Finance, Technology and Macroeconomics

Philippine Financial Account 2007

2008-02-12T10:46:00.000+08:00

General Comments

(1) We generally agree with the conclusion of the paper that the country’s international investment position has improved since 2001 due to strong foreign exchange (FX) inflows and improved macroeconomic fundamentals.

(2) The comparison among emerging market economies (EMEs) is a fruitful exercise and provides an overall picture of the country’s relation with respect to other economies. However, the paper fails to provide a more graphic representation of this comparison and does not establish a benchmark where Philippines’ position may be assessed relative to others.

(3) The paper lacks extensive analysis of the country’s low level of foreign direct investments (FDIs) and the policy implications, through rational, does not stem from the description of the country’s financial structure.

Specific Comments

(4) We propose the following revision to first bullet of page 1: “Net foreign direct investment (FDI) flows, which had been slow in previous years, have turned strongly positive since 2005.” We find that the term “very weak” needs a basis for comparison.

(5) On second paragraph of page 5, we request that the paper cites the sources that argued for the relatively small need to attract foreign capital in the Philippines.

(6) We suggest the revision of the last paragraph of page 6 to include efforts that have been made to reverse the slump in investment, such as the implementation of Medium Term Public Investment Program (MTPIP), which guides public sector resource allocation and pipelines public sector programs and projects for official development assistance (ODA), private sector participation and other finance sourcing.

For its part, the BSP continues to foster stable macroeconomic environment by keeping inflation in check and the public’s inflation expectations well-anchored. On the external front, BSP policies have always geared toward: (a) ensuring sustainability of the country’s external debt; (b) maintaining an essentially market-determined exchange rate with scope for occasional official action to smoothen sharp movements in the rate; (c) maintaining a comfortable level of reserves; and (d) further improving the foreign exchange environment through FX deregulation.

The BSP also remains committed to the strengthening the banking system through continued structural reforms and speedier disposition of non-performing assets. The asset clean-up of banks has intended to help spur credit and investments, and contribute in providing the basis for more sustainable economic activity in the medium term.

To further develop the domestic capital market, the BSP continues to work actively with other government agencies and the private sector for the completion of critical market infrastructure to enhance system integrity and overall market confidence.

(7) On the first paragraph of page 8, we suggest the provision of a more detailed discussion on the standards of EMEs to which the paper claims that the Philippines falls short of. In particular, we strongly recommend the identification of the indicators and the benchmarks established on governance, property rights, cost of doing business, competitive market environment and freedom of entry.

On its specific suggestion regarding FDI, we wish to clarify that competition policies are in place, which have been effective in important sectors, such as banking, telecommunications and retail trade.
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Most of the comments were provided by Ms Tets. I just substantiated No. 6 but this provides a good framework in reviewing papers.

Comments on IMF's Access Policy

2008-02-11T21:31:00.000+08:00

Review of Access Policy in the Credit Tranches and Under the Extended Fund Facility and the Poverty Reduction and Growth Facility, and Exceptional Access Policy

Background: In exceptional circumstances, a member's access could exceed the above credit tranche/EFF or overall GRA limits. The exceptional access apply in such cases.

Do the Directors consider the existing structure of annual and cumulative access limits in the credit tranches and the under the EFF, as well as the global limit on overall access to GRA resources provides an appropriate dividing line between normal and exceptional access?

Wala namang problema dito. Ang problema eh granting exceptional access between capital account and non-capital account cases.

We recognize the importance of flexibility in decision-making especially for unique circumstances. We are of the view, however, that existing structure may still need to come up with a clearer dividing line, which may be in the form of general principles, such as providing exceptional access to limit the contagion effect of a potential or actual crisis situation. In view thereof, we suggest that the paper provides a brief description of the bases on granting exceptional access in the past, which may serve as a starting point in developing a criteria in providing exceptional access.

Do Directors agree that the access ceilings and the delining access norms in the PRGF cases remain important to ensure the efficient use of the limited PRGF resources and should continue to be applied?

We agree that access ceilings and declining access norms remain important. We cannot rule out the possibility that the availability of IMF funding promotes investor confidence on member economies. As long as the international financial markets are assured that member economies have liquidity support facilities then we expect robust global economic activity.

Commenting on IMF Papers

2007-12-05T08:25:00.000+08:00

1. Read the questions/issues for discussion;
2. Read the paper;
3. Underline important parts; and
4. Isama ang e-mail (so there's no way for me to slack on this).

The Paris Club

2007-09-18T11:12:00.000+08:00

The Paris Club is an informal group of financial officials from 19 of the world's richest countries, which provides financial services such as debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors. Debtors are often recommended by the International Monetary Fund after alternative solutions have failed.

It meets every six weeks at the French Ministry of the Economy, Finance, and Industry in Paris. It is chaired by a senior official of the French Treasury, currently the Director General of the Treasury and Economic Policy Department Xavier Musca .

The club grew out of crisis talks held in Paris in 1956 between the nation of Argentina and its various creditors. Its principles and procedures were codified at the end of the 1970s in the context of the North-South Dialogue.

In the 1990s, the club began to treat the HIPC (Highly-Indebted Poor Countries) and non-
HIPCs differently. The club began to grant increasingly larger debt reductions for the HIPCs. For the non-HIPCs, the club engaged less in debt reductions and moved towards encouraging the absorption of non-HIPCs' financial losses by bondholders and other private creditors.
In 2004, the Club decided to write-off the debts of Iraq, as the rebuilding of Iraq is incomparable. After the 2004 Indian Ocean earthquake, the Paris Club decided to suspend temporarily some of the repayment obligations of the affected countries.

As of April 2006, Nigeria became the first African country to fully pay off its debt (estimated $30 billion) owed to the Paris Club.

The permanent member-nations of the club are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

2007 Subprime Mortgage Financial Crisis

2007-09-12T16:29:00.000+08:00

The subprime mortgage financial crisis refers to the sharp rise in foreclosures in the subprime mortgage market that began in the United States in 2006 and became a global financial crisis in July 2007. Rising interest rates increased newly-popular adjustable rate mortgages and property values suffered declines from the demise of the housing bubble, leaving home owners unable to meet financial commitments and lenders without a means to recoup their losses. Many observers believe this has resulted in a severe credit crunch, threatening the solvency of a number of marginal private banks and other financial institutions.

The sharp rise in foreclosures after the housing bubble caused several major subprime mortgage lenders, such as New Century Financial Corporation, to shut down or file for bankruptcy, with some accused of actively encouraging fraudulent income inflation on loan applications, leading to the collapse of stock prices for many in the subprime mortgage industry, and drops in stock prices of some large lenders like Countrywide Financial.[1]

This has been associated with declines in stock markets worldwide, several hedge funds becoming worthless, coordinated national bank interventions, contractions of retail profits, and bankruptcy of several mortgage lenders.

Observers of the meltdown have cast blame widely. Some, like Senate Banking, Housing, and Urban Affairs Committee chairman Chris Dodd of Connecticut, have highlighted the predatory lending practices of subprime lenders and the lack of effective government oversight.[2] Others have charged mortgage brokers with steering borrowers to unaffordable loans, appraisers with inflating housing values, and Wall Street investors with backing subprime mortgage securities without verifying the strength of the portfolios. Borrowers have also been criticized for over-stating their incomes on loan applications[3] and entering into loan agreements they could not meet. [4]

The effects of the meltdown spread beyond housing and disrupted global financial markets (see financial contagion and systemic risk) as investors, largely deregulated foreign and domestic hedge funds, were forced to re-evaluate the risks they were taking and consumers lost the ability to finance further consumer spending, causing increased volatility in the fixed income, equity, and derivative markets.

Econ Vocabulary: Global Financial Stability Report September 07

2007-09-07T14:44:00.000+08:00

1. Procyclic - A condition of positive correlation between the value of a good, a service or an economic indicator and the overall state of the economy. In other words, the value of the good, service or indicator tends to move in the same direction as the economy, growing when the economy grows and declining when the economy declines.

"Financial regulation is inherently procyclical"

2. Moral Hazard - Moral hazard refers to the chance, or hazard, that a party in a transaction with more information about its intentions or actions behaves in a way that a party with less information would consider inappropriate, or in the extreme, "immoral". It arises because an individual or institution in a transaction does not bear the full consequences of its actions, and therefore has a tendency or incentive to act inappropriately, leaving another party in the transaction to take at least some responsibility for the consequences of those actions.

Moral hazard is related to asymmetric information, a situation in which one party in a transaction has more information than another. A special case of moral hazard is called a principal-agent problem, where one party, called an agent, acts on behalf of another party, called the principal. The agent may have an incentive or tendency to act inappropriately from the view of the principal, if the interests of the agent and the principal are not aligned. The agent usually has more information about his actions or intentions than the principal does, because the principal usually can not perfectly monitor the agent.

Moral Hazard in Finance

Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the highest return. A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.

Moral hazard can also occur with borrowers. Borrowers may not act prudently in the view of the lender when they invest or spend funds recklessly due to the belief that they have access to a large line of credit. For example, credit card companies often limit the amount borrowers can spend using their cards, because without such limits those borrowers may spend borrowed funds recklessly, leading to default.

I encountered this when we were discussing about the opt-out provisions.

3. Propitious - Presenting favorable circumstances; auspicious

4. Hedge fund - a private investment fund charging a performance fee and typically open to only a very limited range of qualified investors. In the United States, hedge funds are open to accredited investors only. Because of this restriction, they are usually exempt from any direct regulation by the SEC, NASD and other regulatory bodies.

A hedge fund's activities are limited only by the contracts governing the particular fund, so they can follow complex investment strategies, being long or short assets and entering into futures, swaps and other derivative contracts. They often hedge their investments against adverse moves in equity and other markets, because a common objective is to generate returns that are not closely correlated to those of the broader financial markets.

In most countries hedge funds are prohibited from marketing to non-accredited investors, unlike regulated retail investment funds such as mutual funds and pension funds. As hedge funds are essentially a private pool of managed assets, and as their public access is commonly restricted by the government, they have little to no incentive to release their private information to the public.

Inarguably private entities, hedge funds have a corresponding reputation for secrecy, and less is known about the methods and activities of hedge funds than about publicly-accessible "retail" funds. However, since hedge fund assets can run into many billions of dollars, and thus their sway over markets—whether they succeed or fail—is substantial, there have been calls for regulation of these private investment funds.

Lotilla perfectly describes how I feel right now

2007-07-19T18:26:00.000+08:00

MANILA, Philippines -- After 22 years as a public servant, Energy Secretary Raphael Lotilla is bidding goodbye to government service, wanting to pursue more “intellectual” endeavors. In one of his most candid interviews yet, Lotilla said that in his more than two decades in government -- particularly during his two years as energy czar -- he had not been able to perform much mental calisthenics.

The pressure of having to jump from one issue to another, he said, deprived him of whatever “intellectual depth” government service could afford. “I want to have more time for that kind of thinking. In government, you don’t have the luxury of time to think that deeply,” he said. “I would like to end my vow of poverty and all the ancillary vows that come with it.”

Bachelor

A bachelor, Lotilla’s frugal nature has been a source of both awe and amusement to energy industry players -- and reporters. He is said to have no TV set at home, making him one of Manila Electric Co.’s (Meralco’s) lifeline customers, or those using less than 100 kilowatt-hours of electricity a month.

No surprise

Wednesday’s announcement of President Gloria Macapagal-Arroyo’s acceptance of his resignation actually did not come as a surprise to Lotilla. “I don’t recall when exactly I found out, but I’ve known for some days now,” he said. Speaking before more than 200 people at the League of Corporate Foundation’s CSR Expo 2007, he somehow preempted the Malacañang announcement by hinting at leaving the Department of Energy.

“I’m sure my successor will do a good job in ensuring that all the reforms that have been put in place will be sustained,” he said during his speech. Shortly after answering some questions from the floor, the organizers announced the arrival of Environment Secretary Angelo Reyes -- Lotilla’s replacement. Neither of the men acknowledged each other’s presence, even if they were within less than a meter of each other. Not even a glance was exchanged.
Vacation and exercise

Talking to reporters later, Lotilla was still in a jovial mood, saying he was ready to take a much needed break. “The first item on my agenda is to go to Palawan. I haven’t gone to Palawan for the last two years, since I became energy secretary,” he said. “And I also haven’t been able to exercise regularly. I’ve actually put on some weight. So that’s what I’m going to do.”

He was silent on what his plans for his professional life, saying only that he was still willing to help the government as best as he could -- and if asked. “It does not mean that I will not assist the government where I can. It’s just full-time government service that I’m taking a break from,” he said.

Long overdue

June 18, the day when heads of government-owned or -controlled corporations were asked to submit courtesy resignations, was not the first time Lotilla attempted to exit from the government. “I’ve been resigning for years. It was only now that it was approved,” he revealed. “I’ve always wanted to take a vacation, as I only intended to stay with the national government for two years. But after President Ramos’ term, I was requested to at least help out the new government.”

More changes

Talk that National Power Corp. (Napocor) president Cyril del Callar would also be replaced surfaced again, following Lotilla’s resignation.

Bloomberg Focus

2007-06-01T11:11:00.000+08:00

15 August 2006

Increased regulation of derivatives mkts.
Fundamental theorem of asset pricing.
Risk-neutral valuation.
Arbitrage pricing theory.

Deputy Governor Nestor Espenilla

1) Everyone is slowly moving to Basel 2 Accord

2) Market risk management

3) Financial liberalization - relaxation of banking regulations, intensified competition. Change in emphasis from profit-oriented to risk-return management.

4) sound risk management systems quantify prices and control risk.

5) Fixed income exchange - increase secondary market trading

6) Risk-based examination of recent banks

7) New regulations do not unduly prohibit banks to avail recent/new products

8) VAR - market risk capital requirement. banking - highly dynamic industry, growing complexity, sophistication and concentration.

9) capital treatment for market risk remain unchanged.

10) capital treatment for counterparty credit

- Internal Model Method (IMM)
- Standardize Method
- Current Exposure Method: presently applied domestically

11) Capital treatment

- failed transaction
- double default
- operational risk capital change

12) basic standard approach

13) a. change in market structure, b. increased trading account.

International Finance Corporation

2007-05-28T09:39:00.000+08:00

A. Background

1. As the private sector arm of the World Bank Group, the International Finance Corporation (IFC), takes a leadership role in areas such as capital markets development, new models of public-private partnership for infrastructure, environmental and social sustainability, corporate governance, environmental finance, and investment climate research.

2. So far, it is the largest multilateral source of loan and equity financing for private sector projects in the developing world. It invests in for-profit ventures and charges market rates for its products and services, which are the following:

(a) Equity and Quasi-Equity: IFC buys shares in project companies, other project entities, financial institutions, and portfolio or private equity funds. They generally subscribe to between 5 and 20 percent of a company’s equity. They do not normally hold more than a 35 percent stake or be the largest stakeholder in a project. With quasi-equity instruments, they invest through products that have both debt and equity characteristics.

(b) Loans and Intermediary Services: IFC finance projects and companies through their A-loans, which maturities generally range between 7 and 12 years at origination, but some loans have been extended to as long as 20 years. IFC’s loans are provided in major currencies and in an increasing number of emerging market currencies. They also make loans to intermediary banks, leasing companies, and other financial institutions through credit lines that result in further on-lending. These credit lines are often targeted to smaller businesses.

(c) Syndicated Loans: Through syndicated loans, or B-loans, financial institutions share fully in the commercial credit risk of projects, while IFC remains the lender of record. Participants in IFC’s loans benefit from the status of IFC as a multilateral development institution, including their de facto preferred access to foreign exchange.

(d) Structured Finance: IFC also offers structured finance solutions to clients, enabling them to raise a significantly larger amount of capital than that represented by IFC’s own exposure. Through partial credit guarantees of debt instruments, the triple-A rating of IFC help clients diversify their funding sources, extend maturities, and obtain financing in their currency of choice. IFC also helps clients structure securitizations and risk-sharing facilities, transactions that allow a client to sell off part of the risk associated with a pool of assets.

(e) Risk Management: IFC’s risk management products provide clients with access to long-term derivatives markets. Currency hedging instruments allow clients to hedge foreign exchange exposures typically related to foreign currency borrowings.

(f) Technical Assistance and Advisory Services: Technical assistance complements IFC’s investment activities by offering advisory and training services to governments and private companies in developing countries. They deliver many of these services through donor-supported technical assistance facilities that focus on either a region or a strategic aspect of development. They also manage trust funds supported by donor governments and have established a funding mechanism that sets aside a portion of the Corporation’s net income as a contribution to donor-funded operations.

3. IFC and the World Bank work together to survey and assess the investment climate of developing countries. An online database makes data from 30,000 firms accessible to governments considering reforms. IFC and the Bank also publish the annual Doing Business report, which provides objective, quantifiable indicators of business regulations in 150 countries. Reform efforts in many countries have been spurred by the data and recommendations.

B. Transactions with IFC

1. Financial Restructuring of Mariwasa Manufacturing Inc. (MMI)/Mariwasa Siam Ceramics Inc.(MSCI): MMI and MSCI had to restructure all its outstanding loans due to financial problems contributed by increased production cost, dampening of domestic demand and depreciation of the peso since the Asian financial crisis.

BSP-Monetary Stability Sector approved the restructuring of the JPY1,257.96 Million (about US$10.37 Million) and US$3 million loans from IFC, which refinanced outstanding FCDU Loans, on 05 March 2007. At the same time, BSP also approved the redenomination to Japanese Yen of the remaining balance of the US$3.0 million IFC loan after restructuring (approximately US$706,161.40 including capitalized interest) to consolidate the IFC loans into one account.

2. IFC Peso Loans Funded by PhP/USD Cross Currency Swaps (CCS[1]). In August 2003, the Monetary Board (MB) approved in principle the proposal of IFC to extend Peso loans to Philippine clients funded by the CCS. The following loans have been approved by MB under the said lending program:

(a) South Luzon Expressway Project Phase 1: US$50 Million 9-year loan to South Luzon Tollway Corporation (SLTC) approved on 16 November 2006.

(b) Financing for the purchase of contracts to sell receivables from real estate developers covering housing mortgages of low and middle income households: PhP1.06 billion (approximately US$20 million) loan to Planters Development Bank (PDB) approved on 22 June 2006

(c) Financing for the purchase of housing mortgages: PhP2.25 billion loan to Filinvest Land Inc. approved on 16 June 2006

(d) Capital investment program: PhP equivalent of the US$15 million loan to Cagayan Electric Power and Light Co.,Inc. (CEPALCO) approved on 05 May 2005

(e) Financing for the purchase of National Home Mortgage Finance Corporation’s non-performing loans: PhP1.65 billion loan to Balikatan Housing Inc. approved on 14 April 2005.

3. Private Enterprise Partnership for the Philippines (PEP-Philippines) : The PEP-Philippines was launched in 2006 and is designed to support the development of small and medium enterprises through the provision of investment and technical expertise to implement projects that would ease small and medium enterprises’ access to finance, strengthen linkages between large and small market players and help improve the overall business environment. This is managed by IFC and co-financed by the Governments of Australia and Canada.

4. Projects provided with Technical Assistance Advisory Services (TAAS) by IFC:

(a) North Luzon expressway on private transport work.

(b) Manila Water Corp. and the Metro Cebu Water District on water and sanitation work.

(c) Light Rail Transit Authority (LRTA) on the extension of the LRT-1 rail line from southern Metro Manila into Cavite province.

(d) Cagayan Electric Power and Light Company (CEPALCO) on private electricity distribution, which is now running on solar-powered photovoltaic cells under the IFC's Global Environment Facility (GEF) in partnership with the international Sustainable Energy and Economy Network.

C. Potential Collaborations

1. IFC may want to consider providing loans with improved terms and conditions for transportation, irrigation, energy and other infrastructure projects to comply with BSP’s external debt management framework that aims to obtain loans at favorable terms and conditions and to channel priority projects and activities. In particular, IFC is encouraged to explore the possibility of waiving some fees to make their proposals at par with those offered by World Bank and Asian Development Bank

2. BSP may also need the support of IFC in the development of a centralized credit information bureau to improve the quality of financial information to investors, expand private sector access to credit and minimize exposure to risks of financial intermediaries.

3. IFC can also be tapped to play an instrumental role in the advocacy program of BSP on microfinance, particularly in promoting the development of sound and sustainable microfinance operations.

[1] IFC swaps its own hard currency financing for local currency at the time of disbursement
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1. Read on IFC - two hours
9:45 - 11:45

2. Read on BSP - two hours
11:50 - 12:00
12:05 - 12:20
13:30 -15:05

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Note for me:
1. It would help if you also let the staff know what you are up to. In that way, the staff won't feel that you are just passing the job to him/her.

Asian Bond Fund

2007-05-23T14:02:00.000+08:00

Asian Bond Funds (ABF) were initiated to promote greater regional financial integration particularly in the bond market and to eventually help financing private sector investment in Asia. The initial step involved pooling US$ 1 billion of their foreign reserves to form the ABF1 to purchase a basket of U.S. dollar-dominated bonds issued by eight EMEAP economies (China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, and Thailand).

Since inception in July 2003, the BISIP Series ABF1 has registered a total return of 14.39% versus 13.77% for the JACI sovereign and quasi-sovereign index. The performance of a comparable constant duration US treasury benchmark was 8.93%. Net of fees the ABF1 returned 13.71%. The total size of the ABF1 as of 31 January 2007 was USD 1,165,494,157.

In December 2004, the ABF2 was launched comprising a Pan-Asian Bond Index Fund (which is now named as ABF Pan-Asian Bond Index Fund/ PAIF) and eight Single-market Funds. The PAIF is a single bond fund investing in sovereign and quasi-sovereign local currency-denominated bonds issued in the eight EMEAP markets. The eight Single-market Funds will each invest in sovereign and quasi-sovereign local currency-denominated bonds issued in the respective EMEAP markets.

Taiwan

2007-05-23T08:22:00.000+08:00

Interesting.

How would you call Taiwan if one of the delegates is China?

Still waiting for the answer.

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Carry trade - investors borrow in low interest rate currency to invest in high yielding currencies, taking on, currency risk in the process

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Japan Philippine Economic Partnership Agreement

2007-05-23T07:47:00.000+08:00

Also known as JPEPA

A reminder that that I put together notes for the Japanese Legislative Agenda and JBIC yesterday (22 May 2007) as part of the brief of the BSP Governor.

They'll sign a side agreement, to be signed by the two countries’ foreign ministers, will have Japan promising not to export materials considered illegal in the Philippines
A recent report from the Japan Center for Economic Research showing how the ASEAN plus 3 (Japan, Korea and China) grouping would directly benefit the Philippines.
By 2020 the Philippines was projected to grow by 3.3 percent more, which, added to the current projected 6 percent, would mean a growth of 9.85 percent.
With ASEAN plus 6 (Northeast Asia, India, Australia and New Zealand), the country would grow by an additional 4.10 percent, which would mean 10.20 percent.
Philippines is now back on the radar of European and US investors, with the stock market at an all-time high, more foreign outsourcing and IT businesses locating in the country, and higher average growth in the past six years.
With Japan back on track after a decade of economic slump and looking to its neighbors as the key to future growth in the face of its ageing population, we have to develop relationship with them.
If anything, officials are worrying that investments might be coming in too fast and the peso would rise to P45:$1, which would worry exporters.
Siazon pointed out that the Philippines grew 4.3 percent on the average during the past six years.
The President said government activities yielded big economic rewards, including the $1-billion expansion of the US-based Texas Instruments. Tokyo Electric Power Co. and Marubeni Corp. were also making a $4-billion investment -- the largest Japanese investment in Philippine history.
The two areas which the Philippines would like Japan to invest in are power and information technology.
Japan is the Philippines’ second largest trading partner. In 2006, the total volume of trade was $14.7 billion, with the Philippines enjoying a surplus of P700 million.It is also the largest source of tourists, with more than 400,000 Japanese visiting the Philippines every year.
Japan is also the biggest provider of official development assistance to the Philippines, accounting for two-thirds of all ODA annually and there are 200,000 Filipinos working in Japan.
If the JPEPA is ratified, the Philippines can soon start sending trainees as nurses and caregivers to Japan, said Siazon.
Japan and the Philippines share a Mutual Defense Treaty with the United States -- a relationship that the Philippines considers important in stabilizing the region.
The President will meet with Prime Minister Shinzo Abe, who is expected to brief her on the process of amending the Japanese Constitution -- an issue now being hotly debated.
Japan’s pacifist Constitution is seen to hamper its ability to take on a leadership role in the world commensurate with its status as second largest economy.

Financial Market

2007-05-22T21:11:00.000+08:00

Market for the exchange of capital and credit in the economy. Money markets concentrate on short-term debt instruments; capital markets trade in long-term debt and equity instruments. Examples of financial markets: stock market, bond market, commodities market, and foreign exchange market.

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Types of financial markets

The financial markets can be divided into different subtypes:

Capital markets which consist of:
- Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
- Bond markets, which provide financing through the issuance of Bonds, and enable the subsequent trading thereof.
Commodity markets, which facilitate the trading of commodities.
Money markets, which provide short term debt financing and investment.
Derivatives markets, which provide instruments for the management of financial risk.
- Futures markets, which provide standardised forward contracts for trading products at some future date; see also forward market.
Insurance markets, which facilitate the redistribution of various risks.
Foreign exchange markets, which facilitate the trading of foreign exchange.

The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.

Moving Up the Ladder

2007-05-20T20:14:00.000+08:00

I keep the newspaper clipping on this. Before I lose it, I'm going to post it here.

10 Strategies for Getting Yourself Promoted

Some career experts say that the day you start a new job you should begin planning for your next job. And you know what? You should! Just make sure that you stay focused enough on the you were hired for that you succeed and excel in the position before looking for the next one.

Promotions are not a given. It is used to be that workers progressed along specific career paths during their careers, but the impact of technology, globalization and flatter organizational structures has changed that paradigm. Today, employees have to create and manage their own career paths -- through one or multiple organizations. And remember that a promotion is not always an upward path. Sometimes - especially in today's business environment -- you may need to make a lateral move to position yourself for a later upward move.

How do you develop your promotion plan? Incorporate these 10 strategies into your plan.

Surefire Ways Not to Get Promoted

1. Don't plan your day. Go to work each day without a plan in mind.
2. Do the minimum. Have the attitude of "they don't pay me that"
3. Rely on your current base of knowledge. No need to learn new skills.
4. Voice your complaints. Be vocal about what you don't like at work.
5. Don't share the credit. Put your name alone at the top of successful projects.

From Dr. Donald E. Wetmore's The Productivity Institute

1. Develop Mentoring Relationships

One recent study found that in four out of five promotions, those promoted had a mentoring relationship with someone higher in the company who helped spread the good word about them. Some companies have formal mentoring programs, but even if your company does not, there are still ways you can build relationships with people in higher positions in the company. Mentors can also be great sources for information and career guidance.

2. Quantify Results

While promotions are not necessarily based on your past performance, you can certainly make a better case for promotion by showing detailed information about your past successes. Those who get reseults, get ahead.

Keep a record of everything you do that enhances the company's bottom line, that puts the company or your department in a good light, that is creative and innovative, and that shows your loyalty and commitment to the organization.

3. Practice Self- Promotion

We're taught by our families that modesty is a virtue, but as with job-hunting, if no one knows how great you are, you simply won't go ahead. Be a known quantity. If you have had a major accomplishment or created new or award-winning programs, make sure people know about them -- especially doing the promoting.

Sell yourself -- and let it be known that you are seeking a promotion. One professional we know sends out a monthly e-mail to his boss and his boss' boss to keep them updated on his progress on various projects -- and to share any accomplishments and accolades that occured in the previous month.

4. Establish a Bond with Your Boss

It might help to think of your boss as one of those border guards between countries. S/he can either be raising the gate and waving you onward and upward to your next position within the company, or s/he can be keeping the gate down and blocking you from any movement within the company. Use all opportunities to make your boss a key supporter of your promotion.

Use professional settings to seek counsel and stress your interest in staying with the company. Use performance appraisals not just to go over your accomplishments, but to talk to your boss about potential roadblocks to a promotion -- and how to overcome those roadblocks.

Some experts also suggest building rapport with your boss by learning more about his/her outside interests and hobbies -- and then chatting about them during conferences, parties or other informal activities.

5. Acquire New Knowledge and Skills

It goes without saying that one of the best ways to succeed in getting a promotion is to expand your knowledge and skills sets in areas that are critical to the organization. As technology and other environmental forces change rapidly, you need an ever-increasing skill set not only to perform your job but to stay marketable.

Experts also suggest that employees who want to get ahead should not only keep current with industry news and event, but also pay attention to trends and events outside their specialty.

6. Build Your Network

The more people who know you, know your strenghts and abilities, know your value to the organization, and know (at least some of) your ambitions, the more likely your name will be discussed when opportunities arise.

An added benefit of networking is that you will learn much more about the company if you network with people in other areas of the organization. Learn more about networking here.

7. Ask for More Responsibilities

Volunteering to help out other departments or teams -- or simply asking for more responsibilities -- increases your value within the organization. Asking for more work shows your interest and desire to help your department and company to succeed -- as well as putting a spotlight on your value to the organization

8. Act Professionally at All Times

Earn a reputation for being dependable, professional and cooperative. Act and look the part.

- Dress professionally and neatly -- even on business and casual days
- Ask questions when you aren't sure how to do something
- Dare to be different -- make yourself stand out from the pack
- Keep a postive outlook on things, even when in tough situations
- Don't whine or complain -- or blame others -- when things don't go your way
- Make a name for yourself in your industry through conferences, articles, speeches
- Don't be a clock watcher

Finally, be a problem-solver. Don't go to your boss with your problems. If a difficult situation arises, be sure to come up with at least one solution before seeking your boss' blessing for dealing with the situation. Problem-solvers get promoted. Complainers who expect the boss to solve all their problems don't.

9. Be a Team Player

Because so much work is now accomplished through teams -- departmental or cross-functional -- it becomes even more important to share successes with your team and to avoid pointing your finger when there are failures.

And by being a team player, you only build your reputation and increase your value to the organization.

10. Create Your Own Opportunities

After studying the needs and challenges of the organizations, if you see an area that has been neglected -- and you have key skills in that area -- write a proposal for a new position.

And even if the company does not go for the new position, you have again shown your initiative, creativity and value to the firm -- and these things can only help you the next time you request a promotion.

EMEAP: Observations

2007-05-19T06:09:00.000+08:00

Executives' Meeting of East-Asia Central Banks

So here's what to know when I get on board.

A. Note in advance external and internal requirements

A.1 External

A.1.1 Logistics: Accommodations, Flights, Activities, Preferences
A.1.2 Programs
A.1.3 Papers: Those to be delivered by Speakers

A.2 Internal

A.2.1 Aide Memoire for the Governor and the like
A.2.2. Information Support from Other BSP Groups (Due Diligence)

---

I am not a fan of short notices. I've been working for the government for the past 8 years and I learned that "working under pressure" is due to holders of managerial position who doesn't know how to manage. Before anything else, the appointed lead should know the big picture. It's similar to knowing the most probable ending of a movie. The financing transactions we had in 2006 were executed smoothly in the span of two weeks because all of us were aware of the big picture. So far, the most difficult was the Offering Circular -- the hundred plus plus investor handbook on everything about NPC/PSALM and ROP. Here are the things I learned with due diligence for the Offering Circular while I was in PSALM:

1. Familiarize self on the topics - Give it a day.
2. Introduction is on the recent activities of the economies.
3. Someone should really lead and impose deadlines.
4. Map and get commitments.

Transfers within the Government

2007-05-10T16:10:00.000+08:00

I am more prepared now compared to my tranfer from DBM to PSALM. Here are some tips:

1. Inform immediate supervisors way ahead prior to actual transfer/resignation.
2. Two weeks' notice is enough. Get salary first before leaving.
3. Make sure you have enough funds to cover periods without salary.
4. Get all your stuff on a weekend.
5. Set up Out of the Office Assistant of your mail.
6. Make notes on computer configurations.
7. Bring CD to transfer files.

I'll miss the fast internet connection in the office. With the 2 Fino Leather Bag on my mind and the Philip Stein Watch, how could I ever get a Globe Visibility? Hay, why am I buying these things with only PhP50,000 in my pocket. Moreover, I still have that Shang-ri La Mactan Conference that I need to attend to. Anyways, tapusin ko na nga yung financial projections para di ko masyadong iniisip ito.

First Writing Racket: Lessons Learned

2007-05-05T00:13:00.000+08:00

1. Get the Big Picture.I took this stint to know how it works so that next time, I can systematize and manage it well. The stint initially involved financial projections for a start-up mining company. Eventually, client asked to provide figures for the financial part of the feasibility study. The dangerous part of it is we left Bob do the coordination part because he was the one who has connections to the client. Bob, however, is too busy to even study the requirements of the projections. Information are usually incomplete and I ended up preparing something that wasn't really needed because Bob failed to capture the big picture. When I was reading the materials for the stint, it dawned on me that our services were sought for the feasibility study. If I knew then that we were supposed to work on it, I should have not gone through great lengths to work on this.

2. Know the industry before opening up to commitment. Ask client to give you 24 hours to think about the service being sought. Since I was assigned to financial projections, I didn't find time to familiarize myself on nickel content. The first thing I did was to check Bloomberg. which showed prices for precious metals and base metals but none of it on nickel with different grades.

3. Sign an Agreement. Prior to making a commitment, spend one hour familiarzing self with the industry. To avoid multiple revisions, sign an agreement with a clear description of what the client needs. Put some allowance for revisions, say the client can ask revisions thrice and every revision thereafter is charged with an additional 5%.

4. Ask for a timeline. Agree on reasonable deadlines. I realized that the stint was stressing me because it was taking so much of my time with Bob asking for outputs to be delivered immediately or on the same day. Initial output to be provided within 5 business days while revisions may need a maximum of 3 business days. Next time, I should be strict to myself. I shouldn't spend the entire day figuring things out. I should take time.

Research (3 hours).
Readings (5 hours).
Research (3 hours).
Action (important things first: 3 hours)

4. Don't commit unless client knows exactly what she/he is looking for. Related to getting the big picture. Awhile ago, when we were having a meeting. Bob was saying that price would depend on importation cost. Eventually, when Eileen arrived with data from, he said the LME would provide prices for nickel with 1.05 something. So, Bob confused me a lot. I realized that with him at the helm, I just have to note everything that he is saying then focus on what matters. Some 90% of the things said doesn't contribute to anything related to the stint.

--

Summary: Arm self with an agreement.

PSALM Strategic Planning: First and Last Before BSP

2007-04-24T15:37:00.000+08:00

April 23 - 24, 2007
Ate Amy and Kuya Jun of Treasury
Have not thought of me actually leaving PSALM.
Avoiding ba so that I won't be dramatic about it.
Anyways, I have to leave.
There's really nothing more I can do about it.

Telecentre.org

2007-03-01T03:21:00.000+08:00

Computer History Museum
Mountain View, California
28 February 2007
www.telecentre.org

1. place where people can access computer and internet
2. innovators - those that have not touched computers
3. there are 100k telecentres globally - powerful platform for social economic development
4. make this centres offer skills, services and opportunities

Pre-Qualification Group in Action

2006-11-23T11:14:00.000+08:00

Day Count Glitch

2006-11-02T23:50:00.000+08:00

When Dulce called me about the day count that is inconsistent with the final approval, I didn't panic. There are two things that can happen, either the bank gives in or P/NLO pull the strings. It was partly my fault because I signed off the third draft of the Purchase Agreement, when it was the first time that the banks reflected the terms and conditions. I now know why VP/NRB requires a table of the main terms and conditions. Nonetheless, when this will be discussed in the evalaution, we'll just accept their suggestion. There is no point in justifying our position to them. At least, we had the glimpse on how the Finance Ministry selects proposals.

Funny moment: We patched in to a different conference call...hahahaha...with Singaporeans on the call.

Offering Circular 2006

2006-10-31T15:05:00.000+08:00

I started reading the Offering Circular. I noticed one mistake for the 5 pages I checked out on the description on the Distribution Sector, which says 142 distribution utilities consisting of 119 electric cooperatives, 17 private utilities and 5 municipal utilities that actually totals 146.

The boss told me that we are going to hold a meeting with Didith next week to discuss the peso borrowings. I should be reminded to prepare the proposals and the calendar.

NPC lights up the market

2006-10-31T12:46:00.000+08:00

Napocor prints lowest ever Philippines dollar coupon

2006-10-31T12:14:00.000+08:00

News article on the bond issue

US$500 Million Notes due 2016; Statistics

2006-10-31T11:48:00.000+08:00

For this year, my job in PSALM only requires me to work non-stop for two weeks.Most of it, however, were spent coordinating information from NPC people to the transaction counsel.

The deal was quick because we were just lucky. There was so much liquidity in the market. It does not require so much brouhaha. It was just tiring because I was surrounded with drama queens. So much of the crap talk, here are the stats.

Terms

Issuer : National Power Corporation
Guarantor : Republic of Philippines
Issue Ratings : BB-/BB
Guarantor Ratings : B1/BB-/BB
Size : $500mm Reg S/ 144a
Yield : 6.875% s/a 30/360
Maturity : 02NOV2016
S/D : 02NOV2006
Spreads : UST+ 207, L+202, 27.5 over implied ROP curve (+30.5 over the OCT16, and 40.5 JAN16)
Price : Par
Books : Citi / DB
Denoms : 100k, 1k
Listing : Singapore

Headlines
Lowest coupon ever
Tightest spread to sovereign since crisis
Largest book ever for Natpow deal
Fastest deal ever for Natpow (14 hour execution)

Book colour
Books over 10X oversubscribed
210 investors
15 orders of over 100mm
Over 100 investor new to the NPC

Geographic Split
USA 31%
Sing 20%
Phils 14%
Cont 14%
UK 12%
HK 8%
Other Asia 2%

Investor Type
Funds 49%
Banks 24%
Ins/pension/cb 21%
Retail 6%