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The Philippine government recently announced plans to lower the floor price for the historic Manila Hotel when it comes up again on the auction block. The government had earlier tried to get bidders for a 30% stake in the 83-year-old hotel but many backed out in view of the $17.2 million floor price and the possibility of government interference in running the renowned hotel. Government officials have expressed willingness to address the concerns of potential investors and many have been encouraged by this development.

The island of Mindanao in the Philippines is experiencing an oversupply of electric power. This situation is not an unalloyed blessing since the area's chief utility firm, Northern Mindanao Power Corp., has only been able to utilize up to 80% of its capacity and has even been closed for about three months in 1994. Nevertheless, energy officials believe that this development will not be permanent and have thus decided to approve the construction of another private power plant in anticipation of increased demand.

Matthew Sutherland, research director at Philippine Asia Equity Securities Inc., thinks that Globe Telecom GMCR Inc. is the player to watch in the telecommunications sector. He believes it will emerge second to market leader Philippine Long Distance Telephone Co. due to its recent launching of its cellular and international call services. However, other analysts do not share Sutherland's optimism since Globe Telecom has not been earning in the past years.

The move to develop Manila's main international airport along with the development of the former Clark Air Base of the US in Olongapo City has resulted in a year-long debate and study. Four major groups are vying for the award of the projects but the Philippine government is still studying the proposals. There is no doubt that the country's capital needs to develop its airport facilities. The concern centers on the inadequacy of transport facilities to service both airports.

Philippine television is airing advertisements for birth-control pills, despite regulations against such promotions. An advertisement for Couple's Choice, a family planning program funded by the US Agency for International Development, is regularly seen on television. It is part of a 'social marketing' program that seeks to increase awareness of family planning as well as boost access to affordable contraceptives.

The Philippine peso has gained from 28 pesos to 24.331 to the dollar since the beginning of 1994. The pesos's strong trend is largely due to the influx of foreign money from sources such as foreign investments and remittances from overseas workers. Economic observers have foreseen that the trend will continue even as the Philippine government plans to limit the pesos's value through several measures, including a limit on banks' dollar reserves and the removal of mechanisms the prevent the occurrence of oil schocks.

Critics are still wary over a scaled-down proposal to redevelop Camp John Hay, the former US military rest and recreation center in Baguio, Philippines. The Bases Conversion Development Authority initially drew flak from Baguio residents when it proposed a 42 billion peso project to convert the facility into an upmarket tourist destination and residential estate. Baguio residents raised concerns over potential water shortages and environmental damage. The scaled-down plan calls for 450 million pesos to expand existing facilities and lease out more cottages.

Investors and consultants are dissuading the Philippine government from pushing ahead with its plan to upgrade Manila's international airport while building a new one. They point out that passenger traffic growth will not be fast enough to keep two international airports profitable. Moreover, dependence on funding from private investors, a new law on such projects and interagency conflict makes the construction of a new facility doubtful.

Investment analysts believe that the Philippine stock market is worth another look. Several analysts agree that Philippine stock valuations based on price/earnings are steep compared with other markets in the area. However, underlying fundamentals such as strong corporate earnings, a recovering economy and increased liquidity indicate a favorable investment climate in Manila. Economists predict a stronger growth in the Philippine economy in 1995.

The Philippine economy is finally on the road to recovery, following four years of stagnant growth. The country's GNP is expected to grow by 5% in 1994, twice the previous year's rate. More importantly, GNP is outpacing population growth for the first time since the 1980s, reversing a trend of shrinking per capita GNP. The country's economic growth is expected to continue for a couple more years, owing in part to rising exports, low interest rates and stable inflation.

Major donor countries and agencies in Asia are increasingly shifting their focus away from massive infrastructure projects to smaller programs that deal with social issues like education and health. Institutions and aid agencies such as the Asian Development Bank and the US Agency for International Development plan eventually to devote the bulk of their projects to social programs and increase their social lending.

The Philippine government has ruled that the consortium that will be selected to jointly own and develop the 529-acre Fort Bonifacio military area will be restricted from selling its shares between three to five years. The restriction was imposed as a way to help curb speculation. The Philippine government has expressed its desire to convert the former military camp into an upscale business and commercial establishment.

A memorandum of understanding has been signed by Nynex Corp. and TelecomAsia of Thailand to invest in Benpres Holdings Corp. in the Philippines. Under the agreement, the two companies will acquire up to 25% of Benpres' telecommunications business. The investment could exceed $50 million. Benpres is among several Philippine companies trying to wrest market share from the country's leading phone company, the Philippine Long Distance Telephone Co.

The value of Philippine Long Distance Telephone Co.'s (PLDT) stocks has declined sharply and the trend is expected to continue. The Philippine Stock Exchange has announced that it will replace its Composite Index with the Phisix Index starting Oct. 3, 1994. If this pushes through, PLDT will have its weighting of around 20% reduced in half, prompting some foreign fund managers to also reduce their holdings. This could pose serious financial problems to PLDT.

The Philippine government will begin offering 529 acres of Fort Bonifacio for bidding in Aug. 1994. Supervised by the state's Bases Conversion Development Authority, the privatization program is part of the government's plan to increase revenues and create a modern central business district. Some analysts have expressed optimism on the privatization plan, saying that the project has a high potential. However, others believe that it is too risky, citing legal problems as a major impediment to the success of the project.

The Philippines plans a revamp of its tax system to make it simpler, more equitable and more efficient. The current tax regime in the country is comprised of cumbersome tax laws and an inequitable system, thus making collection difficult and resulting in widespread tax evasion. According to Finance Sec. Roberto de Ocampo, such a revamp is necessary if economic development is to be achieved.

Manila, Philippines-based Benpres Holdings Corp. has opened up its dollar-denominated convertible bonds to foreign investors, at rates equivalent to a 15% to 17% discount on the underlying shares. The media holding company's share price rose from July to August 1994, from a low of eight pesos (30 US cents) in early July, as a result of higher earnings expectations. During the second week of August, the shares shot up to 11.50 pesos and the bonds have been pegged at roughly 10 pesos per share.

Philippine VP Joseph Estrada is the butt of countless jokes which usually focus on his fractured English and liking for women and booze. Despite the putdowns, the veep is unfazed and believes that these will only make him more popular among the Filipino masses come election time. In fact, Erap, as he is fondly called by his friends and supporters, feels 'very elated' with the publication of 'ERAPtions: How to Speak English Without Really Trial.'

Philippine Pres. Fidel V. Ramos has proposed a new tax policy which has solicited little support from Filipino taxpayers. In his state of the nation address, Ramos said that the proposed tax reform is necessary if the Philippines wants to develop. Compared with other Association of Southeast Asian Nations members which could collect taxes equal to 18% of their GDP, the Philippines' tax collections equaled only 14.7% of the country's GDP. Consequently, the government had to abandon several infrastructure projects. Ramos hopes to increase the tax effort to at least 17% of GNP in 1995.

The price of Petron Corp.'s stocks as a result of its initial public offering may be determined by political rather than economic factors. In 1993, the Philippine government sold 40% of Petron to Saudi Aramco for $502 million. Another 20%, or one billion shares are being offered, of which 300 million will be offered to foreigners. The remaining 700 million shares will be sold at a fixed price of nine pesos to local investors. The price of the shares to be offered to foreigners will be influenced by political factors since an oil-price increase is improbable because of the 1995 elections.

Metroplex Bhd. will acquire 55% of Subic Bay Resort (HK) Ltd. (SBR) at a cost of $9.1 million from Genting International Ltd. and Resorts World BHD. The move, which raises stake in SBR to 85%, gives Metroplex control of SBR and allows the company to gain entry into Asia's gambling industry. The purchase will also enable Metroplex's hotel and leisure operations to raise its contribution to company revenue and earnings, which stands at 20-25% of Total income. Metroplex is planning to construct a 400-room resort hotel and another casino at SBR's location in Subic Bay, Philippines.

The Manila Electric Co. (Meralco) has three dozen inspection teams tasked with investigating tampered electric meters. Meralco's loses due to electricity pilferage was estimated at $37.4 million a year. While the utility has been successful in catching pilferers, it has been less successful in prosecuting them due to legal obstacles. Meralco's success in deterring pilferage is evidenced by the 9,000 illegal connections it detected in 1993, compared to 33, 000 in 1987.

Presidential intervention in the Philippines usually results in a common agreement. Pres. Fidel V. Ramos recently applied his micromanagement style to resolve a labor dispute that involved Philippine Airlines Inc. ground crews. However, Ramos issued a statement that he will not pursue a career in labor arbitration. The 66-year-old president, who graduated from the US Military Academy at West Point, has also involved himself in trivial issues that range from the reversal of a censorship board's decision to the solution of local problems.

Philippine Pres. Fidel V. Ramos announced that non-Filipinos may own businesses in various industries that are presently restricted to 40% foreign ownership. This is in line with a liberal foreign-investment law that becomes effective on Oct. 24, 1994. Foreigners will be able to invest in industries such as insurance, travel, wholesale trading, convention organization and manufacturing under foreign licenses. Ramos is determined to foster increased competition, especially since representatives from the local business and political sectors who oppose liberalization are campaigning for an extension to the filing of tax exemptions deadline.

Whale hunting has been banned by the Philippine government and ended a lucrative industry for whale hunters living in Pamilican Island. The ban made the islanders consider other prey for hunting. However, a conservationist group has called on all whaling families to totally stop hunting and instead consider being guides for whale-watching tourists. Pamilican Island conditions make it favorable for tourists interested in whale-watching.

Hopewell Holdings Ltd. dominates the private power generation market in the Philippines. The company supplies half of the new 4,440 megawatts that private firms have contracted to build in the Philippines. Hopewell started to operate in the country in 1991 with a $42-million, 210-megawatt plant in Navotas. The company added facilities in the Navotas complex when it signed another contract in 1992. For its next contract, Hopewell is building a 700-megawatt coal-fired plant south of Manila, which is expected to be completed in 1996.

Chinese-Filipino Lucio Tan and the Philippine government have been at odds over the management of Philippine Airlines Inc. (PAL). However, the two largest stockholders suddenly announced that they have been able to put their differences behind them. PAL Chmn. Carlos Dominguez failed to give reasons for the sudden turn-around, but he expressed optimism that the two parties will soon find more areas of convergence with regard to the company's management.

Preliminary and unaudited reports show that Philippine Airlines Inc. posted some 283 million pesos in losses for the year ending in Mar. 31, 1994. This is in stark contrast to the net profit of one billion pesos reported during the previous year. The loss is attributed to increased maintenance costs and huge one-time charges. The airline was privatized in 1992 and main private stockholder Lucio Tan seeks major management and operations changes to reverse the business losses.

The Philippines' Silangan Airways is offering passengers the chance to choose between a 5% discount on a future flight or preferred stock options worth the same amount. Silangan Chmn. Vicente Araneta related that this is a marketing scheme designed to build a customer base of shareholders. The airlines currently has only one three-engined Russian Yakolev 42D jet but will be purchasing another to increase flights to Cebu.

Philippine Airlines Inc. (PAL) majority shareholder Lucio Tan is confident that he can steer the airline to a 2 billion-peso-a-year profit over the next three years. Tan wrote in a letter to Philippine Pres. Fidel Ramos that he was willing to guarantee that the government will receive the projected profits within the span of three years. Tan's confidence was bolstered by Malaysian businessman Robert Kuok's offer to buy a sizeable share of PAL's stocks.

The senior management of the Philippine Airlines (PAL) has opted not to buy two Boeing 747-400 jetliners. Chinese-Filipino Lucio Tan, who holds the controlling interest in PAL, was one of the critics of the purchase proposal. PAL Chmn. Carlos Dominguez wanted the new aircraft to help reduce maintenance costs, upgrade on-time performance and improve fuel efficiency. The management, however, questioned the profitability of buying the $240-million jets.

The Philippine government is optimistic that it can finalize a deal on a borrowing program with the International Monetary Fund (IMF) after protracted negotiations. The two parties are negotiating on an three-year extended fund facility accord. The agreement would facilitate loans from the IMF, allow the rescheduling of $1 billion in debt and encourage more foreign investment in the Philippines.

Chinese-Filipino tycoon Lucio Tan has decided to retain his strategic stake in Philippine Airlines Inc. (PAL) and has dismissed the Brunei Investment Agency's offer to buy his controlling interest in PR Holdings. Tan is expecting Malaysian businessman Robert Kuok to acquire the Philippine government's 20% interest in PR Holdings. A buyout of the government stake in PR Holdings will resolve the current ownership standoff in PAL which has resulted in a conflict between Tan and the government over strategic questions such as the proposed purchase of two Boeing 747-400 jetliners.

Pres Fidel Ramos will have to gain IMF's 'good housekeeping seal' of approval after the withdrawal of his decision to increase oil prices due to popular opposition. He will have to convince the IMF of his commitment and capability of keeping the Philippines on its path of economic growth. The goals both the Philippines and the IMF wish to achieve are long-term growth, more savings and investment, raise tax revenues, remove tariffs and make government more efficient and smaller. Mr Ramos will also need Congress' cooperation.

Ayala Land's weakening stock price is expected to reduce the number of investors that are willing to risk their finances. As the Philippine's largest property company, Ayala Land has been maintaining the rates of its stocks to keep it from gaining too much profit. The company adopted the attitude to render it financial flexibility and thus, protect it from drastic changes in the market.

The error committed during the typing of a tax law passed in 1992 proved to be very costly for Manila government officials. According to the Philippine Bureau of Revenue, the addition of the word 'each' in the document is costing the government 3 billion pesos in tax revenues. On the other hand, married couples have benefitted from the error and gave them the right to claim 18,000 pesos worth of personal deductions from their taxes. The error was noticed only during an analysis of the budget.

The Asian Development Bank will institute changes in its lending practices. The bank admitted that it has approved loan applications for projects that were not sufficiently evaluated in its desire to meet its programmed lending targets. In their restructuring plan, ADB will decentralize bank operations, conduct a more regular project review and incorporate feedbacks from completed projects. The bank admitted that these would slow down loan processing and pull back lending growth but it would benefit from productivity gains and resource savings if these plans are implemented.

Newly appointed Philippine Finance Sec Roberto de Ocampo is aiming to finalize agreements with the International Monetary Fund (IMF) and foreign creditors when talks for a new loan program begins in Mar or Apr 1994. The Philippine government and the IMF have agreed to work out a three-year economic program prior to approval of an extended loan facility. However, Congress has been very slow in approving key economic reform measures, which will include corporate and income tax reforms and a restructuring of the civil service system.