Displaying items by tag: Economy

Inflation feared with gov’t directive on rice

President Rodrigo Duterte’s directive for the National Food Authority (NFA) to boost rice supply from local farms before considering importation could unduly drive up consumer prices, New York-based think tank Global Source said.
In a commentary titled “Inflation risk from rice policy?” by economists Romeo L. Bernardo and Marie-Christine Tang, Global Source said the policy could lead to the depletion of NFA’s inventory, driving up local prices.
“The struggle that led to the President insisting on the NFA buying local rice risks the country’s rice stocks falling further [especially if domestic farm outputs fall short of expectations] and thus, domestic rice prices spiking,” Global Source said.
Global Source was referring to the conflict between majority of the NFA Council—the agency’s governing body comprised of NFA officials and economic managers from various departments—and NFA administrator Jason Laureano Aquino.
The majority, led by the council’s chair, Cabinet Secretary Leoncio Evasco Jr., wanted the NFA to continue accommodating inbound shipments through private-sector importation. Aquino had disagreed, pushing for government importation through the NFA itself.
Inflation trend to persist
The conflict led to the dismissal of Cabinet Undersecretary Maia Chiara Halmen Valdez, who represented Evasco in council meetings.
“Rice accounts for close to 9 percent of the CPI (consumer price index) basket and given the projected inflation path, double-digit increases during the lean months would push the headline inflation rate well over the upper end of the BSP’s (Bangko Sentral ng Pilipinas) inflation target band,” it said.
The BSP is bent on limiting average inflation this year within the range of 2 percent and 4 percent.
“Many economic watchers have raised concerns about recent increases in consumer prices. From below 2 percent in the 16 months to August 2016, the headline inflation rate climbed past 3 percent in February and March 2017,” Global Source said.
The think tank added that the BSP now expects the uptrend to continue through the third quarter, driving the figure “very close” to the upper end of the target range.
Global Source said the government’s latest rice policy is “an emergent risk that could ‘shock’ inflation forecasts.”
While both factions in the NFA Council bickered over how to import and beef up its stock, Global Source noted that inventory as of March was good for 12 days’ consumption only.
Importation to ease worries
The NFA is required by law to maintain a minimum stock good for 15 days for most of the year, but it must have at least 30 days’ supply during the lean months from July to September.
The country’s main crop is planted and grown during the third quarter, and harvest does not start until October.
Meanwhile, Aquino the NFA administrator said last Tuesday the agency was currently unable to buy palay as farm-gate prices averaged at P18.60 per kilo as of the last week of March, higher than the NFA’s price cap of P17 a kilo.
“With rice prices starting to inch up recently and import lags of anywhere from one to four months, a decision to allow importation would help allay fears of impending shortages that could lead to higher price increases in anticipation of the demand/supply gap,” Global Source said.
“To avoid delays in light of the internal NFA disagreement and ensure that a decision to import is quickly carried out, the President might as well decide also whether NFA itself should import or allow private traders to do it,” the group added.

By: Ronnel W. Domingo - @inquirerdotnetPhilippine Daily Inquirer


$470-M business deals signed during Saudi trip

RIYADH – Seven business deals worth $470 million were signed here last Wednesday in a development officials said reflected investors’ confidence in the Philippine economy.

President Duterte witnessed the signing of the agreements during a business forum attended by business leaders of Saudi Arabia and the Philippines.

“The estimated amount of investment is about $470 million. That will create 16,000 new jobs in the country,” Trade Secretary Ramon Lopez said in a press conference here.

“We look forward to a much stronger relationship with Saudi Arabia. They’re doing a lot for our citizens here and we see bright prospects,” he added.

Lopez declined to name the companies that would sign the agreements but revealed that they were into halal production, tourism, hotels, pharmacy, manufacturing, agriculture, engineering, tourism and logistics.

“It was good that the President himself is our trade and investment ambassador. Every time he talks with his counterpart, he pushes for trade and asks them to buy more of our exports and invite investors to the Philippines and to take advantage of the current economic boom we are experiencing,” Lopez said.

Trade volume between the Philippines and Saudi Arabia hit $1.12 billion in 2016. The Philippines imported $1.04 billion worth of goods, mostly petroleum and oil, from Saudi last year while Philippine exports only hit $82.46 million.

Among the Philippine products being exported to Saudi Arabia are fruits, pastries, sauces and seasonings.

By Alexis Romero (The Philippine Star)


One Root of Our Inequality

We’ve heard a multitude of comments over the years about the growing wealth gap in this country. Many have attributed this to high CEO salaries and the growing differential in executive pay vs. average pay. And this can’t be denied. However, I would propose that other factors are at play, factors that have left the typical Trump voter in the middle of the country troubled by an unsubstantiate-able suspicion that the system is rigged. Let me explain. Let me begin with a story.

About two weeks ago, a technologist working on an exciting new area of invention asked me to find a connection to a high profile venture fund that was just launched. Because this discussion is alive and well, I’ll use a fictitious name in the hopes that the webcrawling robots don’t connect the dots. Let me call it BSD Capital. That’s vague enough.

BSD Capital was announced to the media as the big swinging deal in energy investing with $1 billion to play with. It was spearheaded by none other than Bill Gates and had names like George Soros, Julian Roberston, and Jeff Bezos on its board. I would have thought that a fund with such a public profile was intended to fund ideas from well…the general public. You’d think. So when I went to the website, I was a little disappointed to see this:

“As you know, BSD (name changed) is just getting started, so we aren’t considering any unsolicited investment opportunities at this time.

When our team is assembled and we are ready to evaluate proposals, we will post more information on our website about how best to engage.”

It took me exactly 4 days to figure out a workaround to this obstacle. After lamenting my great flaw of losing most of my business cards in my dusty mess, some of which belonged to the Soros-complex, I found a way in. It’s called a network.

I should have been glad, but I was miffed. If a professional or personal network was the most effective way to get an idea in front of BSD Capital, what about the average person who went to school in a square state and yet came up with the brilliant idea of creating clean and infinite power out of (just an example), say, emotional distress. Talk about an infinite source, at least in my life. Square State girl—because it will be a girl—will remain sadly out of the loop, that loop that takes a good idea, adds a little capital, stirs, shakes and gives you odds on your first billion. It factors into why one part of the country is languishing while another is funding missions into outer space. The concentration of the network, the natural cluster of connection in specific geographies, has exacerbated the wealth gap.

There is a reasonable rebuttal to this. This week, I met with an investor who did just this kind of angel funding. He put much more weight on his network, he told me. It is a natural sieve that allows him to depend on the judgment of those he knows. It is reasonable for someone to depend on his network for sourcing investments and very reasonable that private investors should be allowed to source investments by any means they like as long as those means are compliant with the law of the land.

Just wondering…could this behavior change on its own? If these big swingers at BSD Capital thought through the broader effect their clubbishness is having on society, would they make an effort to be more democratic in the way they allocate the opportunities they are creating? After all, if they are trying to change the world by giving society better energy alternatives, wouldn’t they also be motivated to democratize the opportunities they create? Moreover, if public money like CalPers and CalSters and the teachers unions understood the clubbishness of the private equity investments they are funding (this does not apply to BSD as it is private money), would they demand more democratic behavior? I have my all-powerful forward button to help me find out. I’ll let you know in a subsequent column what thoughts are shared back.

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