Worse than Arrovo, New Philippine Bank Notes have more errors

The Inquirer points out the errors...

Geographically challenged Philippine maps and a rare parrot with the wrong-colored beak have perturbed the country after the Bangko Sentral ng Pilipinas (BSP) rolled out error-filled new editions of its peso bills.

The new banknotes, scheduled to be rolled out this month and containing the signature of President Benigno Aquino III who took office this year, bombed spectacularly in the graphics department, according to critics.

The reverse side of the new 500-peso bill features a rare native bird—the blue-naped parrot, with its red beak incorrectly rendered in yellow and its tail feathers underneath colored green instead of yellow.

A map on the same bill—which also carries portraits of Mr. Aquino’s late parents—mislocates Palawan’s Saint Paul’s subterranean river that has been designated a UNESCO world heritage site.

Image from www.inquirer.net

Image from www.inquirer.net

Blogger Lamang Lupa was the first to blow the lid off on the dubious BSP bidding for the production of the Philippine's new currency.  

http://lamanglupa.blogspot.com/2010/09/arrovo-bill-printer-awarded-printing-of.html 

Oberthur won the bidding for the printing of all six denominations

It posted a a bid of Euro 21, 371, 480 million (US$ 28.14 million). In pesos, this amounts to P1,257 billion 

With the winning bid of 21 million Euro, security experts predict that the total cost of the new currency to the country will be Euro100 million or US$140 million or P6.1 billion. This is because The BSP will need 3.5 billion pieces of the new banknotes over a three-year period.

Significantly, Oberthur is the same currency printer that made the hideous mistake of misspelling the name of President Gloria Macapagal- Arroyo in its printing of the Philippine 100-peso banknote. It misspelled her name as “ARROVO.”

As early as September this year, the Tiyanak blogger came out with a series of posts which described just how ridiculous the Bangko Sentral ng Pilipinas or the Philippine Central Bank is when it comes to producing the currency that we all use.

Delarue has been the subject of controversy and concern because of quality problems in the printing of banknotes. Its stock has fallen in the stock markets, and its CEO has resigned.

NOT A SINGLE BANKNOTE OF THE NEW CURRENCY WILL BE PRODUCEDD BY THE BSP SECURITY PRINTING COMPLEX

Most alarming, not a single banknote of the new cutrrency will be produced by the Security Printing Complex of the BSP, which was built at a cost of billions for the purpose of showing the sovereignty of the Philippines in the printing and minting of its money.

Because of BSP neglect in the upgrading of the SPC printing facilities and technology, the SPC will just be an onlooker while Oberthur makes billions from the printing of the nation’s money.

Who benefits from this appalling situation? Obviously the printers.

And those who have a vested interest in their business.

Outsourced Currency Printing: Surrender of Philippine Sovereignty

(Reposted from Lamang Lupa)

Monday, August 2, 2010 at 1:52pm

There are serious issues involved in these decisions of the Central Bank and the Monetary Board to engage more and more in the outsourcing of the printing of Philippine currency, and the neglect in upgrading the capability and technology of the Security Printing Plant in Quezon City.

The first and most important issue is sovereignty. Printing one’s own currency is an act of sovereignty. The nation’s central bank must guard its printing with the greatest care. Outsourcing a substantial portion of the production of banknotes to not one, but several commercial printers is highly irresponsible.

Secondly, security is a vital matter for concern. In 2005, one foreign printer misspelled the name of President Arroyo to read “Arrovo”, causing great embarrassment to the country. This year, a huge batch of banknotes had to be returned to the foreign contractor because of a mistake in the color of the notes. Such lapses are a danger to the nation and our sovereign currency.

Third, it is disturbing that the BSP is now entrusting the banknote design and production to foreign hands. It is not as if we Filipinos cannot do these tasks ourselves. We have in the SPC a ready facility for undertaking the design and printing of the nation’s banknotes – if only it will be allowed to perform its mission.

The involvement of the SPC in all aspects of banknote design, production and sourcing is imperative, in order to guarantee the compatibility between foreign printed notes and locally printed notes. Procedural and organizational obstacles have complicated the coordination between the SPC in Quezon City and the BSP's administrative offices and committees in Roxas Boulevard.

In May 2010, Assistant Governor Evelina Avila, who has been batting for the upgrading of SPC facilities, abruptly resigned. Insiders say that she was overruled and by-passed by the MB, the BAC and certain BSP officers. Ms. Avila has left the country to work in Uganda.

BSP Currency Saga Continues: New Series of Philippine Peso BanknotesShare

(Reposted from Lamang Lupa)

Monday, August 2, 2010 at 12:12pm

In 2009, the BSP announced plans for the issue of a full series of new peso banknotes ("New Generation Currency").

In February 2010, the BSP's Numismatic Committee invited potential suppliers for a briefing about the New Generation Currency and the requirements for banknotized sketches, origination and printing. In April, the BSP accepted the sketches submitted by De La Rue, as well as De La Rue's offer to provide the origination free-of-charge. The other potential suppliers were advised by the BSP that their services were no longer required in this regard.

The design of the new series and additional security features will make it technically impossible for the SPC to produce these banknotes with its current equipment. Unless new printing equipment is installed at the SPC, the BSP will have no other choice than to buy all the New Generation banknotes from foreign printers.

The BSP plans to introduce the full New Generation series in one shot, issuing, by the end of 2010, five million banknotes of each denomination. As this initial issue will not be sufficient to meet the country's currency requirement, the BSP will have to place very large additional orders for finished banknotes in 2011. It may be assumed that the BSP will announce the tender for the initial batch of finished New Generation banknotes (based on De La Rue's banknotized sketches and origination) in the coming months and that subsequent tenders will be announced periodically thereafter.

Significantly, almost all countries introduce their new banknote series sequentially, i.e. one denomination every three to six months or a year, which allows testing public acceptance, adjusting the cash operations of commercial banks, correcting any issues that may occur with one denomination and improving the implementation of subsequently released denominations. And they spend time in planning and testing. In the case of the new US $100 dollar note, the US spent some five years of preparation and testing. The same happened with the issuance of new series of Swiss Francs and Euros.

In the case of the Philippines, the BSP is undertaking a total makeover of the country’s currency, and it is doing it after just over a year of preparation. No one understands the big hurry.

More on BSP Currency Anomaly: the True State of the RP Security Plant

(Reposted from Lamang Lupa)
Since 2003 the BSP has been engaged in protracted discussions and evaluations regarding the acquisition of new printing equipment with KBA-Giori of Switzerland and Komori of Japan.

• The technology of KBA-Giori (Switzerland) is recognized, by both state-owned and private printers, as the worldwide standard for banknote printing, More than 90% of all banknotes currently in circulation in the world are produced on KBA-Giori machines, including 100% of the Philippine currency. The existing machines at the BSP’s SPC, as well the equipment used by the suppliers of finished Peso notes, are from KBA-Giori.

• Komori (Japan), a big manufacturer for machinery for commercial (offset) printing, has newly entered the specialized field of integrated turn-key banknote printing equipment. Machines built by Komori are used for the production of the Japanese Yen banknotes. The only other large-scale installation of Komori banknote presses is at Salboni (Calcutta), one of several printing plants of the Reserve Bank of India.

The process of bidding out the new printing equipment has been drawn out for reasons that few can understand.

• The process began with a negotiated bidding with KBA-Giorri, the supplier of all the other machines of the SPC. In 2008, however, the BSP unilaterally aborted negotiations with the company. It subsequently sent a delegation to Germany, France, Thailand, India and Japan to investigate the feasibility of buying machinery from Komori.

• In October 2009, the BSP officially announced its decision to purchase a new printing line through an open tender and published its Invitation to Bid with an Approved Budget for the Contract (ABC) of USD 56.8 million. However, the tender was subsequently postponed indefinitely before any bidding could take place.

• On June 3, 2010, the BSP’s Bids & Awards Committee (BAC) published a new Invitation to Bid for a complete line of banknote printing and finishing equipment (with increased capacity and performance specifications) with an ABC of USD 71.9 million and a scheduled opening of bids on July 13. KBA-Giori and Komori participated in the pre-bid conference held on June 25. On July 8, the BAC advised KBA-Giori and Komori that “the bidding has been moved to a later date to be advised” as a result of KBA-Giori’s objections to Komori’s efforts to modify the bid specifications retroactively (eligibility and certain technical requirements).

The long drawn-out evaluation and negotiation process, stretching over more than six years, is contradictory to the urgent need to upgrade and increase the printing capacity at the SPC.

Urgently Needed: A Change in BSP Policies

(Reposted from Lamang Lupa)

Tuesday, August 3, 2010 at 1:08pm

• BSP should postpone the issue of the New Generation series until the new banknotes can be produced locally by the SPC.

• BSP should limit the importation of finished notes from foreign printers to exceptional "overspill" requirements, which is the practice of most nations.

• BSP should purchase up-to-date equipment for the secure production of the Philippine Peso in the Philippines.

• BSP to increase the efficiency and productivity at the SPC and to reduce waste by using modern equipment equivalent to the installations in comparable state-owned printing plants throughout the world.

• BSP should carefully review its relationship with De La Rue, which is currently having problems meeting quality printing standards and has suffered a 19%-drop in its stock price. De La Rue designed the new generation notes for free, in the hope of monopolizing the printing of them.

• BSP should carefully prepare the design, production and phased roll-out of the New Generation series of banknotes, so that it will serve the nation well for the next 10 to 20 years. Special attention must be paid to

1. the selection of design and images that properly reflect our national identity;

2. the specification of appropriate security features (anti-counterfeiting); and

3. the issuing process, so as to avoid possible mistakes (such as the imported "Arrovo" banknotes of 2005)

Peso printing anomaly in BSP

(Reposted from Lamang Lupa)

Thursday, July 29, 2010 at 3:11pm

A few days ago, a company called De La Rue found itself in deep doo-doo as its stock prices plunged 19% (as of my last count) because it had to shut down its production due to faulty paper supply... (see http://www.bbc.co.uk/news/uk-england-hampshire-10712831) this company is a security printing company that manufactures currency for a number of companies, including the Philippines. Now normally any country outsources up to 10% of its currency printing, just to play safe in case their own printing facilities have problems.

But wait, it turns out that nearly half of Philippine currency is outsourced!

WTF? That means when De La Rue is in trouble, so are we. Just check out the most recent businessmirror story:

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=28144%3Absp-no-worries-on-de-la-rue&catid=23%3Atopnews&Itemid=58

But there's a darker side to this. The Security Printing Complex (SPC, in Quezon City) of the Bangko Sentral ng Pilipinas (BSP) today has insufficient equipment to print banknotes. Some of the machines are over 30 years old and no longer suitable for efficient production. The installed equipment cannot be used for the printing of banknotes with sophisticated new security features, such as are common today.

Due to its limited and outdated machinery, the SPC is unable to produce the volumes of banknotes currently required for the country. Since 1998 the BSP has been importing more and more finished banknotes from private printing companies in Europe. The leading private security printing companies are De la Rue (UK), Giesecke & Devrient (Germany), Oberthur (France), Enschedé (Netherlands) and Orell Füssli (Switzerland).

BSP’s yearly importation of finished notes have increased from approximately 100 million notes in 1998 to approximately 900 million banknotes in 2009 (more than 40% of the country’s annual requirement).

BSP deputy governor Armando Suratos, who supervises the operations of the SPP, has claimed that the report that BSP outsources some “47%” of its banknote printing requirement is “exaggerated” and “very high.” He further claimed that outsourcing is “more the exception rather than the rule” at the central bank.

He is directly contradicted by several former directors of the SPP and former officials of the BSP. They say that Suratso is lying. Outsourcing of printing has been growing in volume in recent years. The percentage now is from 47-50%.

Also, De La Rue’s troubles with quality printing standards are cause for worry for the Philippines. It handles a major part of the outsourcing orders of the BSP. And it designed the new generation currency of the country.

Apart from the Philippines, Nigeria is the only country in the world with a large population that has been outsourcing the printing of a significant portion of its currency requirements to foreign printers. However, given the high cost of outsourcing, Nigeria recently purchased several lines of state-of-the-art machinery to print more of its banknotes locally.

It is estimated that at present the BSP is spending annually $35 to $40 million for the importation of banknotes of the current series.

With the plan of the BSP to issue a full series of new peso banknotes (New Generation Currency) at the end of the year, the volume of outsourcing and importation will cover 100% of all requirements. This is because the SPC has no capability to print the new notes with their new security features.

The costs to the country are estimated to go as high as $70 million per year. The amount is almost the same as the cost of acquiring the technology and equipment for printing the new currency at the nation’s security printing plant.