June 2007 Archives

Azi sent this comment on my previous post on Costly mistakes when using a credit card.

Can you please explain the computation (of finance charges)? How can my interest become higher than 3.5%?

Most Philippine credit card companies compute finance charges using the average daily balance method. Here is an actual example. Don’t ask me who owns this credit card :) : The actual formula is: ADB x 0.035 (Interest) x 12 (months) x Days in Cycle/366 (Days in a Year) What this table tells us:

• Pay your credit card billing in full every month. Just do it. Period.
• If you are still in the process of paying down your credit card, the best strategy is credit substitution. Find a low-interest loan and pay down your balance in full and use your credit card wisely from now on. Examples of low-interest loans are loans from the Social Security System, loans from your friendly cooperatives, loans from relatives, among others. But make sure you have a plan how to pay those loans, too!
• If you decide to simply pay down your credit card monthly, don’t pay the minimum amount only. That’s just like handing over your money to the credit card company on a silver platter. The headache will never end. (see previous post on The dangers of paying the minimum amount due). Pay at least 10 percent of your credit limit instead.
• If you get a bonus from your company, pay down the balance or parts of it as soon as you can. As you can see from table, the finance charges go down significantly each day you move up your payment. Procrastinating will cost you dearly.
• If you need to swipe the card for an important purchase, delaying the purchase as much as you can will significantly reduce your finance charges. Know when your billing cycle begins and ends. The closer to the end of the billing cycle, the lesser the finance charges.

This month, I will make a P15,000 profit from a small business transaction and I didn’t have to shell out any money. I charged the cost to my credit card. I will collect my earnings and pay my balance in full this month. No capital needed on my part to earn P15,000. (No, I have not just swindled somebody hahaha. The earnings should have been much more than P15,000, but I didn’t want to charge a friend more than what my conscience can handle. Sigh, I guess I will never be a shrewd business woman.) Point is, make the credit card company work for you, not the other way around.

Noet Ravalo wrote an excellent piece today on scams and how to do a quick sniff test so that you don’t end up being victimized by crooks. An email writer also tipped MoneySmarts about a company that’s offering investment schemes with fantastic returns. I’m in a fighting mood today, so let’s see if this company passes our smell test. After all, if a company offers a legitimate investment option, it should be able to survive public scrutiny, right? The company goes by the name Suise Financials, oddly similar to the name of Zurich-based investment bank Credit Suisse Group. Don’t confuse the two. They are not related. You can find the company only by going to its url http://deutchfrancs.com/?pg=home. There is no office address or any whiff of information in the website on where this company is physically or geographically based. Very convenient, as the AMLC will now have a difficult task of finding out which regulator of which country to contact. It’s a “don’t find us, we’ll find you” thing, because the only way you can get in touch with its representatives is via an email form on the website. The company promises to give you a 10 percent commission every time you successfully refer one person to invest on the left side of your network and another one on the right side of your business network. The persons that invest under you then get their own referrals to invest in the company under their own right and left trading post, and so on, giving you a chance to “leverage” on the efforts of others. In short, this is where you supposedly earn your quick buck: refer two persons, sit back and watch your money grow. This is called a binary scheme, a marketing strategy that’s being used in many Ponzi schemes. You become a “Suise financial consultant” when you initially invest, and then becomes a “Suise finance financial planner” when your network grows. If you just follow the company’s instructions, the company promises that your start-up capital of $10,000 gives you a return of $81,000 in six months, guaranteed. That’s an 800 percent return in half a year. Let’s see how this company fared during my smell test. Stink number one: No physical location, no known regulator, no investment management credentials like a CFA charterholder managing my money when the company is supposed to be a world-class investment company. Stink number two: Companies make money by either selling services or goods. I don’t see any “financial product” being sold by this company that will create the return or the value it is promising. It does not explain how it will grow your money. It does not even pretend to explain. Its website says: “As specialist in international investments, we offer variety of financial services and investment opportunities to individuals globally and assist them in managing and reducing the risk of their investment. So, we invite you to come and grow with us. Take advantage on the business and investment opportunities that awaits you and let your money work for you.” So, what are these global investment opportunities? What are these financial services? No mention of bonds, equities, commodities, real estate, foreign exchange, structured bank products, lending…it’s all smokes and mirrors. It sounds nice especially if you don’t know a thing about global markets. But a closer look shows vague statements, at best. If it does not have a product, where will it get the money to pay the return you were promised? Most likely from the people you referred. Stink number three: The promise of unrealistic returns is the thing that stinks to high heavens. I’m sorry, but no company can guarantee an 800 percent return in six months. Not investment in stocks, not in lending, not in gold, mining or finding Yamashita’s treasure. Stink number four: Filipinos are generally risk-averse. That’s why we have P1.3 trillion in time deposits. We don’t like volatility. But we like guarantees. We are suckers, however, when it comes to default risk. As long as someone guarantees the return, especially someone that we know, we part with our money even if there is a possibility we might not see the person tomorrow. If you read the stuff in its website, Suise Financials claims experience and investment expertise. What, does it have access to instruments that no other company in the world has, that’s why it can offer fantastic returns? If something is too good to be true…it probably is. Trite but true This company may be able to give you the return you promised. It’s possible that some investors have already received returns since this company was introduced in the Philippines a few months ago. But if the four stink bombs I enumerated are in any of the investment schemes being offered, just walk away instead of trying to sift through the confusing claims. Asking more questions when you know it smells bad sucks in victims. Investing, for all its technicalities, is not that complicated.

I’m playing catch-up with a grin on my face, seeing that this blog has been active despite my absence last week. What a magnificent thing it is to see people sharing experiences, knowledge, and skills unselfishly with each other. Thank you! Last week, INQUIRER.net’s personal finance section featured an article on money lessons for children. Some of the advice may surprise parents. Instead of the traditional “teach children how to do with less”, the article talked about giving children extra allowance so they would learn to budget their extra money. It talked about teaching children the importance of saving, investing, keeping good records, of being content with what they have, of being good stewards of their belongings, of learning how to give to others and enjoying the fruits of their labors so they will not turn out to be misers. Good, basic advice. Unfortunately, they will all be useless without consistent practice. Let me explain. Last year, my husband and I increased our eldest child’s allowance precisely to give her some room to budget her extra money. I made a ceremony out of opening her bank account. I let her arrange everything with the bank teller, sign her signature card for the first time and I let her keep her own passbook. She asked me about inflation and we talked about time value of money. We talked finance over her favorite merienda at a dimsum place, charged to Papa’s account, of course. I saw people looking at us curiously. Perhaps, everybody thought finance was for college students. Well, not for this kid, mom thought proudly. She was all ears and the discussion was totally painless. In fact, it was a lot of fun. We went home...she went back to her homework…mom went back to her writing. It was almost eight months before we remembered her bank account. Total savings for eight months: around P250, and only because someone gave her extra money. She spent most of her extra allowance on candy. Children need consistency. Their systems crave it, even if they don’t know it. Talking will not be as effective as constant practice. Worse, if they see you being irresponsible with your credit card purchases, or buying expensive and unnecessary stuff, perhaps falling prey to a toy tantrum at Toy Kingdom even if the tantrum was theirs, the disconnect between sermon and action is going to cost them dearly. In short, all those financial planning talks and lessons won’t nearly mean as much if our conscious is still riddled with a gotta-have-it mentality. Children need consistency, both in words and actions. So, if you want to be serious about preparing kids early in life so they could avoid serious money mistakes when they grow up, be prepared to walk the talk as well. Sure, we can’t expect to perfect, but we can be upfront with children regarding our financial goals. Better yet, empower them so they can pick on you when you make mistakes! And hey, remember to breathe when that happens and accept the ribbing with a good sense of humor. Case in point. Look at yourself from your children’s eyes for a moment. When you buy things for them, do you swipe your credit card to win their love? Or to console? What about to fulfill your own longings (*I* didn’t have Barbie when I was growing up. My child should have one)? Sometimes, do you buy them toys to keep up with other parents? The answers to these questions may not be immediately obvious to you, but your children sense them and absorb them. These motives scream louder than any financial planning sermon you can give. This is not to say buying toys and nice things is baaaad. MoneySmarts will not be responsible for miserly conduct among its readers! Heaven forbid! J Buying things for the wrong reasons is what we need to avoid. My daughter has since realized she wanted to save more. She is spending less on candy so that she can spend a planned amount by December and not even mom can keep her from buying what she wants with her reward money. She will definitely be a happy camper. That kind of talk is what I’m counting on to keep her away from bankruptcy when she grows up. Here are some tips on kids and money I wrote for another magazine a few months ago: 1. Pay for additional chores. This is a controversial issue that divides financial experts. The idea is to teach children the value of work and give them the skills they need to live independently. However, there is a danger to this. When this is not done properly, children may feel like they are being bribed to do chores in the house. Or, this may result in a power struggle between child and mom. The best system I found so far is to require them to pick up after themselves (clean their room, pick up their toys, wash the dishes) without payment but compensate them for additional or heavier chores like cleaning the rugs or washing the car. This removes the pain out of building personal responsibility in your children and teaches them to find pleasure in work. 2. Buy a piggy bank and open a savings account for your child. As your child starts earning allowance and gets compensated for work, encourage him to pay himself first before spending extra money on toys and other stuff. This teaches him a very important concept in personal finance. Tell him to set aside 10% to 20% of what he earns and put it in his piggy bank or savings account. Make it a big deal that he has his own money. Help him make targets and goals on how much to save, say, in 6 months time. Give him incentives like matching every P100 with P50. At first or with younger kids, the traditional piggy bank is more effective because they can see the money going into the fat tummy and feel how little Ms. Piggy is getting heavier. When they have enough to open a bank account, make a ceremony out of going to the bank to fill up account forms and lining up to get to the teller. Bank accounts make them feel important and drive home the value of saving more effectively. 3. Strive to be "cool" about mistakes. As they learn how to handle money, children will make mistakes. Be prepared and be careful how you react. They need a sense of caution, not fear. Talking about mistakes is a perfect teaching opportunity and will help them how to deal with bigger mistakes in the future. 4. Adjust as they grow older. As children become teens, they want more say on where to put their money. Trust and accountability are major issues. They will definitely come to you with more ideas on what they "need" so you'll have to be firm on what to approve and what needs are actually "wants". 5. Talk about the family budget. I know a widow who had to raise five children out of her meager income as a teacher. She told me she never had to deal with a temper tantrum caused by things her budget cannot accommodate. She involved the children in budgeting so they know that when she says there is no money, she is not just being stingy. 6. Talk about your investments. I'm often surprised by how much my near-teenage daughter knows. She observes a lot. Kids are like that. They know more than we think because we often assume that they are into their kinds of things when all the time they are watching and learning about us all the time. Talk to them about why you buy stocks, bonds or mutual funds. Be grateful if they read the business section of your newspaper! 7. Teach them to be an entrepreneur. As I child, I watched my mother cook polvoron and other what-nots to sell to our neighbors and classmates. These activities teach children that work and money go together and allow them to realize that it will pay to develop marketable skills they can use to earn money as they grow. Book give-away Citibank has launched a new booklet called “Use Credit Wisely” as part of its credit education campaign. The book’s three major sections explains all about credit and how it works, gaining financial control and handling hard times such as living with a disability or how to cope with a marriage breakdown and how to avoid fraud, identity theft and our legal rights. The contents are not as Philippine-centric as I would like it to be and very bank-friendly (pay at least the minimum amount on your credit card promptly to avoid late payment charges), but some portions are very helpful like the part where Citibank gives advice to people who owe too much on their credit cards. The worksheets are also nice. “Don’t be afraid to work with your creditors to devise a way to pay off your debt. Come up with a plan you can present to them. You may want to pay an equal amount monthly to each creditor, or pay more to the creditor charging the highest interest rate. The first step is to call each creditor. Tell them you want to pay in full but you need more time to pay. Explain your problem. Let them know you’ve taken steps to reduce your spending.” Sounds like a significant statement, coming from them. I don’t want to try it just to see if the advice would keep away the nasty collection agents, though, haha. Free offer from Citibank:

Get your own copy of Use Credit Wisely by sharing personal stories of how you've used credit to your advantage - to better manage your household expenses or even start your own business. The first 100 readers to send in their stories will receive their copy compliments of Citibank. Offer limited to participants with a Metro Manila mailing address.

Ssend your stories to me: salve.duplito@inquirer.net.

I was exhausted, cranky, in need of a long, warm bath and some chocolate bars to perk up my mood. Worrying about someone in the family who is sick, especially if that person is a baby, does that to you. But the voice of the man near the admission counter of the hospital where my son was admitted pierced the cloud of selfishness around me. He was obviously in pain. And he could not get a room at the hospital. “I’m sorry, sir. We don’t have a room for you. You can wait in the ER until we have a room that fits your card,” the clerk said. “Why, what’s wrong with my card?” the man said. “We need to double check if you can get a private room just as you requested. I know that the maximum for your card is P1,900 per night, but we will have to check again,” the attendant said. In the end, he decided to go home while waiting for a room. He was seventh on the list and it was already 4 p.m. Sickness is a financial planning wild card. Even if you stock up on vitamins, eat lots of fruits and vegetables, swear by the benefits of eating wheat bread, there’s no telling if or when you will get sick. There are just too many factors when it comes to health – including genes. It’s a probability that each family needs to prepare for. Are you prepared for the cost of getting sick? Is there room in your finances right now for sickness in the family? I have long wanted to do a comparative study on HMOs in the Philippines, but my son’s condition prompted me not to put the topic in the backburner any longer. However, instead of presenting you with data, I will have to throw questions at you, hoping that you will share your experiences so that we can have an initial data scan of what options Filipinos have out there when doing emergency planning. What HMO do you have? How much are you paying? What are your benefits? How would you rate the delivery of these benefits? How would you rate the quality of their service? Let me be the first to answer: My family’s HMO is Intellicare. We pay P1,484.40 per month for five cards, one of which is for a 1.6-year old baby, which I understand is the most expensive one. We have dental benefits, annual executive check-ups, check-ups with doctors affiliated with their network. The HMO covers room rates up to big private room for my husband who is the main cardholder and small private room for his beneficiaries. Whenever someone is hospitalized, they give P1,000 per day in cash, I suppose to cover other expenses during hospitalization. Ours is a corporate plan. The service is excellent. What about serious illnesses? Are you prepared for them? Last week, I attended a press conference organized by Stryker Corp., one of the biggest orthopedic implant maker in the world, which has entered into a tie-up with HSBC and BPI Credit Cards so that Filipinos can avail of an operate-now-pay-later plan. Orthopedic implants cost around P80,000 to P150,000. The entire operation can reach up to half a million. Under this scheme, if you have been recommended to have an operation, you can use your card to pay for the implant at zero percent interest and in so doing defray the cost. Using our litmus test for those zero-percent advertisements, I asked them what would happen if the patient wanted to pay in cash. Same price, they said. I was able to have a good talk with their Finance guy (they are my favorite people in every company) and he said that Stryker was charged one percent per month by the card companies, totaling 12 percent per annum, but the company decided to shoulder the cost for the first year of the program. I guess, a good deal, all in all, as long as you don’t default on your payments. One-month default would lose that zero percent deal and trap you into paying a 42 percent per annum interest on a huge amount of debt. That would give you a headache to go with your new bone transplant. Not a nice combination. The best strategy is still to have an emergency plan in place. Make sure you have three to six months worth of expenses as emergency buffer, and a good HMO to back you up. Medical insurance companies, are in general, cheaper than HMOs. But they operate by reimbursement, so you need that cash for this to work. Let the HMO story sharing begin :).

I'M blogging from my son's hospital room. He was admitted this morning; his baby body unable to cope with the huge volume of phlegm in his throat and lungs. As I went through the motions of admission, one question kept going through my mind: does brand matter? Conventional wisdom dictates that frugal living and money smarts have to do with beating marketers at their own game. Companies spend millions to build a brand. They hire professionals and pay them seven-digit salaries. These professionals crack their brains to create a story that would make consumers part with their money. Spas don't sell massage services or the use of sauna and jacuzzi. They sell the story of wellness and balanced lifestyle. Expensive boutiques don't sell great clothes. They sell the story of status and prestige. Observe how shoppers in Glorietta who lug around well designed paper bags (with a maid in tow) walk with an invisible air of affluence. Everybody is lonely, Seth Godin said. People buy things to exhume that loneliness. People use shopping like a drug, the way obesity is fueled by emotional eating. The next time you go splurging irresponsibly, ask yourself if you are plugging a loneliness hole that can actually be solved differently -- with a less expensive outcome. Having said that, I believe there are times when brand matters -- and these are the times when products don't even have to be marketed. Take HMOs and medical insurance companies. At Capitol Medical Center, early today, I saw a list of HMOs that had been suspended because of habitual failure to pay the hospitals. Surprisingly, some brands are big names. These include Philippine Axa Life, Total Care, Pro Health, Apollo Risk, Ayala Aeon Risk, Health Net, Optimum and Orange Aetna. Be careful what brand you choose. Banks. I've seen too many bank owners bleed their banks with dosri loans. I only bank with institutions that have strong independent corporate directors and whose management are responsible and professionals. Insurance companies. You don't want to outlive your insurance company. Investment houses. You don't want anyone running away with your money, no matter how high the yields that some nobody is offering you. Medicine. I was able to interview generic drug makers early last year for a study and these insiders admit that there is something in original drugs that they cannot replicate. Schools. It's a really painful thing that our public schools are slipping down tremendously. At the college level though, a UP education is still something to be proud of. I'm sure the list can grow longer, so jump in and share your brand angst.

From one of my favorite business authors and speakers, Seth Godin:

When you are sitting right on the edge of something daring and scary and creative and powerful and perhaps wonderful... and you blink and take a step back. That's the moment. The moment between you and remarkable. Most people blink. Most people get stuck. All the hard work and preparation and daring and luck is nothing compared with the ability to not blink.

This quote transfixed me. That moment can be when you’re faced with a tremendous investment opportunity, a chance to get into a business, an offer that’s wildly outrageous and yet resonates with all that you hold dearly. That moment can be about family and financial security. Do you blink or do you get stuck? Another article kept bugging me last week and Hachiko again bugged me about it in this blog the other day, :-). Only in da Pilipins, most people say, and again we have proven as a society to be unique in another area.

The report, titled “Working Time Around the World,” showed that employed women were two to three times more likely than men to work exceptionally long hours of over 64 hours per week. Working Filipino women worked 41.3 hours a week, slightly longer than the 40.4 hours a week put in by Filipino men, said the ILO, using 2002 figures.

I don’t think, however, that we are becoming a matriarchal society. In my personal observation, the power of the purse is still with the men even if women do bring in the money. Especially in the lower income brackets. What makes this more interesting is that women in the Philippines still get paid lower salaries than men, so the fact that they work longer hours does not immediately translate to higher family incomes. Any thoughts? Other things I’m reading today: PLDT raises ’07 profit goal to P33B Profit stories are important readings for stock and equity fund investors. Profit means total earnings less total expenses. Higher profit is the goal of every organization, especially in the long-term view. Good earnings that translate to good profits usually result in an increase in stock price. There may be profit sacrifices in the short-term, say when the company decides to invest some money in new brands or new equipment, but all of these should result in higher profit in the long-run. Quiz: Do you have what it takes to get rich I love this quiz from CNNMoney. Its interactive. Not just a quiz, but a teaching experience. I got perfect results, woohooo! Jestskee tells her tragic experience with bank remittance in a very funny way. Some snippets below:

"This is what happened: I had a small writing racket for a company in HongKong, for which I was supposed to receive US$150. This was way back when the exchange rate was still just under P50=$1. I gave the company my bank account details so they can wire the money over. But then I get an email from them saying that transfer charges are too prohibitive - US$24! So they’ll just mail me the check. I get the check - thanks to the country’s ever reliable snail mail system - more than three weeks later. So I deposit it in the bank, and I was told I would have to wait around a month for it to clear. Hmm. Fine. A few days though, the bank told me that since it was a US$ check from HongKong, meaning it wasn’t in the native currency, they would have to send it back to HongKong for “collection” - and the entire process will cost me US$60!!!" Read the rest of her post.

Reyna Elena is worried about her credit card debt. She has turned to this strategy to pay it off: Paying off credit card one post at a time. Bloggers, pay close attention! Bankrate.com has a very interesting take in this article on Can you make money in the balance transfer game? Read it but remember the author is talking about the United States banking system. Still, some tips here are worth considering. Here's a good video on on financial literacy provided by Entrepinoy. Know more about saving and handling credit, and how emotion get in the way of financial security. Finance Manila gives his opinion on where the PSEi is headed in this blog post. Wilson Ng has similar views with Pinoy Investor on being smart on what is cheap and what is expensive in this post: Get the One with enough Horsepower. He says:

"Sometimes, trying to save on the wrong things may be a ‘penny wise and pound foolish ‘ decision. At most times, it is still appropriate to get ( whether it is a car , an appliance, or an employee) the resource that has enough horsepower to deliver what you want to accomplish with some oomph to spare.

Lastly, some comic relief. Giggling moms help fight baby allergies shows how we can all avoid allergies! And save money too! (only for mothers :-), though)

Life for Sheldon, 26 and single, has never been this exciting. After a job as community educator for a property company, a few years as a marketing consultant, then a stint in several publications, he was hired by two Internet publishing companies to handle some of their projects. His income quadrupled almost overnight to P60,000 net of taxes. What would a 26-year old do with all that cash? “I went crazy. I bought a P93,000 laptop and other techie gadgets. I bought a 350D camera and two lenses. I went out many times a week. I started traveling. Then I read MoneySmarts and I got very scared. I realize I was spending too much and I needed to be sober,” Sheldon said. Sheldon doesn’t know it, but he is a financial planner’s dream client. He’s young and can therefore take advantage of the power of compounding, where interest on his money can earn more interest. He’s not lusting after designer clothes, fast cars and a condo of his own. He even bought a variable universal life insurance (VUL) for himself with a P1 million face amount – and that was before he started getting concerned about his finances. His entertainment expenses are his biggest headaches, but even that may be solved with some nips and tucks. Financial planner Efren Ll. Cruz is not that worried. The important thing is, Sheldon wants to be sober and, unlike most of his generation, he is concerned about the future. “This is very simple and you’ve heard this often, but it is still true. It’s not how much you make but how you spend it,” says Cruz. Sheldon’s spending pattern is typical for a 26-year-old, but with some unique twists. He spends around P1,000 for “gimmick nights” four times a week on the average. He works at home, but blows around P5,600 every month on gas, maintenance and toll fees. He wants to budget around P20,000 this year for trips to Boracay, Bohol and Cebu. The unique twist has to do with his credit card usage and contributions to home expenses. He has a P30,000 balance on his credit card that he is paying down monthly. And he has decided to put his card in deep freeze until he has paid it down. Sheldon also contributes P6,000 a month to home expenses for the maid and telephone bills. For Money Makeover, Cruz said he would coach Sheldon how to come closer to his short-term financial objectives within a span of 12 months. When asked about what his financial objectives were, Sheldon gave his financial planner another pleasant surprise. Sheldon knew exactly what he wanted. “I want to have P50,000 passive income every month and be able to save for a wedding in the next three years,” Sheldon said. After the initial meeting, Cruz committed to creating a personal income statement for Sheldon and a strategy for reaching his goals. In the meantime, Sheldon was to track his spending rigourously for the next month. Off the cuff, Cruz said cutting entertainment expenses would immediately boost Sheldon’s savings by P16,000 a month. He also said Sheldon might be unduly scolding himself by mixing up his business and personal expenses. “We will separate your business and personal needs like your laptop and cellphone expenses. We will also make a strategy so that you can have your emergency fund. After constructing your income statement, we will be able to see which are your discretionary expenses and we will focus on reducing that,” Cruz said. (The next issues of Money Makeover, where volunteers are matched with financial planners who will coach them for one year so they can reach their financial goals, will talk about Sheldon’s personal income statement and Cruz’ recommended strategies. Through this series, MoneySmarts hopes to show how a good financial plan can change the course of people’s lives. People don’t need another Sermon on the Mount on financial planning. They need to see how financial planning can be done well. By the way, Sheldon is an alias to protect our volunteer's identity.)

I don’t know if this story will make it to newspaper dailies tomorrow. What I do know is someone is very bullish on the Philippines. JP Morgan is a global financial services giant, Wiki says one of the oldest in the world. In May, it was third in the Philippine Stock Exchange’s broker ranking. Last month, it held its first investor conference in the Philippines since the 1997 Asian financial crisis. Now, it’s saying the key Philippine Stock Market index (PSEi) may reach 4,400 by mid-2008. Reminds me of the “blue skies” foreseen by Association of Securities Analysts of the Philippines (ASAP) president Francisco Liboro. He said in this article that once the market hits 3,700, the sky’s the limit. That means the market will be in uncharted territory. If you agree with JP Morgan, wait before the market dips a little before adding to your equity fund holdings. Stock analysts believe the market is likely to undergo some correction in the next few days. Buy low, so you can maximize your returns. Then hold on tight. It might not be too late to ride the bull run after all. It’s increasingly hard to find pessimists these days. If you don’t think the market and the economy will grow well this coming year, do let me know and tell me why. I’m interested in finding “contrarians.” :-) So What Chocnut snippet: What is the PSEi? It’s the Philippine stock market’s key index, composed of a basket of 29 companies. It used to be called the Phisix. It’s a widely accepted barometer of stock price movements. The composition of the PSEi was modified last year to make sure stocks included in the index meet rigid criteria. Do not confuse the PSEi with the PSE itself. The PSE is a private organization that ensures an efficient market for the buying and selling of shares, “efficient” being a relative term of course, in case you are going to compare the PSE with the Dow Jones or the NASDAQ. Other business articles for those who want to be in the know: Gov't proposes P1.227T budget for 2008 Government is the country’s biggest “economic entity.” Its budget is a major factor in how the economy moves. I used to pore over national government budget documents at the DBM. Lots of stories there. (UPDATE) Shares close higher on bargain hunting Mining boom amid buoyant metals prices This article gives a very good situationer on the mining industry. BSP siphons off P200B in excess liquidity Can you imagine that kind of money “sloshing” all over our financial system? Scary. Money changer, 4 others nabbed for duping balikbayan Practical note if you intend to travel to the Philippines with dollars in your pockets, or you know someone who will. Small money changers may offer better rates to lure you. Be sure you are not alone, even if you feel you can trust your friendly neighborhood changer and be sure they count the money well in front of you. Uhh...You know what? Go for more secure establishments instead.

Financial markets are fickle animals. They can turn anytime. Plus, there are too many things that affect them, not just in our country but movements of other markets. So, whenever I hear forecasts especially on the peso-dollar exchange rate, I listen to them but with more than just a grain of salt. But I’m addicted to asking my sources for their forecast. Picture me with my clunky recorder (I still use that kind, not the minuscule ones newbies carry nowadays), lunging after a financial market expert attending a conference, tugging at his sleeves, stepping on his toes – whatever I can do to catch his attention because I’m not even five feet tall – and asking, “Sir, sir, what’s your forecast on the peso?” with my notepad and big fat ballpen already in front of me. Sigh. Journalists are mixed up persons! The truth is, I have been trying to get my sources to give me their projections for the peso-dollar exchange rate. So far, the most remarkable forecast is P44 to the dollar. Did that shock you? This guy is bullish on the economy (sorry, I cant disclose his name) and while I am pessimistic by training being a journalist and all, I must admit that most indicators point to a continuous improvement in the economy and foreign exchange inflows especially with chunky foreign direct investments already committed by companies like Coca-Cola, Texas Instruments, etc. No doubt about it, the peso will be appreciating for quite some time. Let’s not delude ourselves into thinking we can guess what the rate will be. I think the more important thing is to understand what the peso’s appreciation can mean for us, like some of MoneySmarts' readers are trying to do. INQUIRER.net’s personal finance article today answers an OFW’s question on what he can do to cushion himself from the impact of the peso’s rise. I also received an email from Mike who says he is concerned that his dollar bond fund earnings this year may not be enough to cover the loss in value of the dollar. His concerns are valid. As Citibank points out:

Gone will be the days that a five percent per annum return on US treasury bonds will suffice. For 2007, the peso has already appreciated by about six percent absolute. One’s USD investment should thus be earning about 14 percent to 15 percent per annum to offset the effect of the depreciating dollar and still make money in peso terms.

I understand the panic among dollar earners or those whose investments are in dollars. Those who invested with a five-year time horizon, with this year or next year as the scheduled time to liquidate are probably hit badly. There’s nothing to it but to cut your losses by liquidating now if you need the money in the coming months or next year. There are other options that the article recommends, mostly for OFWs who send money home regularly:

One option is to explore a “forwards” arrangement with a bank. “Forwards” will allow OFWs and their families to lock in the exchange rate for a future conversion. Inquire from banks regarding policies for foreign exchange transactions and foreign currency accounts.

These are not over-the-counter type arrangements, though. You need to be at a “relationship-level” with your bank to be given this type of option. Talk to your personal banker. The right words may open doors. Here’s another option:

Other options are dollar global equity funds, global balanced funds, global high yield bond funds, and alternative asset classes such as commodity funds and real estate investment trusts (REITs). These investments may potentially yield a high interest income per annum. But since these investments come with risks, the OFW should determine first if he can handle the risks. Check too, if these investments are easily available and accessible to the OFW and/or his family.

Unfortunately, REITS are not yet available here. We still need an enabling law for it. Global balanced funds, global high yield bond funds and global equity funds are available in other countries, not yet here in the Philippines. Those who are working abroad, I hope you can use this tip. For those who are here, it will not hurt to inquire with your bank. Special Deposit Accounts have been accessible via the treasury departments of banks since early May, providing another alternative to investors looking for a better rate on their deposits and allowing the central bank to siphon off liquidity from the market. Unfortunately, SDAs are being apportioned off to a huge market. It may be tough to get an allocation, and some banks have reportedly already used up theirs. But do try. Your banker will know about this, so let him know that you know, too. So, where does that leave us? Go back to the reason for your investment. Your investment objectives should guide you on what asset classes you need to have. If your dollar holdings are needed soon in pesos, cut your losses and liquidate before you lose any more from the strengthening peso. If it’s for the long-term, say 10 more years, go back to the drawing board. There are many strategies in between, depending on what your investment objectives are. There is no getting away from the fact that you have to make some tough calls and some assumptions that hopefully will not make you lose sleep. So, let those assumptions be yours, not someone else’s. When that’s done, keep in mind that there is a silver lining to the peso appreciation.

Half of the country’s debt is denominated in foreign currency. A strong peso means lower interest and principal payments in peso terms, making it cheaper for the government to service debt. When the government makes lower debt payments, more funds are devoted to investments (like infrastructure) and social projects (like increasing social security benefits and building schools). There will also be less pressure to raise taxes. Lower peso interest rates also mean more affordable housing and car loans. It also means that companies can reduce their borrowing costs. Operating margins should benefit both company workers and owners. This means higher salaries (hopefully) and higher profits. A strong peso will also help keep prices low since the import component of goods will become cheaper.

Do I hear someone groaning? Is someone rolling his eyeballs? I understand. :-) Enjoy your Kellog’s and imported chocolates.

Your budgeting system is probably perfect. I only have great admiration for you if you can track your spending religiously and can put our expenses in little boxes that never overflow. I truly do. But I have long discovered that a rigid budgeting system doesn’t work for me. I’m not a fan of painful budgets for the Duplito household. I wrote all about that in an earlier post. But I do know life will be miserable if I blow money monthly on each little whim. I need to find that sweet spot somewhere between responsibilities and fun. I discovered this sweet spot is all about giving myself guilt-free money. This is how this plan will go. Let’s say I earn P100,000 on a book project. Let’s say the gods have seen fit to give me a new project to work on this year on top of my very cool project called MoneySmarts. :-) I ask myself, what portion of that amount can I spend without feeling guilty? I would say P5,000 would be alright. (What can I say? I want to be cheap, just like Pinoy Investor, eh? The way he said it with so much pride inspired me!) Am I feeling good about my money and all those countless nights working on the manuscript? You bet I do! After enjoying that warm rush of excitement, I put the P95,000 in my investment portfolio, or add it to my emergency plan, or use it to pay down debt and save on interest, or whatever financial decision makes the most sense. Then I will bring hubby and the kids to spend the P5,000 on gum, candy, kikay kits or nifty software and anti-hacking books for hubby. The idea is to spend it crazily and enjoy it! No need to account for it. I have a feeling that will make some people queasy, but here are some of the arguments for this kind of strategy.

1. It makes me want to have another book project even if I have to work 48 hours a day with cranky people.
2. This way, I feel like *I* control my money, not letting money (and a rigid budget) control me.
3. It takes the sting out of saving and investing or paying down debt. I’m still responsible, but I also enjoy what I make. Sounds like a recipe for success.
4. It protects me from the danger of splurging. As I’ve often said, when I feel deprived all the time, I’m vulnerable to splurging money and this has happened many, many times. This keeps the spending at a manageable level.

This post was inspired by an email from a very good friend who reacted on my earlier post about ignoring bonuses and salary increases.

“ei, earth to salve ;) have some ice cream to celebrate the promotion... i'm sure it won't make a big difference in the retirement money.. it will be worth the fun! :) haha! bad influence ba?”

So What Chocnut Headlines today you shouldn’t miss: Pressure seen to upset market this week. Asian and US markets particularly will be interesting. Some investors take cover and duck during tough times, but the really good ones make money. That’s what I noticed during rough spells in the local markets anyway. World Bank urges RP to plug leaks, not levy taxes. We all need a breathing spell from taxes. The reality in the Philippines is that salaried individuals carry the brunt of the tax burden. The guys at the Department of Finance know that, and believe me they are not ogres. They want a better, less-taxed life for everyone. But government, Finance officials most especially, are pressured to deliver the “acceptable” amount of revenues. Unfortuanately, some officials in its bureau -- the BIR of course -- are not. Taxing the salaried guy is the fastest and most convenient way, and even the World Bank gives positive reinforcement whenever the government reports higher revenues and lesser budget deficits. When something like this statement comes along from international financial institutions, I hope it’s not just talk. Mining poised for takeoff, but old woes persist As far as I know, the fund I invested in does not own shares in mining companies. Some investors still think investing in mining is speculative play. But I have been following news recently, and it is obvious this industry will be quite a major player in the near future. You think funds should change their position on mining? Hope to hear your thoughts. SMC prepares to issue 1.5B preferred shares San Miguel Corp., despite all the issues hounding its ownership, is a blue chip. That term refers to well-established and financially sound companies that paid good dividends historically whether the market turns north or south. Land Bank remittance business expanding Last week, the Bangko Sentral ng Pilipinas said the cost of sending money home is declining. Makes sense to look into other products out there to compare cost. How to invest in a Philippine index fund by Joseph James Lago RFP’s Lago gives sound advice to an INQUIRER.net reader who doesn’t want to pick stocks. She just wants to invest in an index fund. Remember, however, that for a fund to mirror the index’ return, it has to earn higher than the index because of tax issues. What clear investment objectives can do for your portfolio by Dr. Johnny Noet Ravalo Investment objectives are not just boring, academic requirements. You need clear-cut objectives to help you reach your goals. Ravalo says why and as usual, he is right on the money. The high cost of education It’s tuition time and a lot of households are hard-hit this time of the year. Education is becoming very expensive and sad to say that the public schools that offer good options are too few. This article gives parents a chance to do better on their education planning for next year. Don’t miss this article. Ingenious savings plan for urban poor in QC Mayor SB Belmonte shows a lot of heart in this article, or his PR managers do. I don’t think that’s something to be ashamed of hehe. His savings plan involves a “house-shaped piggy bank” for Quezon City dwellers. If they drop P57 daily, they will get a better chance at having a home of their own they can be proud of.

Last month, when I was about to pay my credit card bill with the combination of a check and cash I had in my wallet, I found that I was P2,000 short. Since I still had a few days before the actual due date, I made a mental note to pay the rest the following day. And promptly forgot about it. The following week, I went shopping with my kids. I had some guilt-free money to spend. After buying stuff for my kids, I bought hubby some management books. I’ve had my eye on those titles since last year and wanted to surprise him. Bought myself some stuff, too, of course hehe. I was actually proud of myself. This was programmed spending. This was good. Or so I thought. Came the time for my credit card billing to go sailing through the door. Wham, bham, kazzam, kablooey. My “small” P2,000 mistake gave the bank an excuse to charge me interest of P3,000. Ouch. This is how pernicious it is to roll over credit card debt. If you pay in full, your grace period will allow you to borrow money interest-free for more or less a month. When you pay in full, you have in effect free money for, say, 30 days. Some, even for 45 days. But if you leave even a P5 balance come billing time, you get penalized with interest on that itsy bitsy balance AND new purchases. You immediately lose whatever grace period the card gives. Every purchase you make gets charged interest immediately after you swipe. And don’t forget that most Philippine credit card companies charge interest using an average daily balance method. They add each day’s balance on your credit card and divide that by the number of days in your billing cycle. This means the more you use your card, the more expensive interest becomes. This is not the same as merely computing how much is 3.5 percent of P60,000. Erwin Oliva asked a very good question on whether doing a balance transfer is a good move. If you are thinking of getting the balance transfer offers of many credit card companies with “low add-on rates”, read the fine print first. You MAY get a smaller rate than the usual 42 percent per annum, and they will amortize your payments so that you pay a uniform amount monthly. The catch is that as you release some of the debt-induced tension courtesy of your balance-transfer deal, the new shiny card will encourage you to swipe and swipe. And if you fail to pay your balance in full on that new balance-transfer card, you will lose your “preferential rate.” These are very costly mistakes. As for me, this was a costly error that I am never going to repeat. But, hey, I'm human too, hehe.

This is the kind of tip you can’t find through Google and you can’t read on MarketWatch and CNN. Paying off debt is always a good idea, but you have to be smart in doing it. If you are caught between the devil (say, resorting to one meal a day) and paying off debt completely, there has to be a place somewhere in between that will allow you to breathe easier and yet escape a pauper’s life. One way is to do credit substitution. That simply means retire your debt with the highest interest rate by borrowing with a lower interest rate. A simple solution for getting out of debt is to get a salary loan from the Social Security System (SSS), Government Service Insurance System (GSIS) or from your company to pay off your high-interest bearing debt. I am very surprised how many SSS members and GSIS members do not know their benefits. A salary loan from the SSS is supposed to help members with financial emergencies. The nominal interest rate is 10 percent per annum, the maximun amount loanable is P30,000. Nominal interest rate on loans means the interest rate has not been adjusted for the full effect of compounding. Unfortunately, we have yet to know the frequency of compounding used by the SSS so I cannot give you the effective interest rate. However, I am pretty sure the effective interest rate will be higher than 10 percent but definitely much lower than the 42 percent credit card companies are charging. For government employees, GSIS’ salary loans have an eight percent to 12 percent interest rates. Maximum loanable amount is up to eight months of basic salary. Here’s another side benefit from tapping your SSS and GSIS benefits: some discover that their employers have failed to remit SSS contributions only after they applied for a loan. These cases have been increasing and they are shameless and dangerous. Spotting the problem early can save you some amount of money. Another way would be to talk to your Human Resource Department to know if your company has any special benefits for employees burdened by financial emergencies. Take advantage of these benefits because they charge below-the-market rates. Simpler and more effective, of course, would be to get an interest-free loan from your mother, father or siblings. But if you go this route, be responsible and pay some interest. And do honor your loan, please. It is just too tempting to ask mom to write it off. Now, before you fill up that salary loan application form, know that having that P30,000 check in your hand will be very, very tempting. Do not use it for other purposes, or else you will end up with having to retire two loans instead of one. What is the relationship between paying debt smartly and turbo-charging your savings? Interest on loans is one of the biggest holes in your savings net. It can eat up any returns you may be getting from savings and investments. For personal finance enthusiasts, interest on debt is the face of the enemy.

My hubby, who allowed himself to be absorbed by the rate race after years of consultant work, got promoted the other week after only two years in the company. Initial reaction: whoppeee! Lets go out to dinner to celebrate…We can buy that second car after all…Should I arrange for a vacation out of the country next year? Earth to Salve…earth to Salve. Financial planning bibles out there say my husband and I are still in the accumulation stage because of our age. I can’t afford yet another misstep in financial planning, like splurging on vacations and baby gear. We are still paying for our children’s education, good insurance policies and other stuff. I have to discipline myself to ignore promotions and bonuses (especially if they are my husband’s haha), keep them immediately tucked in our savings and investment portfolio, so I can turbo-charge our retirement kitty. This one’s a no-brainer Money Myth Buster. It’s easy to see how a mindset of not counting chicks even if the eggs are hatched can help us get totally out of the rate race. But can the additional scrimping and saving really turbo-charge my savings or am I merely looking at a slow, painful growth in savings despite the sacrifices I am preparing to make? After all, I live in a third-world country :-). (Sorry, I couldn’t resist, heh.) So, I turn to Bankrate.com, my favorite site for financial calculators. No need to learn fancy accounting stuff. I just plugged in the numbers and literally watched my savings grow. They have cool flash charting tools, too! The compounding interest calculator shows that if I ignore the increase in his monthly salary and invest the amount regularly in an instrument that gives a conservative 6.5 percent return compounded annually, we will have an additional P10.8 million by the time we both retire. Cool eh? Just for doing nothing. If I factor in the annual bonuses he receives, we will have an additional P23 million hot moolah by the time we are 60. Hmm…I think those nice shoes and second set of wheels will have to wait. We will just have to settle for delayed gratification, then. Some notes, though. This tip may not work on everyone. Incomes in the Philippine setting are widely varied, as you have heard me say before. The gini coefficient, which measures inequality of income, shows that the Philippines’ rich people are grossly rich and very few…and the poor are grossly poor and very many. For those whose incomes are insufficient for monthly expenses, totally ignoring much-needed salary increases and bonuses may not be sustainable. It can make you feel deprived, make you vulnerable to splurging and will make it difficult to stick with the savings plan. Perhaps a 50-50 savings plan will be more workable, or a 40-60. Spend half, save half. Wealth smarts is about balance and being happy while saving smartly. So What Chocnut? Interesting news for personal finance watchers. Shares again closed at a new record high, this time boosted by Wall St. and regional gains. Yet another firm is going into the hotel and tourism business, and this time, it’s another taipan. Metrobank will build the country’s tallest hotel in Fort Bonifacio, Taguig. Have you been to that place lately? It’s like a blank canvass for property developers. Wide streets and less traffic in the area sound really appealing now that there are a lot of developments in the area. But if you saw that place in 2000 before Ayala Corp. came in, you would be depressed. The mood now is very, very different. Jeanette Yutan, an analyst for JP Morgan Securities, pointed out to me just this afternoon that it’s now very, very hard to get good hotel rooms in Metro Manila. The hotel industry is in bloom, and all the planned government infrastructure spending, coupled with a lot of other factors of course, has increased confidence in the economy so well that big chunks of foreign direct investments have been committed by companies like Coca-Cola, Texas Instruments, Unilab, Nestle etc. All told, we really could be looking at economic resurgence. “These are all telltale signs. Cyclically there are factors driving the economy, but more importantly, there are structural factors as well,” Yutan said. HSBC is reacting to that resurgence with its decision to expand its insurance business in the Philippines. It’s imperative that you don’t outlive your insurance company, right? HSBC has one of the biggest names in the financial industry, and its good that Filipinos will have more options where to buy their insurance policies. More players, more competition – tougher for the players but better for consumers. All hail Adam Smith!

INQUIRER.net receives hundreds of emails a day, many of them on whether certain financial products are any good. Our columnist, Johnny Noet Ravalo opted to write about certain generic rules in creating a portfolio people can live with, rather than just do the math. This led to a discussion on the dangers of copycat portfolios.

You need to be comfortable with your portfolio because it is your savings that we are talking about. Copycat portfolios may be the fastest way to earn your first million ... or lose everything you own. Since you will not know in advance which one it is, then live with the consequences if you take this chance.

Sometimes, we think there is an “ideal” portfolio out there for everyone that we have to know about. That if only we knew the secrets of the ingredients of this dream portfolio, we would be rich. Noet says there is no such thing. He went to the kitchen for his analogy – cooking lasagna.

Cooks take a lot of pride in the dishes they prepare. They often have a personal stamp on their dishes. This is no different from investing because the product reflects your preferences and how you like to put things together in a particular way. The lasagna is just like your portfolio. Everyone knows that it has meat and pasta and cheese. What defines your lasagna is how you prepared the dish. Everyone also knows that there are shares of stock, bonds, insurance products, bank offerings, derivatives and pooled investments out in the market. This does not mean that given the same financial ingredients, two people will prefer to put these instruments together in the same way. That’s the personal touch that makes your lasagna different from my lasagna.

A previous article on “The anatomy of a diversified portfolio” may help those who are coming in from the cold, but for those who already know the basics, and are already mulling what investment ingredients to choose, don’t forget to focus on how specific investment instruments can complement the overall portfolio rather than just zero in on whether the instrument will give you fantastic earnings. Portfolios have become more complex nowadays as economic boundaries thin and Filipinos move from one country to another the way we used to move only from one town to another. Insurance policies are an important part of the financial plan. Be careful with the pitfalls of a dollar insurance policy, Honesto General says.

To go around the licensing requirements, a foreign insurance company issues dollar policies and invoices outside the country, usually Hong Kong. An unlicensed agent or broker, with a nice office somewhere in the Makati business district, represents the company here. Receipts are purportedly issued in Hong Kong. The premium collection is laundered somehow. Or, you can buy your dollar policy, and pay the dollar premium thereon, when you are traveling abroad. Nothing illegal about that. But, there are pitfalls. If you have a minor claim, like a week’s stay in a hospital, you probably will not have a problem getting your claim paid. But, if you have a claim that runs into hundreds of thousands of dollars, you could have a serious problem. The company can throw a number of reasons at you to deny the claim. Then, you find out that, to pursue your claim, you have to file suit at some distant island in the Central Pacific, such as Samoa. If you bought your policy from a Hong Kong firm, you can go into arbitration before filing your suit in Samoa. But, you have to hire a lawyer based in Hong Kong, or a Manila lawyer with an office or a correspondent in Hong Kong. Either way, you will be fighting your battle on foreign soil. You avoid all these pitfalls by buying your dollar insurance policy from a firm duly licensed here. A wide variety of life, accident and medical policies is available. The Insurance Commission has approved the wordings of these policies. You can be sure that, in case you have a controversial claim, you do not have to file suit at some distant Central Pacific island. You fight your battle in home grounds. Oftentimes, you have the commission by your side. Best of all, buy your insurance policy through a duly licensed local agent or broker. If ever you have a problem on a claim, you will need his help.

I can’t think of someone who would want to have the kind of headache General is talking about. Be careful when buying your life insurance policies. Speaking of dollar policies and dollar earnings, the strong peso has been the subject of a lot of discussions these days. Moolah Matters says if the peso stabilizes at P47 to a dollar by the end of the year, he’s okay with that rate. But not before he had some nightmares about the dollar exchange rate. Reyna Elena wonders whether people are stocking their wealth in other currencies because the dollar is growing weaker day by day. MLQ3 agrees that they are probably going into properties, and this can be seen in the meteoric rise of property stocks in the equities markets. All in all, a very exciting scene for foreign exchange traders. These well-dressed forex dealers make money whether the peso goes up or down because they know how to play the market and they know how to position their money. Me? I buy dollars if I need to spend in dollars and leave the speculating to those who have gazillions in their account. I don’t mean to sound insensitive to the plight of dollar-earners. But bear with me please. For those who earn in dollars, make sure you salary in dollar terms compensates you for your skills and for your time, not for the amount of pesos you can buy with it. In short, peg your salary to the dollar, not the peso. The peso equivalent then becomes a byproduct of your salary, not your worth in the company. And don’t lose sight of the fact that you still have P45 for every dollar you earn, because you are too focused and upset over the P5 per dollar you lost. Markets go up and down, currencies fluctuate. That’s a reality in the financial world. As my OFW friend says, just be smart in spending it, that should be a better strategy than losing sleep over the exchange rate.

Would you frequent a restaurant more if you knew that it separates its biodegradable waste from the rest of its garbage? Would you shift to a different oil company because it invests in biofuels? Would you stop buying a product if you knew that it is made in factories that are polluting the environment? Does it make more sense to buy Ayala stocks because the company donates huge chunks of cash to provide public schools with computers and Internet connection? These questions were tumbling in my mind as I observed around six corporate chiefs preaching their green projects to reporters at the Good News Kapihan last Wednesday. The League of Corporate Foundations, the organization that effectively coaxed these CEOs to traipse across clogged Makati streets to show that they care about the environment, prides itself in bringing competing companies such as Shell Pilipinas and Petron, Globe and Smart, and other unheard-of tandems, in the name of corporate social responsibility. In recent years, CSR has become a sexy buzzword. If you are one of those who believe an individual can make a difference, just imagine what corporations can do if they embrace the idea of allowing their businesses to flourish without losing their soul. Unfortunately, though, some companies still use CSR only as a buzzword and a PR tool. So, MoneySmarts popped a question for the corporate chiefs: How involved are you in CSR work? How do we know this is not just a PR effort and that you don’t relegate the job of being socially responsible to a small department that has no say in corporate policies? Here are their answers. Ed Chua, CEO of Shell Pilipinas: CSR is part of our core values because it is the right thing to do. We believe that our investments in projects like biofuels will provide returns for the company in the future. We are doing this not as a separate project, or delegating it to some philanthropy department, but as part of our corporate philosophy where staff volunteerism is a major part. Luis Miguel Aboitiz, senior vice-president for power generation of the Aboitiz group: In the Aboitiz Group, every CEO is involved in our CSR efforts because the ideas come from them. Staff can suggest, of course, and they do the implementation but the ideas come from the CEO. Khalil Al-Faddagh, president of Petron Corp.: We have made major investments in making sure that we are not harming the environment. We have spent P100 million to make sure our refineries comply fully with the Clean Air Act. We are investing in development of biofuels and also to remove risks associated with moving big volume of fuels. One of our projects is the well-known coastal cleanup project in Bataan and we are expanding this to the Manila Bay area. I am pleased that people are paying attention to the problem of global warming, which really is a very complex issue. Guillermo “Bill” Luz, executive vice-president of the Ayala Foundation: The Ayala Foundation is 46 years old, so right there you can see the group’s level of commitment in CSR work. Our social initiatives are built in to the business and now, we are looking at how to measure all our efforts. Our company’s CSR efforts are focused on three areas: education, environment and entrepreneurship. Each company takes a lead in each of these areas. Lydia Sarmiento-Enrile, chairperson of the Sarmiento Foundation: At LCF, we make it a point to push our agenda to the CEOs because they are the creators of a company’s social vision. And if he doesn’t take CSR to heart, the whole organization will not follow. We have engaged other business organizations in this effort, like the Makati Business Club, the Management Association of the Philippines, the People Management Association of the Philippines and recently the Financial Executives Institute of the Philippines. We feel very confident that we are able to push our agenda to the CEOs. Chit Juan, president of Figaro: You don’t have to be as big as all of them to have CSR. We have small companies like Binalot who are also implementing socially responsible projects. MoneySmarts, just someone who works at Inquirer.net: If these guys have true ownership of their companies’ CSR efforts, there might be hope here after all. But six CEOs out of the many CEOs out there will not cut it. Perhaps one way to let them know effective social intervention among corporations matters to the average Pinoy is to give them an incentive for doing it -- show them that it pays to be a do-gooder. Inspirational environmentalist David Brower said there is no business to be done in a dead planet. Let me add that there will be no business to be done in a country where people are not well educated, where the land and seas are sick, where the government is corrupt beyond measure, where people do not know how to build businesses. Question is, do consumers really care. Do you? I would really like to know. Rare Egyptian tortoise. I love em! Photo from AFP.