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Home Community RP Government Updates RP Economy on Solid Footing, Says Ambassador Kenney
RP Economy on Solid Footing, Says Ambassador Kenney PDF Print E-mail
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Communities - RP Government Updates
Thursday, 18 September 2008 13:20
The fate of gigantic New York-based Lehman Brothers will have minor effects on the Philippines, whose "economy is on solid footing."

This was the comment today of American Amb. Kristie Kenney, who added that it should use this footing to its advantage by maintaining an investor-friendly environment.

Lehman Brothers is a lending company operating globally, with the AIG among its associates. AIG has a major operation in the Philippines.

 

Lehman Brothers declared bankruptcy this week, but the U.S. government moved quickly to rescue AIG.

 

According to Ambassador Kenney, this move helped stabilize the situation for AIG and, by extension, the Philippine market.

 

Philippine banking giants Banco de Oro and Metrobank are also among those who declared having "exposure" to Lehman.

 

Because of the ripple effect U.S. companies have on US-dependent economies such as the Philippines, the U.S. Congress is also "looking to improve regulations on banking" in the U.S., she added. (PNA)

 

* * * * *

 

Gov't Action Vs MILF "Needed, Important" -- U.S. Envoy

 

Government action to curb lawless activities in Mindanao is important, this was stressed by U.S. Ambassador Kristie Kenney, who was referring apparently to military operations against Moro Islamic Liberation Front (MILF) groups attacking civilian communities.

 

"There is a strong need...important to curb lawless elements. I hope it's effectively wrapped up," Ambassador Kenney told reporters of the Department of Foreign Affairs.

 

The ambassador did not use the term "MILF," "military operations" or "attacks," careful to emphasize that the United States is not part of peace negotiations which have been aborted between the Philippine central government and the MILF.

 

Negotiations for what was to have been a distinct territorial homeland for Muslims were suddenly scuttled a month ago when disgruntled MILF senior field combatants attacked mostly Christian communities in Lanao and Cotabato.MILF said their "lawless activities" were a revenge when the Supreme Court ruled against a Memorandum of Agreement for an Ancestral Domain.

 

Despite the Muslim Ramadan, there is no cessation of hostilities and military operations to flush out the perpetrators of the attacks in Mindanao.

 

Kenney would not use the expression "immediate resumption of peace talks" in describing the position of the U.S. government about the scuttled negotiations.

 

"Talks... dialogues...I think there is a path to be found back to peace," she said. "It's up to the Philippine government to determine what is good for them."

 

She insisted that American troops currently in Mindanao are in the conflicted area under a continuing agreement with the Armed Forces, but are not part of Philippine contingents fighting out the MILF.

 

Kenney's measured words came as other organizations and governments, such as the European Union and Malaysia, expressed their respective wish for "an immediate resumption of peace talks." (PNA)

 

* * * * *

 

National government wants to fast-track “Super Regions” projects

 

The national government has directed the different agencies to accelerate infrastructure projects under the “Super Regions.”

President Gloria Macagapal Arroyo said “Super Regions” help to sustain growth that has been weighing heavily on two of the economy’s key drivers -- exports and remittances from overseas Filipino workers (OFW’s).


President Arroyo has asked the Budget department to coordinate with the implementing agencies for the prompt release of funds for the “super regions” projects.

 

Currently, the Pro-Performance System and the Procurement Transparency group to ensure quality but reasonable priced infrastructure, formed in September 2007, have started monitoring, releasing advisories and remedial action for projects that encounter problems.

 

Malacanang has allotted P156.6 billion for infrastructure spending this year, more than P22.6 billion allotted last year.

 

The country posted a 7.5 percent economic growth in the last quarter of 2007, though both local and foreign analysts have warned against overdependence on OFW remittances which make the country even more vulnerable to the fortunes of host economies.

 

Data from the Bangko Sentral ng Pilipinas (BSP) showed that remittances of OFWs coursed through banks last August exceeded the one billion dollar mark, reaching US$ 1.2 billion and bringing the year-to-date level to US$ 9.3 billion.

 

Administrative Order No. 206 ordered the so-called Super Region Champions to intensify infrastructure monitoring and fast-track construction while ensuring transparency.

 

The Super Regions consist of Subic-Clark Alliance for Development Council (Luzon Urban Beltway); North Luzon Agribusiness Quadrangle, Central Philippines, Presidential Adviser on Peace Process, and Commission on Information and Communications Technology.

 

* * * * *

RP Can Withstand the Effects of Financial Crisis – PGMA

 

During the government's mid-year economic briefing, President Arroyo expressed confidence that the government's fiscal reforms will allow the country to withstand the effects of the financial crisis.

 

Thomas Crouch, ADB's deputy director-general for Southeast Asia, likewise said that the Philippine cannot be insulated from the financial crisis but there have been macro-economic policies that have made it less vulnerable and in a better position to respond to the negative impacts of these events.

 

PGMA acknowledged that the country's Gross Domestic Product (GDP) growth posted only a 4.6 percent increase in the second quarter compared to the 8.3 percent growth recorded in the second quarter last year.

 

The global economy has hit the Philippines hard and had painful impact on every Filipino through higher prices of food, fuel and rice.

 

The Philippines was not the only one in Asia affected by the turmoil in the US market, citing the dismal growth in the economies of Singapore, Hong Kong and South Korea.

The country has remained resilient because of the government's reform in the tax system. The funds raised by the government through the value-added tax (VAT) will help cushion the country from the global hike in food and oil prices as well as the effects of the meltdown of the US financial system. It has given the country the funds to invest in targeted relief to the most poor through programs aimed at relieving the high price of energy and food.

 

Among these programs were the removal of tariff on petroleum products, food-for-school program, power subsidy, microfinance, scholarships and college loans, fuel discounts, income tax exemption, and supplemental calamity budget.

 

The government is doing its best in all fronts to manage inflationary pressures, provide safety nets to those members of our society who are hit hard by these global developments, and deliver the growth that will continue to generate jobs and the tax revenues that we need to fuel our investment in the future.

 

President Arroyo also announced plans to reduce corporate income taxes to 30 percent in 2009 from the current rate of 35 percent. The cut in corporate income tax rate next year will give companies more headroom to reduce their prices to the public and be more competitive.

 

The government is doing everything in its power to focus on the fundamentals, keep the economy steady and provide relief to those most in need. But government will only be successful if every segment of society pulls together and commits to building an ever stronger Philippines.

 

Meanwhile, Bangko Sentral ng Plipinas (BSP) Governor Amando Tetangco said the country's banking system remains sound despite the collapse of US investment firm Lehman Brothers.

 

The Philippine banking system has not been significantly affected. Furthermore, the Philippine domestic banks' exposure to structured products issued by Lehman are well-cushioned by the banks' capital base.

 

The government will continue to monitor developments in the global financial markets since these could effect impact not just in the banking sector but in economic growth as well.

 

Ermita cites before world body PGMA’s commitment to peace process on or before 2010

The Philippines major contribution to the Geneva Declaration’s vision of a peaceful and progressive world is its commitment to noteworthy gains in the peace process on or before 2010.

 

Executive Secretary Eduardo Ermita, who represented the President at the Review Summit on the Geneva Declaration on Armed Violence and Development, and delivered the Country Report, said today the Philippines’ commitment is in response to the Geneva declaration’s target of achieving a measurable reduction of armed violence worldwide by 2015.

 

”The country statement focused on our current strategies and gains in the peace process, human rights promotion and protection, anti-terrorism campaign, and small arms and ammunition control, as they positively impact on efforts to prevent or reduce conflict in the country to pave the way for sustainable development in afflicted-affected and conflict-prone areas,” he said.

 

“I specifically mentioned the importance of armed conflict reduction and prevention in light of the Philippines’ experience in dealing with five armed groups in the last four decades – two Muslim secessionist groups in Southern Philippines, a local Communist movement operating all over the country and their two breakaway groups in the Visayas and in the Cordillera region,” the Executive Secretary said.

 

Ermita further said he informed the assembly of 76 participating countries, as well as 16 international organizations, four Geneva-based institutes, and 35 non-government organizations from various countries who attended the Geneva conference that adding to the complex armed conflict scenario in the country is a handful of terrorists in the fringes of Mindanao.

 

Ermita said the Philippines’ participation in the Review Summit – which was held under the auspices of the Foreign Ministry of Switzerland and supported by the United Nations Development Programme (UNDP) -- “was made doubly significant as it served as Declaration Core Member, along with Southeast Asian neighbours Indonesia and Thailand.”

 

Ermita said he was in a panel of seven minister-representatives from Brazil, Qatar, Ghana, South Africa, Morocco, Norway, and the Philippines-- especially chosen to issue statements affirming their respective country’s efforts in promoting development, most especially through the 15-year Millennium Development Goals, in the context of armed violence prevention and reduction with the Geneva Declaration as framework for action.

 

The Executive Secretary added that he also underscored the fact that funds annually spent for internal security operations to address these conflicts could and should have been used for development purposes if only we were a nation free of these conflicts.

 

“I, however, noted and expressed our country’s gratitude for the involvement of several foreign organizations, such as the UNDP, that are continually supportive of our peace and development programs.”

 

Swiss Minister Calmy-Rey, Ermita said, revealed that apart from the tremendous cost in human life, armed conflict around the world has been estimated to cost as high as US$163 billion every year, based on a based on a study of the Small Arms Survey, an international non-government organization that assists in monitoring small arms and light ammunitions that are illegally in circulation.

 

* * * * *

 

 

“Insolvency not an issue in RP banks with exposures at Lehmans” Secretary Ermita

 

Amid the shockwave sent through the rest of the world by the massive fall of the Lehmans Brothers bank, Malacanang today allayed fears of depositors of Philippine banks that have exposures with Lehmans Brothers, stressing that “insolvency is not an issue.”

 

Executive Secretary Eduardo Ermita stressed that Philippine banks that have exposures with Lehmans brothers “can weather” the present crisis as they have strong capital base.

 

“Our banking system is strong due to the strong economic fundamentals the President has put in place since day one of her administration,” Ermita said.

 

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Esperilla said so far, three banks, that include the Metrobank and BDO (have disclosed to the Philippine Stock Exchange their exposure with Lehmans) out of the over 60 banks surveyed by the BSP.

 

“Only a few (banks have exposures ) but these are one of the biggest banks.. A large number have no exposures, he said.

 

 

The worst scenario, that is, if Lehmans will be completely worthless, is that the Philippine banks will just register lower income for this year.

 

“These banks will not be destroyed. At most, we expect their net income reduced as these banks have other sources of income,” he said.

 

“Their exposures are far less compared to their capital bases,” he added.

 

The Lehmans Brothers bank held over $100 billion in stocks and shares all over the world.

 

The US investment bank is the fourth largest in the world and may be selling its core assets to Barclays bank in UK in order to adhere with bankruptcy, the BSP Deputy Governor said. # # # #

 

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