sarah SAAVEDRA - SONGALIA, CPA

WASHINGTON — Most of the world’s developed countries are at an economic standstill or on the brink of recession and policy-makers need to take aggressive action to avert a deep global downturn, a top IMF official said on Thursday.

“Nearing the end of the year’s third quarter, most advanced economies are either virtually stagnant or on the verge of recession, while underlying inflation risks are becoming increasingly well-contained,” John Lipsky, first deputy managing director of the International Monetary Fund, said in a speech to the Center for Strategic and International Studies.

A “damaging global recession” could still be avoided, he said, but any recovery would likely be gradual, and public funds may be necessary to safeguard the financial system.

“A more systematic approach may be needed to deal with such basic issues as the disposition of distressed assets, the degree of protection offered to depositors, and the scale and scope of liquidity support that is offered to institutions and markets,” he said.

As Lipsky spoke, news reports said the Bush administration is considering a plan to create a federal agency similar to the 1990s-era Resolution Trust Corp. to take on problem assets from financial institutions.

Lipsky told reporters afterwards such a step would be one of the broad measures that would be appropriate at this time, especially during turbulent times that makes it difficult to value assets. “The need is for a broad approach, a consistent approach, one that is not piecemeal,” he added.

Lipsky said more financial institutions will fail but he stressed that a systemic failure should be avoided.

“It is also very clear this needs to be done in an internationally coherent and decisive way,” he said, referring to coordinated central bank responses to throw a lifeline to markets amid upheavals on Wall Street and to free up bank-to-bank lending.

While US and European banks hurt by the year-long credit crisis have raised capital, “these infusions are still some $150 billion less than the write-downs, and further capital raising will become much more expensive, if not impossible,” he said.

The slowdown in developed countries should help contain inflation and the IMF believed monetary policy was broadly appropriate across most advanced economies, but there was scope for both the European Central Bank and the Bank of England to lower interest rates, Lipsky said.

In emerging economies, most countries could take a “wait-and-see” approach on interest rates, although some were still grappling with serious inflation risks and their monetary policy should have a tightening bias.

Lipsky said so far emerging markets have been relatively insulated from the financial turmoil, in part because many have been capital exporters and have current account surpluses.

But he warned that these economies could face large reversals of capital flows, with serious implications for their economies’ activity and financial institutions.

He said the IMF was closely watching access by these countries to international markets, especially for emerging markets that depend on large-scale capital inflows to finance current account deficits.

More recently, there are signs that capital is beginning to flow out of many emerging economies, reflecting less appetite for risk and slowing growth prospects, he said. These outflows pose risks and warrant close attention, Lipsky added.

Source: Lesley Wroughton

American International Group and its assortment of businesses run the gamut from aircraft leasing to life insurance for Indians to retirement plans for  schoolteachers.

Parts of the company have been battered by the credit crisis, but many of its operations, if put up for sale, could prove attractive to prospective investors and competitors. The main insurance unit has remained profitable, as has the aircraft leasing arm.

The great assortment of assets reflects the determination of the man who built AIG, Maurice Greenberg, to create an global empire operating in complementary businesses. Not even the company’s annual reports to shareholders or its regulatory filings offer a chart of its complex corporate structure.

Though its name is American, the company is rooted in Asia. According to company lore, its founder, Cornelius Vander Starr, a World War I veteran, traveled to Asia with only ¥300 in his pocket and started the firm in Shanghai in 1919.

With a partner, he sold marine and fire insurance and expanded rapidly throughout the Philippines, Indonesia and China by hiring locals as agents and managers, a business strategy AIG uses today. Nearly half of AIG’s 116,000 direct employees — about 62,000 people — are in Asia.
In 1960, Greenberg joined the company, following his mentor, an executive at Continental Casualty Company in Chicago. Greenberg focused on making giant commercial deals, increasing its share of the life insurance business and writing what were, decades ago, unusual types of coverage, like insurance against kidnapping and protection from suits against a company’s officers and directors.

AIG’s general insurance business, which accounted for nearly half its $110 billion in revenue last year, has held up well. AIG claims that its companies are the largest underwriters of commercial and industrial insurance in the United States. Its policies cover everything from environmental liability for companies to auto insurance.

AIG’s asset management group — it includes a private banking subsidiary for the wealthy, a broker dealer and another unit that manages mutual funds — has had losses, but it is not a unit that pushed the company to the brink. That group reported its first loss in years in the last quarter of 2007; in the second quarter of this year, it reported an operating loss of $314 million, which is modest these days.

Then there is the aircraft leasing business, which owns more than 900 planes and is part of the company’s financial services group. The company stated in its annual filing with regulators that the leasing unit would buy 73 new aircraft this year. That unit is profitable, according to the most recent report for the quarter ended June 30.

AIG’s problems rest in the company’s London-based financial products unit, part of its financial services group, which is exposed to securities tied to the value of home loans — the same kind of securities that forced Lehman Brothers into Chapter 11 bankruptcy proceedings on Monday. The financial products group sold credit-default swaps, complex financial contracts allowing buyers to insure securities backed by mortgages. Many of the buyers were European banks. As home values have fallen, the value of the underlying mortgages has declined, and AIG has had to reduce the value of the securities on its books.

The company has other forms of real estate exposure. One subsidiary, American General Finance, makes home loans and has suffered along with the housing market. Another subsidiary, the United Guaranty Corp., provides mortgage guarantee insurance. Still other units buy mortgage-backed securities directly.

“We’ve always been opportunistic,” Greenberg said, responding to a question about whether the company would buy other insurers struggling in the wake of the Sept. 11 terrorist attacks. “When we see opportunities, we will never change. At AIG, it’s part of our culture.”

Geographically, AIG is sprawling. One of its life insurance company operates in 50 countries and other units offers other products, like health insurance and retirement services, in countries like Japan and the United States. It claims to be the largest life insurance company in the Philippines. Its private bank is based in Zurich.

AIG ’s Asian asset management business has $115 billion in assets, and the company peddles mutual funds in the Philippines, Hong Kong and Singapore and investment trusts in Taiwan.

The company is a sizable investor in Asian development projects, from toll roads in the Philippines to Seoul’s international finance center. It is also a major investor in the Taiwan government. As of February, AIG held $14.2 billion in Taiwan government bonds, 13.1 percent of Taiwan’s total issued government bonds.
Though he left the company a few years ago after an accounting scandal, Greenberg’s fortune remains locked up with AIG, in which he has a stake of about 11 percent through various holdings, according to Bloomberg News.

Early in 2005, questions arose about financial transactions that had the effect of making the company’s earnings look better. Greenberg resigned as chief executive after regulators sent a wave of subpoenas to the company; eventually AIG restated earnings covering a five-year period. His successor tried to restore confidence in the company but his efforts did not meet with investor approval and he was replaced this summer, after the company announced that it lost $7.8 billion in the first quarter of the year, the biggest loss in its history. In August it announced that it had lost another $5.3 billion in the second quarter.

Source: Jonathan D. Glater

Should a trial court grant a petition for reconstitution of a lost or destroyed certificate of land title on the basis of a tax declaration, survey plan, and technical description presented by the supposed landowner?

“No,” said the Supreme Court (SC) as it cautioned trial courts “against the hasty and reckless grant of petitions for reconstitution.”

In a decision written by Justice Antonio Eduardo B. Nachura, the SC said that a tax declaration is executed for taxation purposes only, is prepared by the alleged owner himself, and is not a reliable source for the reconstitution of a certificate of land title. Justices Consuelo Ynares Santiago, Ma. Alicia Austria Martinez, Minita V. Chico Nazario, and Ruben T. Reyes of the SC’s third division concurred in the decision.

It said that a survey plan and technical description are merely additional documents that should accompany the petition for reconstitution and that previous SC decisions ruled that “reconstitution based on a survey plan and technical description is void for lack of factual support.”

It stressed that possession or claim of ownership is not an issue in a reconstitution proceeding. “A reconstitution of title does not pass upon the ownership of the land covered by the lost or destroyed title, but merely determines whether a re-issuance of such title is proper,” it said.

The SC pointed out that if a petition for reconstitution is denied for lack of sufficient basis, the petitioner’s remedy is “to file an application for confirmation of his title under the provisions of the Land Registration Act, if he is in fact the lawful owner.”

With the ruling, the SC granted the petition of the government as it reversed the decision of the Court of Appeals (CA) that upheld the order of the Regional Trial Court (RTC) in Calapan, Oriental Mindoro in 2000 granting the petition for reconstitution filed by Dominador Santua in 1999 for his supposed 3,306-square meters of land in Victoria.

In his petition for reconstitution, Santua claimed that the original copy of his land title was among those destroyed when a fire gutted the Oriental Mindoro capitol building in 1977, while his owner’s duplicate copy was lost when his house was leveled to the ground by an Intensity 7 earthquake in 1977 and could not be retrieved despite diligent efforts.

He complied with all the jurisdictional requirements for his petition for reconstitution, except that he presented in evidence a tax declaration for the supposed land in his name, technical descriptions of the property, and a blue print for the land based on a survey, and a certification from the acting provincial register of deeds that all original certificates of title on file with the registry had been destroyed by a fire in 1977.

Source: Rey G. Panaligan

Joseph Vincent Go, owner of one of Iloilo’s leading transport service firms, tells the story of their company’s humble beginnings.

They started in 1975 with a single taxi unit. The responsibility for operation and maintenance of the taxi was divided among family members.

“I learned the trade of the transport business in high school. I have been business-oriented since I was a kid,” Joseph says, recalling that he was assigned to manage the money matters of the business.

When he finished his business administration degree, major in accounting, he took on greater responsibilities in the company.

In 1994, the family transport business was known as the Light of Glory Taxi Services. They had three taxi units.

As the business started to grow, problems brought about by competition also surfaced. Light of Glory Taxi Services was already operating 25 units of FX taxis when new models of Corolla taxis came out. The riding public preferred the new models and business became nearly stagnant.

The family thought of giving up the business, but Joseph told his family to be positive. He told his father that if customers wanted something new, then their business should adapt in order to continue.

Joseph proposed a switch from FX taxis to Corollas. His father gave in to his suggestion but instead purchased units of the less popular Kia.

Joseph continued to explain to his father the advantages of purchasing Corollas for their transport business. They eventually made the switch and Light of Glory Taxi Services was back in business.

Years passed and more investments followed to expand their enterprise.

Light of Glory Taxi is not only focusing on improving the quality of their taxi units but also aims to professionalize the industry by investing in a program that would educate and train their drivers and employees on customer relations and communication.

At present, Light of Glory Taxi Services has a total of 168 taxi units in Iloilo. Though Joseph is now the one running the business, he still consults with his father.

Joseph credits their company’s success to the will and determination of their family to keep the business running despite hardships, citing the importance of having the “guts to do it.”

He believes that entrepreneurs should never give up and learn to see opportunity from adversity.

For aspiring entrepreneurs, Joseph gives this advice: “Be guided by available opportunities and be brave to enter it. An entrepreneur must have a thorough understanding of the business. He has to know how to manage the business, his competitors, the market, his money and his customers.”

“Reading good entrepreneurial books, investing in the mind, is also a great help. Be innovative – do not follow the trend. What worked in the past will not necessarily work in the present or the future,” he adds.
Sarabia’s success story

Known as one of Iloilo’s foremost landmarks, the Sarabia Manor Hotel and Convention Center continues its legacy of excellence through 30 years of service.

Like many other successful businesses, Sarabia Manor Hotel and Convention Center started as a family business.

In 1978, Salvador Sarabia took on the responsibility of managing and running the family business after attending the Asian Institute of Management.

Apart from Salvador having no prior management experience, another major challenge in running the business was the turbulent times during the Marcos era.

The dictatorship and endless street demonstrations against it led to economic instability. Determination not to fail his parents and fear of failure were the factors that drove Salvador to keep going.

Since Salvador took over, he managed to complete the construction of the hotel, pay the financial obligation two years in advance, and run the enterprise for two decades. Sarabia Manor Hotel and Convention Center was also recognized with the Kalakbay Best Hotel Award of 2000. Salvador owes all these to his family’s support, hard work, God’s blessings and timing.

He recounts that the hotel business entered a period when Iloilo City needed more hotel rooms, convention and conference facilities and entertainment, riding on the nation’s growing tourism industry. It was the time when the Development Bank of the Philippines provided soft loans and provided Sarabia Manor Hotel and Convention Center with added capital.

As the business progressed, Salvador brought his siblings into the business, and they have contributed much to the development of the Sarabia Manor Hotel and Convention Center. At present, the hotel is being managed and run by the siblings as a family enterprise.

Salvador also started another personal business with the help of his wife. They put up the St. Therese Printing Press as their first business together. They also started a laundry business, car leasing, travel and tours agency. In 1982, Salvador and his wife opened their Villa Rosa by the Sea beach resort.

He said he owes the development of his enterprise experience to the support of his family, sound advice of his friends, spiritual development and to the balanced life that he lives.

Salvador shares these tips with young and aspiring entrepreneurs who would like to engage in business: “Business is a cycle. Like the season, it has to change. And we must learn to predict and adapt to changes. Developments are repetitive. Markets usually invent tools to make man’s living more comfortable. But it is the same.”
Awarding today

Joseph Vincent Go and Salvador Sarabia will be given the Most Inspiring Ilonggo Entrepreneur Awards today at the Go Negosyo sa Iloilo, the latest leg of the continuing Go Negosyo campaign spearheaded by Presidential Consultant for Entrepreneurship Jose Ma. Concepcion III, at the Rose Memorial Auditorium, Central Philippine University, Iloilo City.

Go Negosyo sa Iloilo is presented by the Philippine Center for Entrepreneurship in partnership with the Iloilo Business Club chairman Antonio Jon, DTI Region VI director Dominic Abad and Taytay sa Kauswagan Inc. president Angel de Leon.

Go Negosyo sa Iloilo will also be graced by Presidential Management Staff chief Secretary Cerge Remonde, who is also chairman of the Cabinet Oversight Committee for MSME Development. Member agencies will also be present to reach out to participants.

Awardees were endorsed by the Iloilo Business Club, Micro Finance Council of the Philippines, and Taytay sa Kauswagan Inc.

Go Negosyo sa Iloilo is also made possible by major partners Iloilo Business Club, PLDT SME Nation, Smart Communications, Globe Business, Condura, RFM Corp., Ariel and San Miguel Corp.
Source: Philstar