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Mark the
day after tomorrow on your calendar. First-quarter
economic data for the Philippines will be released on
Thursday.
The
first-quarter numbers are important as several factors
affect the results for these three months. Consumer
buying drops after the Christmas season and companies
are usually short of funds after year-end cash-flow
juggling and preparation for tax time.
Any
comments about overseas Filipinos’ remittances being
high in January-March and helping growth are not
important in the big picture. If domestic activity is
not good, even the current growth of remittances is not
going to make up for the shortfall in light of higher
prices.
My
prediction, looking at stock-market trading, is that
first-quarter growth will be in the middle of estimates;
so nothing too good, nothing too bad. For 2008, growth
will exceed 6 percent under current conditions. Any
favorable developments, and growth will top last year’s
numbers, but there is only a slight chance of that
happening.
****
Headless
chickens running. Lots of dust. No progress. That’s the
experts and politicians talking about the Manila
Electric Co. (Meralco), oil prices and other
economic/business matters. It might even be better if
showbiz gossip and sports became the hot topics instead
of the real problems. That way, the front pages of the
newspapers might make more sense.
I have
refrained from speaking on the Meralco issues in the
hope that some common sense would prevail in the
conversation. All public utilities are a nasty animal,
at best. They are monopolies. They provide a vital
commodity. The government walks a very dangerous line
through regulation. And no one is ever happy with the
results.
I find
Meralco’s customer service good, but that is based on my
own personal experience. Others have not been so
fortunate. I am a big fan of the Lopez Group, but also
recognize that their financial results have been uneven.
However,
the talk of the government taking over Meralco seems to
be “full of sound and fury, signifying nothing.”
There
would be a little more substance to the argument of
lowering electricity rates through a government takeover
if the takeover target was the company that makes the
electricity, the National Power Corp. (Napocor). Oh,
wait a minute. The government does own Napocor.
Not even
the Government Service Insurance System (GSIS) would be
foolish enough to put its money into Napocor’s
privatization. Maybe that is why it owns more than 30
percent of Meralco. Who wants to own money that has a
gazillion pesos in long-term debt?
Yet, as
a public utility, it does serve the public’s interest
for close scrutiny of its business practices. But it is
totally unrealistic to think that government ownership
and, more important, government management, would make
Meralco a better company.
The
logical solution—if the government does not believe that
the Lopez group ownership control of Meralco is in the
public interest—is to buy out the Lopez shares, then bid
out the management and operation of Meralco to the
private sector.
That way
the government has direct oversight without as great a
potential for the corruption and shenanigans that are
usually rampant when the government owns businesses.
However, we all know that is not going to happen.
Imagine the Senate hearings after that contract were to
be awarded.
****
The more
gasoline prices go higher, the faster the chickens run.
The government puts the blame on external factors. The
Left-leaning groups blame the greedy oil companies. Most
everybody else blames the government.
An
interesting weekly report from international financial
institution MF Global sounds some caution about
spiraling oil prices. US demand for crude oil is down
over 2 percent since last year.
Further,
inventories are building, which might create a supply
surplus in the coming weeks. In addition, prices are
reaching technical levels that may trigger
profit-taking. Also, and maybe most important, the large
money funds are reducing their buying exposure in the
oil markets. Last week saw a significant drop in the net
open buying positions of the big money boys.
****
I must
call your attention to someone who is not a “headless
chicken,” Sen. Manny Villar, who wrote in his regular
column in the BusinessMirror this Monday a piece
entitled “Why the property sector remains strong.”
Cutting
through the sometimes hysterical pronouncements from
other leaders, Senator Villar gave a sober and
reasonable assessment of the economic prospects through
2008. What you should note in the senator’s analysis is
twofold. First is that the banks are looking for greater
opportunity to loan money, and there is a good demand
from business to borrow.
Second,
Philippine tourism is booming, and no one seems to know
about that fact. The first quarter saw an increase of 8
percent in tourist arrivals. The amazing statistics were
that there has been a large increase of tourists from
both China and America. China, we might expect, but
arrivals from the
US
have been stagnant for some time.
Although
there is a bit of panic in the recent move against the
peso by some speculators, it is unlikely that this trend
will continue. Peso demand is good as “we continue to
see reports about BPO [business-process outsourcing]
companies setting up shop here, and developers still in
high gear in constructing office spaces to accommodate
them.”
It might
be in the best interest of the country if the rhetoric
were turned down a little. We need a few more serious
and contemplative voices both in and out of government
talking right now.
E-mail comments to mangun@email.com. |
