• President Aquino graces opening of Muntinlupa-Cavite Expressway

APEC News Releases

• APEC forum on infrastructure spells out recommendations for adoption of members
• Changing global economic scenario makes Philippines more attractive to foreign investors, expert says
• Good governance in local government helps lure investment, says expert
• Bankable projects, good capital market to draw infrastructure investments in Asia Pacific
• Philippines must focus on infrastructure development to sustain growth, says official
• Government wants the public to invest in financial instruments other than bank deposits
• Philippines keen to sign Asia Region Funds Passport during APEC Finance Ministers’ Meeting
• Philippines-China economic ties stable amid territorial row, finance official says
• Expert says more developed Phl peso market could attract infrastructure investment

Coordinator of the Asia-Pacific Infrastructure Partnership and Asia Pacific Financial Forum, Julius Caesar Parreñas, said during a briefing on Thursday that among the recommendations is the development of the classic repo market.

Parreñas, who is a senior advisor for Nomura Securities, said regulators must understand it by organizing a region-wide discussion about the proposal.

This means inviting the international capital market players so regulators could learn more about it, he said, adding that there may be reservations about this as some local players are also developing their own repos.

Repo, or repurchase agreement, is the sale of securities that comes with an agreement that the seller could buy back the securities at a later date.

Another recommendation is the promotion of the available information for capital market investors.

“There is a lot of interest of SEC (Securities and Exchange Commission) in this. The thing is the government provides a lot of information but the private sector does not need all of those information and the private sector investors need information that are not available,” Parreñas said.

He cited three types of information investors would like to have to gain confidence when they invest in capital markets — information about the issuer and this means disclosure; bond market data to help investors monitor what is happening to their investments over the course of time; and investors’ rights whenever the issuer becomes insolvent.

“This is really addressing the information needs at various stages of an investment. You want to invest, so information about the issuer during the life of your investment, data about how your investment is progressing, and when you have to exit because the issuer becomes insolvent (are necessary),” he explained.

Parreñas said there must be clarity in the laws as well as the information that are being made available.

“The SEC is very interested in that because they want to know what actually are the needs of investors so that they can reallocate resources from those providing information that investors don’t need to (those) providing for what the investors need,” he said.

Asked if the APEC economies are open to adopting them, Parreñas said they have already developed a template for the three types of information and submitted it last year to the APEC ministers, who gave it a warm reception.

He said the only question now is how APEC economies would operationalize the proposal.

Putting it into practice, he said, means going from country to country, bringing in the people from the private sector, credit rating agencies, and investors, to have a dialogue with officials in each country who are responsible for making those information available.

He however said it is doable in the near term because it is quite straightforward and not a complicated thing.

The APEC delegates are meeting here until Friday to discuss infrastructural and capital market development. PND (as)

Senior advisor for Nomura Securities, Julius Caesar Parreñas, said a lot of Japanese companies are very interested in the Philippines, especially these past few years.

This is partly due to such global developments as the drop in oil prices that has hurt oil-exporting countries like Malaysia, Indonesia, and Brunei, said Parreñas, who is also the Coordinator of the Asia-Pacific Infrastructure Partnership and Asia Pacific Financial Forum.

“In terms of relative performance, we are doing better than our neighbors. Also the slowdown in exports for example that hurt other counties in Asia, like Singapore, Malaysia, and Thailand, which are very strong in exports,” he said.

In the case of the Philippines, exports are less important for the country because a bigger chunk of the economy comes from domestic consumption, he noted, adding that this puts the Philippines at a relative advantage vis-a-vis its Asian neighbors, thus the country looks better than them.

“But I think a big part of that is also because of the ability of the Aquino administration to really introduce the right policies that investors want to see, to focus on things that investors like…, like infrastructure PPPs (public-private partnerships),” he said.

This government action has sent a very strong signal to investors all over the world that the Philippines is something that they should look at more seriously, he said.

In the case of Nomura, Parreñas said that after the Lehman crisis, Nomura had to reduce its presence in Asia, most especially in Southeast Asia.

He however pointed out that the region is becoming interesting again, due to such developments as the slowdown being experienced by China’s economy.

“We are starting to look at expanding our operations in the Philippines and expanding operations in areas like infrastructure, although we still don’t know how we’re going to do it because there are many ways of putting or being involved in infrastructure investment,” he said.

“But definitely, it is an area that now many Japanese companies are looking at.” PND (as)

“It would be good if there are more investment in infrastructure outside the major growth centers in the Philippines in order to have an economic development throughout the country. But these are really the jobs of local governments,” Parreñas, who is also a senior advisor for Tokyo-based Nomura Securities, said during the Asia-Pacific Economic Cooperation (APEC) meeting here.

He noted that by practicing good governance, Iloilo’s local government has attracted a lot of investments.

Iloilo City has also been identified as one of the “next wave cities” in the Philippines, which offers new destination hubs in other parts of the country to support the strong business process outsourcing (BPO) industry, he said.

Property developer Megaworld Corporation, which has invested P5 billion for the construction of a BPO complex in Iloilo, is only one of many companies interested in investing in the province, he said.

“Good governance is the key. If you have a local government that has good governance and puts right policies in place and makes the place business-friendly and investment-friendly, then investments.., and investment in infrastructure will come,” Parreñas said.

Canadian Ambassador Neil Reeder earlier mentioned that Iloilo City’s hosting of the ongoing APEC meeting is a big opportunity for the province to attract more investment.

“It is a big opportunity to bring the Asia-Pacific region (investors) to Iloilo,” the envoy said. PNA (kc)

During the Asia-Pacific Economic Cooperation (APEC) meeting that opened here Thursday, representatives of Asia-Pacific member economies identified the lack of available attractive projects and well-developed capital markets as among the major concerns of the private sector in engaging in infrastructure projects.

Asia-Pacific Infrastructure Partnership and Asia Pacific Financial Forum Coordinator Julius Caesar Parreñas said the lack of capital is the main stumbling block in developing infrastructure.

Parreñas, who is also a senior advisor for Tokyo-based Nomura Securities, cited a study conducted by the Organization for Economic Cooperation and Development (OECD) in 2013 showed that institutional investors are looking for places to channel some US$97 trillion in investments.

According to the Asian Development Bank (ADB), the available fund in the market is 12 times larger than the demand for infrastructure funding in Asia for the next 10 years, estimated at US$8 trillion.

“So, you actually have a lot of money going around in this world and they are looking for investments,” he said, adding that the bulk of the available amount comes from pension funds and insurance companies.

“They are looking for assets which could yield higher and of course, infrastructure is perfect for these types of assets because pension funds and insurance companies have long-term horizons,” he added.

Parreñas however noted that there are very few bankable infrastructure projects that are available to companies that want to invest.

He explained that when the government pushes all risks of a particular project to the private sector, the project’s bankability and attractiveness begin to wane.

The region’s governments need to understand how to develop bankable infrastructure projects and must share risks with the private sector, he said.

“The way that we have done this in APEC is to gather together knowledgeable people within the government who understand these things and establish PPP (public-private partnership) centers, which can serve as knowledge disseminators within the government structure in order to make people within the government, the line agencies for example, who develop the projects, local governments, to understand how best to structure projects to make them attractive to the private sector,” he said.

Parreñas however said that although they have available funds, pension funds and insurance companies do not have the capability to manage infrastructure assets.

“One of the ways by which pension funds and insurance companies put their money into infrastructure is through capital markets,” he said.

“The problem in many Asian countries is that the capital market is not very well-developed and that is why one of the issues that we are dealing with is — what are the things we need to develop capital markets?”

“What we have been discussing in the finance ministers’ process is we bring together the expertise of governments and agencies that are supporting them… And to bring the private sectors into the discussion to improve the situation to help government develop gradually their capital markets, develop instruments that will help long-term investors put their money in infrastructure and also help government structure projects that are attractive to the private sector,” Parreñas concluded. PNA (kc)

Finance Undersecretary Gil Beltran said in a press briefing that the Asia-Pacific Economic Cooperation (APEC) meeting here covered the fourth pillar of the Cebu Action Plan, which is infrastructure development through financing.

“Infrastructure, all of you know, is closely linked to economic growth. We can only sustain rapid growth if we are able to build the necessary infrastructure,” he said.

Beltran acknowledged that there is an excess of capital in the APEC region if the balances of all the APEC economies are pooled together.

“The APEC region has excess capital. Savings exceed its investments,” he said.

However, despite the huge money available, there is still a lack of infrastructure financing in the region, so the Iloilo meeting is trying to get the stakeholders to develop a program that would enable the region to expand capital available for infrastructure, he added.

For his part, Securities and Exchange Commission Commissioner Manuel Gaite said the APEC meeting in Iloilo ties up the infrastructure agenda of the APEC finance ministers to the development of the capital market by raising funds through cross-border transactions.

Gaite agreed with Beltran on the lack of capital for infrastructure development in the region.

To address the challenge, he said, the finance sector, the regulators, the securities commissions in the APEC economies have worked in the past four years to come up with a framework or platform for cross-border transactions of collective investment schemes.

“We are now at the stage where we are about to launch the passport funds,” he said.

“We have just one more group meeting in Hanoi next month but our target is to have the signing of the statement of understanding by the finance ministers during the Finance Ministers meeting in Cebu in September.”

After that, he said, they will proceed with the signing of the memorandum of understanding (MOU) and the rules governing the cross-border transactions of collective investment schemes.

“Hopefully, we are able to address both the initiatives of the finance ministers, the infrastructure development, and the financing of infrastructure development,” he added. PND (as)

“The regulators have been going around the country, the BSP (Bangko Sentral Ng Pilipinas), trying to educate our people on the merits of investing in financial instruments aside from deposits,” Finance Undersecretary Gil Beltran said in a press briefing here Friday.

“Deposits have very low interest rates and they are short-term money. What we want is longer-term money, which is usually invested in mutual funds, invested in equities,” Beltran said as he explained the government move to promote financial literacy.

Aside from mutual funds and other instruments, people can go to the stock market and invest, look for a company of their choice and then put their money there, he said.

“There are opportunities like this where returns are much better and it should be made known to everybody,” he added.

In the case of the Bureau of Treasury, Beltran noted that sometimes when it issues small denomination treasury bonds, finance personnel go around the country, explaining to households that it is an opportunity for them to improve their rate of return.

On the part of the Securities and Exchange Commission (SEC), Commissioner Manuel Gaite said they also launch information campaigns to inform the public where to invest and where not to invest.

The SEC issues advisories to save the public from dealing with dubious investment companies, he said, adding that ordinary corporations must have a secondary license before they sell securities, so the SEC could monitor their businesses.

He warned the public that if the offer is too good, usually it is a scam.

Delegates to the Asia-Pacific Economic Cooperation (APEC) forum have been meeting here since Thursday to discuss infrastructural and capital market development. PND (as)

Upon his arrival here, President Aquino personally drove his SUV to the toll booth, making him the first customer of the 4-kilometer (km) tollway connecting the Daang Hari Road to the South Luzon Expressway (SLEX). He was joined by Ayala Corporation Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala on the passenger seat and Public Works and Highways Secretary Rogelio Singson on the back seat.

The Chief Executive paid his toll and drove through the newly constructed four-lane road.

After his short drive-through, the President graced the project briefing led by Zobel, who signed a 30-year concession agreement for the operation and maintenance of the toll road.

“It is truly a great privilege and honor for Ayala Corporation to be part of this first PPP project. We are delighted to deliver the Muntinlupa-Cavite Expressway to the public,” Zobel said.

“Ayala has always believed in the power of public-private partnership and your administration has pushed this in a big way. We have been delighted to be able to participate and I think your initiatives on this front have made a big difference to the movement of infrastructure in our country and it has been a great privilege for us, Mr. President, to be part of it,” he added.

The business magnate expressed his willingness to undertake more PPP projects with the government, hoping that the next president would “continue with a similar set of policies” as President Aquino.

Zobel then announced the good news that toll fees for commuters would be waived for one month.

The MCX toll rates are set at P17 for Class 1 vehicles, P34 for Class 2 vehicles, and P51 for Class 3 vehicles.

It will formally open at 2 p.m. on Friday, July 24.

The MCX cuts the travel time of road users to one hour since it is 1.5 km shorter than the Daang Hari-Alabang Zapote route to Makati City and 3 km shorter than the Commerce Avenue-Filinvest route to Makati.

It is expected to relieve traffic congestion along the Daang Hari Road and Commerce Avenue and give commuters from Molino and Bacoor, Cavite faster and easier access to the SLEX.

Ayala, which started early works on the road in May 2013, invested about P2.2 billion to build the toll road. PND (jb)

Securities and Exchange Commission (SEC) Commissioner Manuel Gaite, in a press briefing during the APEC meeting here Friday, said the Philippines is ready to join the ARFP once the country’s re-application for International Organization of Securities Commissions (IOSCO) membership is approved.

The ARFP is a cross-border transaction rule that aims to facilitate the movement of capital across participating economies.

For instance, in the absence of the ARFP, a Philippine-based mutual fund can only sell shares in the local market.

However, when the Philippines becomes an active participant in the ARFP, the local mutual fund can register with other ARFP signatory countries and participating countries to enable them to sell shares. After its counterpart reviews the country’s compliance to the Passport Rule, the Philippine-based mutual fund can retail its shares to the offshore market.

“The Philippines is interested in joining but we still need to hurdle some eligibility issues. We are not yet a (full) signatory to IOSCO. We are also in the process of re-applying for IOSCO membership Appendix A,” said Gaite.

Participation in the ARFP requires an interested economy to be a full signatory to the IOSCO Multilateral Memorandum of Understanding (MMoU) Concerning Consultation and Cooperation and the Exchange of Information.

According to Gaite, the Philippines re-applied for IOSCO membership early this year and was evaluated last March in Sydney by the IOSCO’s screening group. However, there was no consensus yet regarding the country’s re-application.

“The next round of evaluation for the Philippine SEC membership will be September this year, in time for the SOU signing during the Finance Ministers’ Meeting,” he added.

The SOU is a country’s statement to join the ARFP. The signing of the Memorandum of Understanding, on the other hand, is set in the last quarter of the year.

After the MOU signing, ARFP signatories will be given six months to adjust their domestic laws to conform to ARFP rules.

The actual operation of the ARFP is expected to take place in the second half of 2016.

Gaite noted that aside from the IOSCO membership re-application, no other issue hinders the country’s participation in the ARFP.

“We’re not really seeing any regulatory barriers. It is the usual tax issue that we are still trying to work on. We’re not seeing to have a single tax system governing all these cross-border financial transactions,” he said.

“Here, it will still be a disclosure method where each economy will disclose the tax regime present in their jurisdiction and disclose all other members of Passport Fund so they know the kind of tax regime they are entering into, once they go cross-border and vice versa,” he explained.

The SEC commissioner noted that even though the Philippines is not yet a signatory to the ARFP, the country has for the past four years been part of the working group mapping out the rules governing cross-border transactions.

Australia, New Zealand, Singapore and South Korea are active participants in the ARFP while Japan has expressed interest to join the pact. PNA (kc)

Beltran, in a press briefing during the Asia-Pacific Economic Cooperation (APEC) meeting here, said the economic ties between the two APEC member economies remain stable.

“I have not seen any problem (in our economic cooperation) despite these territorial problems we are facing,” he said, noting that China continues to provide the Philippines development assistance.

He added that the country’s financial sector remains firm and unaffected by the dispute with the giant economy.

Early this month, the Philippines presented its arguments on the case it has filed against China before the Arbitral Tribunal in the Permanent Court of Arbitration in The Hague, Netherlands.

Meanwhile, the 21 APEC economies, which include the Philippines and China, concluded on Friday the workshop on infrastructure financing and capital market development to facilitate investment in infrastructure in the region. PNA (kc)

Aside from using the available technical assistance that multilateral agencies offer, as well as the participation of local governments, the Philippines must have a more developed peso bond market, Coordinator of the Asia-Pacific Infrastructure Partnership and Asia Pacific Financial Forum, Julius Caesar Parrenas, said Thursday.

“The other thing is the need to develop the local bond market because in infrastructure, the revenues are in local currency,” said the senior advisor to Nomura Securities.

“So for foreign companies, it is very difficult for them to invest in foreign currency because of the currency risks.”

He said if the Philippines has a local currency bond market, foreign companies could actually raise the financing in the country and invest in infrastructure.

“They bring in their money and then make some arrangements, for example, swaps and then the amount that can be raised can be invested in infrastructure. So there’s no currency mismatch,” he explained.

The problem is some technical details still need to be addressed to make the Philippine peso bond market more helpful to investors, he said.

One of the issues mentioned by Parreñas is the liquidity of the bond market. Liquidity means the presence of active players and cash in the market at a particular time.

“Because there are many buyers and sellers in the market, whenever you want to sell a bond, somebody can buy it and when you want to buy a bond, somebody is there to sell it,” he said.

“But the thing is there are not enough sellers and buyers in the market.”

The Philippines thus needs more diverse investors, issuers, and the kind of financial instruments that would allow investors to hedge the risks. For instance, the repo and derivatives markets have to be developed.

“There are technical issues that make it difficult to develop and that is actually what we need to address,” he said, adding that the good thing is that initiatives are already underway.

Citing an example, Parreñas said the Asian Development Bank and the International Securities and Derivatives Association Inc. are advising and bringing together the players to develop the market.

The Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Philippine Dealing and Exchange Corp. (PDEx) and all other players need to agree to the necessary legal reforms so the repo and derivatives markets would work, he said. PND (as)