Asean round-up

M’sia too will suffer because of drop in PC sales juz like S’pore http://atans1.wordpress.com/2013/04/11/when-economy-slows-not-nec-its-cause-ft-supply-ltd/ because Penang too is part of the Mircosoft ecosystem. And it too is not part of the Apple or Google ecosystems.

Asean round-up

Indon IPOs: Private-equity firm PT Saratoga Investama Sedaya, and Indonesia’s biggest taxi operator Blue Bird Group, have picked underwriters to prepare their initial public offerings (IPOs) as they seek to raise money ahead of a 2014 general election.

Burmese telco update: Telecoms will be among the first industries to be liberalised under Burma’s reformist government, which hopes to place mobiles into the hands of between 75% and 80% of its 60 million citizens by 2016, up from an estimated 6% today.

If take-up is high, the entire mobile market in Burma – renamed Myanmar by the ruling military junta – could be worth $10bn (£6bn) a year, with networks generating $7.3bn of those revenues, research by Ericsson found.

Foreign companies are eager to partake in what has been described as a mouthwatering opportunity, and by Thursday’s deadline 22 bids had been submitted.

http://www.guardian.co.uk/business/2013/apr/04/vodafone-china-mobile-burma-telecoms

SingTel and Temasek are also trying their luck. but LKY’s remarks about “stupid” generals (a few yrs ago) can’t be helpful.

Iskandar: Some issues are beginning to surface as highlighted in a recent Business Times article which said that investors are not getting assurances in black and white on issues like land zoning, mortgage loan quantums and Bumiputra employment quotas, among others.

Foreigners investing in Iskandar might do better if they can understand that most policies in Malaysia are instituted by politicians of the day. When the politician leaves, a new policy replacing the old one is to be expected. When doing business in Johor, one has to factor in such risks.

Remember that Putrajaya, the state administrative capital of Malaysia, is still struggling after more than 20 years in the making. When Iskandar was mooted in 2006, authorities were confident about getting funds from Middle Eastern investors. Obviously, that plan didn’t work out and the focus is now back to Singaporean investors.

http://www.tremeritus.com/2013/04/01/perils-of-investing-in-iskandar-malaysia/

Thailand is the “Detroit of the East”. And it is Japanese carmakers in particular that use the country as a manufacturing hub. In 2012 production reached 2.45m vehicles of which 1m were exported. This made Thailand the 7th largest car exporter globally.

http://www.economist.com/blogs/schumpeter/2013/04/thailands-booming-car-industry

Eat yr hear out Dr M. Remember, he started Project Proton because he wanted to kick-start M’sia into becoming a leading vehicle manufacturer.

Pinoys ahoy: Over 10m Filipinos, equivalent to about a quarter of the country’s labour force, live or work abroad, permanently or temporarily, legally or illegally, in over 200 countries. Their remittances are equivalent to 8.5% of GDP, helping the country to plug its trade deficit and amass over $80 billion of currency reserves. As a result, the Philippines has become a net creditor to the rest of the world … , not just a net supplier of labour.

These impregnable external finances are one reason why Fitch, a ratings agency, awarded the Philippines its first ever investment-grade credit rating on March 28th.

http://www.economist.com/news/finance-and-economics/21575812-archipelago-has-never-been-more-creditworthy-ratings-heaven

Asean round-up

Airbus has won a record order for 234 A320 planes worth 18.4bn euros (US$24bn) from Indonesia’s Lion Air.The order trumps last year’s record order for 230 Boeing planes – also from Lion Air.

Last Saturday, Bloomberry Resorts Corp’s was opened by Philippine President Benigno Aquino.

Big casino operators will be scrutinising the Philippines’ debut as Asia’s newest top-end gambling destination this weekend to see if Manila can deliver on promises of better profit margins and lower costs than global betting capital Macau, says Reuters.

They also want to know whether Bloomberry Resorts Corp , whose shares have climbed 40% in the last six months on hopes of quick returns, can overcome national security concerns and flawed infrastructure to bring in VIPs from China to place bets at its US$1.2 billion Solaire casino resort.

Its rivals are Melco Crown Entertainment Ltd and Genting Hong Kong Ltd, with their respective local partners Belle Corp and Alliance Global Group Inc.

“There are high rollers coming in to play … I am expecting at least 1-1.5 billion pesos (US$25 million to US$37 million) to be wagered tomorrow night,” Cristino Naguiat, head of local regulator the Philippine Gaming Corp (Pagcor) told reporters.

The advantage that the Philippines has is that junket operators are welcomed, unlike in S’pore. Junket operators have a reputation for laundering money, and ties with organised crime.

Bangkok skytrain operator BTS Group Holdings Pcl has received commitments worth $850 million from 20 cornerstone investors for Thailand’s biggest initial public offering, a source with direct knowledge of the plans told Reuters on Friday.

The investors in the infrastructure fund IPO include insurer AIA Group Ltd, hedge fund Azentus Capital Management and global asset managers Fidelity and Capital Research and Management, added the source, who was not authorized to speak publicly on the matter.

BTS on Friday week filed a prospectus for the up to $2.1 billion IPO, but the document did not include the names of the cornerstones.

The fund will likely yield between 6-6.2%, Reuters reported.

PT Matahari Department Store (LPPF)’s owners raised 12.7 trillion rupiah (US$1.3 billion) selling stock in the Indonesian retailer, Bloomberg reported.

CVC and Lippo Group sold 1.167 billion shares at 10,850 rupiah. The shares were initially offered at 10,000 rupiah to 11,250 rupiiah

The sellers, seeking to capitalize on investor optimism about consumer spending in Indonesia, asked for as much as double the median valuation among department stores in emerging Asia, price-to-earnings data compiled by Bloomberg show T(he shares were offered for as much as 28 times Matahari’s forecast 2013 earnings). Jakarta’s stock benchmark is up 11.3 percent this year and hit a record high earlier this month.

Temasek GIC is a cornerstone investor despite selling some shares too.GIC also committed to buy a 1.8% stake in the share sale as a cornerstone investor at the same time as its private equity arm was one of the main selling shareholders. Temasek too was a cornerstone investor. There were 15 cornerstone investors each with less than 5%.

(Update: Last para amended and expanded on 24 March 2013.

Asean round-up

The Philippine unit of Macau casino company Melco Crown Entertainment Ltd  said on Tuesday it plans to sell up to 1 billion shares as it prepares to develop a $1 billion casino-resort project with local partner Belle Corp.

Melco, run by Australian billionaire James Packer and the son of Macau gambling tycoon Stanley Ho, bought a 93% in Manchester, a formerly illiquid stock with investments in pharmaceutical and real estate businesses. Melco paid Manchester shareholders 1.3 billion pesos for the backdoor listing.

Melco and Belle, controlled by the Philippines’ richest man, Henry Sy, formalized their partnership in October.

Belle plans to build an integrated entertainment resort complex called Belle Grande Manila Bay, which features a 30,000-square-metre casino in a sprawling gaming complex being developed near Manila Bay. Melco will operate the casino.

There are three other groups with casino licences in the Philippines.

Financier Nathaniel Rothschild has lost his bid to oust the current board of coal mining giant Bumi, the company he helped to found.

Chairman Samin Tan survived a vote to remove him but informed the board he was stepping down.

Mr Rothschild had wanted to rejoin the company and expel 12 of the 14 board members, including the chief executive and chairman.Allegations of financial irregularities at Bumi’s key Indonesian operating subsidiary, PT Bumi Resources – in which it owns 29% alongside the Bakrie family – first emerged in September 2012 , after Mr Rothschild received information from a whistleblower.

Thailand’s economic growth exceeded expectations in the last three months of 2012 as it continued to recover from the previous year’s devastating floods.

Gross domestic product surged 18.9% in the October-December period, from a year earlier. Most analysts had forecast a figure close to 15%.

Compared with the previous quarter, the economy grew by 3.6%. But inflation is a concern.

Asean-round up

In Thailand – up 7.5% since the New Year – the market has been helped by a raft of initial public offerings and a boom in cross-border takeovers by Thai companies.

But the Stock Exchange of Thailand is also becoming a hub, connecting its securities trading with that of Malaysia and Singapore, and helping Laos develop its fledgling equity and bond market.

It has also signed a memorandum of understanding to help Burma do the same. FYI, the Laos market, tiny and illiquid, is up 17% in the last five weeks.

The Philippines has for decades resolutely defied the expectations that have been heaped upon it since the end of the Marcos era, and underperformed with monotonous regularity.

However, the fundamentals do look convincing now: low inflation of about 3-3.5%, growth estimated at above 6% through to 2016, strong consumption, election spending and rising foreign investor interest.

The economist Nouriel Roubini, who predicted the 2008 financial crisis (and got the recovery dead wrong by continuing to maintain a determinedly gloomy attitude to the world economy ever since), had surprising comments for the Philippines earlier this month, predicting 7% growth and praising its economic success based on fiscal and governance reforms.

He even predicted the rating agencies would grant it an investment grade rating – a stamp of approval for foreign investors. At present, the country’s rating is a notch below investment grade.

By contrast the economy in Vietnam is now in the doldrums and experts pointing to decades of economic mismanagement as the cause. Many Vietnamese are now saying their trust in the government has gone. Sounds familiar?

Another exciting year is in store for initial public offerings (IPOs) in Malaysia. A recent report by HwangDBS Vickers Research identified close to 30 companies that may be floated on the Malaysian bourse this year.

Among the biggest IPOs set for this year are Malakoff Corp Bhd, Iskandar Waterfront Holdings Sdn Bhd, the power assets of 1Malaysia Development Bhd (1MDB), AirAsia X and possibly Westports Malaysia.

Corporate bonds issuance hit nearly RM124 billion (S$49.7 billion). A record amount of nearly RM146 billion was raised through corporate bonds and IPOs, an 89% jump over the RM77.2 billion raised in 2011, going by capital market statistics released by the Securities Commission.

The corporate bond market raised 73% more than the RM71.2 billion raised in 2011; it was the highest amount raised to date, with sukuk issuances amounting to RM97.5 billion or 79% of total bond issuances.

The increase in government-guaranteed assurances boosted growth in private debt securities (PDS) and 2013 issuances are expected to be even higher.

Asean round-up

In Vietnam, the government’s planned sale of a 20% in Sabeco, a brewery,  is expected this year, according to bankers.

Wilmar, one of Asia’s largest agribusinesses, and Cargill, the commodities’ trader are setting up in Burma.

18 companies, including Malaysia’s Axiata, Norway’s Telenor Group, parent of the Thai mobile operator DTAC, Digicel, the Caribbean based operator, and two Singaporean companies, Singapore Telecommunications, one of southeast Asia’s biggest telephone companies, and ST Telemedia, a unit of Temasek Holdings, have submitted proposals for the two telecoms licences

The Burma has abolished a 25-year-old ban on public gatherings of more than five people: more liberal than S’pore.

Malayan Banking Bhd (Maybank) has made a US$100 million capital injection into its Philippines operations.The banking group, the fourth largest in the region, on the previous Friday launched a new corporate head office in Manila and announced plans to double its number of branches in that country to 100 by 2014, and thereafter to 200 by 2018, Malaysia’s Business Times said.

It currently has 54 branches there, with another expected to open in the city of Davao by the end of this month.

Maybank Philippines Inc (MPI), which has been operating since 1997 and is now the 24th largest bank by assets, may eventually go for a listing there. The Philippine central bank had last year issued a directive, requiring banks controlled by their foreign counterparts to go for a listing on the Philippine Stock Exchange.

Asean round-up

Gd news for SE Asia. China has reported better-than-expected trade data, adding to optimism that growth in the world’s second-largest economy may be rebounding.Exports, a key driver of expansion, rose 14.1% in December from a year earlier. Most analysts had forecast a figure closer to 4%.Imports also rose, climbing 6% and indicating stronger domestic demand.

The US has filed a complaint with the World Trade Organization (WTO) against Indonesia’s restrictions on imports of horticultural and animal products. BBC report. Other agricultural exporters like Australia and Thailand have been unhappy about Indonesia’s restrictions too.

Thailand is considering measures to help companies cope with the country’s rise in the minimum wage (35% up from level of last year), but has rejected business warnings of job losses, factory closures and a shift by some manufacturers to neighbouring countries

Thailand’s central bank left its benchmark interest rate unchanged at 2.75% on Wednesday, as expected, saying the global economy continued to recover while growth this year could be higher than thought and inflation was stable.

The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth. Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.

A $US200m deal with Masan Group by KKR is the largest by a private equity firm so far in Vietnam. It comes in addition to an earlier $159 million investment by KKR. Masan is Vietnam’s leading fish, soya and chilli sauce producer. As well as sauces Masan makes instant foods such as noodles, cereals and coffees. The firm estimates that 90% of local households use its products.http://www.bbc.co.uk/news/business-20954875

Japan was in talks with the Philippines on Thursday to enhance maritime co-operation amid their separate territorial rows with China.

“We talked about the challenges that we appear to be facing in view of the assertions being made by China,” Philippine Foreign Secretary Albert del Rosario told reporters after meeting with his Japanese counterpart, Fumio Kishida, in Manila.

Part of the co-operation may include 10 new patrol vessels from Japan to boost the Philippine coast guard, as well as communication equipment, Mr Del Rosario said.

Asean round-up

The Philippines economy grew 31.5% more than forecast in the third quarter, boosted by increased consumer and government spending and a recovery in exports.

Following violent anti-govt protests at the weekend, Thai Prime Minister Yingluck Shinawatra, on Wednesday, easily survived a no-confidence vote. She was accused her of failing to crack down on corruption.

The actions against this protest shows that the changes in Burma are still a work-in-progress. The protest also highlights China’s growing image problems amid intensifying local opposition to its extensive natural resources and infrastructure projects. In fact, one of the reasons why the generals opened up was their fear of Chinese domination.

“Najib said the 13th general election would be the decisive point for the future of the country and the people should be able to judge for themselves the advantage of choosing BN over the opposition.” (CNA). Actually what he means is that it determines his wife’s position as FLOM: First Lady of M’sia. LOL. She gets heself called FLOM, even though she is not the queen. Non-parisan analysts don’t expect Bn to lose power, but neither do they expect BN to regain its two-thirds majority in parliament, UMNO’s holy grail. If Najib can’t deliver this, there will be a new PM.

Asean round-up

This week, shares in Universal Entertainment, a Jap co fell on reports that one of its affiliates made illegal payments to an associate of the former head of the Philippine gaming regulator.

Last Tuesday, it was reported that Thailand’s economy has slowed in the third quarter after weak global demand dented exports to the US and Europe.Gross domestic product increased by 3% in the three months to the end of September from a year earlier. That is down from 4.4% in the second quarter. Analysts expect growth to pick up in the coming months as domestic demand offsets weaker foreign sales. Thailand’s GDP increased by 1.2% when calculated on a quarter-on-quarter basis, slightly more than many analysts had forecasted.

Carrefour sell Indonesian Operations for US$672.7m. Another French biz bites the dust in region. French car makers rarely sell cars in the region, and major French banks have ceased providing US$ trade financing.

And fly AirAsia at yr own risk? The M’sian authorities have renewed its safety licence for only six months, instead of the usual one year. More probably, shaking mgt for money? Elections are coming.

And talking of elections, Indian and Chinese voters will be most “daft” to vote for PK. While Anwar’s gang and DAP are secular parties, PAS is a branch of the Muslim Brudderhood. Not only do the Brudderhood want to cut-off limbs and ban partying, but in Egypt it has just reinstated a regime based on a presidency that  has the powers of a pharaoh: something that secular Egyptians died to overthrow just over a year ago.

Private equity increases focus on SE Asia

Buyout Firms Increase Focus on Southeast Asia Moves by the Carlyle Group and K.K.R. show their “increasing interest in one of the world’s most promising, but complicated, emerging markets: Indonesia.”

• WALL STREET JOURNAL

Indonesia attracted a record US$5.9 bn in foreign direct investment in the third quarter. It is a hot despite a bleak global outlook and worries about corruption and corporate governance http://www.reuters.com/article/2012/10/22/us-indonesia-economy-fdi-idUSBRE89L04220121022.

Note KKR has juz opened an office in S’pore.

FT says the economies of Indonesia, Malaysia and the Philippines are being driven by relatively strong corporate balance sheets, commodity exports and robust consumption amid the emergence of a rapidly urbanising middle class with purchasing power, hence the PE interest.

If Vietnam gets its act together, it could join these countries. Thailand has the corporates and the middle class but not commodities. It manufactures. So it too will be on PE radar.

And taz why the PEs have set up shop here. Convenient hub.

Around Asean: recent financial news

Shares in the London-listed Indonesian coal miner Bumi rise sharply for a second day after a proposal from Indonesia’s powerful Bakrie family to split from the firm. The dynastic Indonesian Bakrie family has proposed a split from Bumi that they helped to create with the British financier Nathaniel Rothschild. Wonder what the guy who bot at 11 thinks?

A.I.A. to pay US$1.7bn for ING’s Malaysia business. A.I.A. said the acquisition will catapult it to the No. 1 position in Malaysia’s lucrative life insurance market. For the Dutch insurer ING, it is the first major deal in its plan to divest its Asian assets.

The founders of Malaysia’s AirAsia, Tony Fernandes and Kamarudin Meranun, are set to launch three IPOs in 2013 worth more than US$500 million (S$614 million).

Tune Group, a financial services-to-discount hotel conglomerate owned by Fernandes and Kamarudin, is expected to launch US$65 million IPO of its insurance arm, Tune Insurance, not later than the first quarter of 2013, according to two sources with direct knowledge of the deal.

Meanwhile, AirAsia’s long-haul arm, AirAsia X, recently hired CIMB, Malayan Banking Bhd and Credit Suisse Group for a US$250 million IPO expected early next year.

The group is looking to list its Indonesia operations, Indonesia AirAsia, by the first quarter of next year in a deal that could raise up to US$200 million.

The listing plans also come at a time when Fernandes is stepping down as the chief executive officer of the Malaysian-listed airline to focus on regional growth through Indonesia. The group’s plan to buy up to 100 Airbus jets, potentially worth about US$9 billion, is designed to fuel the growth of what is becoming a cluster of related airlines under Fernandes, who placed a record order for Airbus jets last year.

With an operating fleet of more than 116 aircraft, AirAsia has ordered a total of 375 Airbus jets as part of dramatic expansion plans that include the acquisition of Indonesia’s Batavia Air.

DBS Group, South-east Asia’s largest lender, is selling more than half of its 20.3% stake in The Bank of Philippine Islands (BPI) to conglomerate Ayala Corp for 25.6 billion pesos (S$757.3 million). “With the divestment of a 10.4 per cent interest in BPI, DBS will hold an aggregate 9.9 per cent investment in the bank. DBS will continue to have representation on the BPI board.”.

DBS, which has been a strategic investor in BPI since 1999, would realise a gain of about S$450m against the carrying value of the investment.

Ayala is the biggest shareholder in BPI, the Philippines’ largest bank by market capitalisation.

DBS is selling the stake at a time when the Philippines stock market is among the best performing markets in South-east Asia. The Philippines main index has gained some 23% this year, with BPI 42%.

Nice little profit in a rising market. Can’t blame DBS for not trusting the bullishness that the Philippines has got its act together finally.  It’s cyclical, juz like another peace treaty signed with Muslim rebels in the South.

Japan intends to start lending Burma money aiming to help transform Burma into a production and investment hub to rival Vietnam.  ”Japan’s big trading companies are at the forefront of the investment effort. Mitsubishi, Marubeni and Sumitomo have signed an agreement with the Myanmar government to develop the initial phase of Thilawa, a 2,400-hectare site close to the southern port of Yangon, which will feature housing, commercial space and an industrial park,” reports FT

Education: England learning from S’pore

Aimdst all the angst (a foreign publication’s take) about our educational system (tuition, PSLE exams etc), pause and reflect please especially netizens.

In England, reforms are underway so that

– Slower learners will try to pass the new exam a year or two later than their peers (like our 5 yr  O levels and 3 yr A levels, while

– “using the best performers in international tables as a guide (expect things to look a lot more Singaporean in the next few years)”. http://www.economist.com/node/21563330

And the Philippines is looking to S’pore for inspiration http://blogs.wsj.com/searealtime/2012/09/14/philippines-draws-inspiration-from-singapore/ utm_medium=twitter&utm_source=twitterfeed&WSJASIA_article_outbrain=&obref=obinsite

What say you haters of all things PAP: KennethJ, GMS, Dr Chee and groupies, TOC*, xmen and various bloggers? Bang yr balls in frustration. Stop living in an echo-chamber.

The policies of the governing PAP are not all bad. And S’poreans know this.

—

*I exclude TRE because it is very clear that its mission is to counterbalance the constructive, nation-building local media. Juz like them, it makes no pretensions of being objective.

Thailand & Philippines hip: Indonesia is history

http://blogs.wsj.com/searealtime/2012/07/19/investors-look-to-thailand-philippines-as-indonesia-love-affair-fades/

http://blogs.wsj.com/searealtime/2012/07/11/indonesian-rules-dousing-u-s-investor-enthusiasm/

But Indonesia has a few things going for it:

– two major exports are recession-proof

    — lower cost producer of thermal coal and closer to China (tpt costs lower) than Oz means there will still be demand for its coal; and

    — palm oil cooking oil is the cheapest cooking oil;

– cheap labour attracting the likes of Foxcomm;

– last yr’s floods in Thailand are prompting MNC manufacturers to a “Thailand + one” strategy; and

– consumption now accounts for two-thirds of gross domestic product in Indonesia.

Malaysia is one of the most vulnerable Asian economies should a “perfect storm” of a disorderly debt default in Europe, a slowdown in China and the United States and rising tensions in the Middle East materialise, Roubini Global Economics said in a recent report.

The research firm, which predicted the 2008 global financial crisis, said Malaysia had the highest exposure to a pullout of capital as its euro zone and US bank claims amount to more than 25% of GDP.

The report said Malaysia was among the lowest ranked in terms of monetary and fiscal capacity to respond to a crisis, coming in ahead of only Thailand, Japan and Indonesia.

“Malaysia, Taiwan, South Korea and Vietnam appear to be the most exposed to a perfect storm through their trade and financial linkages, while South Korea, Australia, Vietnam and the Philippines … have the most policy space to offset such an external shock.”

Filipino super bull

BDO Unibank Inc., the Philippines largest lender on Tuesday priced the country’s largest share sale (US$1bn 1-for-3 rights offering at a 24.9% discount to its 15-day VWAP to give a total deal size of Ps43.5bn,US$1bn),  to give the bank funds to compete for infrastructure lending. Details.

Teresita Sy-Coson, vice chairwoman of SM Investments Corp., said “Infrastructure is not our area of expertise, but we intend to join the government’s initiatives by providing funding for those who will take up those projects.” She is the daughteer of the controlling shareholder.

.The bank aims to reduce its dependence on consumer loans by tapping credit demand from the nation’s biggest companies, including Ayala Corp. (AC) and San Miguel Corp. (SMC), as they bid for $16 billion in infrastructure projects unveiled in 2010 by President Benigno Aquino. The fund infusion will also bolster Manila-based BDO’s risk buffers and spur overseas expansion, Sy-Coson said.

http://www.bloomberg.com/news/2012-06-03/billionaire-sy-plans-record-share-sale-for-bank-southeast-asia.html

The Philippines’ PSE Composite Index is up 15% since the start of the year.

BDO Unibank is not the only bank bullish on the Philippines. In early May, CIMB  agreed to buy just under 6o% of the Philippines’ Bank of Commerce (BOC) for 12.2 billion pesos (M$881 million) in cash, a move analysts said gives it early mover advantage in a market with high-growth banking potential.

Maybe if DBS can’t get its deal on Bank Danamon through or on acceptable terms, it should look North.

DBS has a 21.4% stake in BPI via its 40% stake in Ayala DBS where Ayala has the majority 60% stake. UOB seems to have a 2% stake in BDO Unibank. OCBC doesn’t seem to have a presence in the Philippines. All three local banks have subsidiaries in Indonesia.

Temasek is Filipino-lite. It doesn’t own anything direct in the Philippines: no banks, no telcos.

Its largest exposure is via Singtel which has a major investments in the Philippines (via Globe 47% which it controls together with Ayala 32%. Global is the second largest telco in the Philippines.

Keppel has some exposure via a shipyard but its not big.

If Temasek wants to go big in the Philippines, then DBS could be used.

Related post: http://atans1.wordpress.com/2012/06/02/philippines-reasons-for-optimism-and-scepticism/

Philippines: Reasons for optimism and scepticism

(Or “Why CIMB is buying a bank in the Philippines”)

Brokers have upgraded their full-year economic growth forecast for the Philippines after the government announced a surprising 6.4% growth in the first quarter (better than other countries in the region)

Example– Nomura now expects the economy to expand by 5.1% this year from an earlier 4.6%.

“[First quarter] GDP soared to 6.4%… beating expectations. This was led by high public sector spending and still-robust private consumption …  We upgrade our 2012 GDP growth forecast to 5.1% from 4.6% as we believe these drivers will not only persist, but will also be augmented by faster increases in private investment owing to on-going reforms.”

Nomura noted that the country is also expected to improve its position in an annual competitiveness ranking, “The Philippines has fallen two spots to 43rd due to a weak ranking in the economic performance criterion, which we think is related to last year’s under spending by the government.”

As the Economist wrote a few weeks ago: Future prospects are indeed enticing: besides the unexploited mineral resources, business-process outsourcing is booming, already employing some 600,000 people. Remittances from all those Filipinos overseas have remained strong through economic crises. As costs rise in China, the Philippines is among places manufacturers eye as an alternative. Tourism has huge potential, recognised by the government’s nicely pitched campaign: “It’s more fun in the Philippines.”

…

The government has also started making some important reforms. In an effort to raise its revenues—at present a paltry 12% of GDP—it wants to jack up “sin” taxes on alcohol and tobacco. The bill enacting this made important progress in May when it passed a House of Representatives committee—a triumph over powerful tobacco and alcohol lobbies. It still has to pass the full House and the Senate, however.

But it remains sceptical: In fact, the Aquino administration has little concrete to show for its two years in power. The centrepiece of its programme, public-private partnerships to tackle the inadequate infrastructure which is such a hindrance to all the nation’s economic hopes, is only now stuttering to life after just one of the ten projects scheduled for approval last year saw contracts awarded. The pursuit of Mrs Arroyo and the chief justice is a distraction as well as a mission. Securing Mr Corona’s conviction might entail so many promises to senators that the point of the exercise—enhancing the government’s clean image—is lost.

http://www.economist.com/node/21555906

Well CIMB for one is bullish. In early May, CIMB  agreed to buy just under 6o% of the Philippines’ Bank of Commerce (BOC) for 12.2 billion pesos (M$881 million) in cash, a move analysts said gives it early mover advantage in a market with high-growth banking potential.

It got in into Indonesia on the cheap in 2002 before the ang mohs rediscovered Indonesia yet again. It bot into the government’s recapitalisation of a major local bank (Bank Niaga)  that was nationalised after the 1997/1998 financial crisis. 

The PBOC could be an encore.

Call me: Software powers a Philippines success

(Or “Why the Philippines is the country to watch”)

Last year, with more than 600,000 call centre workers, the Philippines officially overtook India as the world’s call centre capital.

If you phone up to book a flight, buy a theatre ticket or complain that water is cascading out of your washing machine, you’re now more likely to speak to a Filipino than an Indian.

The Philippines has a number of obvious advantages when it comes to call centres. Wages are low and most Filipinos speak English in an accent which, given the American colonial influence here, is easy for US customers to understand.

Filipinos also pride themselves on being approachable and friendly – a trait which is essential for speaking to strangers on the phone every day.

But its also high tech software that plays a big part.

http://www.bbc.co.uk/news/business-18061909

But the Filipinos are ambitious. Going for Business Process Outsourcing

The Philippines may have more call centre agents, but India still has more BPO employees – and every year a great proportion of them work in the more lucrative and more skilled non-voice-based services.

Looking at the returns, it’s easy to see why the Philippines wants to follow India down this route. In 2010, India’s overall BPO revenue was $70bn, compared to just $9bn in the Philippines.

A move away from voice-based services will need more staff, more training and more hardware.

But Jojo Uligan, head of the Contact Center Association of the Philippines, is bullish about the future.

His projections show the Philippines more than doubling its BPO employees by 2016 – from about 600,000 to 1.3 million people. Take this projection with a latge pinch of salt, Filipinos love to talk big. But the trend is right.

Philippines not safe for PRC nationals warns China

China told its citizens on Thurday  they were not safe in the Philippines and its state media warned of war, as a month-long row over rival claims in the South China Sea continued.

Chinese travel agencies announced they had suspended tours to the Philippines, under government orders, and the embassy in Manila advised its nationals already in the country to stay indoors ahead of protests on Friday. Five hundred protested outside the Chinese embassy, in the event.

And the Philippines wants Chinese gamblers to visit Manila, and the Chinese to invest in the country. What a joke!  Want Chinese money but intent on upsetting China. Filipinos are not realists.

The Philippines: Other side

Last Saturday, I blogged that it’s day in the sun may finally be coming.

Hopefully, for the poor, that day will become soon. These pixs brought back memories (I was a stockbroker in Manila in1996-1997, living off the fat of the land) of how poor the poor are in the Philippines, and how the rich and poor live literally beside one another.

If the government wants to make sure of the PAP retaining power, one gd way would be to organise school trips to the slums of Manila, and then lecture the impressionable minds abt the perils of too much democracy. Yes, of course taz a dumb way of summarising the reasons for the poverty there, but the young wouldn’t know.

The Philippines: Its time has come finally?

With even my dogs knowing abt the Indonesian story, while investors are getting excited about Cambodia and Burma, rightly, and rediscovering Vietnam (later abt it in the week), the Philippines has been quietly (a surprise as Filipinos tend to be excitable, boastful and noisy) getting things right.  

But some investors are aware and reaping the benefits. Last yr, the Philippines stk market was the 7th best performer (and I think tops, 2.% rise, in Asia: yup was a bad yr overall for Asian and global mkts), and so far this yr it is among the top 10 globally, up more than 20%.

The Philippines, after years of indebtedness, is a net creditor.
the country is getting its fiscal house in order. … The deficit has narrowed from a worrying 5-6 per cent a decade ago to a manageable 2 per cent …
the political situation is vastly improved. (The FT (recently) via Today.

Remember that Brazil is finally becoming the powerhouse it always had the potential to be after almost 100 yrs of disappointing investors regularly. But then Argentina has gone the other way. Bulls can only hope that Filipinos are more like Brazilians, even though they like the Argies have Spanish blood, rather than Portugese blood)

BTW, Temasek is Filipino-lite. When it was unfashionable to own shares in the Indonesia, it had major stakes in Danamon (now being sold to DBS) and BII (sold at very high valuation to sucker MayBank) and in Indosat (sold at nice profit). It doesn’t own anything direct in the Philippines: no banks, no telcos.

Local banks presence is pretty light in the Philippines when compared to Indonesia. DBS has a 21.4% stake in BPI via its 40% stake in Ayala DBS where Ayala has the majority 60% stake. UOB seems to have a 2% stake in BDO Unibank which has juz called a massive US$1bn rights issue. OCBC doesn’t seem to have a presence in the Philippines. All three local banks have subsidiaries in Indonesia.

Singtel has major investments in the Philippines (via Globe 47% which it controls together with Ayala 32%) and in Indonesia. Global is the second largest telco in the Philippines.

A Gamble Too Far? Pinoys gamble on China

The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.

Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.

Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.

And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.http://www.bbc.co.uk/news/business-16753960

But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?

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*They could make travelling to the Philippines inconvenient.