Hong Kong.

The BSP noted continued efforts of banks and non-bank remittance service providers to expand reach through partnerships and establishment of remittance centers abroad. "As of end-June 2014, commercial banks’ established tie-ups, remittance centers, correspondent banks, and branches or representative offices abroad rose by 6% to 4,675 from 4,409 in the same period last year," the central bank said.

Remittances, equivalent to around 10% of gross domestic product, support growth by boosting private consumption. -- DEDS

source:  Businessworld

Reaching out to the unbanked

INDIAN PRIME Minister Narendra Modi made headlines last week when he announced a program to reduce his country’s “unbanked” population, offering bank accounts with debit cards that also come with accident insurance and a 5,000-rupee overdraft facility guaranteed by the government.

This being a political initiative, announced during the PM’s high-profile independence day speech, questions were immediately raised about who ultimately pays for defaults on the overdrafts. Another sticking point was the record of previous Indian outreach programs to the unbanked, many of whose accounts went dormant shortly after they were opened, imposing additional costs on banks and fellow depositors. 

Whatever the flaws in the execution of India’s program, very few people disagree with the idea that people need bank accounts. They are instrumental in establishing a credit history and access to loans, which steers people away from more predatory forms of lending. Many effective poverty-reduction tools like microcredit and conditional cash transfers work best with bank accounts.

Because private-sector banks deem the poor to be less-desirable customers, governments often need to intervene, offering bank accounts through government agencies with a presence in most communities, like post offices. In India’s case the process involves compensating middlemen in remote towns who form the last link between the bank and many account-holders. The private sector, for its part, has experimented with mobile banking to remove the need to travel to a bricks-and-mortar bank branch.

According to World Bank data, the unbanked are more likely to be women living in rural areas, where the barriers to banking are greatest because of the costs of visiting town centers where banks are likely to be located. Some 59% of adults in the developing world are estimated not to have an account at a formal financial institution, and 55% or borrowers in these countries use only informal sources of credit. 

As the Philippines dabbles with microcredit schemes and CCT, it’s a good time to take stock of where the country stands in providing the banking infrastructure that makes such programs possible.

Metro Manila still focus of state spending in 2013

THE NATIONAL Capital Region (NCR), or Metro Manila, cornered bulk of state spending last year, according to a statement posted Wednesday on the Philippine Statistics Authority-National Statistical Coordination Board (PSA-NSCB) Web site.

PSA-NSCB said NCR got the biggest share of 49.1% of Government Final Consumption Expenditure (GFCE) last year among the country’s 17 regions.

It was followed by the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon), Central Luzon and Western Visayas regions that accounted for 5.9%, 5.7% and 4.5%, respectively.

GFCE rose 11.99% to P1.282 trillion last year from P1.145 trillion in 2012, according to separate PSA-NSCB data.

Regions with the lowest shares were the Autonomous Region in Muslim Mindanao (ARMM), Caraga and Cordillera Administrative Region with 1.7%, 1.8% and 1.9%, respectively.

A chart that accompanied the statement showed GFCE growth rates slowing across all regions last year from 2012.

The South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City (Soccsksargen) region grew the fastest last year at 14%, followed by Calabarzon (13.5%) and Central Luzon (13%), while NCR bared the slowest growth of 3.6%, followed by ARMM’s 5.9%.

Metro Manila got the biggest share of state spending since "economic and business activities are heavily concentrated in the NCR", according to both PSA-NSCB Expenditure Accounts Division Chief Vivian R. Ilarina and University of Asia and the Pacific economist Cid L. Terosa in separate phone interviews on Friday.

source:  Businessworld

The one that got away

THE non-narcotic drug Prialt (generic name Ziconotide) helps cancer and AIDS patients manage chronic pain, with fewer known side-effects and a fraction of the addictiveness of morphine.

Derived from the venom of the fish-eating Conus magnus snail, which is found in the Philippines, Prialt would have been the poster child for the potential of Philippine flora and fauna to produce valuable medicines.

Instead, foreign researchers ended up being awarded the drug patent in 2004, building on the pioneering work of the University of Utah’s Dr. Baldomero Olivera, a distinguished graduate of the University of the Philippines.

Dr. Olivera is said to have been first driven into snail research by childhood memories of their venomous properties. His work in the field dates back to the 1960s. His name does not appear on the Prialt patent application.

“Prialt is the one that got away,” according to Ricardo R. Blancaflor, director-general of the Intellectual Property Office of the Philippines, who spoke to BusinessWorld over lunch last week as part of a broader effort to spread the word on the need for universities and corporations to protect their intellectual property.

Mr. Blancaflor, a lawyer who has held positions in various government departments, believes the Philippines is uniquely positioned to be a force in biotechnology by virtue of its biodiversity -- if only local researchers could put a little more effort in safeguarding their IP.

“The Philippines is one of the regional leaders when it comes to biotechnological research because of its innate pool of natural specimens,” he said -- an advantage that is wasted when foreign researchers claim first rights to drugs derived from Philippine discoveries.

The statistics on pharmaceutical and biotechnology patents (see chart) suggest a highly competitive ecosystem of researchers combing the oceans, forests and jungles of the world for new drugs -- a situation that demands a greater consciousness of IP rights than ever before for researchers in Philippine universities.

Perhaps Prialt might be the mistake the Philippines can afford to make, serving a purpose as a cautionary tale. While a useful drug, it is too specialized to be a blockbuster in the multi-billion dollar global market for pain treatment, posting US sales of $20 million in 2009. It’s a tidy enough sum for a small drug company and ought to produce decent royalties for a university research lab.

But the stakes could be much higher if the next discovery out of the Philippines isn’t so modest. -- Agbayani P. Pingol II and Virgil S. Villanueva