Philippines keeps rates on hold

Updated 13 December 2012
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Philippines keeps rates on hold

MANILA: The Philippine central bank kept its benchmark interest rate unchanged at a record low, saying the economy needed less support with strong domestic demand seen extending into next year, but it saw risks from strong capital inflows.
The rate decision was in line with a Reuters poll in which 12 of 13 economists had predicted the Bangko Sentral ng Pilipinas would keep the overnight borrowing rate at 3.5 percent.
“The Monetary Board’s decision is based on its assessment that current monetary settings remain appropriate, as the cumulative 100-basis-point reduction in policy rates (earlier) in 2012 continues to work its way through the economy,” Governor Amando Tetangco told a media briefing.
The Philippines’ economy, like many of its Southeast Asian neighbors, has remained largely resilient in the face of the global slowdown as strong domestic demand and government spending largely offset the impact of weaker exports.
Highlighting its view that price pressures will remain moderate despite robust economic growth, the central bank trimmed its forecast for average inflation in 2012 to 3.2 percent from 3.3 percent. It also lowered its 2013 inflation forecast to 3.1 percent from 3.9 percent and its 2014 forecast to 2.9 percent from 3.1 percent.
It set an inflation target of 2-4 percent for 2015-2016.
Economists have contrasting views on where interest rates are headed in the later part of 2013, with some not ruling out further cuts if the global economic outlook deteriorates, and others predicting as much as 50 basis points in hikes to guard against demand-pull inflationary pressures.
Some analysts are concerned the central bank could be underestimating price pressures.
“The marked downward revision in next year’s inflation estimates might be downplaying risks, in light of firm domestic demand, commodity price shocks and utility price adjustments,” said Radhika Rao, economist at Forecast PTE in Singapore.
Philippine gross domestic product (GDP) expanded by a faster-than-expected 7.1 percent in the third quarter from a year earlier, making it likely it will surpass the official 5 percent to 6 percent growth target for the full year.
Despite strong domestic consumption, inflation has remained under control so far, helped in part by a strong peso. The average annual inflation rate in the 11 months to November was near the bottom of the central bank’s 3 percent to 5 percent target band for the year.
That has allowed the central bank to cut interest rates by a total of 100 basis points this year to boost domestic demand to make up for the weakness in exports as global demand sputters.
The peso has risen about 7 percent against the US dollar this year to become Asia’s second-best performing currency as foreign investors attracted by its growth story snap up Philippine assets such as stocks and bonds.
Strong capital flows have fueled a 33 percent jump in the benchmark share index this year, but are a worry for policymakers given their potentially destabilizing impact.
“We see the threat of capital flows,” Diwa Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas told reporters, adding that non-monetary tools, like macroprudential measures, may be more effective in managing such risks rather than monetary policy.
The country is targeting faster growth of 6 percent to 7 percent in 2013, banking on further increases in domestic consumption and higher government spending.
The central bank said it expects imports to grow by 12 percent next year against 7 percent this year, supporting domestic expansion, which would cut the country’s balance of payments surplus.
The government has set aside a record of more than 400 billion pesos ($ 9.8 billion) for infrastructure projects and capital outlays under next year’s 2.01 trillion pesos budget.


UAE to loosen visa rules for investors and innovators

Updated 21 May 2018
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UAE to loosen visa rules for investors and innovators

  • UAE cabinet announces the launch of an integrated visa system to attract talent and talent in all vital sectors of the national economy
  • The Council also announced changes in the system of foreign ownership of companies in the country, which allows the acquisition of 100% of the global investors by the end of the year

DUBAI: The United Arab Emirates, home to financial hubs Abu Dhabi and Dubai, is loosening its residency laws and will grant long-term visas for up to 10 years to investors and highly-skilled professionals.
The 10-year residency visas will be granted to specialists in science, medicine and research, and to “exceptional students.” The state-run WAM news agency says the plan aims to attract global investment and innovators.
The UAE Cabinet approved the new rules on Sunday, saying plans are also on track to allow foreign investors 100 percent ownership of their UAE-based companies this year.
His Highness Sheikh Mohammed bin Rashid Al Maktoum affirmed that the UAE will remain a global incubator for exceptional talents and a permanent destination for international investors. “The UAE has been open, governed by tolerance and contributed to by all who live on its land.
“Our open environment, tolerant values, infrastructure and flexible legislation offer the best opportunities to attract international investment and exceptional talent in the UAE,” he said. “Our country is the land of opportunity, the best environment for realizing human dreams and unleashing their extraordinary potentials.”
The new regulations include raising the percentage of global investors’ ownership in companies to 100% by the end of the current year. He directed the Ministry of Economy in coordination with the concerned parties to implement the decision and follow up on its developments and submit a detailed study in the third quarter of this year.
The new regulations approved by the Council of Ministers and the authorities concerned have also set the procedures for implementing them to grant investors residence visas of up to ten years for them and all members of their families, as well as granting residency visas of up to ten years for specialized competencies in the medical, scientific, research and technical fields.
The new regulations also include visas for students studying in the country for five years and a 10-year residency for exceptional students.
Under current laws, foreign companies must have an Emirati owning 51 percent of the shares, unless the company operates in a free zone. Major brands Apple and Tesla are believed to be exceptions to the rule.