Philippine property prices slightly up in 2010

MANILA, Philippines (UPDATED) - Residential property prices in the central business district of Makati recorded a 0.19% increase in 2010 supported by strong economic expansion and all-time low interest rates, a property research firm recently reported.

This makes 2010 the Philippines' first year of house price growth after 2 years of decline, Global Property Guide said in a statement.

"During 2010, secondary market prices for 3-bedroom condominiums in Makati rose 0.19%, with a 0.20% rise occurring during Q4 2010, the Philippine-based online property research firm noted.

These are based on inflation-adjusted rates, which "provide a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents," the firm explained.

In 2009, Philippine prices for these properties, when inflation-adjusted, declined by 5.24%.

If based on nominal prices, changes in 2010 showed a 3.12% hike while 2009 experienced a 2.5% decline.

Inflation in 2010 is expected to be around 4.5% while 2009's averaged at 3.2%.

The research house said only 15 countries experienced house price increases in 2010. Citing its latest house price survey on the recovery of the global housing market using available fourth quarter statistics, it noted that, generally, prices have stalled in 2010.

Below are some of geographical trends from its study:

• Prices fell further in the United States in 2010 than the previous year.
• Ireland, Bulgaria, Hungary, Lithuania Greece and Ukraine are also still suffering badly.
• Eastern European housing markets are still falling. House price falls in 2010 were less than the previous year.
• The Scandinavian house price boom may be ending.
• In the Baltics, Latvia and Estonia’s housing markets recovered strongly in 2010. But now they seem to have stopped rising.
• Price rises still continue in some Asian countries (Taiwan, Thailand, Japan), but Singapore’s boom seems to have moderated.

Mideast unrest highlights Asia's oil dependence

BANGKOK, Thailand - The tremors from political upheaval in the Middle East are rippling through energy-thirsty Asia, which has long struggled to kick its addiction to oil from the volatile region.

Every day millions of barrels of oil pass through the Indian Ocean from the Middle East to Asia, the world's busiest route for supertankers, providing energy to fuel the region's rapid economic growth.

It's an intercontinental voyage that highlights the ever-increasing interdependence of the world economies and explains why the fallout from unrest in the Middle East is having an impact thousands of miles (kilometres) away.

Oil prices have skyrocketed on world markets on fears that uprisings in countries such as Egypt and Libya could spread to major oil producers including Saudi Arabia and Algeria.

The effects are already being felt by motorists in Asia, which relies on the Middle East for the vast majority of its oil imports.

Resource-poor Japan for example buys 90% of its crude from the Middle East, while Singapore gets about 85% of its needs from the region and South Korea about 82%.

But it is the developing countries that might be the hardest hit by the price spike.

"India and Thailand would struggle most within Asia if oil prices were to remain at their current level," said Mark Williams, a senior economist at the London-based research firm Capital Economics.

"The region's biggest loser would probably be India. Its current account deficit is already high, its economy is oil-intensive, and fuel subsidies are a drain on already stretched government resources," he said.

"Thailand too is exposed due to its high reliance on oil and the large potential knock-on impact on inflation."

Rising consumer prices are emerging as a top concern for policymakers in the region.

High energy prices -- which also tend to push up food costs through increased transportation costs -- have even triggered social unrest in Asia in the past.

In the Philippines, price surges led to riots in the late 1980s as communist guerrillas burned buses amid street protests.

Indonesia, an oil producer, saw violent protests in 2008 in response to a steep rise in fuel prices. Late dictator Suharto's decision to hike fuel prices in 1998 fanned unrest that eventually toppled his regime.

Countries such as India, Thailand, Vietnam, Malaysia and Indonesia which subsidise fuel costs could face a large bill if oil prices remain at current levels.

India, which imports 80% of its crude oil needs, mostly from the Middle East, has seen fuel and petrol prices jump four times in the past year.

"By contrast, China seems relatively secure with the vast bulk of its energy coming from coal," said Williams.

But Chinese demand for crude has continued to rise strongly, jumping 17.7% year-on-year in December to a record 10.4 million barrels per day, according to the Paris-based International Energy Agency.

Inflation has become Beijing's top economic concern as it struggles to keep a lid on rising costs of food and other key items to head off public unrest.

China raised wholesale petrol and diesel prices by 4.6% on February 20, the second rise in two months.

In Japan, Economy, Trade and Industry Minister Banri Kaieda warned last week rising oil prices were the biggest risk to the nation's economic recovery.

And in South Korea authorities are even considering turning off unnecessary lighting and ordering public buildings to cut back on power use if oil prices do not fall.

Vietnam -- grappling with double-digit inflation -- recently raised petrol prices by 18% but for another reason: a currency devaluation that increased the cost of imported fuel.

Vu Dinh Bac, an economics student, said his already-tough life would get even harder.

"I fear that the price of a motorbike taxi ride, a cup of coffee and even a cup of iced tea will also go up," he said.

Not all Asian nations are net oil importers -- Malaysia produces more than it consumes, but even it is not immune to the effect of higher prices.

"Higher oil prices will push up food, transport and other essential items," said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd in Kuala Lumpur.

Analysts said that while Asia is particularly vulnerable to the rising oil prices, they also have an advantage because their economies are in better shape than those of the West.

"In general, Asia's strong growth would enable it to cope much better than the more fragile, albeit less oil-intensive economies of Europe and the US," said Williams.

Tourism dep’t to revive local destination media blitz

MANILA, Philippines - The Department of Tourism will revive a media campaign promoting local destinations as it aims to further strengthen the domestic tourism market.

Tourism Secretary Alberto A. Lim said the campaign, called "Pilipinas, Tara Na (Philippines, Let’s Go)" will take off from where the old campaign, known as "Tara Na, Biyahe Tayo (Come, Let’s Travel)," left off.

He expected the campaign to help increase domestic tourism to 25 million tourists this year, two million higher than last year’s official figures.

"It will be a mass media campaign. We hope to invite young stars such as [singer] Charice, to grace the campaign," Mr. Lim told reporters at the sidelines of opening of the 18th TravelTour Expo 2011 on Friday.

He clarified that the campaign is not related to the botched "Pilipinas Kay Ganda" slogan, which was ditched by the department last year which drew flak from many sectors, including none other than President Benigno S. C. Aquino III himself.

"We’re not doing a re-branding here. This is not for the international market, but more for the domestic tourism market," Mr. Lim said.

The campaign will promote so-called priority tourism destinations, namely, the "Central Philippines" which groups Palawan, Boracay, Bohol and the Bicol Region.

"We will also push for the Ilocos [Region], the Cordilleras, Cagayan de Oro and Davao," he added.

The campaign seeks to strengthen the department’s program -- launched just last month -- that promotes local festivities nationwide.

Mr. Lim said funding for the campaign will come from partnerships and sponsorships with the private sector.

"We hope to launch this formally by March or April" he said.

BSP insists no urgent need to raise rates

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) currently does not see the need to raise interest rates despite claims that it, along with other Asian central banks, needs to be more proactive in addressing inflation.

Unlike regional counterparts which have begun tightening policy to address rising consumer prices, the Monetary Board last Feb. 10 decided to keep key rates unchanged, arguing that inflation remains manageable.

Some analysts said this indicated that rate hikes would only be implemented starting the second quarter. Last Wednesday , however, a senior HSBC economist urged that these be made as early as the next policy meeting on March 24.

Earlier in the week, meanwhile, Standard & Poor’s (S&P) issued a general warning that Asian central banks might need to act with dispatch to avoid stoking inflation expectations.

"For the next policy meeting, we will take into account all the developments that we have seen and that we will see between the last policy meeting and the next one," BSP Governor Amando M. Tetangco, Jr. told reporters last Thursday.

"So we’ll have to reassess the inflation outlook given the developments during this period and then come up with an overall evaluation of the price situation."

The Feb. 10 decision not to touch policy rates came as inflation rose to 3.5% in January from December’s 3%. The Monetary Board, however, raised its 2011 and 2012 inflation forecasts to 4.4% and 3.5%, respectively, from 3.6% and 3% previously.

The new outlooks remain within the BSP’s target inflation range of 3-5% for both years. Actual inflation averaged 3.8% last year, also within the 3.5-5.5% target.

"There are other factors that can affect the inflation forecast and then on that basis, we will make a decision on the policy interest rate. But right now, since we met only last week, the stance is still appropriate," Mr. Tetangco said.

He also claimed that the relatively small size of the BSP’s rate cuts -- a total of 200 basis points compared to 300-500 bps in other countries -- was another argument against an immediate tightening of policy.

The BSP’s overnight borrowing and lending rates were lowered to 4% and 6%, respectively, during the course of the global financial crisis and have been kept at those levels since July 2009.

"Our interest rates actually have remained positive in real terms," Mr. Tetangco said, reiterating a BSP argument that these have stayed ahead of inflation.

Asked to comment, University of the Philippines economist Benjamin E. Diokno said a tightening of policy was unlikely during the March 24 meeting.

Inflation data for February is scheduled to be released during the first week of March.

"My reading of the BSP’s statement is that it will not raise rates yet in the meeting in March. Rates were not really reduced significantly," Mr. Diokno said.

Earlier this week, HSBC senior economist Frederic Neumann said rate hikes would likely start in May but added: "We would like to see interest rates go up at the March meeting".

"I think the earlier, the better, especially since the Philippines is now the stand-out in the region [in terms of not having raised rates] ... To reassure markets, it might be prudent to act early," he said.

While the BSP has so far been successful in keeping inflation within target, it "must cement its inflation-fighting credibility. It has to reinforce that through a rate hike," Mr. Neumann said.

Debt watcher S&P, meanwhile, last Monday said in a report that inflation expectations could be kindled if Asian central banks tolerated the rise in prices and increased interest rates too gradually.

"The optimal policy mix to combat inflation is likely to be different in each economy," S&P said. "But we believe that monetary authorities can only succeed in taming inflation expectations if they show their willingness to tighten monetary conditions in a preemptive manner," it added.

The BSP, along with its Indonesian counterpart, was cited as among those which had delayed rate hikes to this year. Indonesia finally raised its benchmark rate last Feb. 4 .

Mancao files motion to intervene in Lacson case

MANILA, Philippines - Former police officer Cezar Mancao filed Tuesday a motion for leave to intervene before the Court of Appeals in an effort to reverse the appellate court's ruling junking two murder complaints against Sen. Panfilo Lacson for the Dacer-Corbito twin killing in November 2000.

In the ruling dated February 3, 2011, the appellate court said Mancao, in implicating Lacson, was an incredible and untrustworthy witness.

Mancao said the ruling was "unfair" because he was not even party to the case for certiorari (review) filed by Lacson and was thus not given an opportunity to explain why his affidavits dated June 2001 and March 2007 was "inconsistent" with his February 13, 2009 affidavit.

It was in the 2009 affidavit that Mancao implicated Lacson, or 8 years after the execution of his first affidavit.

"It's unfair po sa CA na hinusgahan ako na nagsisinungaling nang hindi naman naririnig ang aming panig," Mancao told reporters in a news conference today.

"Intervenor's rights as an accused and a witness, and his interest in the treatment of his extra-judicial testimonies, have been transgressed without due process in the present proceedings, and such rights and interest may not be defended, protected or restored if he is not allowed to intervene," Mancao's motion meantime read.

Mancao's counsel, Ferdinand Topacio, claimed it is not the appellate court which should rule on the credibility or lack thereof of Mancao but the trial courts.

"Ang sinasabi namin sa CA, kung hahatulan niyo kami isali nyo kami diyan at pakinggan ninyo ang aming panig. Sinaklaw nyo ang kapangyarihan ng trial court na maghatol sa isang kaso nang hindi man lang narinig si col mancao," Topacio said.

Apart from the motion to intervene, Mancao also filed a motion for reconsideration-in-intervention where he maintained that Lacson's petition "should have been dismissed outright" because it was not Lacson but Lacson's counsel, Alexander Poblador, who signed the Verification and Certification Against Forum Shopping attached to the petition.

Citing a Supreme Court ruling in Clavecilla v. Quitain and a Court of Appeals ruling in Mariveles Shipyard Corp. v. Court of Appeals, Mancao insisted it should have been petitioner Lacson himself who signed the certification.

Mancao also assailed why no justification was provided by Lacson for his failure to personally sign the certification against forum shopping.

Mancao's MR alleged Lacson actually engaged in forum shopping because, through counsel, he raised the same issues he elevated to the appellate court before the trial court.

He also assailed why Lacson was allowed relief by the appellate court when he refused to submit himself to the jurisdiction of the courts by refusing to honor a warrant for his arrest.

"A person who has not submitted himself to the jurisdiction of the court has no right to invoke the processes of the courts," Mancao's MR read.

PALEA denies agreeing to settlement in labor row

MANILA, Philippines - The ground crew union of Philippine Airlines (PAL) has denied it agreed to consider a partial settlement of its dispute with the airline's management before Malacañang hands down a decision on the year-long labor row.

The PAL Employees' Association (PALEA) issued a statement, saying it was not open to a gradual implementation of PAL's outsourcing plans and higher separation pay as settlement.

"Neither management or the union proposed such ideas in the mediation meeting called by the Office of the President last Friday," said PALEA president Gerry Rivera.

Rivera was reacting to news reports by ANC and abs-cbnNEWS.com that cited a radio interview of deputy presidential spokesperson Abigail Valte.

Valte was quoted as saying that the parties were mulling a settlement during Friday's 1.5-hour meeting.

"We certainly made it clear that we do not agree to either gradual outsourcing or higher separation or both,"Rivera said.

"We hope that Malacañang will issue its own clarification since such 'wrong mistakes' will not help the Office of the President in mediating the PAL and PALEA dispute," he added.

Rivera maintained his group was against PAL's plan to outsource non-core units, which would lead to the retrenchment of some 3,000 workers.

He said what they asserted was the commencement of collective bargaining agreement (CBA) negotiations with PAL management.

"PALEA must remain vigilant until the CBA negotiations actually start and our mass actions serve this purpose of alerting PAL and the government that we are not complacent. CBA negotiations will be historic since it will mean the end of the dozen year moratorium," Rivera said.

However, PAL president Jaime Bautista had said that the Lucio Tan-owned airline was firm in its decision to let go of non-core units, and that any new CBA would be negotiated with only those who would be left behind after the spin-off.

US embassy: We audit grants we gave to Philippine military

MANILA, Philippines - The US Embassy in Manila has decided not to comment directly on the ongoing exposés surrounding the malversation of funds by top officers of the Armed Forces of the Philippines (AFP).

Statements from retired Lt. Col. George Rabusa, former AFP budget officer, and those of former state auditor Heidi Mendoza also point to funds from the United Nations as among those missing from AFP coffers.

Rabusa had also mentioned that funds allotted for the annual joint Philippine-US Balikatan military exercises as part of the sources of "pabaon" to high-level AFP officials.

When asked if the United States is also now concerned as to the safety of their own funding, the embassy replied in a text statement: "The United States Government conducts auditing and end-use monitoring to ensure foreign assistance grants are used properly."

The United States is a major source of military assistance by the Philippines through grants and military equipment.

A member of the Transparency and Accountability Network, meanwhile, expressed shock at the systemic corruption revealed in the exposés.

“Ako shocked pa rin ako, kung gaano na ka-pervasive ‘yong corruption. Kasabwat din pala ang COA [Commission on Audit]. Imagine, pati ‘young nagbabantay ay nababahiran na,” said Dean Tony La Viña of the Ateneo School of Government (ASG).

La Viña, a member of TAN, said the latest revelations differ from other scandals like the botched national broadband network deal with ZTE and MegaPacific deals, because these were done with a single action. In comparison, corruption in the AFP entailed many people performing corrupt acts for unknown periods of time.

“What's shocking here is that heneral, colonel, auditor ang gumagawa nito... Mga taong hindi dapat gumagawa ng mga bagay na ganito,” said the ASG dean.

La Viña said that if not managed properly by the current AFP leadership, this exposé could very well spark yet another outrage from the lower ranks of the military.

And while the revelations in no way justify past uprisings from the military like those of Oakwood and Manila Peninsula, the ASG dean said he believes this would make the people more sympathetic to the motivations of junior officers who may become disgruntled.

MILF admits major split ahead of talks

SULTAN KUDARAT, Philippines - The Philippines' largest Muslim insurgent group said Saturday it has a potentially serious rebellion in its ranks after a key leader broke away ahead of peace talks with Manila.

Ameril Umbrakato resigned from the Moro Islamic Liberation Front (MILF) seven months ago, taking with him at least a thousand MILF fighters, top MILF leaders told a news conference.

The development poses a potentially major problem to formal peace talks scheduled to start in Malaysia on Wednesday, conceded Murad Ebrahim, chairman of the 12,000-member movement.

"We are talking with them and urging them to toe the line on the MILF position," Murad said.

Previous peace talks collapsed in 2008 after the Supreme Court outlawed a draft peace settlement that would have given the MILF control over large areas of the mineral-rich southern island of Mindanao.

The group has began waging a rebellion since 1978 for an independent Muslim state on Mindanao, which makes up the southern third of the largely Roman Catholic Philippines.

The Supreme Court's decision triggered attacks by MILF commanders including Umbrakato on Christian communities in Mindanao. The resulting surge in violence displaced 750,000 people and left nearly 400 dead, according to official data.

More than 150,000 people have died since the early 1970s due to the rebellion, according to the government.

Mohagher Iqbal, head of the MILF peace negotiating panel, said Umbrakato accused the leadership of turning its back on the original goal of an independent Muslim nation.

"He said the MILF is a revisionist group," Iqbal said.

"We have sent ulamas (Muslim elders) to talk to him and we are trying to engage him," Iqbal added.

The MILF itself is a 1978 splinter of the Moro National Liberation Front, which signed a 1996 peace treaty that won the large Muslim minority limited self-rule in four Mindanao provinces.

FAO sees 2008 food crisis repeat

MANILA, Philippines The Food and Agriculture Organization (FAO) of the United Nations warned of a repeat of the 2008 global food crisis as crop harvests fall in the United States, Europe, Australia and Argentina, and agricultural-commodity prices spike in global markets.

FAO Director General Jacques Diouf noted that the volatility in the price of agricultural products is due partly to the failure of rich and poor countries to address the structural imbalances in the international agricultural system.

“We continue to react to circumstances and, thus, engage in crisis management,” said Diouf in a statement.

He warned that if current trends persisted, one of the Millennium Development Goals (MDGs) set by world leaders would not be met by 2015.

“Reducing by half the number of hungry people on the planet by 2015 would only be achieved in 2150 if current trends persist,” said Diouf.

“We must, therefore, forcefully remind everyone that conditions needed for an adequate supply of food for a population that is constantly growing and that, in the next 40 years, will require a 70% increase in agricultural production worldwide and a 100% increase in the developing countries,” he stressed.

FAO said the solution to the problem of hunger and food insecurity in the world requires an “effective coordination” of decisions on investment, international agricultural trade and financial markets.

“In an uncertain climatic context marked by floods and droughts, we need to be in a position to finance small water-control works, local storage facilities and rural roads, as well as fishing ports and slaughterhouses,” said Diouf.

FAO said there is a need to conclude the Doha Round of negotiations at the World Trade Organization (WTO) to put an end to “market distortions and restrictive trade practices.”

“Finally, there is a pressing need for new measures of transparency and regulation to deal with speculation on agricultural commodity futures markets,” said Diouf.

FAO said implementation of such policies at the global level requires the respect of the commitments made by the developed countries, notably at the Group of 8 Summits of Gleneagles and L’Aquila, as well as at the Group of 20 Summit in Pittsburgh.

Developing countries such as the Philippines, said FAO, must increase their national budget allocations to agriculture and to ensure that private foreign direct investments will be made in conditions that will ensure “an equitable sharing of benefits among the different stakeholders.”

“Crisis management is essential and a good thing, but prevention is better. Without long-term structural decisions and the necessary political will and financial resources for their implementation, food insecurity will persist with a succession of crises affecting most seriously the poorest populations,” said Diouf.

SM Investments eyes P7-B from notes issue

MANILA, Philippines - Mall-to-banking group SM Investments Corp. (SMIC) announced on Friday it would issue P7 billion worth of 5-year corporate notes to refinance debt.

In a statement to the Philippine Stock Exchange, SMIC said the notes would be priced "at 50 basis points above the PDSTF and will be available via private placement to institutional lenders."

The conglomerate will use most of the proceeds to refinance an existing liability worth P4.3 billion which will mature in 2012. The balance will go to other corporate requirements.

ING Bank N.V., Manila Branch has been appointed lead manager and sole bookrunner for the issue.

SMIC, owned by the country's richest man Henry Sy, earlier said it expected earnings growth of 12% to 14% this year.

Shares in the company, which has interests in mall operator SM Prime Holdings Inc. and top lender Banco de Oro Unibank Inc., fell 0.6% in a market that was down 0.06%.