The Philippine Economy

[manlajay]

Originally Posted by 3cr

China tells Mar: Let's mend fences
InterAksyon
http://www.interaksyon.com/article/4...ts-mend-fences

BEIJING - Chinese leader-in-waiting Xi Jinping has told DILG Secretary Manuel 'Mar' Roxas, special envoy for President Aquino, that he hopes ties hurt by a territorial row can recover, Chinese state media said Saturday.

Vice President Xi told Roxas that tensions between the two countries had "eased" after a blow-up over a disputed island in the South China Sea, Xinhua news agency reported.

Parang ganito lang yan ibig sabihin ng China...

Umalis na kayo sa Panatag etc.. para walang gulo...

[3cr]

Poverty scores improve
Business World
http://www.bworldonline.com/content....prove&id=58944

Results of a third-quarter SWS poll made exclusive to BusinessWorld found 47% of the respondents -- equivalent to an estimated 9.5 million families -- saying they were mahirap or poor, four points down from 51% (est. 10.3 million families) in May.

The last time that self-rated poverty fell below 50% was in December last year (45%). The record low is 43%, first hit in March 1987 and again in March 2010.

Fewer families also claimed to be poor in terms of food in the latest SWS survey, which recorded an identical four-point drop to 35% (equivalent to an estimated 7.2 million families) in August from 39% (est. 7.9 million) three months earlier.

The latest food poverty rate is the lowest since March 2010’s record low of 31%.

Malacañang said the improvements were a sign that the Aquino government’s efforts to achieve inclusive growth were being felt. The SWS, for its part, noted that the gains came with further belt-tightening by families.

Self-rated poverty scores improved in Mindanao (57% from 65%), Metro Manila (35% from 41%) and Balance Luzon (38% from 43%), but increased in the Visayas (63% from 57%).

It fell by five points in urban areas to 37% and by three points to 58% in rural areas.

Self-rated food poverty, meanwhile, also improved in Mindanao (45% from 53%), Balance Luzon (29% from 32%) and Metro Manila (24% from 25%), and picked up slightly in the Visayas (47% from 46%) from three months earlier.

The SWS said families were continuing to tighten their belts, with the self-rated poverty threshold -- the monthly budget that poor households need in order not to consider themselves poor -- remaining "sluggish despite considerable inflation."

"This indicates that poor families have been lowering their living standards, i.e., belt-tightening," the survey research institution said.

The median poverty threshold stayed at P15,000 in Metro Manila and P10,000 in the Visayas, and fell to P8,000 in Balance Luzon and P7,000 in Mindanao.

The median food poverty thresholds, meanwhile, rose to P7,500 in Metro Manila and fell to P4,500 in the Visayas, P4,000 in Balance of Luzon and P3,000 in Mindanao.

The SWS said both the latest self-rated poverty and food poverty thresholds had already been surpassed in the past for all areas.

Sought for comment, Secretary Ramon "Ricky" S. Carandang of the Presidential Communications Development and Strategic Planning Office, said: "We have worked for inclusive growth since the start of this administration. This may be a sign that our efforts are being felt but these self-rated poverty figures tend to be volatile at times.

"We must persist in our efforts for us to see a sustained reduction in poverty. Nevertheless, this is a good sign," the Palace spokesman added.

The third-quarter SWS survey, conducted last Aug. 24-27, involved face-to-face interviews of 1,200 adults nationwide. They were asked to rate whether their families were poor, on the line or not poor. A similar question was asked with regard to food poverty.

[3cr]

Corn export seen by yearend
Business World
http://www.bworldonline.com/content....arend&id=58943

THE PHILIPPINES is looking to export at least 200,000 metric tons of corn next year to take advantage of high world prices amid a projected surplus, an Agriculture official said during the weekend.

"PhilMaize is targeting to start exports to Korea, Taiwan and Malaysia before the year ends," said Mr. De Luna, declining to provide details on planned volumes.

Next year, meanwhile, "We are looking to export about 200,000-400,000 metric tons (MT) ... as we are already projecting to have a surplus...," he said.

An interagency committee, comprised of National Corn Program representatives, the Bureau of Animal Industry and stakeholders including livestock farmers, has been tasked by the National Food Authority (NFA) Council to work on PhilMaize’s proposal.

The NFA, under its mandate, must first certify that there is a surplus of corn before producers can be allowed to export as the crop is a major staple. Currently, the Philippines still has a deficit of 179,000 MT.

"Production has been strong so far. The Philippine Coconut Authority has also allowed the intercropping of corn in some 150,000 hectares of coconut plantations, which would boost this year’s production further, which means we could possibly allow exports earlier," Mr. De Luna explained.

The department is targeting to produce a record 7.819 million MT this year. In 2011, output was 6.971 million MT, 9.31% higher than 2010’s 6.377 million MT.

The Agriculture department expects to achieve self-sufficiency in corn by end-2013 with output of 8.45 million MT.

"The target next year is to lower postharvest losses in the crop to 10% from the current 12-15%, which would translate to an additional yield of 300,000-400,000 MT, wiping out our deficit," Mr. De Luna said.

[3cr]

Exports, remittances boost current account surplus
InterAksyon
http://www.interaksyon.com/business/...-surplus-in-2q

MANILA - The country's current account surplus in the second quarter of this year jumped on the back of higher exports and remittances, the Bangko Sentral ng Pilipinas said on Friday.

In a report, the BSP said the surplus surged 48.5 percent to $2.8 billion - equivalent to 4.6 percent of the Philippines’ gross domestic product - from the surplus of $1.9 billion in the second quarter of 2011.

In the April to June period, the country's exports performed "strongly," rising 11.4 percent to $13.8 billion, outpacing imports, which increased 3.2 percent. This allowed the trade-in-goods deficit to narrow by 27.5 percent to $2.4 billion from $3.3 billion a year ago.

The trade-in-services surplus dropped 33.8 percent to $298 million in the second quarter because of higher payments in transportation, including freight, travel and insurance services – all of which tempered the gains in business process outsourcing-related transactions.

Also boosting the current account surplus was the 10.6 percent increase in net receipts of $438 million this year from $396 million last year. This stemmed from the higher remittances, which grew by 12.1 percent to $1.6 billion year on year.

[3cr]

DOE mulls additional incentives to draw investors to oil, gas exploration
InterAksyon
http://www.interaksyon.com/business/...as-exploration

MANILA - The Department of Energy is considering additional fiscal incentives to oil and gas exploration and development firms to encourage more investments.

Undersecretary Jose M. Layug, Jr. said the department is studying how to improve the upstream oil and gas industry's fiscal regime to attract more companies into scouring for potential reserves in the country.

"The only way we can entice investors is to provide an attractive set of fiscal incentives," he said.

Under the government's sharing agreement with oil companies, the state gets 60 percent of revenues once an oil or gas project begins production.

Companies, however, are allowed to recover their investment cost from gross production. Investors are also exempt from all taxes except for income, which is paid out of the government's share.

Despite these incentives - which ranks the Philippines highest followed by Thailand, Vietnam, Myanmar, Malaysia, Brunei and Indonesia among fiscal regimes in the region that favor investors - Manila needs to offer more concessions to oil and gas firms, Layug said.

He said the country’s geography – with its relatively deeper seas and numerous islands – continues to spook potential investors.

This is despite the department’s efforts to level the playing field by canceling non-performing contracts, streamlining auction procedures, and conducting road shows abroad.

Among the additional incentives the DOE is mulling to offer investors is "ring fencing," in which companies may be allowed to recover costs in their other oil and gas projects in the country from a producing service contract.

This would allow companies to increase the number of drilling activities in the country without having to cough up additional capital to do so.

"The more we attract, then the more wells can be drilled," Layug said.

The Philippines has only two oil and gas producing sites that are of commercial scale: the Malampaya natural gas and the Galoc oil field in offshore Palawan.

[3cr]

Sin Tax bill passage to positively impact PH trade, finance and social services – Drilon
InterAksyon
http://www.interaksyon.com/business/...rvices--drilon

MANILA, Philippines – Passing the Sin Tax Bill will make the country compliant with the World Trade Organization (WTO) standards against discriminatory taxation on alcohol, and spare key exports like tuna from countermeasures that could hurt their competitiveness, Senator Franklin Drilon on said Sunday.

At the same time, it will enhance the country’s financial standing, making it easier to attain investments grade status that will cut interest rates on Philippine loans, freeing up more funds for social services, said the chairman of the Senate Committee on Finance.

“We must pass the sin-tax bill in order for us to be compliant with the standards set by WTO on alcohol taxation since our excise tax on spirits and liquor are discriminatory in nature, [favoring] the local brands against foreign products,” Drilon explained.

The WTO is questioning Manila’s alcohol taxation and if this is not corrected, other exports products such as tuna will be adversely impacted, he added.

“May question ang WTO, kasi ang ating excise tax sa alak ay discriminatory, meaning we are in favor of the local products, may discrimination sa foreign brand,” Drilon said.

“So, we must correct that to make sure the scheduling of excise tax on liquor or alcohol is compliant with the WTO standards. If not, it will affect our major export products such as tuna,” he explained.

This means that countries that import our tuna may impose retaliatory measures such as discriminatory tax rates.

“Tatamaan din ang ating mga mangingisda doon sa General Santos City [Our fishermen in General Santos City---which accounts for most of the Philippine tuna exports---will be hit by the retaliatory measures],” he said.

Factor in 2013 revenues

Drilon also said the revenue projection for 2013 has factored in the passage of the Sin Tax bill, which finance and revenue officials estimate will draw in an additional P30-60-billion in fresh funds for the government. Some lawmakers, notably Senate ways and means committee chairman Ralph Recto, have asked the Executive for a firmer basis for their “math.”

If the bill is passed before yearend, the revenue from the higher tax rates will be factored into the 2013 budget. I hope we can pass this anti-cancer sin tax bill because it will boost our people’s health, swell the budget for health including for Philhealth and reduce hospital care costs for diseases arising from tobacco and alcohol,” said Drilon, speaking in Filipino.

Investment grade status

Aside from 2013 revenues, passage of the measure will help enhance the country’s investment grade in the international financial community, Drilon said.

“That [bill’s passage] will contribute much toward our attaining investment grade, something we need to bring down the interest rates for our debts,” he explained.

With this, more funds can be allocated to social services, according to the chairman of the Senate finance committee..

“Kapag naabot natin iyang investment grade sa pamamagitan ng pagdadagdag ng kita ng ating bayan sa pamamagitan ng mga reporma sa buwis tulad ng sin tax, bababa ang interest ng mga utang natin at maidadagdag natin ang matitipid natin sa mga sociall services programs tulad ng 4Ps at Philhealth ng ating mga kababayan,” he said.

[3cr]

JAZA: Credibility key to PH's sustainable growth
Rappler.com
http://www.rappler.com/business/1290...ainable-growth

MANILA, Philippines - Is the Philippines' high economic growth sustainable?

Businessman Jaime Augusto Zobel de Ayala, who heads the country's oldest conglomerate, Ayala Corp, believes so.

“Yes, it is very much sustainable. There are steps being taken by the Philippine government to lead to sustainability,” he told Rappler CEO Maria Ressa in this week's #TalkThursday. Watch the interview below.

Key to sustainability, he noted, is credibility – a major consideration for investors when betting their money on a particular market.

And thanks to President Benigno Aquino's good governance campaign, Zobel said the Philippines has started to regain this.

“We've had some difficult years in the past so credibility is hard to build… the Philippine government has put a great deal of emphasis on the issue of good governance. The President's rating is very high and a lot of that has come from the kind of credibility he has brought to the standards of the country.”

Zobel said one of the main elements necessary to create sustainable economic growth – which is also the core of Aquino's governance agenda – is now in place. “There is strong discipline beginning to take place in the fiscal side - like when you run a household or a company. The government is earning more than what it's spending.”

The Aquino government has shown it could keep its fiscal house in order by reducing its budget deficit significantly, gaining the vote of confidence of the global market in the process.

In 2011, the country's budget deficit reached nearly P198 billion, equivalent to just 2% of gross domestic product (GDP), against the record-high P314 billion, or 3.5% of GDP, in 2010 that was mostly attributed to the administration of Aquino's predecessor, Gloria Arroyo.

Corruption vs transparency

The Philippines' improved fiscal position was largely attributed to by international debt watchers like Standard & Poor's, Moody's and Fitch Ratings for the past 7 rating upgrades they gave the country.

But while they recognized the reduction in the country's deficit, they also raised concern over the main factor that caused it – the delays in infrastructure spending. Underspending, along with weak exports, was blamed for the Philippines' lackluster economic growth of 3.7% in 2011.

On this issue, Zobel was very forgiving. He said if the delays were necessary to get rid of corruption in public contracts, so be it. After all, he said the government has made up for underspending last year.

“I'd like to give Secretary (Rogelio) Singson a pat on the back. His department (Department of Public Works and Highways) has been spending a tremendous amount this year. We've had great growth in the first half and I believe this will continue in the second half. A lot of it is because of the government's capacity to pump prime the economy.”

“I think Secretary Singson is one major component of that. He's very transparent in the way he shows how his projects are taking place. It's wonderful,” Zobel remarked.

Philippine GDP grew by a higher-than-expected 6.3% in the first quarter, the second-highest in Asia, next to China, owing in part to increased government spending. Growth slowed slightly to 5.9% in the second quarter, though it was still among the highest in the region.

Back on investors' map

Zobel said the Philippines' growth and the reforms that the government is implementing have put the country back on foreign investors' map.

Zobel, who was among the Philippine delegation in the recently concluded Asia-Pacific Economic Cooperation Summit in Vladivostok, Russia, said the country received "very positive" feedback from the event.

“We are one of the 3 largest growth countries in the world – there's China and Indonesia, which is slightly ahead of us. Their focus is on the Philippines and emerging markets. We are on top of that list. There's a lot of attention on us and people are really looking at us.

“I think we've come a long way in garnering people's attention… The governance side has given us credibility. Credibility is important especially for long-term investments, not just the short ones.

“Bringing our economic house in order has put us on the map in a new way.”

Partnership with private sector

Credibility, however, is not something that should be exhibited by government alone, but also the private sector, Zobel concluded.

This way, he said a strong partnership between the two can be established especially since the government needs private sector capital to achieve its targets.

He said locally, investors have been encouraged by the efforts of the Aquino government to put up a “fair” public-private partnership (PPP) scheme for big-ticket, capital-intensive infrastructure projects.

He acknowledged that there have been delays in the rollout of the ambitious program, which was supposed to be the centerpiece of Aquino's economic agenda. “But this is relatively new. You got to be sympathetic to a government that wants to create a good framework for this to succeed,” he said.

He added that despite the delays, they remain keen on investing in the infrastructure sector. “Infrastructure is a great need of the country and we feel we have tremendous skills that we can contribute.”

Partnering with government is nothing new to Zobel's company since “we're probably one of the firsts to enter that space when Manila Water was privatized.”

“We threw our hat in the ring and people were skeptical at that time. But it's been a wonderful business for us.”

Ayala, which is also engaged in real estate, banking, telecommunications, outsourcing, and electronics, was also the first to win a project under Aquino's PPP program -- the P2-B Daang Hari-SLEx Connector Road.

Now, Ayala is partnering with several other big business groups, like the Aboitiz and Metro Pacific Investment groups, for other infrastructure projects to be bid out under the PPP.

[d7beast]

BULLCRAP!!!

Government renegotiates $500-million North Rail deal
By Iris Gonzales (The Philippine Star) Updated September 24, 2012 12:00 AM Comments (5)

MANILA, Philippines - The Department of Finance (DOF) has successfully renegotiated with the Chinese government the payment terms of a portion of a $500-million loan to be used supposedly to finance the controversial North Luzon Railways Corp. (North Rail) project.

This was made on the back of months of growing tensions with China over territorial disputes in the West Philippine Sea (South China Sea).

The Philippine government was due to pay the Export-Import Bank of China (ChinaExim Bank) this year a lump sum of $184 million, but DOF officials were able to lengthen the payment period to two years or up to 2014.

“We will be paying the amount in four tranches,” Finance Secretary Cesar Purisima told The STAR.

A DOF team met with ChinaExim Bank officials in June to renegotiate the payment terms.

Data from the DOF showed that instead of a lump sum payment of $184 million, the government will pay ChinaExim four equal payments of $46 million over two years starting this month.

The amount represents preparation costs for the project such as right-of-way costs and other land acquisition expenses.

The North Rail project is meant to decongest Metro Manila by providing a fast, efficient and reliable mass transport service for people and goods between Metro Manila and Central and North Luzon.



The project, derailed for many years now, has four phases. The first involves the reconstruction of the existing 32.2-kilometer single-track line into a double track using the Philippine National Railways (PNR) line from Caloocan City to Bulacan, according to documents from the National Economic and Development Authority (NEDA).

As of late last year, the Department of Transportation and Communications (DOTC), then headed by Secretary Manuel Roxas II was doing revisions to the North Rail project.

The controversial project was planned during the Arroyo government but it was ordered shelved by the Aquino administration because of irregularities.

Last year, the Office of the President said the government will revise the project but will carry some elements of the original North Rail design.

http://www.philstar.com/Article.aspx...bCategoryId=63

[amigo32]

oi, akala ko ba

[Narnian_King]

Originally Posted by amigo32

oi, akala ko ba

Binenta na din tayo sa china gaya ng ginawa daw ni Little evil gloria

[Sleepwalker]

Nag flip-flop na naman ang gobyerno.

[nayki]

The Philippines is one of the current “darlings” of global investors seeking better returns in emerging market economies and offers even bigger potential returns in the future, according to a ranking official of foreign investment firm Religare Capital Markets Ltd.The company, which specializes in equities investments in India and the Asean region, has decided to set up operations in the country within the year to better take advantage of the nascent Philippine economic boom.“The Philippines is a market where people want to put money into,” Religare’s global head of equity capital markets John Sturmey said in an interview with the Inquirer. “The story here is certainly better than how it was a few years ago. Everyone is saying good things about the Philippines.”Religare, which has the bulk of its operations in India, Singapore and Hong Kong, is hoping to tap into the growing demand from the local corporate market for investment banking and equity deals.The appetite of local corporations for more capital on both the equity and debt sides jibes with the massive amount of liquidity found offshore as central banks in the United States and Europe try to revive their economies with cheap funds, leaving investors awash with cash and few options for better returns in their home markets.“Investors are looking for places where they can make money,” Sturmey said, pointing out that Philippine companies used to have initial public offerings worth only $60 million. “Now we see $300-400 million deals,” he said.Religare’s equities head also said that ongoing challenges being faced by China and Hong Kong—the twin darlings of foreign investors over the past decade—also bode well for alternative investment sites like the Philippines.“Hong Kong and China are offering less opportunities,” he said. “They’re ‘over-banked’ since there are a lot more financial institutions chasing after fewer and fewer deals.” This has made it less attractive for firms like Religare, which would have to contend with thinning profit margins.At the same time, the China and Hong Kong markets have ongoing difficulties with corporate governance issues, which are encouraging investors to look to other emerging market nations.Previous to its announcement that it would set up shop locally, Religare has already participated in the initial public offering of Puregold Price Club Inc. late last year as a junior partner of lead underwriter UBS (most of Religare’s senior officials are former UBS bankers). More recently, Religare also initiated research coverage on local IT gaming firm Philweb Corp.Sturmey said that Religare was particularly interested in the spate of “re-IPOs” being undertaken by local corporations as part of the Philippine Stock Exchange’s thrust to increase the free float of listed companies.“These re-IPOs present good opportunities to people like ourselves,” he said. “The Philippines has great companies here but they’re trading $10,000 a day [in total value turnover].”The Religare official expressed confidence in the local market, saying the country was “in the best place it’s been for decades, with a very strong macroeconomy and a solid political situation.”“It’s always been overlooked for many years, even by the big banks,” Sturmey said. “The bigger question is, whether it’s sustainable.”
http://business.inquirer.net/

[3cr]

Uy aba mabuti pumayag ang China. Ang ibig bang sabihin eh tuloy na ulit ang proyekto? Sabagay kaysa nakatengga buti naman at uusad na ulit itong project na ito. Ang tanong eh nalinis na ba nila yung mga ma-anomalyang parte ng proyektong ito kasi di ba yan ang sinabi nilang rason nuon kanya inihinto nila itong proyektong inumpisahan ni GMA? Ma-anomalya raw ang bintang so dapat lang eh naresolba na nila muna ang mga tinutukoy nilang mga anomalya bago nila ituloy ang proyekto.

PH renegotiates rail loan with China
Rappler.com
http://www.rappler.com/business/1293...oan-with-china

MANILA, Philippines - There is more to the territorial dispute at the South China Sea between the Philippines and China. Onshore, a rail project that has been contentious for years was recently successfully renegotiated.

Instead of settling the entire US$184 million due this 2012 for the Northrail project, the Department of Finance will pay Export-Import Bank of China 4 equal payments of $46 million starting this September.

“We will be paying the amount in four tranches,” Finance Secretary Cesar Purisima recently told reporters.

A team from the Finance department met with ChinaExim Bank officials in June to renegotiate the payment terms and lengthen the payment period of a portion of the $500 million loan to two years or up to 2014.

The Northrail project received funding from the China state-owned bank and was part of scandal-driven agreement between the two countries under the Arroyo government.

The Northrail project is crucial in the planned transfer of the main international airport from the congested Ninoy Aquino International Airport (NAIA) in capital Manila to Clark in central Luzon, a sprawling location ideal for the fast-growing aviation industry.

The long-delayed railway line was supposed to connect capital Manila to areas in central and northern Luzon. The crucial infrastructure was planned as a 2-phase project with the endpoint in San Fernando City in La Union.

Aside from the financial aspect, the construction and design have yet to be completed.

Under outgoing Transportation Secretary Mar Roxas, a review and possible revisions to the Northrail project design was underway. Roxas had said he preferred that the rail project is a fast-train than the current plan for it as a commuter line.

Court decision

The loan renegotiation comes after the Philippine Supreme Court handed down in March a decision giving a lower court the go-signal to hear the case calling for the annulment of the allegedly overpriced contract.

In the decision penned by then Associate Justice -- and now Chief Justice -- Lourdes Sereno, the High Court said that the contract agreement between two state-owned firms Northrail Corp. and China National Machinery & Equipment Corp Group (CNMEG) is covered by Philippine law, and, like any other commercial transaction "could be questioned before the local courts."

Sereno noted that even if CNMEG carried out government functions, it did not submit a certification from the Department of Foreign Affairs stating that it enjoyed sovereign or diplomatic immunity.

CNMEG filed a case with the Court of Appeals after a Makati court dismissed a 2007 petition by CNMEG to dismisss the case.

Lawyers Harry Roque and Jose Butuyan asked the lower court to invalidate the contract, which they claimed, was finalized without public bidding. They added the project would also displace thousands of people who live near the project site.

[expatdingdong]

akala ko ba corrupt north rail... tapos renegotiated..... tarantado talaga tong yellow gov't....

[Biarway]

Hindi ako sasakay d'yan. Hahaha

[pau_p1]

well.. i hope the renegotiation includes the removal of the anomalous portions of the project... Northrail is still a good project... but I hope this time they were already able to clean the project before proceeding...

[wino]

Urong... sulong.....


Sana tuolyntuloy na yan.... wag na haulaan ng pulitika...

[crappypants]

Originally Posted by expatdingdong

akala ko ba corrupt north rail... tapos renegotiated..... tarantado talaga tong yellow gov't....

It's just there was an exchange of hands for the commission fees.

[3cr]

Well actually it's just the loan portion that has been renegotiated pero papalitan daw yung contractor because of inflated cost and the original GMA approved rail project was only for low speed commuter train while what the gov't now wants to do is for the project to be for high speed rail/train. Anyway found some back articles about it...

Gov’t eyes other financiers for Northrail project
Philippine Daily Inquirer
http://business.inquirer.net/52765/g...thrail-project

MANILA, Philippines—The government may replace China as the main financier of the controversial Northrail project, which aims to link Metro Manila to provinces like Pampanga through a train system.

Transportation Secretary Manuel “Mar” Roxas II said discussions with Chinese government officials were on hold in deference to the upcoming leadership change in Beijing.

Once negotiations for the project resume, Roxas said the government’s main demand would be to replace the current contractor, Sinomach Corp., which “has very little to no experience in building train lines.”

He said his department would seek better contract terms for the Philippines. If China would not agree, Roxas said the Philippines might look to other “friendly governments” or even multilateral lenders willing to fund the rail line’s construction.

Despite starting construction in 2004, less than a kilometer of the supposedly 80-kilometer, Overseas Development Assistance loan-funded train line was built by Sinomach at a highly inflated cost.

The train tracks built were also designed for low-speed trains that were not strong enough to handle the high-speed train system the government now wants.


Northrail project back to zero, Mar says
PhilStar
http://www.philstar.com/Article.aspx...SubCategoryId=

CLARK FREEPORT, Pampanga, Philippines – The government is “back to zero” in the implementation of the North Railways (Northrail) project linking the international airport here to Metro Manila, Transportation Secretary Manuel Roxas II admitted yesterday.

Roxas said he tackled the Northrail issue with President Aquino “for hours” the other day.

He said the President is supportive of the project for his constituents in Central Luzon.

But Roxas said the finished portions of the Northrail during the Arroyo administration would probably serve no purpose since the design of Chinese contractor Sinomach was for a slower commuter train.

“Anyway, what was done covered only less than a kilometer of the 90 kilometers of the railway,” he said.

Funds for the project under the Arroyo administration were from a loan from the Chinese Export-Import Bank.

Phase 1 of the project from Caloocan City to Malolos, Bulacan was supposed to initially cost some $403 million, amid reports that Sinomach, which used to be known as the China National Machinery and Equipment Corp. (CNMEC), had already been paid no less than $40 million for their partial accomplishments, consisting mostly of concrete posts for the railways.

“The contractor (Sinomach) had minimal or even no experience (in high speed train projects),” Roxas said, noting reports that the firm had previously handled only hydro projects.

“We will change contractor,” he said.

Roxas stressed the Northrail envisioned between Clark and Metro Manila should run more than 100 kilometers per hour. Travel between the two points should be shortened to no more than 45 minutes, he added.

Such a mode of transportation, he stressed, was needed to realize plans to transform the Clark International Airport into a premiere international gateway of the country.

Roxas, however, added talks with the Chinese government for more funding for the Northrail are expected to be stalled by a change of political leaders in China.

In a once-in-a-decade process, the Communist Party in China is expected to elect Vice President Xi Jinping to replace Chinese President Hu Jintao, with whom the Arroyo administration had already held talks on the Northrail projects, Roxas said.

Roxas said here last January that the Chinese government was willing to provide as much as $2 billion for the railways project, although he said this was merely a “tabletop estimate,” as a definite engineering design still has to be formulated.

Roxas said the Northrail project would again be bid out so a really competent contractor could handle it.

Angeles City Mayor Edgardo Pamintuan, who used to be president of the North Railways Corp. during the Arroyo administration, said that despite the controversy on the Northrail, the government should still pay the Chinese bank for the loans already used for the project.


Chinese firms can be sued in Manila
Manila Times
http://www.manilatimes.net/index.php...sued-in-manila

CHINESE firms can now be sued in the Philippines, the Supreme Court said after it ruled against a Chinese company involved in the controversial North Luzon Railways Corp. (NorthRail) project.

In a five-page en banc decision, the High Court junked China National Machinery and Equipment Corp. Group’s (CNMEG) request for reconsideration in its petition for certiorari, as well as for a temporary restraining order (TRO) and/or writ of preliminary injuction.

According to the High Tribunal, the company is not entitled to immunity from suit in connection with the contract it signed with NorthRail to conduct a feasibility study on a possible railway line from Manila to San Fernando, La Union province.

The Supreme Court also upheld its February 7, 2012 ruling remanding the case to Branch 145 of the Regional Trial Court of Makati City.

The case stemmed from the September 14, 2002 Memorandum of Understanding (MOU) that allowed the study to be conducted.

On August 30, 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance (DOF) signed a MOU, in which China agreed to extend preferential buyer’s credit to the Philippine government to finance the railway project.

China designated EXIM Bank as the lender, while the Philippines named the Finance department as the borrower.

Under the August 30 MOU, the bank agreed to extend an amount not exceeding $400 million to the DOF that will be payable in 20 years, has a five-year grace period and a 3-percent per-annum rate.

On October 1, 2003, then-Chinese Ambassador to the Philippines Wang Chungui wrote a letter to then-Finance Secretary Jose Isidro Camacho informing him of CNMEG’s designation as the main contractor for the project.

On December 30, 2003, NorthRail and CNMEG signed a contract for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan City to Malolos City, Bulacan province, on a turnkey basis.

The project’s contract price was $421,050,000.

On February 24, 2004, Manila and EXIM Bank signed a counterpart financial agreement, called Buyer Credit Loan Agreement No. BLA 04055.

Under the deal, EXIM Bank agreed to extend preferential buyer’s credit, amounting to $400 million, to the project in order to finance the construction of Phase I.

On February 13, 2006, NorthRail filed for the contract’s annulment, as well as a request for a hearing to tackle the issuance of writs and injunctions against several groups, including CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and Management, and the National Economic Development Authority.

In its complaint, NorthRail alleged that both the contract and the loan deal were void for being contrary to the Constitution; Republic Act No. 9184 (RA No. 9184), or the Government Procurement Reform Act; Presidential Decree No. 1445, or the Government Auditing Code; and Executive Order No. 292, or the Administrative Code.

[RonnieR]

Originally Posted by d7beast

BULLCRAP!!!

Government renegotiates $500-million North Rail deal
By Iris Gonzales (The Philippine Star) Updated September 24, 2012 12:00 AM Comments (5)

MANILA, Philippines - The Department of Finance (DOF) has successfully renegotiated with the Chinese government the payment terms of a portion of a $500-million loan to be used supposedly to finance the controversial North Luzon Railways Corp. (North Rail) project.

This was made on the back of months of growing tensions with China over territorial disputes in the West Philippine Sea (South China Sea).

The Philippine government was due to pay the Export-Import Bank of China (ChinaExim Bank) this year a lump sum of $184 million, but DOF officials were able to lengthen the payment period to two years or up to 2014.

“We will be paying the amount in four tranches,” Finance Secretary Cesar Purisima told The STAR.

A DOF team met with ChinaExim Bank officials in June to renegotiate the payment terms.

Data from the DOF showed that instead of a lump sum payment of $184 million, the government will pay ChinaExim four equal payments of $46 million over two years starting this month.

The amount represents preparation costs for the project such as right-of-way costs and other land acquisition expenses.

The North Rail project is meant to decongest Metro Manila by providing a fast, efficient and reliable mass transport service for people and goods between Metro Manila and Central and North Luzon.



The project, derailed for many years now, has four phases. The first involves the reconstruction of the existing 32.2-kilometer single-track line into a double track using the Philippine National Railways (PNR) line from Caloocan City to Bulacan, according to documents from the National Economic and Development Authority (NEDA).

As of late last year, the Department of Transportation and Communications (DOTC), then headed by Secretary Manuel Roxas II was doing revisions to the North Rail project.

The controversial project was planned during the Arroyo government but it was ordered shelved by the Aquino administration because of irregularities.

Last year, the Office of the President said the government will revise the project but will carry some elements of the original North Rail design.

http://www.philstar.com/Article.aspx...bCategoryId=63

It appears that the US$184 Million was already drawn by PH government and the country has to pay the loan. Renegotiating for better terms or "debt restructuring" is not so uncommon in financial world. It is not really an achievement.

It would have been better if the government disclosed the ff.:

1. If the US$500 Million was fully drawn but there is no Northrail in sight;
2. Only US$184 Million got by PH government out of US$500 Million credit line facility?
3. Total cost of the new Northrail?
4. Timetable of construction and completion.
5. Is Northrail different from the planned "high speed rail"?