Bosch PH sustains double-digit growth; welcomes new leadership

By Jing Garcia, News5 | InterAksyon

MANILA, PHILIPPINES | Effective July 1, 2017, Bosch Philippines will be under a new leadership with the appointment of Richard Walker, who will replace Andrew Powell, who, on the other hand, will be assuming a new role as managing director of Bosch Indonesia, also in July.

Under Powell, Bosch Philippines saw double digit growth in the country closing its 2016 fiscal year with US$56 million in consolidated sales in the country. Compared to the previous year, the company achieved a growth of 13 percent.

The momentum, Bosch executives said, was driven by robust growth in the area of construction, automotive and manufacturing industries, and of course, the increased consumer spending power on the back of a steady economic growth.

“With double-digit business growth for the third consecutive year, the Philippines earns a bright spot in Southeast Asia as one of the best performing markets for Bosch,” said Powell, outgoing managing director of Bosch Philippines. “We continue to see many opportunities here.”

Employee headcount in the Philippines grew by 16 percent to 530 associates over the course of 2016, due to expansion of its geographical footprint, along with Bosch’s product and solutions portfolio.

Bosch Power Tools continued to be the company’s strongest contributor to sales in the Philippines, according to the Germany-based company. The division’s revenue was fueled by heavy demand for its Contractors’ Choice mid-price product range, as well as for cordless tools for both professional users and hobbyists.

The introduction of new tools for woodworking is scheduled for 2017, including the one-battery-fits-all concept for Cordless Tools range.

“In 2016, all Bosch business divisions present in the Philippines have developed strongly”, said Powell.

The Power Tools division also expanded its online retail presence in Lazada.

For the Automotive Aftermarket division, the group said that it has achieved a double-digit increase in sales as well, making 2016 its strongest year yet.

The division’s growth, according to Bosch, was attributed to its “parts, bytes, services” philosophy, offering automotive technology with services, based on its network of 85 Bosch Car Service, Bosch Diesel Service workshops, and the opening of Express Car Service workshops nationwide.

PH economy seen facing risk of overheating

By: Ben O. de Vera - Reporter / @bendeveraINQPhilippine Daily Inquirer 


Singapore’s biggest bank has warned that amid robust growth, the Philippine economy is at risk of overheating.

In a report last week, DBS Ltd. said it expected the Philippines’ macro fundamentals “to remain strong, with infrastructure at the forefront of growth.”

“While growth is unlikely to surprise on the upside, progress from tax reform, infrastructure spending and a potential delay in interest rate hikes should keep sentiment positive in the market,” DBS said.

Also, DBS said that “with all eyes now set on the Philippines and how it is progressing under the Duterte administration, it is timely to look at potential growth pockets and bright spots that investors can delve into given the country’s infrastructure-driven economy.”

According to DBS, the plan to ramp up infrastructure spending will augur well for economic growth in the long-term.

Earlier qualms about political risks “should be less of a focus now as economic reforms have been rolled out,” DBS added.

However, DBS warned that “the Philippine economy is displaying early signs of overheating.”

“GDP [gross domestic product] growth has been running at close to 7 percent year-on-year for the past year. Headline CPI [consumer price index] inflation has been above 3 percent year-on-year since February, up from sub-2-percent levels a year ago. Investment growth is very strong; gross fixed capital formation expanded by more than 20 percent year-on-year in 2016,” DBS noted.

“Hence, there is a case for the [Bangko Sentral ng Pilipinas] to tighten monetary policy in the coming months. The BSP has, however, refrained from lifting the policy rate. Philippine peso-market interest rates have responded by drifting higher over the past year, in contrast to flat to lower rates in many other Asian economies,” according to DBS.

“Clearly, Philippine government bonds have underperformed their Asian peers over the past few months. The carry environment has, so far, helped to contain the upside in Philippine government yields. Even so, there is a need to guard against complacency. Philippine government yields can become more volatile when monetary policy starts to address overheating risks,” the bank said.


WB maintains Philippine growth forecast at 6.9%


THE World Bank retained its Philippine growth forecast at 6.9 percent this year, citing positive developments that would buoy the economy, the Washington-based lender said in a report Monday.

In the Philippines, expansionary fiscal policy has boosted capital formation, while robust remittances, credit growth and low inflation have supported private consumption, according to the Global Economic Prospects describing economic developments in early this year.

The Philippine economy grew 6.4 percent in the first quarter of 2017, a tad below the government target of 6.5 percent to 7.5 percent.

Fiscal spending on infrastructure and other capital expenditures grew by 12.2 percent to P175.5 billion in the first three months of the year, from P104.8 billion a year earlier, on account of the armed forces modernization program and road infrastructure and health projects.

Bank lending expanded by 15.6 percent in April as loans for production activities increased, while inflation settled at 3.2 percent on average in the first four months of the year compared with government’s target of 2 percent to 4 percent.

In the April edition of Philippine Economic Update, the World Bank said the Philippine economy will remain a top performer in the East Asia and Pacific region and likely expand by nearly 7 percent in the next two to three years, with infrastructure investment to sustain the growth momentum.

In 2018 and 2019, the World Bank projected the economy growing by 6.9 percent and 6.8 percent, respectively.

The commitment to increase infrastructure investment is expected to sustain the country’s growth momentum through 2018 and reinforce business and consumer confidence.

However, the World Bank said the growth prospects were subject to downside risks on the external and domestic fronts.

Rising global interest rates could weaken the peso, adversely affecting capital flows to the Philippines and driving up inflation.

Strong macroeconomic fundamentals opened some fiscal space for the government to implement public investment and social spending, but the success and timeliness of the administration’s planned tax reforms are vital to preserve fiscal sustainability.

Other forecasts
Most private financial and research institutions also retained their growth forecasts this year after the first quarter GDP numbers were released last month.

ANZ Research held forecast at 6.9 percent, noting that despite missing expectations overall growth is running strong and balanced.

London-based research consultancy firm Capital Economics said despite the slowdown in January to March, the economy is likely to continue growing at a solid pace of 6.5 percent.

DBS also maintained the GDP growth may moderate to 6.4 percent this year.

IHS Markit is forecasting that the economy will grow by 6.4 percent year-on-year, marking the sixth successive year of rapid expansion.

People are 'secret sauce' to growing BPO sector – Santos Knight Frank

The young and English speaking population of the Philippine is the "key" to attracting more business process outsourcing (BPO) firms into the country even if the proposal to remove the value-added tax (VAT) exemption pushes through, according to real estate consultancy firm Santos Knight Frank.

House Bill 5636 or the Tax Reform for Acceleration and Inclusion passed on second and third reading at the House of Representatives late Wednesday. The bill seeks to lower income tax rates but at the same time removing VAT exemptions of various sectors and adjusting excise taxes on fuel and automobile as compensating measures.

Asked how removing the tax incentive of BPO firms would affect the Philippines as an investment destination, Santos Knight Frank Chairman and CEO Rick Santos said there are more important things that make the country attractive to investors.

"I think the demographics are key. The Philippines has the people which are the secret sauce to the growth of BPOs," he said.

If the measure makes it through the Senate and is enacted to law, a 12 would be imposed on the gross receipts of BPO companies.

"It really comes down to skills, the English, the age of the workforce ... Those are the imperatives for the BPO firms," Santos said.

However, removing the tax incentives of BPO firms must be studied deliberately and how it would impact on the sector.

"Because I think the incentives are great drivers for growth in that sector. I think that is an important to their expansion agenda," he said.

"Our view? The BPO industry is the biggest private sector employer today, with 1.5 million direct and 3.7 million indirect employees. The sector also contributed 8 percent to GDP (gross domestic product), with export revenues close to $25 billion," he added.

Santos noted a continuous dialogue between the sector and the government must be encouraged to come up with a "win-win" environment.

"We see fiscal incentives are important to encouraging the growth of BPO investments in the country," he added. — VDS, GMA News

PHL GDP grows slower than expectations at 6.4% in Q1


The Philippine economy grew slower than expectations, expanding by 6.4 percent in the first quarter, the Philippine Statistics Authority reported on Thursday.

It was the slowest phase of growth for the gross domestic product (GDP), since it registered at 6.3 percent in the fourth quarter of 2015.

Socioeconomic Planning Secretary Ernesto M. Pernia attributed the deceleration mainly to the absence of election-related spending. "Growth last year was high due to election spending, impact of which has already dissipated," he said.

"Changing of the guards of the government really took time to settle," the Cabinet official noted.

Pernia said government spending also came in at a slower pace in the first three months of the year.

Overall the economy was slower that what was desired ... "and, for this, we are somewhat downcast because we were expecting something around the midpoint of the growth range 6.5 to 7.5 percent," Pernia said.

Financial markets react

The first quarter GDP compares with the revised 6.8 percent in the first quarter of 2016, and 6.6 percent in the fourth quarter of the same year.

Frustrated by the GDP results, financial markets reacted with a negative note. The peso weakened and shares prices faltered during the morning trade.

COL Financial Vice President and head of research April Lyn Tan noted the declines were a direct reaction to the GDP results. "The market is reacting negatively with the lower-than-expected number," Tan said.

The peso opened 8 centavos weaker at P49.840:$1 from Wednesday's close of 49.760. "Essentially, the peso's decline was a reversal of its prior gain, which was due to initial expectations of strong GDP growth in the first quarter," Land Bank of the Philippines market economist Guian Angelo Dumalagan told GMA News Online.

Pernia, who last month said the economy likely grew by 7 percent in the first three months of the year, noted on Thursday the Philippines remains one of the strongest performers among the major emerging economies in Asia.

"For the first quarter, we overtook Vietnam and Indonesia which grew by only 5.1 percent and Thailand by only 3.3 percent. We are only second to China’s growth of 6.9 percent while India’s number hasn’t come out yet," Pernia told reporters during the press briefing on the National Accounts.

Growth momentum

Pernia is adopting an optimistic view to things. "Moving forward, the domestic economy is poised to maintain growth momentum," he said.

"Government has also been busy laying down a strong foundation," he added, noting the administration plans to invest heavily in infrastructure.

The government intends to spend P8.2 trillion to finance the country's "golden age of infrastructure" over the next six years, with P860.7 billion allocated to big-ticket projects this year.

"Among the many reforms and programs are infrastructure spending as well as other government programs including capital development program," Pernia said.

"We expect construction activities and public spending to pick up sharply," he added. — with Ted Cordero/ VDS, GMA News

US stocks, dollar tumble as investors rethink 'Trump trade'

NEW YORK - Stocks on major markets and the US dollar sold off while bond yields fell on Wednesday as investors fled risky assets amid uncertainty about US President Donald Trump's ability to deliver on his tax and banking reforms and infrastructure spending.

Reports that Trump asked then-Federal Bureau of Investigation Director James Comey to end a probe into the former national security adviser have raised questions over whether Trump tried to interfere with a federal investigation.


US stock market declines accelerated in afternoon trading, and major US indexes ended near session lows. The Dow Jones industrial average fell 372 points, and both the Dow and S&P 500 suffered their worst percentage drops since Sept. 9.

The CBOE Volatility index, the most widely followed barometer of expected near-term stock market volatility, ended above the 15 level in its highest close since April 13. The US dollar index has now erased its post-election gains.

A small but growing number of Trump's fellow Republicans called on Wednesday for an independent probe of possible collusion between his 2016 campaign and Russia.

The news came after a tumultuous week at the White House when Trump unexpectedly fired FBI director Comey and reportedly disclosed classified information to Russia's foreign minister about a planned Islamic State operation.

Optimism over pro-growth economic policies under Trump helped drive a sharp rally in US stocks after the Nov. 8 US election. Even with Wednesday's declines, the S&P 500 stock index is up 10.2 percent since last November's US elections though.

"It's certainly a day when the chickens are coming home to roost," said Donald Selkin, chief market strategist at Newbridge Securities in New York.

"The (equity) bull market is not over by any means, but between the political stuff and the fact that the next earnings season is three months away, there's going to be a lack of motivation."

The Dow Jones Industrial Average was down 372.82 points, or 1.78 percent, to end at 20,606.93, the S&P 500 index lost 43.64 points, or 1.82 percent, to 2,357.03 and the Nasdaq Composite dropped 158.63 points, or 2.57 percent, to 6,011.24.

The Nasdaq had its worst day since June 24. Both the Dow and S&P 500 fell below their 50-day moving averages for the first time since April 21.

While previous threats to Trump's plans have rattled investors, they had failed to cause any significant pull back in stocks. The VIX last week closed at 9.77, its lowest close since December 1993.

Bank stocks, which outperformed in the post-election rally, were the worst hit on Wednesday. The S&P 500 financial sector tumbled 3 percent.

At nearly 18 times forward earnings, the S&P 500 trades at a significant premium to its long-term average valuations of 15 times, according to Thomson Reuters data.

MSCI's gauge of stocks across the globe fell 1.2 percent, while European shares ended down 1.4 percent.

"It's registering with more investors that it's going to be hard to get back on track with the latest allegations," Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Prices of bonds, seen as safe-haven assets, rallied, while yields were on track for their biggest daily percentage drops since July.

Benchmark 10-year notes gained a full point in price to yield 2.22 percent, the lowest since April 21, and down from 2.33 percent late on Tuesday.

The dollar index, which tracks the US currency against six peers and had scaled a 14-year peak of 103.82 on Jan. 3, fell 0.6 percent to its lowest level since Nov. 9, surrendering all of its "Trump bump" gains. The dollar also fell by nearly 2 percent against the yen.

In commodity markets, safe-haven gold hit a two-week high, while oil prices were higher. Spot gold rose for a fifth day and was up 1.8 percent at $1,258.38 an ounce.

Brent crude gained 1.1 percent to settle at $52.21 per barrel, while US light crude rose 0.8 percent to settle at $49.07.

Caroline Valetkevitch, Reuters
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