Philippines to get 5 French patrol boats

MANILA, Philippines—The Philippines will buy five patrol boats from France for about 90 million euros ($116 million), partly to guard disputed areas in the South China Sea, the coastguard said Tuesday.

Rear Admiral Luis Tuason, the chief of the poorly equipped coastguard, said one 82-meter (271-foot) ship and four 24-meter (79-foot) patrol craft would be delivered by 2014.

Tuason cited the need for such ships to patrol the rough waters of the South China Sea, which Manila calls the West Philippine Sea.

“When we patrol the West Philippine Sea, we encounter huge waves, turbulent waters so it will be better if we will use bigger ships,” Tuason said in a statement.

Coastguard spokesman Lieutenant Commander Armand Balilo said the larger ship was a “heavy endurance vessel that can be deployed even in bad weather.”

This is the first such ship to be acquired by the coastguard, he added.

The Philippines and China began a stand-off in April over the Scarborough Shoal, a group of islets in the South China Sea.

China claims the shoal as well as nearly all of the South China Sea, even waters close to the coasts of neighboring countries. The Philippines says the shoal is well within its 200-nautical-mile exclusive economic zone.

Balilo denied that the new French ships were being acquired due to the territorial dispute and said the coastguard, which currently has only nine operating ships, needed new vessels to perform their duties.

He said the new vessels would be deployed throughout the archipelago and not concentrate just on the disputed areas.

AFP

Philippines gets credit upgrade from Moody’s

An international agency has raised the credit rating of the Philippines from two notches to just one notch below investment grade, a positive development for the country amid global economic woes.

With a new rating from Moody’s Investors Service, the Philippines expects to make the last step toward investment grade soon.

An investment rating is expected to allow the country to attract more job-generating foreign direct investments.

As a result of Moody’s decision, the country’s credit ratings from all three major international credit watchdogs are now all at one notch below investment grade.

Fitch Ratings and Standard & Poor’s earlier raised their own ratings for the Philippines to just a notch below investment grade, citing encouraging economic developments.

In a decision announced yesterday, Moody’s said the improved assessment of the creditworthiness of the Philippines was based on its healthy pace of growth, improving fiscal performance of the national government, stable banking sector and projected ability to keep a robust pace of economic expansion over the medium term.

“Despite the head winds from softening external demand, the Philippines has demonstrated considerable economic strength and fiscal resilience,” Moody’s said in a statement.

Good governance

Finance Secretary Cesar Purisima said the upgrade in the credit rating by Moody’s was proof that “good governance is good economics.”

Purisima noted that Moody’s decision was the ninth positive action that the Philippines got from various credit rating agencies since President Aquino took office in 2010.

“This is another affirmation of the economic agenda of President Aquino. Good governance is indeed good economics. This is the ninth positive ratings action since [the President] took office and has brought us on the cusp of investment grade rating,” Purisima said.

Tetangco delighted

Gov. Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas said Moody’s favorable decision would fuel hopes that an investment rating may come “sooner rather than later.”

“We are delighted with Moody’s recognition of the Philippines’ strengthened macroeconomic fundamentals and growth prospects,” Tetangco told reporters.

He said the country’s banking system became strong with the implementation of various regulatory reforms over the years.

“Investment grade is certainly within sight,” said Eugene Leow, an economist at DBS Bank in Singapore.

“This does not come as a surprise given the structural improvement in GDP (gross domestic product) growth and debt management dynamics over the last few years,” he added.

He said a broadening of the revenue base, such as reforms on taxes on alcohol and cigarettes, would probably be needed before the major rating agencies upgraded Philippine debt again.

Stable outlook

Moody’s said the latest credit rating of the Philippines, which applies to debts denominated in local and foreign currencies, was assigned a “stable” outlook.

Such an outlook indicates that a credit rating is likely to remain the same within the short term unless unexpected developments dampen existing favorable economic trends.

In the first half of the year, the Philippine economy grew by 6.1 percent from a year ago, one of the fastest growth rates in the region.

The encouraging growth rate of the Philippines came even as the euro zone suffers a recession and as the United States faces slow growth and high unemployment levels.

“In addition, cyclical features support improved prospects for growth in the medium term,” Moody’s said.

Infrastructure, remittance

The agency said the factors supporting prospects of a healthy pace of growth in the next few years included rising government spending on infrastructure and the still strong remittances from overseas Filipino workers.

Because of remittances, consumption by Filipino households is expected to remain robust.

The fact that banks in the country are profitable and strong indicate that they are capable of providing credit support to businesses and to the government, according to Moody’s.

$82-B forex reserve

Rising foreign exchange reserves, now at a historic high of about $82 billion, was also cited for the country’s improved credit rating.

With the reserves, higher than the combined foreign debts of private firms and government entities, the Philippines can pay debts to foreign creditors as they come due.

The reserves are boosted mainly by remittances, foreign portfolio investments and inflows in the country’s business process outsourcing sector.

Peso, interest rates

“Taken together, these strengths have contributed to the appreciation of the peso and lower interest rate costs for the government. These have in turn helped accelerate the process of debt consolidation, thus addressing the relatively high stock of debt, a constraint on the Philippine rating,” Moody’s said.

The national government’s debt stock—the proportion of its outstanding debts to the country’s gross domestic product—has fallen over the years to just about 50 percent from a high of over 70 percent in the middle of the last decade.

The rise of the peso and the decline in interest rates, both of which are credited for improved investor sentiment, helped cause the decline in the government’s debt stock over the years, according to finance officials.

Efforts to improve revenue collection and measures to discourage tax evasion were also helpful in improving government’s fiscal condition, the officials added.

Peace deal

Moody’s also said that the latest peace agreement between the government and Moro rebels would further boost the country’s economy.

“Over the longer term, the landmark peace agreement signed between the government and the Moro Islamic Liberation Front may have wider beneficial effects on investment and economic growth in Mindanao… which has untapped agricultural and mining potential,” Moody’s said.

The upgrade in credit rating came following the 10-notch jump in ranking—from 76th to 66th out of 144 countries—by the Philippines in the global competitiveness report that the World Economic Forum released last month.

via  Michelle Remo
Philippine Daily Inquirer

The foreign service: our first line of defense

DIPLOMACY IS a key tool for survival in a hostile world for a third-rate power like our country. It fails in this mission if our diplomacy is in disarray, as recent events have shown. Our problem may be summed up thus:

• There are rules essential in diplomacy that, unfortunately, we do not have in place.

• There are rules that are in place for efficient diplomacy but, unfortunately, we violate them.

• We make rules for things we do not have and, of course, we cannot carry out the goals we set because the resources are not there.

Let us start with the first item, in which the key word is security. Back in 1988, after the messy affair at our embassy in Moscow (Ambassador Alejandro Melchor allowed his boys to open a restaurant at the embassy, which is prohibited under the Vienna Convention; there was also an administrative officer handling the embassy code who had a Russian mistress), this writer was detailed to the National Intelligence Coordinating Agency to evaluate what had happened. The result of this detail: We came up with a set of rules to improve embassy security, including rules on how to react in the event that our embassy is penetrated by a hostile power.

The proposed rules and implementing orders we prepared were discarded by the Department of Foreign Affairs.

This gap in security is evident in the way we dealt with Ambassador to China Sonia Brady after she suffered a stroke. We should have evacuated her, and there are now airplanes that are virtual flying hospitals. The reason for this is a patient under heavy sedation may blurt out secrets. This is a common trick used in communist countries. Dissidents are often sent to mental hospitals where they are placed under sedation. Valuable information have been extracted by the KGB using this method.

One can only hope that at the very least, the DFA put Brady under 24-hour watch during her confinement in a hospital in China. If it did not do this, then there could have been a serious  breach in our security.

This leads to the second item, on rules that are in place but are violated. Republic Act No. 7157, or the Foreign Service Law, provides that no ambassador should be allowed to serve beyond the age of 70. There are many horror stories about our aged diplomats, like one about the undersecretary who continued to represent our country in international conferences even after he reached the age of 80. The story goes that he attended a conference and then fell asleep in front of the other delegates. Another ambassador was virtually deaf when he was accredited to the United Nations. He spoke out of turn and his assistants had to shout into his ear the topic being discussed. Four over-70 ambassadors died in their posts of assignment. The Brady episode is the latest addition to these horror stories.

The debacle involving Sen. Antonio Trillanes IV is also a case of ignoring the law. Our diplomacy operates under the Country Team system. What this means is the ambassador is supposed to know every government initiative in his post of assignment. This principle was adopted under the 1972 Integrated Reorganization Plan and was implemented by Presidential Decree 1. It followed US practice. It appears that one of the American ambassadors in Southeast Asia was peeved when he found out that the Central Intelligence Agency was engaged in clandestine activities in his post without his knowledge. So the ambassador protested to President John F. Kennedy, who then issued orders that henceforth, an ambassador must be fully informed of all US activities in his post.

There is room for backdoor diplomacy. But given the Country Team rule, a special envoy who bypasses the embassy is breaking the law. The problem with special envoys is that they invariably claim credit for successes and blame the ambassador for failures. Special diplomats also tend to be lured with quick gains at the expense of future considerations. They knew their missions are of short duration. Senator Trillanes did all of the above.

Finally, we invent rules for things we do not have, and this gets us into trouble. The “back-channeling” imbroglio happened because we kept on pretending that we have China specialists. When we drafted RA 7157 in 1988, we naturally considered the US foreign service as our model. But we rejected the principle of having country specialists. We instead decided to develop our diplomats as generalists, for two reasons: because we have a small foreign service and because our academic infrastructure is not developed enough.

There is no university in our country now where one can get a degree in area specialization. Developing a country specialist requires at least four years of training, two years to gain fluency in a language, plus another two years to gain an advanced degree in the country of choice. All our Asean neighbors have foreign service officers who are also generalists and not specialists.

From the foregoing, what we need now are security rules to safeguard state secrets. This is the first time in our history that we are having a confrontational diplomacy with a big power. We cannot afford the miscues of recent days. On the other issues, we already have rules in place. All the DFA must do is obey the law.

Ambassador Hermenegildo C. Cruz is a retired career diplomat. He was among those who drafted The Foreign Service Act of 1991 and was also the DFA representative to the 1969-1972 Integrated Reorganization Plan, which adopted the Country Team approach in conducting Philippine diplomacy.

via By Hermenegildo C. Cruz
Philippine Daily Inquirer 

Japan electronics firm opens Philippine plant

KYOTO, Japan-based electronics maker Murata Manufacturing Co. Ltd. yesterday opened its first plant in the Philippines and is open to expanding in the country.

The company opened its 3.6-hectare plant at the First Philippine Industrial Park in Tanauan, Batangas. The plant sits on a 22.7-hectare land in the economic zone.

The plant will be operated by its local unit, Philippine Manufacturing Co. of Murata, Inc., which is led by its president, Takashi Masuda.

Earlier reports said the firm would spend about P350 million on the facility, but company officials yesterday would not disclose a definite amount for the construction of the building, equipment and lease of the land.

The plant, which will make ceramic capacitors, is scheduled to go into commercial production in January next year, the president of the parent firm, Tsuneo Murata, said during his speech at the opening ceremony.

“We believe in the importance of the ASEAN (Association of Southeast Asian Nations) region,” Mr. Murata said.

“The Philippine plant is our fourth in the region and it has the largest growth area for expansion,” he added.

Murata manufactures ceramic capacitors and other electronic components that are used in cellphones, smartphones, laptops, televisions and cars. Bulk of the products to be made at the new plant will be exported, Mr. Murata said.

The company has three other plants in Southeast Asia -- in Singapore, Thailand and Malaysia, with the latter two up for expansion, he added.

Listed on the Tokyo Stock Exchange, Osaka Securities Exchange and at the Singapore Exchange, the company also has subsidiaries in the United States, Europe, China and Latin America.

Mr. Murata said the firm is open to expanding its operations in the Philippines, depending on market demand.

Mr. Murata said there is a lot of potential for growth in electronics exports because there are new markets opening up.

“There is a possibility of constructing three more buildings of the same size in the area. So we will have four buildings with 3,000 employees,” said Mr. Murata.

“We would like to see our first building filled first and also base the expansion on the economic situation,” he added.

He said the firm chose the Philippines for its relatively cheap labor cost, fewer turnover, potential for skills training and ease of communication.

The Philippine official assured support for the firm. “We are working closely with locators. We are also inviting more investors in power to make sure that power rates are lowered,” Lilia B. De Lima, director-general of the Philippine Economic Zone Authority, said during the event. -- ENJD

via Business World

Tetangco Named CB Gov For Asia

MANILA, Philippines --- In recognition of his skillful handling of monetary policy amidst external financial threats, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. was named the Central Bank Governor of the Year For Asia by the international financial magazine, Emerging Markets.

“The (Philippine) central bank, under Governor Amando Tetangco’s stewardship has managed monetary policy with considerable skill, not least given the twin threats of China slowdown and spill-over from the Eurozones crisis,” Emerging Markets, in a statement, said.

Tetangco received the award at the sidelines of the World Bank-International Monetary Fund annual meeting recently held in Tokyo, Japan.

The yearly Emerging Markets CB Governor and Finance Minister of the Year Awards recognize the leading policymakers in each region. The awards are chosen by Emerging Markets’ editorial team, taking into account the views of leading regional experts.

This is the second international recognition Tetangco has received for this year to date. Early this year, the Global Finance magazine named Tetangco as one of the world’s six best central bankers in 2012. For global finance, it was Tetangco’s fourth award.

Tetangco was chosen by Global Finance in recognition of his adept handling of the economy with the country taking advantage of the “receding inflation to cut its benchmark interest rate to a record low 3.75 percent in July, to stimulate growth as the global economy weakens.”

In an interview with Emerging Markets, the BSP Chief admitted that the monetary authorities “needed to sharpen our monitoring of market behavior and be creative in implementing market-based solutions to reduce, contain or eliminate asset bubbles.”

Against the backdrop of a brewing financial crisis in the Eurozone and the narrowing of growth in China, the Philippines economic performance has remained relatively strong, registering a 6.4 percent for the first quarter of the year.

via By FIL C. SIONIL, Manila Bulletin

 

Tetangco says Phl in a position of strength

MANILA, Philippines - Amid the challenging global financial climate, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. believes the Philippines is in a “position of strength.”

The country’s top central banker mentioned this in a recent interview with Emerging Markets magazine, which awarded him the distinction of being the central bank governor of the year for the Asian region.

 “The central bank, under Governor Amando Tetangco’s stewardship, has managed monetary policy with considerable skill, not least given the twin threats of China slowdown and spillover from the euro zone crisis,” said Taimur Ahmad, editor-in-chief of Emerging Markets, in a statement.

Tetangco, who received the award on the sidelines of the World Bank-International Monetary Fund meetings in Japan two weeks ago, boasted of the country’s strong macroeconomic fundamentals that allowed it to grow 6.1 percent in the first semester.

 “I think, over-all, we are in a position of strength at this point in time. Our interest rates are still significantly positive. The BSP borrowing rate is at 3.75 percent, so there is room there. The government has a fiscal deficit that is substantially below the projection for the year, so they also have room to accelerate spending,” the BSP chief explained.

BSP’s policy-making Monetary Board has slashed policy rates by an aggregate of 75 basis points this year as inflation, which averaged 3.2 percent as of the third quarter, remained manageable and growth continued to be strong.

It is scheduled to meet again this Thursday and the market is expecting it to cut key rates again by another 25 basis points in a bid to tame the peso’s appreciation and support export growth. That would put interest rates at new record-lows of 3.5 percent and 5.5 percent for overnight borrowing and lending, respectively.

Latest data showed merchandise exports dropped nine percent in August. A strong peso, while making imports cheaper, also trims the value of dollar export earnings and remittances when they are converted into local money.

While easier monetary policy has helped boost growth, it has also sparked concerns of asset bubble formation or a situation when value of assets, given huge demand, tends to rise beyond real market prices.

via Prinz P. Magtulis (The Philippine Star)

New DBP head favors back-to-basics approach

With DBP beset by allegations, banker for life Buenaventura has called for a return to basics approach to run the government bank. Given his excellent track record in banking and having worked in the industry for decades, expect the chief to do wonders. 

=====

For Gil A. Buenaventura, newly installed president and chief executive of the Development Bank of the Philippines, a back-to-basics approach would be the order of the day in a state-run office rocked by controversy. 

“With each and everyone’s unqualified support, I will do what I can, as much as I can, to address issues and concerns—and I know they are varied—for the good of the institution, its officers and employees, and our country,” Buenventura told DBP employees in his first day in office on Monday. 

“This is not a promise of a cure-all for the challenges the bank now faces, but I remain optimistic and committed.” 

Buenventura took on the reins of the state lender a month after the Office of the Ombudsman recommended the filing of graft charges against 22 former officers of DBP. The DBP executives, along with Roberto Ongpin and two other businessmen, had been accused of wrongdoing in connection with two loans amounting to P660 million granted to Ongpin’s firm in 2009. 

Buenaventura on Monday explained that a back-to-basics strategy would entail reinforcing DBP’s financial muscle characterized by a strong capital adequacy ratio, and a consistently healthy balance sheet and earnings predictability.

“Despite challenges, the people that make up DBP have remained patient and reasonable as they are united by a common commitment to DBP’s development mandate,” he said. “This gives me the confidence that I made the right choice—to work for government, with DBP specifically, as I pursue a personal advocacy of giving back to our country.” 

Buenaventura has worked in private banks all his life. Just prior to DBP, he was senior executive vice president and chief operating officer of Bank of the Philippine Islands. 

“Coming from the private sector, I admit that I have much to learn leading a government bank,” he said. “But I believe that a back-to-basics approach should serve the institution well.” 

INQ NET

Palace: Canonization of Blessed Pedro Calungsod a source of natl pride

Blessed Pedro Calungsod's lesson to the modern Filipinos: die for what is right and just and have faith. 

 

====== 

 

The canonization of Blessed Pedro Calungsod as the Philippines’ second saint on Sunday will be a day of great spiritual joy and national pride, Malacañang said on Saturday.

 

Deputy presidential spokesperson Abigail Valte said the Palace joins the Catholic world in the “solemn commemoration and celebration.”

 

“This is a day of great spiritual joy and national pride not only for Filipino Catholics but also those who call the Philippines home,” she said on government-run dzRB radio.

 

She also pointed out that Vice President Jejomar Binay and Energy Secretary Jose Rene Almendras are leading a delegation of Filipinos attending the canonization rites at St. Peter Square.

 

Valte reiterated that Binay and Almendras are President Benigno Aquino III’s representatives to the event.

 

Aquino cannot attend the event as he is leaving on Sunday for state visits to New Zealand and Australia.

 

Calungsod is the country’s second saint after Lorenzo Ruiz.

 

Calungsod was beatified in 2000 by Blessed John Paul II. - VVP, GMA News

Economist: PH likely to get a rating upgrade

MANILA, Philippines - While Standard & Poor's says the Philippines still needs to overcome some hurdles before it can get investment-grade status, a Bloomberg analyst believes it's only a matter of time. 

"The Philippines is well in investment grade actually. If you compare where it's ratings are versus where this instrument is being priced against 50 countries, the Philippines is most likely to get an upgrade... I do think its a matter of time. The Philippines is a great place to be, especially over the long run and there's an immense untapped potential in the country, especially in the mining sector," Michael McDonough, Bloomberg economist, told ANC.

The Philippines' current rating from S&P and Fitch is one notch below investment grade, while Moody's places the country two notches behind although with a positive outlook.

Investment grade status means that the three primary rating agencies in the world perceive a country to be a safe investment. This would lead to lower borrowing costs for the Philippines.

While some traders are already pricing in an upgrade to investment grade for the Philippines, McDonough said there are certain pension funds and money managers that are not allowed to invest in a country unless it is investment grade.

"Speculative money could come in quickly but could also get out quickly, so once you get investment grade, you get more of these long-term money managers who will put money for longer. So you don't have to worry about them getting the money out as quickly," he said.

He noted that the euro zone crisis and weakness in the US economy may have led ratings agencies to be more careful in giving upgrades.

"If you look at what is going on in the world right now, its not very positive. So I'm not surprised if the rating agencies would come out and say we're not doing this upgrade yet...And it's not per se, the Philippines' fault. It lies on places like Europe and US. There's just a lot of uncertainty out there. Unfortunately, these external factors are impacting the decision not to do the upgrade," McDonough said. 

The Aquino administration, which has enjoyed 8 positive credit rating actions in the last 2 years, has been pushing for an investment grade status. - With ANC

Stocks shine as Thais, Filipinos nurture stability

The Philippine economy continues to show amazing resiliency because of its people. Credit needs to go to the Filipinos, here and abroad. Pres Noynoy Aquino also deserves to be praised for his open-politics and and his battle against corruption. 

 Let this ascent continue! Mabuhay Pilipinas!

=====  

BANGKOK —The two Asian nations with the region’s best-performing stock markets in the past year are unlikely havens for investors: Thailand and the Philippines. Both are better known for troubled politics and natural disasters, but have outshone higher-octane neighbors as new leaders nurture relative calm.

The PSE benchmark in the Philippines has soared 29 percent in the last 12 months and Thailand’s SET index is up a whopping 33 percent. By contrast, an index compiled by MSCI that tracks stocks in 12 Asian countries is up a ho-hum 2 percent. The Shanghai Composite Index in rising power China has sunk nearly 14 percent.

The Philippines, long regarded as an economic backwater blighted by a succession of deeply corrupt governments, has gained a measure of credibility due to the stability ushered in by the 2010 election of President Benigno Aquino III. Analysts credit him with boosting investor confidence by cracking down on corruption and living up to his promises of openness and good governance.

Thailand too has benefited from an improvement in its politics, although it’s unclear whether the current stability will be enduring. The country seemed to be veering toward civil war in 2010 when deadly street battles raged in Bangkok between the army and loyalists of Thaksin Shinawatra, the populist prime minister ousted in a 2006 coup.

Local stock brokers were resigned to the Thai market lagging its potential but the landslide election victory in 2011 of a pro-Thaksin party and the popularity of the country’s first female prime minister, Thaksin’s younger sister Yingluck, have boosted confidence. Lately, Thai stocks have also got a fillip from big-spending government policies that include efforts to overhaul flood defenses after a widespread inundation wrecked industry last year.

For both countries, the perception abroad that they have become a bit less risky has drawn renewed attention to their selling points.

One of the high notes for the Philippines is its newly minted status as a creditor nation, the first time in 40 years. Its foreign currency reserves total $80 billion, while foreign debt is about $65 billion. Theoretically, the country could pay off all its foreign obligations and still have $15 billion in cash left over, said Alfred Dy, head of Philippines research at CLSA Asia-Pacific Markets.

“It’s the opposite of the countries in the West, where there’s a lot of external debt,” Dy said.

The country’s accumulation of foreign exchange is driven by two sources: remittances, or money sent home to the Philippines by citizens who work abroad, and the dramatic growth in outsourcing.

The remittance trend began as early as the 1960s, when Filipino nurses traveled to the US to work the night shifts at hospitals—hours that American nurses didn’t want to work. Today, more than one in 10 Filipinos out of a population of 95 million lives abroad for work. They sent home $20 billion in 2011—more than double the amount in 2004.

The fact that they are spread across the world—in the Middle East, in America, throughout Asia—also spreads the risk if a particular region goes into an economic slump.

Meanwhile, a boom in business outsourcing, enabled by the high level of English proficiency in the Philippines and its young workforce, racked up $14 billion in 2011—soaring from $3 billion that was earned just seven years ago. The Philippines now rivals India as a global outsourcing giant.

These trends have insulated the Philippine economy from the export-reliant doldrums being experienced elsewhere in Asia.

“We don’t rely as much as other countries on exports,” Dy said. “It’s really more of a service economy, it’s sending people abroad and getting contracts on business outsourcing, which makes the Philippines a bit unique.”

“Even if the global economy slows down, we think these two items will be relatively resilient compared to traditional exports,” he said.

In Thailand, the government’s drive to boost investment and growth after massive flooding decimated industry last year has helped to make it a favorite of stock investors.

Thailand’s economy shrank 10.7 percent in the last quarter of 2011 after the country’s worst flooding in more than half a century disrupted operations at more than 1,000 factories, bringing the country’s key automotive and computer parts industries close to a halt.

But ever-resilient Thailand is bouncing back. The Asian Development Bank predicts Southeast Asia’s second-biggest economy will grow 5.2 percent this year and 5 percent in 2013.

Investors view positively measures Thailand has taken to increase domestic consumption, such as raising the daily minimum wage to 300 baht ($10) and offering rebates to first-time car buyers.

“It’s enabled households to have more disposable income and spend more,” said Frederick Gibson, associate economist at Moody’s Analytics. “I think the market has taken that as a positive sign, that households will have the ability to spend and that hopefully will have a positive impact on growth.”

Thailand’s public debt load as a percent of the economy—relatively low at 40 percent—means the government has the leeway to undertake expansionary fiscal policies, such as corporate tax cuts and other measures, said economist Eugene Leow of DBS Bank Ltd. in Singapore.

The country also has mapped out major infrastructure projects, including flood prevention measures, in the next few years.

“There are a lot of projects in the pipeline,” Leow said. “All these projects will cushion any slowdown.”

So of the two stock markets, which might be the better bet for investors wanting to take the plunge into Southeast Asian equities?

Herald van der Linde, head of equity strategy for Asia Pacific at HSBC, said he believes the Philippines stock market has become one of the most expensive in the world.

Van der Linde especially likes Thai banks since demand for financial services is growing fast. Like elsewhere in Asia, Thais have begun to invest in their own local markets and investment products, breaking from the traditional way of stashing wealth into houses and land, van der Linde said.

“Thailand, coming from a low base, is not that expensive yet. So if I had to put my money somewhere, I would put it in Thailand,” he said.

By Pamela Sampson
Associated Press