More positive economic news for 2010

According to the Institute for Development and Econometric Analysis, Inc. (IDEA), the Philippines’ eight biggest banks, after being shaken by the global financial crisis in 2008, staged a major turnaround this year– with their combined net income growth averaging 68 percent as of the first nine months to Php29.8 billion. This recovery led to a surge in share prices as investors' appetite on stocks had been revived. Likewise, in line with the plan to help boost remittance growth next year, the Association of Bank Remittance Officers Inc. (Abroi) strive to reduce bank remittance fees from Php100-Php500 to just Php50 per transaction.

Moreover the Bangko Sentral ng Pilipinas (BSP) is mulling new rules on the level of liquid assets local banks should keep, in line with its efforts to update existing liquidity management framework, issued way back in 2006. The BSP clarified, however, that banks will not be required to raise additional capital, but rather ensure that enough assets are liquid to prevent problems should adverse shocks such as financial crises hit the country.

Furthermore, the government remains optimistic that the pending bill in the US Congress, the Save Our Industries Act, which grants duty-free treatment to Philippine-made apparel in the United States will be enacted in the middle of 2010. This proposed measure will help the Philippines recover over $1 billion in annual exports to the US since the end of the garments quota regime in 2005, as its products to the US will be cheaper and more attractive to consumers. Garments exports are seen to grow by 100%, even in the first year of implementation. In exchange, US textile makers will be able to sell $1 billion worth of fabrics to the Philippine garment industry.

Accordingly, the Trade department slashed duties on imported ceramic tiles by roughly 3% at Php1.80 per kilogram, from the Php1.86/ kilo duty in 2009, in line with the safeguard order’s imposition to close the price gap between cheap imports and locally made tiles. Incidentally, it was reported that Hongkong's exports surged in November by 1.3% from last year, rising from its 13-month stupor as global demand shows improvement, particularly from the US, China, and the rest of Asia. Exports should go back to pre-crisis levels in 2011 as 2010 sees growth of 5%.

Finally, a recent study commissioned by the Philippine Stock Exchange (PSE) that looked into the correlation between disclosure and corporate governance practices and firm valuation, found that transparency has a huge bearing on how investors value listed firms. This empirical proof, which is based on data from 2005 to 2008, can be the strong rationale for pushing corporate reform agenda, according to IDEA.

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