News Update Q2 business confidence level up 43.9 pct., says BSP

Philippine businesses are bullish that the country will see better days in the second quarter, supported by stable prices, more remittances from Filipinos overseas, and higher consumer spending after the May 10 polls.

The confidence index (CI) rose to 43.9 percent, up from -2.6 percent year-on-year and by 4.8 percent from the first quarter's 39.1 percent, the Bangko Sentral ng Pilipinas said in a statement Thursday.

The national survey was conducted from April 5 to May 7, with 1,632 respondents from the top 7,000 corporations' list of the Securities and Exchange Commission. The central bank said business optimism was boosted by a recovery in export revenue, moderate inflation, growth in overseas remittances, and a stable peso, stressing that higher consumer spending with the strong cash outflows following the elections would boost businesses in the coming months.

Hong Kong, Indonesia, Singapore, Germany, Italy, and the United States also recorded improved business confidence, the BSP noted.

Businesses located just outside the National Capital Region also registered a higher level of optimism than those in other regions, with expectations of favorable economic prospects and conditions in the days ahead.

Most firms engaged in exports and international trade showed the highest level of positive outlook for the second and third quarters, with the CIs reaching record levels since the survey started in the first quarter of 2007.

The services sector was the most bullish after the financial intermediation sub-sector improved its asset expansion and quality, and domestic banks remained infused with ample liquidity and solvency.

Hotels and restaurants as well as the renting, and construction sectors also expressed better outlook for the second quarter.

The sentiment in the industry and manufacturing sectors, including mining and quarrying, also improved because of higher metal prices and export growth in the electronics sub-sector.

The school opening next month has set precedents in the wholesale and retail trade sectors, which also expressed better outlook.

But the central bank said that third quarter expectations were bleaker, following the usual downtrend cycle during the rainy season, while businesses were mixed about the outlook when it comes to their own operations.

The industry and services sectors, for instance, showed a better outlook because of increased total orders and improved business activity, but the confidence level for the wholesale and retail sectors were down with the anticipated pile-up of inventory due to sluggish economic activity.

In terms of credit access, the second quarter outlook remained positive as more firms reported an increase in access to credit compared with quarter-on-quarter and year-ago levels.

Financial conditions, the BSP noted, improved but remained tight as the index stayed at -5 percent, possibly due to the easing of banks credit standards and tightening conditions of the firms loan contracts.

Despite a lower employment outlook index of 19.9 percent quarter-on-quarter, the BSP said hiring of additional employees would continue in the third quarter especially in the services sector and the renting, business activities, and financial intermediation sub-sectors.

On the downside, the BSP pointed out that weak demand and financial problems could also set in during the second quarter the same factors identified by survey respondents the first quarter of 2009.

Respondent firms expected inflation and interest rates to go up and the peso to appreciate in the second and third quarters.

The appreciation of the peso would come largely from foreign exchange inflows, including higher export receipts, overseas remittances, and foreign investments, the BSP survey showed.

Kopi Talk - Philippines' coco-diesel emerges as top diesel additive

Hi John Grafilo thanks for the article Philippine is definitely very active in this area.

Posted By John
Manila - Jun Ang Lao could not hide his excitement over the prospects for Philippine coco-diesel, which is slowly emerging as the world's most preferred diesel additive.
Lao, operations manager of Chemrez Inc., the sole manufacturer of coco-diesel in the Philippines, said his company was in the process of signing deals with several foreign firms interested in buying Bioactiv, its brand of coco-diesel.
'The positive results of tests from reputable laboratories in the United States, Germany, Japan, New Zealand and Australia, have boosted the international marketability of our Bioactiv,' he said.
Chemrez was the government's partner in a research study on the commercial viability and chemical qualities of coco-diesel or coconut methyl ester (CME), which started five years ago when there was a glut of coconut oil in the country.
The research was carried out in anticipation of the full implementation of the country's 1999 Clean Air Act, which requires the use of cleaner gasoline and diesel fuels.
'Various tests in reputable foreign laboratories showed that coco-diesel is the almost perfect diesel with 91 per cent carbon saturation, compared to palm bio diesel with 49 per cent, jatropha with 22 per cent, soybeans with 16 per cent and rapeseed with 6 per cent,' Lao told Deutsche Presse-Agentur dpa in an interview.
The higher the percentage of carbon saturation of a biofuel, the more stable it is from oxidation and the better are its combustion characteristics.
'Saturated carbon means it is not prone to oxidation and not prone to bacterial growth,' Rafael Diaz, petroleum technologist of the Asian Institute of Petroleum Studies, explained. 'Saturated carbon has excellent anti-corrosion properties and resistance to polymerization and gumming.'
Lao, whose family owns Chemrez, said most of the company's 15-million-litre annual production of Bioactiv is shipped to Europe, including Germany.
'Bioactiv exceeded the European standards on biofuels, which (are) the strictest in the world,' he said. 'Our new manufacturing plant will start full operation in June and we intend to boost our production by 50 million litres (per year) on top of the output from our old plant.'
Lao said the German firm Lurgi's Life Sciences provided the state-of-the-art technology for the production of Bioactiv.
While only a negligible amount of Chemrez' output is consumed domestically, Lao said he expects demand for Bioactiv to pick up when Congress approves a proposed law that would require petroleum companies to blend a certain percentage of ethanol and coco-diesel into their current fuel products. A similar law will be implemented in January in Thailand.
'Within two years from the effectiveness of the Bio fuels Act, the bio fuel board will mandate a 2-per-cent blend of bio diesel by volume,' said Senator Miriam Defensor Santiago, head of the Senate's energy committee.
Santiago said the proposed law 'orders immediate compulsory use because the two fuel blends require no engine modifications for either diesel or gasoline engines.'
But a major downside to Bioactiv is the price, which is much higher than that of other bio fuels. Lao said Bioactiv costs were some 0.15 dollars higher compared to palm oil, which is currently the cheapest in the world market.
In the Philippines, a litre of Bioactiv is sold at 80 pesos (1.52 dollars) compared to a litre of diesel, which costs an average of 34.50 pesos.
'Actually, the higher price slowed down our push in the international market,' he said. 'Many of our prospective buyers ask us to lower our price to the level of palm oil.'
Lao said that a blend of 1 per cent coco-diesel to the total volume of fuel is all it takes to enjoy the full benefits of the additive, which include increased mileage, cleaner emissions and cleaner engines.
With more and more governments passing clean air laws and with the continued rise in oil prices, Lao insisted he was confident that Bioactiv would continue to break through new markets despite its higher price.