MANUFACTURING 'RENAISSANCE' IN PHILIPPINES SEEN
Philippine Daily Inquirer
01 October 2012
After a decade of reliance on remittances and the business process outsourcing sector, the Philippines may be on the brink of manufacturing "renaissance" that can add a leg to its structural growth story, according to German financial giant Deutsche Bank.
In a report titled "Manufacturing: A New Growth Driver" issued last week, the bank said it remained "structurally bullish" on the Philippine economy specially as the investment cycle" seems to have turned sustainably upward." While most bets are on the government's public-private partnership (PPP) infrastructure to be the linchpin in an investment-led growth, the research paper raised the possibility that manufacturing - which remained "under the radar" despite an evidence of a surge since 2010 - could be a key driver as well.
As a share of gross domestic product, industry peaked at 43 percent in the early 1980s falling to 31 percent in the first semester of 2012 - a low level not seen since the 1950s, the report noted. On the other hand, services fueled by remittances and BPOs contributed nearly 60 percent, in turn driving consumption higher.
"But evidence points to a nascent surge in the manufacture sector - a renaissance of sorts. More startling, the growth seems to be coming from the export sector. In fact, an objective reading of the data suggests the rebound has been happening for at least two years nos," said the September 24 research authored by analysts Rafael Garchitorena, Carissa Manhubat and Iza Fernandez.
Deutsche Bank pointed out that loan growth, electricity and water usage and even exports have consistently shown strong industrial growths since 2010. It also favorably noted that investment commitments in export zones hit new all-time highs in 2011, suggesting further demand growth as the plants are completed.
"And the breadth of industries is impressive. Makers of everything from tires, chemicals, capacitors, printers, toys, lenses, boats, ignition wire harnesses and airline galleys are expanding capacity," the research said.
It was often argued in the past that high labor and power costs and poor infrastructure were making the country uncompetitive in manufacturing, thus skewing the economy toward services.
According to Deutsche Bank, labor costs have been "remarkably stable" in the Philippines, with minimum wage growth of just 5 percent annually in the last decade compared to the sharp increases in Thailand and China wages, making the English speaking Filipino worker "much more competitive by default." It said the recent 40-percent increase in Thai wages, for example, had brought the premium of Metro Manila wages (at about $10.68 a day) over Bangkok (at about $9.72 a day) to just 10 percent. Bangkok and Shanghai minimum wages are now about the same as, or more expensive than, in areas just outside Manila.
On power costs, the research said while these remained the highest in the region, some firms operated during off-peak hours when rates were lower. It also pointed out that companies operating in Philippine Economic Zone Authority - accredited zones were exempt from a variety of taxes, which could lower their electricity costs by another 10 percent and further narrow the price differential. Finally, it argued that with the upcoming implementation of "open access" - wherein large electricity users could negotiate supply contracts directly with power generators and aggregators - electricity rates could go down further.
On infrastructure, the research said that while it was true that the Philippines was suffering from poor internal infrastructure, it is an archipelago and, as such, had many sea ports across the country. It also noted the incentives offered by Peza for manufacturing, including duty-free importation of capital equipment and raw materials, three-to eight year corporate income tax holidays and value-added tax exemption for local purchases.
Meanwhile, the research noted that the key downside risk to the manufacturing sector's competitiveness was the strong peso.
Overall, the study said a prospective manufacturing "renaissance" could add another leg to the Philippine stock market's bull story and benefit banks, power, property and consumption the most.
While it said there were few direct plays on a resurgent manufacturing sector, Deutsche Bank's top pick for the theme was Manila Electric Co., the country's biggest power distributor.
PHILIPPINES 'NEW DARLING' OF GLOBAL INVESTORS
Philippine Daily Inquirer
24 September 2012
The Philippines is one of the current "darlings" of global investors seeking better returns in emerging market economies and offers even bigger potential returns in the future, according to a ranking official of foreign investment firm Religare Capital Markets Ltd.
The company, which specializes in equities in India and the Asean region, has decided to set up operations in the country within the year to better take advantage of the nascent Philippine economic boom.
"The Philippines is a market where people want to put money into," Religare's global head of equity capital markets John Sturmey said in an interview with the Inquirer. "The story here is certainly better than how it was a few years ago. Everyone is saying good things about the Philippines."
Religare, which has the bulk of its operations in India, Singapore and Hong Kong, is hoping to tap the growing demand from the local corporate market for investment banking and equity deals.
The appellate of local corporations for more capital on both the equity and debt sides jibes with the massive amount of liquidity found offshore as central banks in the United States and Europe try to revive their economies with cheap funds, leaving investors awash with cash and few options for better returns in their home markets.
"Investors are looking for places where they can make money," Sturmey said, pointing out that Philippine companies used to have initial public offerings worth only $60 million. "Now we see $300-400 million deals," he said.
Religare's equities head also said that ongoing challenges being faced by China and Hong Kong - the twin darlings of foreign investors over the past decade - also bode well for alternative investment sites like the Philippines.
"Hong Kong and China are offering less opportunities," he said. "They're 'over-banked' since there are a lot more financial institutions chasing after fewer and fewer deals." This has made it less attractive for firms like Religare, which would have to contend with thinning profit margins.
At the same time, the China and Hong Kong markets have ongoing difficulties with corporate issues, which are encouraging investors to look to other emerging market nations.
Previous to its announcement that it would set up shop locally, Religare's has already participated in the initial public offering of Puregold Price Club, late last year as a junior partner of lead underwriter UBS (most of Religare's senior officials are former UBS bankers). More recently, Religare's also initiated research coverage on local IT gaming firm Philweb Corp.
Sturmey said that Religare was particularly interested in the spate of 're-IPO's" being undertaken by local corporation as part of the Philippine Stock Exchange's thrust to increase the free float of listed companies.
"These re-IPOs present good opportunities to people like ourselves," he said. "The Philippines has great companies here but they're trading $10,000 a day [in total value turnover]."
The Religare officials expressed confidence in the local market, saying the country was "in the best place it's been for decades, with a very strong macroeconomy and a solid political situation."
"It's always been overlooked for many years, even by the big banks," Sturmey said. "The bigger question is, whether it's sustainable."
DOTC INVITES BIDS FOR BICOL, MINDANAO AIRPORTS
21 September 2012
MANILA, Philippines - The Department of Transportation and Communications (DOTC) is soliciting bids for two airport projects, which have a combined cost of P1.1 billion.
The DOTC published on Friday an invitation to bid for the Bicol International and Central Mindanao Airports.
The construction of the new Bicol International Airport, which is estimated to cost P963.2 million, will help solve the limitations of the present airport in Legazpi.
The DOTC noted Legazpi Airport recorded a total of 198 cancelled and 104 delayed flights in 2011 due to the airport's microclimate. The microclimate is attributed to the mountains near the airport, which produce thick fog.
The new Bicol International Airport project will initially involve airside development, such as continuation of runway strip construction, concrete paving of runway, construction of taxiway, rigid pavement, and other peripheral works.
A separate bidding will be held for the construction of the passenger terminal building and other landside components.
Another P154.5 million is allotted for the development of the Central Mindanao airport in M'lang Cotabato. The airport in intended to operate as a feeder airport to the air terminals located in the coasts of Mindanao, namely the Cagayan de Oro, Davao, and the General Santos Airports.
Once it begins operations, the airport is expected to serve 3.5 million people in Mindanao.
Interested bidders may purchase the separate bid documents for these projects starting today until October 22.
PHILIPPINES IMPROVES STANDING ON CORPORATE GOVERNANCE LIST
Philippine Daily Inquirer
21 September 2012
Corporate Philippines has modestly improved its standing on a regional watchlist compiled by investment house CLSA Asia-Pacific Markets as the Aquino administration ushered in much-needed governance reforms, tackling government corruption and improving transparency and accountability.
Based on the report "CG Watch 2012 Corporate Governance in Asia" dated September 10, the Philippines' overall score improved by 4 percentage points to 41 percent this year, rising notch from the bottom of the list. This year's cellar dweller on the CLSA's CG Watch list is Indonesia.
"It is tempting to state that the improvement in our survey us a result of a concerted effort among government, regulators, NGOs [non-government organizations] and companies alike to improve standards. Indeed, there is evidence that our candidly accurate assessment of the dilapidated state of governance under the Arroyo regime, along with the reformist impetus of President Aquino's new administration, galvanized interested parties into positive action that has borne some fruit," said the report, which is published by CLSA every two years in collaboration with the Asian Corporate Governance Association.
The Philippines is still in the bottom half of the CG Watch list, joining the ranks of India (51 percent), South Korea (49 percent), China (45 percent), and Indonesia (37 percent). The higher-ranked markets include Singapore (69 percent), Hong Kong (66 percent), Thailand (58 percent); Japan and Malaysia (both 55 percent) and Taiwan (53 percent).
Since issuing its last CG Watch report in 2010, the CLSA noted that "cracks" in Asian corporate governance has become more apparent, resulting in lower scores for some of the countries like Japan, which declined by 2 percentage points; Taiwan, down 2 percentage points; China, down 4 percentage points, and Indonesia down 3 percentage points.
The CLSA report favorably noted how in June 2011, the government passed the Governance Act, which created a new body to oversee 157 government-owned or-controlled corporations. It also noted how a new bankruptcy law was enacted.
"What is still lacking, however, is solid evidence among many companies that their approach to corporate governance is more than a compliance exercise imposed on them by regulators, who still lack the resources and firepower to enforce better corporate behavior," the report said.
REMITTANCES UP 5.4% TO $1.81B IN JULY
Philippine Daily Inquirer
17 September 2012
Remittances rose again in July as global demand for Filipino workers remained strong despite the economic and political problems in key labor markets.
The Bangko Sentral ng Pilipinas on Monday reported that cash sent by Filipinos overseas amounted to $1.81 billion in July, up 5.4 percent from $1.72 billion in the same month last year.
This brought remittances for the first seven months to $11.94 billion, 5.2 percent higher than the $11.35 billion in the same period a year ago, documents from the BSP showed.
"Notwithstanding the weak global economic conditions particularly in the eurozone and the geopolitical tensions in some parts of the Middle East, remittances remained resilient on the back of sustained demand for skilled Filipino workers overseas," the BSP said in a statement.
BSP Governor Amando Tetangco Jr. said the continually growing remittances were expected to help boost the overall dollar inflow this year.
The BSP reported that total personal remittances, which include cash and kind, reached $2 billion in July, up 5.4 percent from $1.91 billion in the same month last year.
Total personal remittances for the first seven months hit $13.28 billion, up 5.3 percent from $12.61 billion in the same period last year.
Remittances for the first seven months came mostly from the United States, Canada, Saudi Arabia, United Kingdom, Japan, United Arab Emirates and Singapore.
The BSP said it expected remittances over the short to medium term to remain strong given the significant number of Filipino workers who were recently deployed for overseas jobs.
Citing data from the Philippine Overseas Employment Administration (POEA), the central bank reported that approved job orders for Filipino workers who applied for work abroad totaled 527,370 from January to August. The job orders were wide-ranging, covering services, professional, technical and production workers. The orders were from employers in Saudi Arabia, United Arab Emirates, Qatar, Kuwait and Taiwan.
Remittances are a closely watched economic indicator because these largely fuel consumption of Filipino households.
PPP PROJECTS GENERATE FOREIGN INVESTOR INTEREST
Philippine Daily Inquirer
17 September 2012
Key infrastructure projects being pushed by the government under its Public-Private Partnership (PPP) program have elicited significant interest from several foreign corporate investors
This was disclosed by PPP Center executive director Cosette Canilao, who said a number of Chinese, British and Japanese companies have brought pre-qualification documents.
"There were several investors who have significant interest to participate in the bidding for the projects, although we expect consolidation or the forming or groups [among those that bought pre-qualification documents] in time for the bidding," Canilao said in a press briefing by economic officials of the Aquino administration on Monday.
"Interest in PPP projects has significantly increased even among foreigners. There were several Japanese companies, one or two Chinese firms, and several European companies," Canilao said.
Under the PPP program, the government invites private enterprises to invest in public infrastructure. The objective is to help meet the country's need for infrastructure development even as the government continue to suffer from a budget deficit.
The LRT Line 1 project calls for the extension of the mass transport system to the south of Manila, particularly from the Baclaran to Bacoor in Cavite. The project likewise entails the enhancement of its operation and management.
The Naia Expressway Phase II project calls for the construction of an elevated expressway starting at the existing Skyway toward the existing Naia terminals.
The LRT Line 1 project is estimated to cost $1.4 billion while the Naia Expressway project will be worth $377.6 million. The government targets to bid out the two projects, plus six more PPP projects before the end of the year.
JAPANESE MANUFACTURERS MOVE TO PHILIPPINES
Philippine Daily Inquirer
17 September 2012
Japanese manufacturers are making a beeline to the Philippines due to its young, English-speaking labor market following a rising yen at home and risk factors like floods and political changes in their hubs.
Electronics firm Furukawa Co. Ltd. and adhesive maker Cemedine Co. Ltd. are the latest to invest with a combined 1.016 billion yen in initial capitalization alone. This brought new investments by major Japanese companies to at least 16.51 billion yen so far this year.
Furukawa Electric's subsidiary, Furukawa Automotive Systems Inc. (FAS), established a wholly owned unit called Furukawa Automotive Systems Lima Philippines Inc. with a capitalization of 1 billion yen to make wire harnesses for Japan-made automobiles by March next year. FAS said in a report that increasing demand for its products made it put up a "first step" export hub in the Philippines for its Asian expansion.
Cemedine will establish Cemedine Philippines Corp. with a capitalization of 16 million yen to manufacture and sell adhesive, ceiling and related products by April 2013.
Also setting up new facilities by 2013 are Bandai, the toy maker of Power Rangers and Gundam fame (744 million yen); Fujifilm Corp. which will make optical lenses for digital cameras, projectors and surveillance cameras in Laguna (2.3 billion yen), and electronics components maker Murata Manufacturing Co. Ltd. (620 million yen).
Expanding their Philippine presence are Canon Inc. and Brother Industries Ltd., which are set to make printers with initial investments of 6 billion yen and 4.23 million yen, respectively.
These companies are targeting Asia, Latin America and Europe for exports, according to the Japanese Chamber of Commerce and Industry of the Philippines (JCCIP), which has 500 member companies. As Japanese manufacturers locate in the Philippines, their suppliers will follow suit. This would create a supply chain that would attract a wider range of manufacturers and suppliers, JCCIP vice president Nobuo Fuji said.
Analysts said the Philippines has high-quality labor with lower cost and more stable growth compared with China or Vietnam. Transportation distance to Japan is also shorter from Manila while Thailand has been a traditional choice for manufacturing expansion, the flooding that further hit supply chains that suffered from the triple tragedy in Japan in 2011 has made companies seek alternatives.
To nurture the Philippines' supply chain, Trade and Industry Undersecretary Cristino Panlilio said in a phone interview, that the Department of Trade and Industry (DTI) helped in marketing not only the major manufacturers but also their suppliers in a bid to nurture the Philippines' supply chain. Exports zone locators also get incentives such as income tax holidays and exemption from duties on imported capital equipment.
Fuji also expressed hope that Japanese firms would soon be able to monetaize billions of tax credits that were due way back in 2002 and 2003. He said the JCCPI was awaiting the schedule and rates to be provided by the Bureau of Internal Revenue and of Customs. A tax credit is a rebate or refund of import taxes and duties paid to the government by a firm or manufacturer registered with the Board of Investments for raw materials, supplies and semi-manufactured products it has brought abroad to produce the goods it will export thereafter. To facilitate the refunds the JCCPI has long been urging the Philippine government to implement a more flexible tax rebate system by allowing cash refunds, cross utilization and fast releases at par with those of other Asean countries.
The DTI and the Japanese Embassy have jointly reported that despite "difficult situations" the two countries faced, particularly in 2011, trade volume between the Philippines and Japan increased by P382.7 billion from P335.4 billion in 2010. Japan remains the biggest investor in the Philippines, with total investments of P77.4 billion last year, P19.1 billion more than P58.3 billion in 2010.
Asian Development Bank senior country economist Norio Usui has said in a presentation that manufacturing investments are good for the Philippines as these create more jobs than other sectors.
Nomura Research Institute's Kengo Mizuno and Yoshihiko Iwadare have recommended that the Philippines target non-semiconductor electronic products (printers, multi-function peripheral, projectors, scanners, digital cameras, etc) makers, shipbuilders, and their suppliers as potential investors.
Japan International Cooperation Agency economist Toru Yoshida said that although foreign direct investments across Asia plunged in 2009 during the global financial crisis, the Philippines lagged behind its neighbors in terms of attracting investors. However, the Philippines could take advantage of rapidly changing global conditions (labor issues in traditional manufacturing hubs, supply chain disruption due to Asian floods, hyper-appreciation of the yen that mde firms look for new sites) to present itself as a new growth area,
PHILIPPINES SET ASIDE $110M FOR AIRPORTS REFIT
Published in Philippine Daily Inquirer
13 September 2012
MANILA, Philippines - The Philippines said Thursday it has allotted P4.6 billion (110 million) to revamp its main international airport and three others as it looks to boost tourism.
About P1.64 billion pesos will go toward refurbishing the 31-year-old Terminal 1 at the country's main Ninoy Aquino International Airport, which one travel website ranked as the world's worst last year.
The government will "restore its structural integrity and kick start maintenance activities, which have been deferred by several years," Budget and Management chief Florencia Abad said in a statement.
"Activities supported by this allocation include the immediate repair of the terminal's mechanical, electrical, plumbing and fire protection systems, as well as retrofitting of the overall structure," he said.
Three other domestic airports in the central and southern parts of the country will also get a facelift, he said.
"The release (of the money) will support the improvement or creation of more gateways into the Philippines, given the administration's campaign to cement our position as a prime tourist and investment hub," he said.
President Benigno Aquino told AFP this year that tourism was a crucial sector in his economic agenda.
He said his government was aiming to attract 10 million tourists yearly by 2016, up from four million currently, with each visitor expected to generate one job domestically.
While the country offers some of the region's most stunning beaches and tourist spots, visitors have often been turned off by its bad travel facilities.
In October last year, the interactive website, "The Guide to Sleeping Airports" rated Terminal 1 as the world's worst.
The ranking was based on a survey of complaints regarding safety concerns and lack of comfortable seating to rude staff and poor facilities.
After the report came out, embarrassed leaders ordered a general cleanup and upgrade of the facility, including a renovation of 16 toilets that visitors had often complained of not having any running water.
BPO FIRMS NCO GROUP, APAC MERGE, EYE INFRA INVESTMENTS
Philippine Daily Inquirer
13 September 2012
MANILA, Philippines - Business process outsourcing firms NCO Group Inc. and APAC Customer Services Inc. have merged under the umbrella Expert Global Solutions Inc.
(EGS), which plans to increase its presence in the country.
EGS President and country head Raineiro Borja said the company would invest heavily in infrastructure in the next two years.
"We did the merger formally in April. We've been doing a lot of the integration ever since," Borja said in an interview with reporters on Wednesday.
According to Borja, EGS will put up a stand-alone building in Metro Manila that will serve as its new headquarters.
"We want to be in that building by 2014 when some of our leases expire," he said.
"We're also looking at other provincial locations. One we are looking at is in Mindanao and the other one is in the north," Borja added.
At present, EGS has three sites in Quezon City located at ABS-CBN Compound, Mezza Residences and Cyber Park in Araneta Center. It is also present in Muntinlupa City, Leyte, Clark Freeport in Pampanga, Marikina City and Bonifacio Global City in Taguig City.
EGS aims to employ 15,000 by the end of the year, representing a third of the company's global workforce. The company currently employs 12,000, of which 5,000 came from APAC while the rest from NCO.
Prior to the merger, APAC's strength was in customer relations management (CRM) while NCO was very strong in accounts receivable management (ARM), Borja said.
"Merging the two companies has the benefit of both so now we become a very strong global player in both the ARM and CRM," he said.
OFFSHORE AIRPORT EYED NEAR SANGLEY
Philippine Daily Inquirer
13 September 2012
The developer of Aseana City, which owns key development real estate neighboring so-called Entertainment City, is looking into the viability of developing an offshore airport by reclaiming land near the Sangley Point military facility in Cavite City.
Delfin Wenceslao Jr., chairman of Aseana Holdings Inc., said in an interview that an offshore airport would ease congestion at the Ninoy Aquino International Airport (Naia) complex, drive tourist growth to the Aseana Business Park that hosts both Aseana City and Entertainment City, and address security concerns posed by the traditional mushrooming of real esttate developments around airports and other sensitive facilities located inland.
With four first-class hotels, casinos, business process outsourcing buildings, condominiums and related facilities being put up at the Aseana Business Park, the area could become a convention and tourist hub, Wenceslao said. Its proximity to convention and shopping areas of nearby SM Mall of Asia complex could attract a huge number of foreign and local tourists, he said. Specialized schools being built in Aseana City would also make an ideal place for residential and business developments, he said.
Wenceslao said his company already knew through a study that it was technically viable to construct an offshore airport. "What we're trying to answer is, is it financially viable to put up the airport now? he said, noting that Hong Kong had the same island-airport model.
Studying the financial viability of having an offshore airport to keep pace with developments in the Aseana Business Park, among others, would require about P100 million to 200 million, the construction expert said.
The offshore airport he said, would be located six or seven kilometers from the Aseana Business Park. "We're talking of creating about 1,400 hectares minimum, with right of way so that we don't have issues with the military," Wenceslao said. A two-kilometer causeway could be built to connect the offshore island to the mainland, he said.
The financial study could easily be completed, he said, if the government would support such an undertaking through the current airport administration of Naia.
"The present airport has a single runway and if this gets blocked or congested, the traffic has to be converted to Clark. The recourse is to put up a second runway with a common tower, or just put up an airport in one site. Sangley is expandable and will not be encroached (upon) by other developments because it would be an island," Wenceslao said.
The financial study would push through if the government would support it, Wenceslao said. If the project would be found viable, the government could provide the site or develop the offshore airport on its own, he said.
PH EXPORTS UP 7.8% IN JULY
Philippine Daily Inquirer
11 September 2012
MANILA, Philippines - Philippine exports grew faster in July after a slowdown in the previous month but a downtrend was reported in electronics.
Outbound shipments increased 7.8 percent in July from a year earlier as growth in export items like metal components and activated carbon offset a sharp drop in electronics and semiconductors.
The July export figure marked an improvement from 4.3 percent in June.
According to the National Statistics Office, exports in July registered $4.807 billion in receipts, higher than $4.460 billion reported in the same month last year.
Electronics, which accounted for about a third of revenue in July went down 25.6 percent to $1.675 billion from $2.253 billion registered in July 2011.
Semiconductors, which make up bulk of electronic exports, earned $1.344 billion in July, down 12.1 percent from $1.529 billion a year ago.
Month-on-month, exports went up by 11.4 percent from $4.314 billion in June.
Aggregate exports from January to July rose 7.7 percent to $3.564 billion from $29.306 billion during the same period last year.
REFORMS IN OIL, GAS EXPLORATION READIED
Philippine Daily Inquirer
10 September 2012
The Department of Energy (DoE) is aggressively pursuing varous policy reforms that will enhance the attractiveness of the current business environment for local and foreign exploration firms.
"We have started the process of awakening the sleeping giant that is the Philippines with the creation of Executive Order 60 last year, Hopefully, by the end of the year, we are able to streamline all the government processes in doing business in the Philippines," said Energy Undersecretary Jose M. Layug Jr.
EO 60 was issued by President Aquino last year to establish Upstream Petroleum Task Force, an inter-agency body that will serve as a one-stop shop for investors in the upstream oil exploration and development industry. Its primary thrust is to provide support mechanisms for all those who are undertaking exploration activities in the Philippines.
According to Layug, the executive order would address one of the more daunting challenges currently faced by investors - that of securing about 200 permits from various government agencies and offices that often took at least a year to complete, provided there is no opposition to the proposed projects, in which case the waiting period will stretch out even longer.
One of the targets under EO 60 was to be able to effectively streamline the process and cut it by half, or to six months, Layug said.
Although the government has a long way to go before it can fully achieve the targets of EO 60, improvements were already evident, according to Layug.
The DoE for one, has already cut down the process of issuing tax exemption certificate from the previous prescribed period of five to six weeks, to the current processing period of two to three weeks, while the Department of Environment and Natural Resources has reportedly committed to reduce the processing time for permits issued for upstream petroleum projects.
The Department of Justice has already issued a circular that eases the issuance for foreign contractors, primarily allowing them to secure working visas even before they arrive in the Philippines.
Layug also pointed out the increased coordination among various agencies concerned with upstream oil and gas projects, including the Department of National Defense, the Philippine Coast Guard and the Philippine National Police.
"In fact, we have drafted the rules on safety and emergency. We are now finalizing for proper coordination," he added.
FOREIGN FIRMS RAISE PH GROWTH FORECASTS
Philippine Daily Inquirer
10 September 2012
Global financial institutions Credit Suisse and Bank of America-Merrill Lynch have upgraded their economic growth forecasts for the Philippines this year following hte better-than-expected first-semester performance, but both tempered their outlook heading into 2013.
Regional player Development Bank of Singapore (DBS) also raised its growth forecast for the Philippines to 5.6 percent for this year, but cut its growth projection to 5 percent for 2013. In its latest research paper, DBS said it now expects the Philippines to grow faster this year than the earlier projection of 5.3 percent. The upward adjustment took into account the economy's better-than-expected performance in the first half.
"The Philippine economy has been a clear outperformer thus far this year, registering high growth rates and low levels of inflation," DBS said in the paper released Monday. The financial services firm said robust consumption would continue to fuel a healthy growth rate in the second half.
Credit Suisse jacked up its year-on-year Philippine gross domestic product (GDP) growth forecast for this year to 5.4 percent from 4.5 percent but shaved its 2013 estimate to 4.5 percent from the earlier outlook of 4.8 percent.
Merrill Lynch revised its 2012 GDP growth forecast slightly higher to 5.7 percent from 5.6 percent but also trimmed its 2013 estimate to 5.5 percent from 5.7 percent.
The forecasts of both Credit Suisse and Merrill Lynch exceed the 4.8-percent market consensus for Philippine growth based on the August poll of Consensus Economics. But for next year, BoFA Merrill Lynch's forecast is higher than the current consensus forecast of 5.1 percent although Credit Suisse's outlook is lower.
"While the base for exports going into third quarter is not favorable, we think domestic demand and government spending will continue to offset the external weakness," Credit Suisse said in a commentary dated August 30.
The Philippine economy expanded 6.1 percent year on year in the first semester. Second-quarter growth was at 5.9 percent against the market consensus of 5.5 percent.
In a separate commentary dated August 30, BoFA Merrill Lynch projected that government spending will likely taper off this second half of 2012, which might bring GDP growth to around 5.4 percent this semester.
"Apart from slower government spending, a strong peso may also soften GDP growth as this would undermine growth, the business process outsourcing (BPO) sector and purchasing power of families dependent on overseas Filipinos' income", said the commentary written by analyst Jojo Gonzales of Philippine Equity Partners, the local research partner of Merrill Lynch. "Government consumption may also be slower but public infrastructure spending should help offset the uneven growth in private investments."
The changes in GDP forecast, according to the BoFA Merrill Lynch report, would hardly effect its sector preferences in the Philippines properties, banks and infrastructure-linked conglomerates.
Credit Suisse said the first-semester data supported its view that sequential GDP growth might soften from the "extremely strong print" seen in the first quarter as the boost from electronic export faded. In addition to the robust consumption growth, Credit Suisse added that investments would likely play a more prominent role in boosting growth this year.
The institution said it was still optimistic on Philippine growth this year. "The downward revisions for 2013 GDP growth mainly reflect more difficult statistical base effects," it said.
AYALA, ABOITIZ TEAM UP FOR P10B MACTAN AIRPORT PROJECT
Philippine Daily Inquirer
10 September 2012
The Ayala and Aboitiz groups - two of the country's biggest and oldest conglomerates both led by Hispanic families - have teamed up to bid for a P10-billion project to redevelop the Mactan International Airport in Cebu.
Ayala Corp. and Aboitiz Equity Ventures Inc. signed a memorandum of agreement on Friday to create a 50-50 joint venture that would serve as their vehicle to build a new terminal for the country's second-largest international gateway under the public-private partnership (PPP) framework.
Based on a PPP Center briefing paper, the Mactan project will involve the construction of a world-class passenger terminal building with a capacity of eight million passengers a year as well as the operation and maintenance of the old and new facilities.
Ayala president and chief operating officer Fernando Zobel de Ayala said in a disclosure to the Philippine Stock Exchange on Friday that the Ayala group was excited about this partnership. "We cannot think of a better partner for this project than the Aboitiz group, [which] has not only built a long history and heritage in Cebu but also has a successful track record in undertaking significant size projects in multiple industries," Zobel said.
"Both groups strongly believe in the potential of the Mactan Airport to be a compelling gateway to the country for international passengers and to the Visayas for the growing domestic travelers. We share the vision of creating an airport that provides passengers an efficient and pleasant travel experience," he added.
AEV president and chief executive Erramon Aboitiz said his group was equally excited about the partnership with Ayala, noting it would give AEV the opportunity to enter into a strategic segment crucial to developing both the country's transportation infrastructure and tourism potential.
"It also allows us to harness the Aboitiz group's competencies in construction, logisctics, utulities and real estate development and management. In our over a century of doing business, AEV has always been keen to play a role in nation building and, consequently, we are therefore keen today to support the government's thrust to develop the nation's infrastructure gaps," Aboitiz said.
"Combined with the Ayala group's strength and competencies that have been honed over more than 100 years of doing business, we are very optimistic about the success potential of this project. Moreover, the fact that the project is in Cebu, which is home to the Aboitiz group, gives it more special meaning to us," Abotiz said.
Zobel said both groups were looking forward to leveraging each other's strength "in developing and running a modern airport facility that Cebu and [the] country can be proud of."
FOREX RESERVES BREACH $80-B MARK
Philippine Daily Inquirer
07 September 2012
The country's gross international reserves (GIR) surpassed the $80-billion mark in August, the highest ever recorded by the Philippines and a big boost to the confidence of the international financial community and foreign investors.
According to the Bangko Sentral ng Pilipinas, the GIR hit $80.78 billion as of the end of August, up 6 percent from $75.94 billion as of the same period last year. The latest amount of foreign exchange reserves was also about 1-percent higher than the $79.76 billion posted as of end-July.
The sustained rise in the GIR was attributed to the central bank's foreign exchange operations. The BSP buys foreign currencies in the market from time to time to temper wild fluctuations in the peso-dollar exchange rate.
Supply of dollars in the market remained strong given the continued growth in remittances from overseas Filipinos and foreign investments mostly in peso-denominated instruments and in the country's business process outsourcing (BPO) industry.
The rise in the country's foreign exchange reserves was also traced partly to dollar deposits placed by the national government at the central bank.
The government borrows dollars through loans from foreign creditors or the issuance of foreign currency-denominated bonds. Before the government uses the proceeds from these loans and bond sales to repay maturing foreign debts, it usually parks the funds at the BSP, thus beefing up the country's foreign exchange reserves.
The rise in the GIR was also traced to the increase in the prices of gold in the world market. Of the country's foreign exchange reserves, $10.55 billion were in gold holdings.
NEW AIRPORT PLANNED FOR 'FASTEST GROWING TOURIST DESTINATION' IN PH
INQUIRER.net
07 September 2012
MANILA, Philippines - A new airport is being planned for Camarines Sur, the "fastest growing tourist destination," the Department of Transportation and Communication (DOTC) said Friday.
"The move to develop an airport in San Jose, Camarines Sur came in light of the provinces' sustained growth in tourism," DOTC said in a statement released Friday.
An estimated 2.33 million visitors came to the province in 2010, around 223 percent higher than the 721,024 visitors in 2008, it said.
The DOTC "is inviting consultancy firms interested to conduct a feasibility study on the possibility of developing a new airport in Camarines Sur, the fastest growing tourist destination in the country," it said.
"Camarines Sur overtook perennial favorites like Metro Manila, Cebu and Boracay as the top tourism destination in the country, according to figures from the Department of Tourism," DOTC said.
A popular tourist destination in the province is the Camarines Sur Water Sports Complex (CWC), Caramoan Island, "Our Lady of Penafrancia Church in Naga, the 19th-century churches in Goa, San Jose and Sagnay, [and] the beaches of Sagnay, Sabang and Pasacao," DOTC said.
Another project of the DOTC in the province of Samar is "a master plan study of Calbayog Airport." The DOTC was looking for potential consultants for the P7 million project, it said.
"Calbayog is the biggest city in Samar Island in terms of population. As such, it is one of the commercial trade centers in Eastern Visayas," it said.
"Apart from its growing economy, Calbayog is also home to a host of natural tourist attractions such as the Bangon - Bugtong, Tabokno, and Pan-as Falls; the Danao and Guinogo-an Caves; Mapaso Hot Spring; Mawacat Slide; Binaliw Isle; and the braches of Malajog, Naga, and Bagacay Beach," DOTC said.
Deadline for the submission of eligibility documents is on September 14, after which the DOTC will shortlist five prospective bidders who can submit their formal bids, it said.
BERJAYA GROUP EYES DEAL WITH MAZDA MOTOR TO SET UP AUTO DISTRIBUTION IN PH
Philippine Daily Inquirer
10 September 2012
MANILA, Philippines - The Berjaya group of Malaysia is hatching a deal with Japanese car giant Mazda Motor Corp. top set up a Mazda vehicle distribution business in the Philippines.
In line with this, the Malaysian group plans to infuse P125.4 million in fresh capital to a newly incorporated local affiliate Berjaya Autot Philippines Inc (BAP), thus re-capitalizing the latter ahead of the prospective deal with Mazda.
In a disclosure to the Philippine Stock Exchange on Monday, the publicly listed Berjaya Philippines said BAP, where it has kept a 40 percent interest, received a proposal from the Bermez International Ltd. (BMIL) to subscribe to new common shares in BAP.
The infusion will increase BAP's capital and give BMIL 60 percent control of the enlarged share capital in exchange for the P125.4-million fresh subscription.
BMIL is a wholly owned subsidiary of the Bermez Motor Sdn Bhd, which is in turn 80 percent owned by the Berjaya Group Berhad, a fully owned unit of Berjaya Corp Berhad.
The plan is for BMIL to subscribe to about 125.4 million new common shares in BAP at P1 each in order to acquire 60 percent of BAP.
BAP was incorporated last August 10, with an authorized capital stock of P10-million divided into 10 million shares. While Barjaya Philippines owns 40 percent of this auto unit, 60 percent is held by Bagan Resources Pte. Inc.
The auto unit has yet to commence business operations.
In response to the BMIL's offer, the disclosure said BAP would propose to its shareholders to beef up its authorized capital stock to P220 million and its issued capital to P209 million divided into 209 million shares.
Berjaya Philippines plans to subscribe to additional shares in BAP as well in order to retain at least 30 percent of the latter's enlarged capital.
OFW BENEFICIARIES SEEN TURNING INTO ENTREPRENEURS
Philippine Daily Inquirer
5 September 2012
More households dependent on remittances from overseas Filipinos are expected to go into business as the peso has cut the value of the dollars they receive from abroad.
Esquire Financing Inc., which caters to the credit needs of small and medium enterprises, said that with the strong local currency pulling down the peso value of remittances, recipient families may be pushed to engage in businesses to boost their income.
"More people are going into business, they are going to (financing) groups like Esquire. What's driving this is the positive outlook on the economy and the strengthening of the peso," Rajana Uttamchandani, president and chief executive officer or Esquire, said in a briefing Tuesday.
Uttamchandani said that with the favorable outlook on Philippine economic growth, the peso is seen to remain strong in the years ahead.
Should the local currency indeed appreciate over the short to medium term, Uttanchandani said the income of remittance-dependent households would shrink if family members do not engage in other income-generating activities.
Esquire's total loan portfolio currently stands at P5 billion, he said.
Uttamchandani added that the company expects to get more loan applications from SMEs over the near term as a result of the steady increase in the number of remittance-dependent households getting into business.
The Bangko Sentral ng Pilipinas earlier reported a gradual rise in the number of remittance-dependent households that are investing the money received from family members abroad.
In a survey conducted by the BSP in the first quarter of the year, 8.5 percent of remittance-dependent households in the country reported to have invested some of the money sent home by family members working abroad. This was up from 6.4 percent recorded in the same period last year.
The BSP has projected that remittances will grow by at least 5 percent this year from last year's $20.1 billion.
In peso terms, however, economists expect remittances in local terms to post minimal growth because of the appreciate of the peso against the greenback.
The peso rose by 4.23 percent from January 1 to August 31, when it closed at 42.06:$1.
About 10 percent of Filipino householods are said to be partly or fully dependent on remittances sent by overseas-based families.
PH JUMPS 10 NOTCHES IN GLOBAL COMPETITIVENESS SURVEY
ABS-CBNnews.com
05 September 2012
MANILA, Philippines - The Philippines jumped 10 notches up in the 2012 World Economic Forum's Global Competitiveness Report.
The Philippines ranked 65th among 144 countries in this year's survey, from 75th last year. The WEF report said the Philippines was one of the countries that showed the most improvement.
"Ranked 65th, the Philippines is one of the countries showing the most improvement in this year's edition. Indeed, it has advanced 22 places since reaching its lowest mark in 2009. The Philippines makes important strides this year in improving competitiveness - albeit often from a very low base - especially with respect to its public institutions (94th, up 23 places)," the report said.
It noted a significant improvement in "trust in politicians," up 33 spots to 95th place, but "considerable room for improvement remains."
There is also improved perception that the corruption (108th, up 11) and red tape (108, up 18) are being addressed by the Aquino administration, but the report noted "they remain pervasive."
The WEF also noted improvements in macroeconomic environment (36th, up 18), which it noted was one of the strongest aspects of the Philippines' performance.
The financial sector is also seen to be more efficient and supportive of business activity (58th, up 13).
"Despite these very positive trends, many weaknesses remain to be addressed. The country's infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd)," the WEF report stated.
The Global Competitiveness Report 2012-2013 assesses the competitiveness of 144 economies, providing insight into the drivers of their productivity and prosperity.
For the fourth year in a row, Switzerland topped the overall ranking in the Global Competitiveness Report. Singapore remained in 2nd spot, followed by Finland in 3rd, Sweden in 4th and Netherlands in 5th. The top 10 list also includes Germany (6th), United States (7th), United Kingdom (8th), Hong Kong (9th), and Japan (10th).
PHILIPPINES HOPES TO FLOOD WORLD WITH COCONUT PRODUCTS
Philippine Daily Inquirer
04 September 2012
If the investment plan of the Philippine Coconut Authority (PCA) pushes through, the world may soon be awash in coconut water, virgin coconut oil and other coconut by-products, including chips, jam, vinegar, frozen coco meat, liquid coco milk, coconut milk powder, macapuno, coco liquor, coco coir and coconut handicraft.
The PCA under the Department of Agriculture is looking at investing over P1.7 billion to boost the export of coconut products to at least 100 countries.
PCA Administrator Euclides Forbes cited records that indicated that 30 coconut products and by-products were among the country's leading agricultural exports, with export earnings totaling $1.96 billion last year.
The P1.75-billion investment, Forbes said, would be used "to devise and implement strategies to take advantage of the growing export demand on coco water, VCO and coconut sap sugar."
The PCA, he said, was working with the Department of Science and Technology (DOST) and the Philippine Center for Post-harvest Development and Mechanization (PhilMech) to develop processing and post-harvest technologies to further lengthen the shelf life of coconut water for domestic and export markets.
For his part, Agriculture Secretary Proceso Alcala said that President Benigno Aquino "(has) instructed that assistance be given to coconut farmers." He added that the coconut industry should take advantage of available technologies to enable coconut farmers and entrepreneurs to create new and innovative by-products.
Alcala said the PCA was implementing a nationwide coconut planting and replanting program under which some 14.6-million seed nuts had been planted as of July 31 to sustain the productivity of small coconut farmers and increase their income.
The PCA also hoped to fertlize up to 25-million coconut trees next year and to implement a coconut livelihood and intercropping program, the Kasaganaan sa Niyugan ay Kaunlaran ng Bayan (Kaanib) at 300 sited nationwide, the agriculture official said.
PHILIPPINE BANKS TO SURVIVE GLOBAL CRUNCH - BSP
Philippine Daily Inquirer
03 September 2012
The Bangko Sentral ng Pilipinas would not suffer from a "deleveraigng" in the banking sector similar to that being experienced by financial institutions in Europe, saying local banks have more than enough resources to accommodate higher capital requirements being imposed worldwide.
BSP Governor Amando Tetangco Jr. said that uniline banks in the eurozone, those in the Philippines enjoyed capital levels that were way above existing standards. He said that a tightening of capital requirements would not force banks in the country to dispose of existing assets just to comply with the new rules.
He cited the capital adequacy ratio (CAR) of most banks in the country at 16 to 17 percent, way above the 10-percent minimum currently required by the BSP and the 8-percent floor prescribed internationally. Of the CARs, between 13 and 14 percent are Tier-1 capital, which are mostly retained earnings and common stocks and are thus considered of better quality compared with capital sourced through bond issuances.
"[Developments in Europe] are not very encouraging thoughts, but the upside is that we [BSP] do not believe right now that such is the case for the Philippines," Tetangco said.
Deleveraging, or the act of divesting assets, has heightened in Europe following the need to raise more capital to meet higher capital requirements to be imposed over the medium term. Regulators globally have been urged to impose stricter capital requirements to prevent another crisis similar to the latest global turmoil, which was believed to have stemmed from banking failures in advanced economies.
Stricter capital requirements are required under the Bassel 3, the updated set of international bank-regulatory standards. For instance, banks are required to have a significant amount of Tier-1 capital in their total capital.
The BSP will implement the tighter capital requirements in full by 2014, ahead of most advanced economies that will implement the new standards on a staggered basis through 2018.
With the deleveraging in the eurozone, banks in the Western region have started to dispose some of their assets in emerging Asian markets, including the Philippines.
Monetary authorities in Asia, however, said that deleveraging by European firms should not be a concern. In fact, they said this could benefit Asian banks through the availability of more markets that European banks were leaving behind.
Tetangco has maintained that the Philippine banking sector remained sound and healthy. He added that the effects of the global economic turmoil on banks in the country would not be significant enough to cause stress.
Documents from the BSP showed that the combined net income of universal and commercial banks in the Philippines amounted to P30.45 billion in the first quarter, up 41 percent from nearly P22 billion in the same period last year.
PHILIPPINE ECONOMY GROWS 5.9% IN Q2
with Ana Mae Roa, Philippine Daily Inquirer
30 August 2012
MANILA, Philippines - The Philippine economy grew by 5.9% in the second quarter of 2012 largely due to a strong services sector, the government said Thursday.
This brough economic growth in the first hald of the year to 6.1 percent following a surprisingly strong 6.4 percent expansion in the first three months of the year, said Lina Castro, secretary general of the National Statistics Coordination Board.
Economic Planning Secretary Arsensio Balisacan said economic growth could be attributed to the acceleration of public investment and the recovery in capital formation.
Independent analysts had widely predicted 5.4 to 5.8 percent growth in the second quarter.
JOLLIBEE FORAYS INTO HOTPOT DINING BUSINESS IN CHINA
Philippine Daily Inquirer
22 August 2012
MANILA, Philippines - Home-grown fast-food giant jollibee Foods Coro, has teamed up with Taiwan's leading restaurant operator Wowprime Corp. to own and operate a hot pot dining chain in mainland China, Hong Kong and Macau.
This joint venture deal with a unit of Wowprime raises JFC's stake in Chinaq, also adding a fourth restaurant brand under the group. The joint venture will own and operate thye 12 Sabu brand.
In a disclosure to the Philippine Stock Exhange on Wednesday, JFC said the 12 Sabu brand features "low-priced hot-pot dishes served in a clean and bright dining environment" and "highlights safe and fresh good which each customer cooks in individual fast-heating stone hot pots." As of 2011, there were 18 of these 12 Sabu stores operating in Taiwan, with revenues of about NT$200 million ($6.67 million).
The expected investment from JFC for the period 2012 to 2015 for this venture is equivalent to around $8 million, the disclosure said.
"The joint venture aims to tap into the very popular hot pot dining market in China with the benefit of the combined experience and expertise of Wowprime and JFC," the disclosure said.
JFC's wholly-owned subsidiaries Jollibee Worldwide Pte. Ltd and Golden Plate Pte. Ltd. have signed the deal primarily with Hoppime Ltd., a subsidiary of Wowprime. JFC's subsidiaries combime will own 48 percent of the joint venture company while Wowprime's subsidiary and executives cmbines will own 48 percent. The remaining 4 percent will be owned by "certain individuals with experience in the retail sector in China," the disclosure said.
Through their subsidiaries, JFC and Wowprime will share control and management of the joint venture company equally.
Wowprime, founded in 1990, is a publicly listed company in Taiwan and is known as Taiwan's largest restaurant chain group, JFC's disclosure said.
Wowprime currently owns and operates 210 stores under a total of 11 brands in Taiwan, 46 stores under two brands in China, and two stores under one brand in Thailand. This is the first time for Wowprime to enter into a joint venture with another group.
JFC currently operates 367 stores under the brands Yonghe King, Hong Zhuang Yuan and San Pin Wang as well as research and development and food processing in China.
Offshore expansion is part of JFCs core strategy. JFC operates 2,022 stores in the Philippines and 2,546 globally.
CITI BULLISH ON PHILIPPINE GAMING SECTOR
Philippine Daily Inquirer
22 August 2012
Citigroup is bullish on the Philippine gaming industry, which is seen to triple to $3 billion in terms of gross gaming revenues by 2015 once the Entertainment City along Manila Bay is completed to create a cluster effect similar to that in Macau.
"With significant barriers to entry in the gaming space, we believe new markets such as the Philippines represent a unique way to play the burgeoning and under-penetrated regional consumer story," said a Citi report on Philippine gaming dated August 16.
While Citi continues to favor the Macau gaming market to the Philippines, Singapore and Malaysia, the report said the new developments in Manila were under-covered and "under-appreciated" and likely to outpace the growth in Macau. The report thus offered a favorable view on Bloomberry Resorts, Belle Corp. and Alliance Global Group Inc.
Gross revenues in the Philippines were estimated to have expanded by 40 percent year on year to $1.3 billion in 2011, which Citi said had firmly established the market within the regional gaming arena.
The Citi report also noted that as a result of the lower tax structure and mass-oriented mix of business in the Philippines (equal to an estimated 65 percent of gross gaming revenues in 2011 against 27 percent in Macau), earnings before interest, taxes, depreciation and amortization (Ebitda) margins at Resorts World Manila (RWM) were relatively better than Macau on average.
Citi is forecasting a 30-percent Ebitda margin at Resorts World Manila for the full year (against 31 percent in 2011, due to a weaker hold in the first quarter), which the report said was just above the 29-percent estimated Ebitda margin at Sands China, Macau's highest-margin operator whose revenue base was roughly 10 times the size of RWM.
"Following the success at RWM, which opened in late 2009, we believe each of the new projects under development in Manila Bay will continue to grow that market on the back of increased visitation, growth in domestic consumer spending and an improved economic climate," Citi said.
In addition to the development of the domestic Philippine market, Citi said the country's proximity to a substantial portion of the world's population -including China/Hong Kong, Korea, Japan and Southeast Asia - was providing significant long-term growth potential.
Citi initiated coverage on Bloomberry Resorts with a "buy" recommendation and a target price of P12.75 a share (it last closed P10.06), saying this was the only "pure play" in the local gaming space. "As the next new property and the first in Manila Bay, we expect Solaire will showcase the VIP market potential," the report said.
Citi also gave Belle Corp. (it last closed at P4.86) a "buy" recommendation and a target of P5.65 a share, noting that the proposed gaming alliance with a world-class operator like Macau's Melco Crown group would be "transformative" for Belle Grande and remove risk to Belle shareholders."
The report said Alliance Global Group has the least direct exposure to the gaming theme in the Philippines - through its 50-percent interest in Travellers International along with Genting of Malaysia - but also noted that this has a "far more balanced fortfolio of consumer-oriented businesses." Citi has a "buy" recommendation on AGI (it last closed at P11.18) with a target price of P13.60 a share.
FILIPINO POWER IN FORMULA GREEN
Philippine Daily Inquirer
21 August 2012
The Philippines has always been associated with the iconic jeepneys since its inception in World War II. The vibrantly colored vehicle, which was produced from reconfigured US army Jeeps, is still the main mode of transport for the country's booming population of 90 million people. But if we as a nation strive to be "world class," are we addressing our transport outlook in the same manner as our prosperous neighbors?
While Singapore has brought the McLaren company, a Malaysian airline owner took ownership of Lotus Formula One and Caterham Racing, and a joint undertaking which acquired Lamborghini by Indonesia before they sold it to Audi, we are still stuck in the prehistoric age of the jeepney and tricycle, all because we continue to live by the day and not set our sights to the future. Is this the global mindset we want to instill to our next generation? We can't even implement integrated bus terminals to decongest the metropolis as there are hundreds of bus licenses and no consensus. If it was working, then, where are these terminals? Why is Edsa still clogged with buses, criss-crossing without any regard for traffic rules? Why do Jeepneys continue to make their own rules adding up to the congestion?
In the words of Sheldon Adelson of the famed Las Vegas Sands, it is time to "change the status quo." This was his reponse to critics of his new integrated casino resort in Singapore, which has now surpassed revenue targets of his Las Vegas-and Macau-based casinos. To put it simple, there has to be change to keep up with the demands of an emerging Asia.
The biggest question is why does change need to start elsewhere for any change to influence the Philippines? We are supposed to be a nation of entrepreneurs and leaders - not followers.
Catalysts of change
In a recent gathering of movers and shakers in Monaco, Monte Carlo, hosted by one of Europe's top private banks and the Singapore-based Dr. AB Monozca Foundation, the Philanthrocapitalist Summit saw 12 racing franchises bidded out for the world's first electric racing circuit dubbed "Formula Green". The circuit stood out because the formula type race cars would use a patented and powerful lithium-ion battery pack and a propulsion system which enabled these race cars to hit speeds in excess of about 274 kph and travel a range of 241 kilometers before a battery pit stop change - and that is just the first - generation car. The racing franchises were sold out with the United States, Japan, Singapore, Australia, the Middle East and the Philippines taking the first six slots.
Wait a minute. The Philippines? How?
According to Paul Monozca, a Philippine-born businessman who is chairman of the Europe-based Parmon Trust and has interests in US professional sports, a "top to bottom approach was necessary to showcase what they were doing for the global electric vehicle (EV) market. He has appointed Christopher Lacson, a Filipino industrial designer, to design their new formula and commercial car models. This includes new-age light railway systems running on electric systems which could ply smaller roads and eTrikes for "emerging economies." The prototypes of the racing EVs are currently being tested with a development circuit of Nascar.
Not only will these innovation assist in providing a solution to oil dependence, the Philippines is also playing an active role in world change. A Filipino who is developing the next-generation race car company in the likes of McLaren and Ferrari but with electric technology, is definitely one big news.
"The possibilities for us in the alternative vehicle sector are huge. We are capable of leapfrogging over the older and outmoded technologies that have proven not to work anymore. We can create new (transport) paradigms here in the country for our use as well as export them all over the world," Lacson said.
To help make things happen, Monozca says other like-minded companies are all-out with their support-a leading battery company, a steel company and a car components manufacturer, all Philippine companies.
Unfortunately, the cars will only be available in other markets except the Philippines because everyine else in the coutry is focused on making jeepneys and tricycles better instead of seeing how to provide a more modern version of transport to improve traffic in the metropolis like mini-LRTs and more streamlined bus depots. It's vested interest versus what is good for the future.
According to Monozca, the lithium-ion battery packs they are using is so powerful that it's 30-percent cheaper per 1 mega-watt (MW) of power to set up in an integrate platform used for various applications including powering townships (driving tourism in remote places), cell sites, defense, marine besides transport. The battery packs are part of the over-all business of the company which showcases their technology via the Formula Green EV circuit.
Proof of progress
In an interview with Bloomberg's Susan Li, Deutsche bank's chief economist for Asia, Michael Spencer, touted the Philippines as the strongest as well as the safest place for funds. He said, "the strongest performing economy in Asia today is the Philippines," adding that the country recorded an impressive 6.4-percent growth in the first three months, making it the best-performing economy in the region next to China.
Indeed the Philippine economy is buzzing despite the onslaught of typhoons and other natural calamities as well as political mud-slinging. All the signs that the Philippines is fast shedding its perennial "sick man of Asia" tag are evident; the construction boom continues unabated everywhere; remittances from OFWs that are reaching all-time highs; and investments flowing in strongly through the stock market. Cases in point are the soon-to-rise multibillion-dollar integrated casino resorts in Pasay City, the nascent Clark special economic zone and logistics hub, which is abuzz with Middle Eastern investors, and the continued development at the Bonifacio Global City - the new financial districts.
Can the change of status quo be extended to Philippine transport? We need world-class ideas, government support and swift implementation to see real change happen in this generation. Most of all, we need to support our very own talent on the world stage.
MARITIME CONFAB HIGHLIGHTS SUBIC BAY LOGISTICS, INVESTMENTS OPPORTUNITIES
13 August 2012
MANILA, Philippines - The Subic Bay Metropolitan Authority in cooperation with the Subic Bay International Terminal Corp. is organizing the Subic Bay Maritime Conference & Exhibit on August 23-24, 2012 at the Subic Bay Exhibition and Convention Center in Subic Bay Gateway Park.
Themed "Subic Bay: Asia's Emerging Logistics and Investments Hub," the conference highlights the Freeport zone's attractions as an investment and logistics hub and a gateway to Asia's expanding market.
The Subic Bay Maritime Conference & Exhibit is expected to attract more than 300 investors, shippers, and logistics and supply chain executives from Manila, Subic, Clark and nearby areas, and will look at the advantages of Subic as a vital investment area for shipping and logistics companies.
Speakers include Trade Secretary Gregory Domingo, Transportation Secretary Manuel Roxas II, Tokyo-based International Association of Ports and Harbors Secretary General Susumu Naruse, National Economic and Development Authority Director-General Aresenio Balisacan, Subic Bay Metropolitan Authority Administrator and Chairman Roberto Garcia, Customs Commissioner Rozzano Rufino Biazon, Bases Conversion Development Authority President Arnel Cassanova, Philippine Export Zone Authority Director-|General Lilia de Lima, International Container Terminal Services, Inc. acting head of Asian region Christian Gonzalez, SBMA Director Norberto Sosa, Philippine Chamber of Commerce and Industry Vice President for Transport and Logistics Angelito Colona, American Chamber of Commerce of the Philippines Senior Adviser John Forbes, Air21 Chairman Alberto Lina, and Pacific-Atlantic Group Chairman Ramon de Leon.
Presentations will center on projects and initiatives at the port complex; attractions of Subic Bay as a transshipment port and investment center; opportunities for shippers in Subic; the viability of Subic as an alternative port to Manila; synergy between Subic and Clark; Custom's trade facilitation initiatives in Subic; the greater push to raise productivity and efficiency at the Subic container terminals; competitiveness of the Philippine logistics industry; and the private sector wishlist for Subic.
Event sponsors are Manila North Tollways Corp and Lighthouse Marina Resort (Gold); Ayala Land Premier, Civic Merchandising, Malayan Towage, PTT and SGS Subic (Silver); and Cebu Pacific Cargo, Gerry's Grill, Pilipinas Hino, Petron Pilipinas and MAN Automotive Concessionaires Corp (Bronze).
Supporting organizations are the Association of International Shipping Lines, Clark Investors and Locators Association Confederation of Truckers Association of the Philippines, Department of Trade and Industry, Filipino Shipowners Association, Maritime Law Association of the Philippines, Maritime League, Philippine Ship Agents Association, Subic-Clark Alliance for Development Council, Philippine Exporters Confederation, Philippine International Seafreight Forwarders Association, Port Users Confederation, Rotary Club of Subic Bay, Subic Bay Freeport Chamber of Commerce and Supply Chain Management Association of the Philippines.
Media partners are Australia-based Baird Publications which publishes mostly magazines Ausmarine and Work Boat World; Hong Kong-based Cargonews Asia; China-based Maritime News China; and PortCalls Asia (www.portcalls.com), a news and data provider for the international container shipping industry. PortCalls is also the event manager.
For more information on the Subic Bay Maritime Conference & Exhibit, please call the event manager PortCalls (Liza Almonte) at (632) 552-7072, 551-1775, 551-1972 or email at [email protected], [email protected]. For regular updates, visit www.subicmaritimeconference.com, like our Facebook page or follow us on Twitter@subicconference.
AMERICAN ENTREPRENEUR BETS BIG ON PH
Philippine Daily Inquirer
11 August 2012
American businessman Joseph Sifelman always seens to be at the right place at the right time.
After dabbling in investment banking, this Ivy Leaguer from New York built a successful business process outsourcing (BPO) enterprise in India that expanded to 42 countries.
After that, he moved on the Latin America and co-founded a thriving engineering-construction business on the region's infrastructure boom.
So perhaps it's no coincidence that Sigelman is now putting his chips into the Philippines - and into a business where his previous experience in growing cross-border BPO and construction business comes in handy.
In late 2010, he organized a group that acquired Atlantic Gulf and Pacific Co. of Manila Inc (AG&P) from the Consunji group's DMCI Holdings.
AG&P is a 112-year-old company with a rich legacy, having built the Rizal Monument, the country's first steel bridge and Manila's water and sewerage system. But has been in hibernation since the Asian crisis. It was originally an American company that was acquired by industrialist Roberto Villanueva |Sr. in the 1970s when Pres. Marcos instituted parity laws. DMCI took over in 1997 then sold to Sigelman.
Sigelman, the son of a doctor from New York city, graduated from Princeton University's Woodrow Wilson School of Public and International Affairs and then went to Harvard Business School.
Sigelman, who is only in his late 30s, worked with Goldman Sachs International in London at a private equity unit before becoming an entrepreneur.
It was the entrepreneur in him who saw the gem in AG&P, whose fabrication complex in Batangas is by far the largest of its kind in Southeast Asia.
"I think there's a handful of companies that are emerging at this point in time that will carry the Filipino flag and create global brands and hopefully AG&P is one of those companies," he says in an interview with Inquirer.
Specialization
AG&P's specialization has evolved to what is called modularization, or building large pieces of infrastructure such as power plants or refineries piece by piece (or module), much like how one builds using Lego blocks.
The difference is that AG&P produces giant blocks out of its plant in Batangas and ships these to clients all over the world.
"The Philippines is a business process outsourcing country and I realized it's a BPO for construction. I jokingly call it IPO or industrial process outsourcing," Sigelman says.
The process starts with modular engineering - taking the details of design and making it more "constructible". Based on such engineering design, AG&P starts fabricating.
"Modularization has been around for 20 years but it never really took off recently. Even now, the preponderance of modularization has been in steel and pipe. But now you can integrate to that electrical, mechanical system, instrumentation, heating, ventilation, airconditioning vacuums so you create these big steel blocks that are mission ready," Sigelman says.
Once transported to client site, the modules are plugged in - just like Lego blocks.
"AG&P takes care of the engineering, fabrication, assembly, the load-out, the heavy lift, transportation, the heavy lift on the other side and we bring our people to actually set these things up, to do the installation, the operation and maintenance. It's the entire life cycle of the project," he says.
Such a business cuts across industries or geographies, which is why Sigelman is confident that AG&P has a hige potential for growth.
"Once it leaves our yard, it can literally go anywhere. We can modularize to be containerized" he says.
Sigelman says that more than not, construction projects anywhere in the world are delayed and overshoot budgets,
"I think it's because you bring thousands of people (construction workers) together who have never met. There's no system, no processes. And everyone knows that in 18 to 24 months, they won't have a job, so their bonus is actually to delay the prokect and work a bit longer."
Modularization, the businessman says, reduces the cost "tremendously" and delivers "better quality and safer way of doing business".
What AG&P sees itself doing is thus a highly disruptive approach to solving traditional construction challenges. Because the modules can essentially be plugged in and put to work, they help companies in the oil and gas, power and resource industries get in business faster and therefore start generating revenues sooner, breaking the norm of over-budgets and delays and therefore, substantially bringing down costs.
It's a sweet spot to be in this kind of business at this point in time, Sigelman says.
"In the nexty five years there will be surge in infrastructure projects in this country and we wan t to be as leader in that," Sigelman says, adding that AG&P could team up with the likes of its former owner DMCI in such projects. Because AG&P does not build foundations or civil works, he says it's not competing with local construction giants like DMCI.
Outside the Philippines, he adds that global demand for infrastructure is very high.
"The market is credible right nowm" he says, noting that there are essentially more available resources than the existing infrastructure can manage and insufficient local capacity to meet that demand.
"In Latin America, there's a shortage of workers. You have mining in Argentina, Chile, Columbia; oil and gas in Brazil, Columbia, Peru, Ecuador and Venezuela. All of these will have to be built and need a lot of workers. US may be a slowing economy but it is spending a lot on infrastructure. Canada doesn't have enough people to do the projects being planned in Calgary and other parts of Canada. Even Africa has huge mining projects and lack of skilled labor. Saudi Arabia is changing from an exporter of crude to an exporter of refined products, so they're building huge refineries and in all of the Gulf, you need power to support these," he says.
In Australia, which has a 20-million population or one-fifth of the Philippines', there's $100 billion worth of contracted LNG (liquefied natural plants) today, half of which will be contracted in the next 6 to 12 months, Sigelman says.
At the same time, he says there are huge mining projects across iron ore, coal precious metals as well as huge infrastructure projects like railroads, ports, chemical plants.
A truck driver in Darwin, a city in Australia's northen territory, makes $150,000 a year while a welder in the same city earns $250,000 a year and only works for half a year, Sigelman says.
"Everything has become so ridiculously inflated," he says. "there are way too many projects to be supported by the local population but it has a very strict immigration policy so the only solution is modularization."
Why in Ph
If AG&P market is the rest of the world, is the Philippines competitive enough to be a hib for industrial process outsourcing when there are cheaper suppliers of labor and raw materials in China or in other Asian countries? For Sigelman, the answer is a resounding "yes".
"I love the Philippines and the best advantage is the work force. The Philippines has some of the best workers, best craftsmen, and some of the best managers in the world. That's an pbjective statement. When you go to the Gulf countries, their craftsmen of choice are always the Filipinos," he says.
Filipinos are "incredibly productive, hardworking and highly skilled," he adds.
Having said that, AG&P faces some constraints such as high power rates and the lack of a supply chain, for instance, steel mills. There's less capital available compared to other markets but he says this is changing for the better.
Despite all these, he says Filipino worker is a "very compelling proposition".
"We're not the cheapest when you look at this cost, but if you look at the productive hour, Philippines does extremenly well," he says.
Sigelman says that the country does not have enough access to capital compared to the likes of South Korea, which can put up big fancy fabrication yards with huge machines and highly automated processes.
If additional capital could be brought in to complement high quality Filipino workers, then the Philippines becomes a better proposition, he says.
"Remittances help (Philippine) GDP (gross domestic product) grow but you want to build companies here where people want to work. You want your best people back," he says.
Since his group took over the company, AG&P has expanded its yard from 450,000 square meters to 1.5 million sqms. It also co-owns the Batangas International Port. While transportation is an important cost, it's not its biggest cost, especially as cargo in global shipping industry is favorable for AG&P right now.
Integrated systems
At presemt, AG&P can produce 60,000 metric tons of processed steel a year which should go up to 100,000 MT a year in the next few months, Sigelman says.
"But ultimately, we think about integrated modules, it's more than steels and pipes ... integrate electrical systems and processes inside. Your yard size doesn't need to increase but the value goes up," he says.
AG&P did not have much commercial business but since Sigelman cane in full time in May last year, the company has bagged nearly $350 million in contracted sales. This is expected to increase "very significantly" this year and grow to several hundreds of millions of dollars in backing sales by the end of this year.
Apart from increasing the yard's footprint in Batangas, he expanded the management team, built systems and improved cost structure.
Sigelman estimates that AG&P will invest $200 million over the next 12 to 18 months into the business. By the end ot this year, it expects to employ 3,500 people in its yard which by the middle of next year, will grow to several thousands, many of whom will be women.
"We're focused on diversity. I'd like to have 50 percent of our workforce to be femaile,: Sigelman says noting it's not true that welding is an occupation for men. "You don't have to lift anything. It's doing it with a very steady hand," he says. AG&P's best welder in a recent project for British Petroleum, is a lady who was given citation by BP itself.
"We're giving people in Batangas an opportunity in a safe environment where they have a long term career. It's a lot better option than going to work in Saudi Arabia," he says adding this in turn will also help foreign exchange for the country even without having to export workers.
Apart from Sigelman, AG&P's investor group includes local groups and a Kuwaiti fund. The company, which was brought back to private hands after the group's purchase from DMCI, is majority Filipino-owned.
"We're investing here. We'll continue to invest here. This is our home." says Sigelman.
DOTC READIES P160M AIRPORT UPGRADE PLAN
Philippine Daily Inquirer
07 August 2012
The government has approved P160 million worth of upgrades for three key provincial airports as part of ongoing efforts to improve countryside infrastructure.
In bid invitation published Monday, the Department of Transportation and Communications (DoTC) said the civil works for airports in San Vicente, Palawan; Kalibo, Aklan; and Sanga-Sanga, Tawi-Tawi, would include mostly airside development and terminal facility improvements.
"These airport development projects are in support of the huge potential of tourism in the country's economy, and in the more important goal of creating jobs and livelihood opportunities for the people," the DoTC said.
The country's tourism sector continues to boom. From January to May of this year, visitor arrivals rose almost 14 percent to more than 1.8 million tourist arrivals compared with over 1.6 million visitors for the same period in 2011.
Last year, a record 3.7 million foreign tourists visited the country, and all indications show that the country is on its way to achievinh the projected 4.6 million tourist arrivals by yearend.
A big chunck of the budget for this batch of airport upgrades will go to the new airport in San Vicente. About P72.35 million is allocated for the completion of a runway extension, concrete paving of the runway, and hill obstruction removal in the municipality in Palawan.
This represents another phase in the airport development in San Vicente. A month ago, the DoTC also announced bidding for the construction of a new passenger terminal building in the same area.
San Vicente is highly touted as the next big tourist destination in the Philippines, the DoTC said. Apart from its proximity to El Nido, San Vicente also boasts of a 14-kilometer stretch of white-sand beach.
About P59.5 million was earmarked for the Kalibo International Airport Development Project, one of the busiest airports in the country.
ACCENTURE FIRM UP COMMITMENT IN PHL
The Philippine Star
07 August 2012
Manila, Philippines - Leading information technology provider Accenture committed to further expand its presence in the Philippines amid the country's strong macroeconomic fundamentals and skilled workforce.
Manolita Tayag, country managing director for the Philippines of Accenture, said in an interview with reporters that the country's most diversified IT and consulting firm is shifting its focus on beefing up its domestic client base.
"We are putting a lot of focus on the domestic side because it is important for us to work with domestic clients. With the growth of the Philippine economy, we can focus on domestic clients," Tayag stressed.
He pointed out that the company is now working with several conglomerates operating in the country to service their needs.
"Philippines will continue to be a strategic part of Accenture. It is an outsourcing destination due to the availability of talent, English-speaking workforce, massive IT and telco infrastructure, and service-oriented Filipinos," he added.
Accenture's operations in the Philippines is made up of the largest and one of the most mature IT companies in the country with more than 25,000 employees in Metro Manila and Cebu.
In operates in 14 locations in the Philippines including three in Makati City, three in Quezon City, three in Mandaluyong City, three in Metro Manila, two in Taguig City, two in Cebu City, and one in Pasig City.
"Yes we do want to continue to grow and expand our operations in the Philippines," Tayag said.
Accenture Philippines started in 1985 and is a pioneer of Accenture's Global Delivery network of more than 50 centers worldwide employing 249,000 workforce and generating $25.5 billion in net revenues for the fiscal year August 31, 2011.
BELGIAN FIRM STILL KEEN ON PH SOLAR PROJECTS
Philippine Daily Inquirer
31 July 2012
Enfinity Philippines Renewable Resources Inc., the local arm of Belgian renewable energy developer Enfinity, has committed to push through with its planned solar power portfolio in the Philippines despite the low feed-in-tarriff rate granted for solar power generation.
In an e-mail, Enfinity Philippines president Dennis Ibarra said the parent firm has promised to run half of its worldwide business here in Philippines, including supply and investments, despite recent developments in the regulatory area.
Ibarra admitted that it would be difficult even for a large solar firm like Enfinity - globally the No. 5 solar developer with a 500-million euro revenue and projects with a combined capacity of 500 megawatts for 2012 - to roll out its planned 500-MW solar power portfolio in the Philippines over the next three to five years.
A third of its portfolio will be affected by the feed-in-tarriff rate for solar of P9.68 a kilowatt-hour, which was a far cry from the initial figure of P17.95 sought by proponents. According to other solar developers, it would be hard to put up their solar power projects with the lower-than-expected FIT rate for solar and the lack of economies of scale.
Meanwhile, two thirds of the company's projects are expected to be carried out within the areas where the state-run National Power Corp.'s Small Power Utilities Group (SPUG) operates. These areas, usually in the far-flung, remote parts of the country, are those not connected to any of the main grids.
Ibarra, however, said that while Enfinity expected delays in implementation, the company was finding ways to push through with the solar power projects.
"We will meet with the new board shortly. Enfinity is committed to the Philippines and was notified of another 11 sites awarded to us last week with focus on Mindanao and SPUG. Enfinity will carefully redesign our facilities to match EPC [engineering, procurement and construction] costs and time supply buys," Ibarra explained.
"We also need investment grade for the Philippines so the total cost can be lowered," Ibarra disclosed.
AUSTRALIAN BOAT BUILDER TRANSFERS MANUFACTURING CENTER TO PH
Philippine Daily Inquirer
26 July 2012
Australian military and commercial boat builder Austral has chosen the Philippines as the future center of its global manufacturing operations, taking advantage of competitive labor costs that do not sacrifice the quality of work.
The company which leads globally in the production of high-speed catamarans, said it would soon start exporting state-of-the-art vessels out of its newly acquired facility in Balamban, Cebu.
"It has become uncompetitive for us to build these ships in Australia. It's our intention to systematically and progressively transfer the technology from Australia to the Philippines so it is our center of excellence for all things commercial," Austral CEO Andrew Bellamy said in a recent interview.
The Balamban shipyards is the company's third location.
"We chose the Philippines because of its high level of growth, the English-speaking population that has the righ skill set and work ethic, and the country's location is also an obvious take-off point for our Asian-centric expansion," Bellamy said.
The company's oldest facility is in Perth, Australia, where the bulk of commercial vessels are made.
Among the notable ships the company has delivered are the passenger ferries used for trips between the Chinese cities of Macau and Hong Kong.
The company also has car and passenger vessels operating inter-island routes in Greece.
Austral's second location is in Mobile, Alabama, by the Gulf of Mexico. The United States shipyard focuses on ships for defense. The company has been building warships for the US Navy since 2006.
The company specialized in catamarans and "trimarans", which have several thin hulls that are able to cope with rough sea conditions.
The company has about 200 employees working in Balamban, with a firm plan to hire 150 more people. Being built in Balamban today is a 27-meter three-hull trimaran-the first of its kind Austral has ever built-that will be used by wind-farm operators in Europe.
Bellamy said the Balamban facility, which the company bought from Aboitiz group for $8 million last year, could end up enjoying thousands of employees, if demand stays strong.
This is about a long-term manufacturing capability in the Philippines that will be industry-leading and sustainable," Bellamy said.
US FIRM TO MASS-PRODUCE LED PRODUCTS IN PH
Philippine Daily Inquirer
25 July 2012
MANILA, Philippines - US-based optoelectronic company Light Engine plans to start mass production of its LED products in the Philippines through local electronics manufacturer Cirtek Holdings Philippines Inc.
Cirtek announced the business partnership with Light Engines, an original device manufacturer specializing in LED design, in a press statement on Wednesday.
LED, or light-emitting diode, is an electronic light source, which is both powerful and energy efficient. This lighting technology is expected to predominate over conventional light bulbs in the mass market because of its longer life span and it's being mercury-free, which makes it easy to dispose of.
Light Engines is the LED industry's leader in the design of application specific primary optics. Its corporate office us based in the USA while its research and development as well as design is based in Russia.
LED can be used in a wide variety of lighting application such as street lights, stop lights, decorative lights, medical and plant growth acceleration back lighting, consumer electronics displays and backlighting, advertising billboards and signages and high-end automobile lighting.
Cirtek, meanwhile, is looking at more business opportunities with one of its long-term partners, CamSemi, a semiconductor company that designs, develops and supplies energy-efficient power management for electronics brand and cell-phone charges.
Last July 6, CamSemi awarded Cirtek a plaque of appreciation for helping CamSemi in introducing its new products this year.
Cirtek started business with CamSemi in 2008, producing products intended for the smartphone applications such as battery charges.
CemSemi vice president Kim Tey, represented by Cedrin Lee, said the award was given due to "Cirtek's willingness to go above and beyond, we salute Cirtek Electronics for helping us on our critical new products."
Cirtek provides turnkey solutions that include package design and development, water probing, water back grinding, assembly and packaging, final testing of semiconductor devices, and delivery and shipment to its customers.
PHILIPPINE STOCKS JUMP ON NEWS BSP OPEN TO MORE MONETARY EASING
Philippine Daily Inquirer
24 July 2012
MANILA, Philippines - Local stocks bounced on Tuesday as prospects of local monetary easing tempered lingering jitters from the eurozone.
The main-share Philippine Stock Exchange recouped 20.34 points, or 0.4 percent, to close at 5,159.74, overcoming the weakness in the morning session.
The main index was supported by modest gains eked out by the industrial, holding firm and property counters. On the other hand, the financial, services and mining/ oil countries remained in the red.
Trading was mixed across the region after Moody's placed Germany, Netherlands and Luxembourg on a "negative" credit watchlist as the EU debt concerns persisted. Spain's bond yields also spiked after one of its regions sought financial aid from Madrid.
Dealers said the Bangko Sentral ng Pilipinas' statement on Tuesday, which saw scope for monetary adjustment brought some relief to the market. The central bank is seen to be turning "dovish" or based for monetary easing.
On the other hand, President Aquino's State of the Nation Address on Monday was welcomed by businessmen but offered little catalyst to the market.
Investors picked up shares of Ayala Corp., Metrobank, ALI, SM Investments, First Gen, AGI, EDC, URC, DMCI and Megaworld. Non-index stock FPH also traded higher in heavy trade.
On the other hand, the PSEi's gains were curbed by the share price decline in BDO, PLDT, AEV, ICTSI, BPI, AP and SM Prime. Second-liners Puregold and Security Bank also ended lower.
Value turnover for the day amounted to P4.9 billion. Despite the overall index rise, decliners outnumbered gainers 79-63, suggesting selective buying at the market.
PAL UNVEILS NEW BOEING, EYES NON-STOP FLIGHTS TO TORONTO, PARIS, NY
Philippine Daily Inquirer
24 July 2012
MANILA, Philippines - Flag carrier Philippine Airlines plans to introduce soon on-stop flights to cosmopolitan cities Toronto, Paris and New York City.
This was announced by PAL president Ramon S. Ang Monday night as the flag carrier - now under the management and control of San Miguel Corp. which is also led by Ang - toasted the arrival of its third Boeing 777-300ER, deemed as the aircraft of choice for long-haul flights.
"In the months ahead, three more Boeing 777 aircraft will be delivered to PAL. For us, it means a modern fleet that we can be proud of. And for our loyal passengers, this means more new exciting destinations. In the near future, PAL will fly non-stop to Toronto, Paris and New York City," Ang said.
During the cocktail party, Ang added that Toronto could be added in three months while flights to Paris could be started by February 2014.
He said the strategy for Philippine Airlines was simple: modernization of its fleet, the expansion of its network, and improvements in passenger service.
"Philippine Airlines must become known for its warm, sincere and hospitable service. Each of us must be passionate about exceeding the expectations of our passengers in creative and helpful ways," Ang said.
Ang said PAL was operating in a very competitive environment-but one with a wealth of opportunity.
"The Asia-Pacific is the fastest growing market for air travel and we need to improve our competitiveness as an airline," he said.
"Our number one priority is to turnaround PAL by tapping into the strengths of San Miguel Corp. and the Lucio Tan group of Companies. As PAL President, I am committed to transforming our airline's business operations," he said.
Likewise unveiled during Monday night's cocktails were:
*New flight dishes prepared by five top-rated guest chefs;
*Book & buy ticketing kiosks to be installed at selected Petron gas stations; and
*Apple inflight iPads for entertainment onboard trans-Pacific flights.
The first three Boeing &&&-300ERs were delivered in November 2009, January 2012 and June 2012, respectively. The 370-seater B777s currently fly to Vancouver, Japan, Hong Kong, Australia and Japan (via Cebu).
Each B777 has two of the largest and most powerful commercial jet engines - the DE90-115BL which has cleaner emissions to protect the environment as well as for a quieter cabin. The aircraft is believed to offer exceptional fuel economy, efficiency, reliability and high levels of cabin comfort for its passengers, combines with unmatched levels of payload (28 tons of cargo) and range (7,825 nautical miles).
The aircraft's body uses composites and advanced alloys that save up 2,600 kilos of structural weight. It operates on fly-by-wire technology.
All components are operated electronically, doing away with mechanical operation. Integration of airplane's various systems has resulted to easier maintenance and faster turn-around for availability for flights.
NEDA OKAYS 2 LUZON INFRA PROJS WORTH P48B
The Philippine Star
24 July 2012
MANILA, Philippines - The National Economic and Development Authority (NEDA) - Investment Coordination Committee (ICC) has approved two major infrastructure projects with a combined project cost of approximately P48.12 billion.
The ICC, which is among the seven inter-agency committees of the NEDA Board, evaluates the fiscal, monetary and balance-of-payments implications of major national projects.
In a statement, the ICC said it approved the 47.018-kilometer, Cavite-Laguna Expressway (CALAX) project and the Bicol International Airport Project.
The CALAX project, with an estimated cost of P43.319 billion, involves the financing, design and construction of a new four-lane expresswat that stretches from the end of Cavite Expresswat in Kawit, Cavite to Mamplasan Interchange to the South Luzon Expressway in Binan, Laguna.
Socioeconomic Planning Secretary Arsenio M. Balisacan said the project would partly be financed through the Public-Private Partnershipe (PPP), and partly through official development assistance (ODA) from the Japan International Cooperation Agency (JICA). The Department of Public Works and Highways is the project's proponent.
"The project is consistent with the Philippine Development Plan 2011-2016's transport sector objective of providing dependable access to production areas such as Cavite and Laguna, being rapidly growing industrial and commercial centers south of Metro Manila," Balisacan added.
Meanwhile, the Bicol International Airport Project, with a project cost of P4.799 billion, involves the construction of a new domestic - principal Class 1 airport of international standards in Daraga, Albay. It will replace the existing Legazpi Airport due to the latter's limitations and safety concerns.
Balisacan said the project would improve safety and efficiency of aircraft operations. The construction of a new airport in Albay would meet international standards and practices, as well as enhance the accessibility of tourism destinations in the Bicol region.
The project also involves the construction of landslide and airside facilities, passenger and cargo terminal buildings and related facilities/ equipment, security and navigational aids equipment, detailed engineering design and land acquisition for the airport compound.
The project would source its funding from the Department of Transportation and Communication (DOTC) budget.
E-VEHICLE MAKERS, DEALERS TO BENEFIT FROM AUTO ROADMAP
The Philippine Star
24 July 2012
MANILA, Philippines - Electric vehicle manufacturers, importers and dealers may benefit from incentives from the government after being included in a proposed roadmap for the auto parts industry to the Board of Investments.
The Electric Vehicle Association of the Philippines (EVAP) said in a statement yesterday EVs have been included in the proposed roadmap following the group's request.
The proposed roadmap which was prepared by the University of Asia and the Pacific professor Rafaelita Aldaba, seeks to strengthen the country's position as a significant player in the automotive industry in the medium term and by 2020 by becoming a regional hub for completely built units and for auto parts.
The roadmap proposes to grant fiscal incentives for local assembly of auto parts and components, for new technologies such as EVs and for export activities starting 2013.
Proposed fiscal incentives to be granted included tax holiday (ITH) from three to eight years; extended ITH for high technology activities such as EVs; tax and duty exemption on capital equipment, spare parts and on imported raw materials; additional tax deductions for labor expenses, export market development, and research and development; tax incentives for periodic increases in exports; and application of special tax rate of five percent on gross income after the ITH and exemption fom local and national taxes.
In order to expand the domestic market, the roadmap is likewise recommneding tax credits on domestically-purchased supplies and materials; reduction from 35 to 30 percent of the excise tax on vehicles with engine capacities of two liters or less; elimination of smuggling and banning of imported second hand vehicles; and government procurement of locally manufactured vehicles.
"We see these initiatives as a much-needed shot-in-the-arm sunrise EV industry and will ultimately help us be competitive in the region," EVAP president Rommel Juan said.
Juan said if the proposal is approved, the EVAP expects the cvountry's local completely knocked down assembly to double by 2019, and for the local value-added labor and parts to rise by 50 percent in the same year.
The country's export sales of vehicles as a result of the approval of the proposed roadmap, he said, may rise to $6 Billion by 2015.
With the approval of the proposed roadmap, he said jobs in the mainstream auto and parts industries are expected to reach 150,000 while some 50,000 would be generated in the allied industries.
Given the benfits, he said, the EVAP is very suportive of the proposed roadmap for the auto parts industry.
"We expect that if the roadmap is apporved, the prices of electric jeepneys, quadricycles, tricycles, buses, scooters and bicycles will be reduced by as much as 30 persent. Thus, we are confident that the EV industry will then also grow at the same, if not faster rate than the auto industry," he said further.
PHILIPPINES REALLY OPEN FOR BUSINESS ANEW, SAYS EXPORT SECTOR LEADER
Philippine Daily Inquirer
23 July 2012
MANILA, Philippines - Stakeholders of various industries on Monday agreed with President Benigno Aquino's claim that the Philippines has opened itself to business again, given the reported improvements in governance, public works, as well as services.
As such, industry groups also vowed to continue supporting government's agenda on a wide range of issues from the campaign against corruption to hiking mining revenues and improving the country's investments climate.
Sergio R. Ortiz-Luis, Jr., Philippine Exporters Confederation, Inc. (Philexport) president, said in a phone interview that the President's stress on growth in tourism and investments sets a good tone for the rest of 2012 and for coming years. "While infrastructure still needs momentum after two years, we see infrastructure investments gaining more momentum in coming years."
The Federation of Philippine Industries chairperson Jesus L. Arranza said in a phone interview that most of the group's 40 industry associations and 95 corporate members have been bullish on the economy and would continue to be so, having noted the governance reforms and improved infrastructure spending, among others, of the Aquino administration.
"By and large it seemed like a truthful narration of developments, especially the figures related to projects. We've seen investments coming in, for example, in mining and tourism," Arranza said. "We've seen reduction in graft and corruption, and the President alluded to the impeachment trial, which I think showed the world who we are, that we are making changes. For industries, we've experienced a better working relationship with the Bureau of Customs under its present leadership. With a good credit rating and all, yes, we can say the Philippines is open for business."
Arranza noted that industry leaders have been working with Customs as technical experts to help curb smuggling, which has been hurting tax-paying, legitimate businesses. He said the use of CCTVs (closed circuit TV) has helped in crime reporting, as well.
If there was one thing he would have wanted to hear from the President's State of the Nation Address (Sona), Arranza said, it was more on what would be done to address crime." Perhaps there should be a crime czar to better coordinate efforts on various types of crimes," Arranza said.
The electronics industry, which contributes the most to exports, has also drawn more interest from foreign investors, according to an industry leader. Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) president Ernesto B. Santiagp said in a text message that big and small investors from Japan, Korea and other countries have been visiting the SEIPI headquarters in Manila lately - to make inquiries.
"We just have to see if this will all materialize in the next coming months," Santiago said.
The Chamber of Mines of the Philippines (CCMP) was likewise supportive of government reforms and drive for a bigger share in mining revenues, which President Aquino mentioned in his speech.
COMP chairperson Artemio Disini said in a phone interview that the mining industry "will continue supporting government in developing the industry and promoting environment protection." Disini said the group would help in fast-tracking a much - awaited legislation on revenue sharing, which would lift the current moratorium on new mining agreements.
COMP earlier said in a statement that, "We reiterate our commitment to cooperate with the executive and legislative branches in developing a rational revenue sharing scheme. We are one with the government in its program to improve the economy without compromising the environment for future generations."
Overall, the underlying messages of the Sona (that institutions need fixing as a foundation for long-term change and what seems impossible can be possible through collective hard work) sets the tone for the rest of the year", National Competitiveness Council co-chairperson for private sector Guillermo Luz said in a phone interview. These are efforts that we should build upon year on year since long-term results cannot be expected to be visible right away, he said.
"Especially compared to last year, when we were making changes but were not yet seeing the results, now that we're seeing the results, I see this year as a turning point for the Philippines. The markets seem to be recognizing the changes, for example, structural reform, the strong bias for education, inclusive investments through CCT (conditional cash transfer). We can see the recognition through our improved credit rating and portfolio investments, which are good indicators. In terms of competitiveness, we hope to see that the markets recognize all our collective efforts," Luz said.
The Inquirer also sought comments from the Philippine Chamber of Commerce and Industry and the Joint Foreign Chambers of the Philippines but officials were still unavailable for comments as of this writing.
BUSINESSMEN REACT POSITIVELY TO AQUINO'S SONA
Philippine Daily Inquirer
23 July 2012
MANILA, Philippines - A banker and a business analyst said they got what they wanted to hear from President Aquino's State of the Nation Address, or Sona, on Monday, when it came to establish an economic environment hospitable to fress investments.
Paul Joseph Garcia, senior vice president at Bank of the Philippines Islands and head of Odyssey Funds, cited the positive message of the Sona to investors. Garcia lauded Aquino's commitment to good governance and the eradication of corruption while implementing economic programs and reforms to make growth "inclusive".
"The boost in infrastructure spending will boost the economy's competitiveness and attract more foreign direct investments. The Philippine's economic growth in first quarter 2012, one of the highest in the world and second to China's (in Asia), would continue to attract more investor interests in sectors like BPO [business process outsourcing], tourism/gaming, property, financial services, power and energy, retail trade and mining," Garcia said.
Jose Mari Lacson, head of research at Campos, Lanuza & Co., said, "The Sona speech was very long. After the 85 minutes mark, however, I think the speech was already beginning to lose its value."
But on the economic points, Lacson said the Sina was within expectations. "We expected President Aquino to be consistent in his message that his government is focusing on reforms aimed at removing graft and corruption."
Lacson, though, noticed the President's silence on the public-private partnership program to boost investments in infrastructure. "We also said that most likely President Aquino would not dwell on the PPP [public-private partnership] projects considering there was nothing worthwhile to report. As none of the 16 original projects scheduled for 2012 have been bid out, it was understandable that the President could only mention that the bidding for the LRT-1 extension is now progressing. We are cautiously optimistic over the plans to upgrade several international airports such as Panglao and Laguindingan, however, these were also included in the 2012 PPP projects yet progress remains slow," Lacson said.
The analyst said he hoped that Congress would heed the call to put in place the necessary legislation on the mining sector that was requested by President Aquino. Enactment of the revenue-sharing amendments would remove much of the remaining unvertainty over the mining sector, he said.
Lacson said the most uplifting economic indicator, however, were the decline in the unemployment rate and the increasing contributions of the BPO sector and toursit arrivals. "Those were really tangible yet relatively unreported gains of the administration."
On the other hand, Lacson said the Aquino administration could not really take full credit for the stock market's robust and record-setting performance. He added that the stress on social services was the right tack to take.
"I think the mention of several socio-economic indicators such as health, education, public safety and disaster preparedness was very welcome in the sense that these contribute to the long-term competitiveness of the economy, i.e. the administration is not short-sighted in its thrusts," Lacson said.
The longest-lasting and most robust applause was given to the President's statements on responsible parenthood, which suggested that the President would actively push for the Reproductive Health Bill. "This is understandably so because the high population growth is often blamed for negating economic profuctivity gains," Lacson said.
The analyst said he was not at all surprised by Aquino's statements on the West Philippines Sea/ Spratlys/ South China Sea issue. "The call for national unity in asserting our claims in the West Philippine Sea was also expected and is probably the most important as fas a establishing President Aquino's leadership in front of Congress. However, we also risk further intensifying tensions in the West Philippine Sea despite previous pronouncements to hold back any statements that reveal our position", he said.
CANADA OPEN TO NEW ROUND OF AIR TALKS WITH PH
Philippine Daily Inquirer
18 July 2012
Canadian Foreign Minister John Baird said Wednesday his country was open to having new air talks with the Philippines to discuss potential flights by Air Canada to the Philippines and additional entitlements for Philippine Airlines (PAL).
Given the huge Filipino population in Canada, demand for direct flights between the two countries is high, Baird said at the joint membership meeting of the Canadian Chamber of Commerce, Makati Business Club and the Management Association of the Philippines.
Canada's ambassador to the Philippines Christopher Thornley, however, said PAL had not fully used its entitlements for Canada.
As for the prospects of direct flights by Air Canada, Thornley said that would depend on whether the Canadian airline would see enough demand.
"Air Canada tends to be a carrier that has a business model that depends quite heavily for its overseas trans-Pacific flights on the business class, executive class carriage. I guess they will have to determine if this market will support that," Thornley said.
CAB executive director Carmelo Arcilia, who is part of the country's air negotiating panel, said the Philippines was interested in amending its air agreement with Canada.
The last bilateral air talks between the two countries took place on May 30, 2008, according to the Civil Aeronautics Board. Since then, PAL has said a number of times that it wanted to add direct flights to Vancouver and to US destinations with a stopover in Vancouver.
However, the downgrade of the Philippine's air security agency, the Air Transportation Office, by the US Federal Aviation Administration (FAA) from Category 1 to Category 2 complicated the matters. FAA's Category 2 prohibits PAL from increasing its flights to the United States and its territories and from changing the type or increasing the number of aircraft used on these routes.
The rating has also become an issue in air talks with other Western countries although it only applies to the flights to the US.
On January 8, 2008, the FAA downgraded the Philippines' rating on the grounds that the Air Transportation Office of the Philippines did not meet six out of seven safety standards established by the International Civil Aviation Organization, or ICAO.
PAL currently operates direct flights to Vancouver, Canada (five times a week), and is the only local airlines serving the route. The flag carrier is seeking additional flight frequencies.
Besides CAB, other members of the negotiating panel are the Clark International Airport Authority and the Departments of Transportation and Communications, Foreign Affairs, Tourism and Trade and Industry. Private airline compares are also represented.
PH EXPORTS GREW AT DOUBLE-DIGIT PACE IN MAY
Philippine Daily Inquirer
11 July 2012
The country's exports rose by a double-digit pace in May after recovering slightly in April.
Outbound shipments increased by 19.7 percent in May from a year earlier due to robust growth in metal components, ignition, wiring sets used in vehicles, aircraft and ships, which managed to offset contractions seen in electronic products, garments, woodcrafts and furniture.
According to the National Statistics Office (NSO), exports in May generated $4.931 billion in receipts - higher than the $4.119 billion reported in the same month last year.
Electronics which accounted for 38 percent of revenue in May, declined by 0.7 percent to $1.872 billion. But on a monthly basis, electronic products went up by 14.5 percent from $1.635 billion in April. Semiconductors, which make up bilk of electronics shipped out of the country, earned $1.417 billion, or 0.7 percent more than last year.
Month on month, exports rose 6.4 percent from the $4.635 billion reported in April.
Aggregate exports in the first five months grew 6.4 percent to $22.443 billion from $20.711 billion during the same period last year.
Benjamin Diokno of the University of the Philippines noted that the value of exports could still be less than the pre-crisis level.
"Given the sharp contraction in exports in the second half of last year, modest growth may still be seen as weakness rather then strength. Electronic product exports continue to struggle," Diokno said in an e-mail.
According to Philippine Exporters Confederation president Serio R. Ortiz-Luiz, Jr., the group will keep its export target of 10 percent, believing that electronics will improve while other sectors are expected to perform well.
Even though woodcrafts and furniture were the second-top export item in May, with $175.67 million in receipts, the value still represented a decline of 5.7 percent from that of last year.
On the other hand, revenue from shipments of metal components reached $140.28 million, rising by 162.4 percent from that of the previous year.
Japan was the country's top export destination in May, accounting for $1.133 billion in receipts.
Other top buyers of Philippine products were the United States with $714.06 million, and Thailand with $568.92 million.
NSO also reported that total external trade in goods for 2011 reached $108.801 billion, representing a 2.2 percent increase from the $106.430 billion reported in 2010.
25 FIRMS INTERESTED IN LRT-1 EXTENSION PROJECT
10 July 2012
MANILA, Philippines - Twenty-five local and foreign companies, including Sam Miguel Infra, Mitsubishi Corp., Hanjin Heavy Industries and Construction, DMCI, Sumitomo Corp. and FF Cruz & Co., are interested in participating in the P60-billion Light Rail Transit (LRT) 1 extension project.
The 25 companies have purchases pre-qualification documents from the LRT 1 extension project,
During Tuesday's pre-qualification conference and investors' briefing, Transportation Secretary Mar Roxas said the number of bidders will likely increase as the Department of Transportation and Communications begins an international roadshow this month.
"We expect that there will be more joining because we want only the best firms with the best qualification in so far as operating and maintaining a busy train system such as the LRT is concerned," Roxas said.
The other companies are Macquarie, Leighton Contractors, Sycip Salazar Hernandez & Gatmaiten, FSG Capital Inc., EFC Enterprises, Marubeni Corp., BPI Capital Corp., ING Bank, Jorh Planning & Development Corp., RATP Development, Benchtel Overseas Corp., Comm Builders & Technical Philippines Corp., Lenvoisa Construction Inc., APT Global Inc., Makati Development Corp., Tranzen Group, Cathay Energy Service Corp. and SYSTRA Group.
Philippine and foreign companies, whether individual or grouped in a consortium, are allowed to join the bidding.
Interested firms who have purchased the pre-qualification documents woth P10,000 have until August 22 to submit their requirements.
The first component of the project involves the operation and maintenance of LRT1, which spans from Baclaran to Quezon City and transport 500,000 passengers a day.
The second component involves constructing an additional 11.7 kilometer elevated railway system from baclaran station of line 1 to Bacoor, Cavite City.
Roxas said the extension is meant to capture a significant population that regularly travels between Cavite and Manila.
The third and final component involves the operation and maintenance of the integrated Line 1 train system.
Once the project is completed, the estimated travel time from one end to the other will be an hour and 10 minutes.
The P55-billion project will be evenly split between the government and the private sector. The government's share, P27.5 billion, will be used to buy up to 39 new car train sets and construction of a satellite depot, among others.
Meanwhile, Ayala Corp. and Metro Pacific Investments Corp., who have teamed up to bid for Metro Manila's light rail peojects, is looking at bringing in another partner.
"There is a possibility that we may bring in another member with technical expertise in the wailway project. We are currently discussing it. We will make the proper announcement soon," MPIC president Jose Ma. Lim said.
NET FOREIGN BUYING AT PH STOCK MARKET UP 382% TO P71B IN 1ST HALF
10 July 2012
MANILA, Philippines - Foreign investors went on a buying binge in the Philippine stock market in the first half of the year, resulting in a hefty 382.3 percent year-on-year surge in net foreign inflow to P71.12 billion and allowing the local index to outperform peers across the region.
The net foreign buying recorded in the first six months stood nearly fice times larger than the P14.75-billion level recorded in the same period last year, said a report from the Philippine Stock Exchange.
This strong foreign investor appetite allowed the main-share Philippine Stock Exchange (PSE) index to break into new all-time highs 19 times in the first semester, rising by a total of 20 percent to finish at the 5,246.41 level at the end of June.
"The market's run in the first half has been nothing short of historic, and there's a good chance that we will be able to extend this forward momentum as we anticipate better first-half earnings from our listed firms. The latest sovereign credit rating upgrade also provides additional support for future growth so overall, I think we are in a terrific position to keep on improving," PSE president Hans Sicat said in a press statement.
Last July 5, the PSEi again beat its previous record high to post a fresh all-time high at 5,369.98. As of July 6, the PSEi was the top performing market in Asia, with a gain of 22.7 percent year-to-date, beating bonuses in Singapore, Indonesia, Malaysia, Thailand, Vietnam, Hong Kong, India and China, among others.
In the first six months, cyclical stocks banking and property led the PSEi's rise in the first quarter albeit all indices were on the green.
The financial index emerged as the best performer in the first half after surging by 34.6 percent to the 1,304.42 level. The financial index was likewise the best performer in terms of bottomline based on first-quarter earnings culled by the PSE.
The next best performer was the property index, which jumped by 30.1 percent to finish at 1,927.48 in the first half.
The holding firms index rose by 28.1 percent to the 4,488.80 level.
Other indices performed as follows in the first six months: the industrial index rallied by 10.8 percent to finish at 7,839.57; the services index climbed by 8.8 percent to 1,759.02; - the mining and oil index crept higher by 4.8 percent to 24,629.48 points.
"Just like our main index, investor confidence in Philippines Inc. is at an all-time high. What's remarkable is that we have been able to achieve unprecedented growth even in the midst of ongoing uncertainties in the Western hemisphere and a cooling Chinese economy. This is a testament to the effectiveness of the reforms that the country has undertaken, which further contribute to the stable macroeconomic environment," Sicat said.
The PSEi's finish in the first six months was higher by 955.20 points from its previous close of 4,291.21 in the same period last year.
The combined market capitalization of issues listed on the PSE during the January to June period stood at P10.05 trillion, up by 12.8 percent from a year ago.
Total turnover for the first half reached P947.73 billion or 43.2 percent higher than the P661.81 billion registered in the same period the previous year. Average daily turnover stood at P7.64 billion, an increase of 45.5 percent year-on-year.
PHL ECONOMY SEEN GROWING 6-7% NEXT YEAR
The Philippine Star
10 July 2012
MANILA, Philippines - The economy is projected to grow by six to seven percent next year and accelerate to 7.5 to 8.5 percent in 2016, according to Budget and Management Secretary Florencio Abad, citing the latest macroeconomic assumptions approved by the interagency Development Budget Coordination Committee (DBCC)
The Aquino administration see the economy expanding by 6.5 to 7.5 percent in 2014, seven to eight percent in 2015 and by 7.5 to 8.5 percent by the end of its term in 2016.
The economic growth projections are anchored on expectations that the country's external trade would fully recover in the next four years.
Exports are protected to grow by 12 percent in 2013 and in 2014 and by 14 percent in 2015 and 2016 from the 10 percent growth projections for the year.
Similarly, imports are projected to grow by 14 percent next year, according to the latest macroeconomic assumptions.
Imports are projected to grow by 15 percent in 2014 and by 16 percent in 2015 and 2016.
The latest growth forecasts are also anchored on expectations that inflation would remain benign at three to five percent from this year to 2014 and at two to four percent in 2015 and 2016.
According to the DBCC, growth will be fueled by the government's infrastructure spending, dollar remittances from overseas Filipinos and steady growth of manufacturing, services and tourism sectors.
However, for the rest of the year, Abad said the government would retain its official forecast range of five to six percent despite the higher-than-expected performance of the economy in the first quarter of the year.
"The numbers are good. The first quarter growth is good but will remain conservative," Abad said.
The Philippine economy, as measured by GDP grew by 6.4 percent in the first quarter of the year, surpassing analysts' expectations and beating year-ago figures of 4.9 percent.
BRIGHT PROSPECTS SEEN FOR PH OFFICE MARKET
Philippine Daily Inquirer
21 June 2012
Metro Manila continues to be the most cost-effective office destination, outperforming 18 other central business districts, according to real estate services and advisory firm CB Richard Ellis (CBRE) Philippines.
As economies in the West tighten, CBRE pointed out that the strong demand for alternative office locations has pointed multinational companies toward Asia and has opened opportunities for the Philippines.
"The Philippines is becoming the lifeboat for many US and European companies that need to outsource in order for their businesses to survive and actually preserve jobs back in the US and Europe," noted CBRE chairman and CEO Rick Santos. "All eyes are now moving from BRIC [Brazil, Russia, India, China] economies to TIP [Turkey, Indonesia, Philippines] economies.
Based on data provided by CBRE, the average office lease rates in Metro Manila stood at $22 per square foot a year. In contrast, the top six countries that have the highest rates were Hong Kong - Core Central woth $200; Beijing CBD with $173; Tokyo, $162; Shanghai - Puxi, $121; and Mumbai - BKC and Singapore, $117.
On a local note, however, rental rates in Metro Manila CBDs, namely, Makati, Fort Bonifacio, Ortigas Avenue and Quezon City, have noticeably increased in the first quarter of 2012 as against the previous year's levels.
These rate increases, CBRE noted, could be attributed to tight office space supply and strong pre-leasing demand.
"Pre-leasing is back. The office sector goes from strength to strength, with a surge of pre-leasing commitments in the central business districts," Santos said. He noted that these pre-commitments were being sustained by several factors, including cost anticipation, securing space, expansion and consolidation.
According to CBRE, office space demand was catching up with supply, particularly in the major business districts where office space requirements were on a steady uptake with no signs of a slowdown. Average occupansy rates during the first quarter this year hovered at 96 percent.
CBRE explained that the sustained expansion of the outsourcing and off-shoring industries, as well as the limited tenant turnover, continued to put pressure on the already tight supply.
Although new supply of traditional and BPO office space was scheduled to come online in the second half of this year, it was not expected to do much to alleviate the situation, the firm noted.
As it is, of the 293,000 square meters of anticipated new supply, about 232,000 square meters have been pre-committed. The limited supply continued to put an upward pressure on office lease rates, CBRE said.
"We urge developers to push through with their planned projects and to avoid any delays and to capture all potential investments in the country. Developers with multiple office projects in their pipeline have the advantage over other developers as these provide confidence to lessee's expansion projections," CBRE said.
"Office market will continue to be active and (it is guaranteed to be at its peak) the next two years," it added.
PH HAS ENOUGH COCO SUPPLY TO ATTAIN 5% BIOFUEL BLEND - PCA
Philippine Daily Inquirer
21 June 2012
Local coconut production can support the proposed increase in the blending of coco-methyl ester (CME) in diesel products, even up to 20 percent, according to the Philippine Coconut Authority (PCA).
PCA deputy administrator Carlos Carpio said in a briefing that the country can achieve its blending targets, provided that "we continue the planting and replanting of high-yielding varieties and hybrids in highly suitable areas of the Philippines."
PCA has already developed 15 hybrids and one pollinated variety, which can yield 4-6 tons per hectare per year, and 2030 is still 18 years away. Thus, if we can do this now, even bedore 2030, we can attain the supply already to support 20 percent blend," Carpio said.
He added that the afency has even recommended that the biodiesel blend be increased to 5 percent from the current 2 percent, as the country has enough supply to meet a higher blend.
Based on previous industry estimates, a 5-percent biodiesel blend will require 350 million liters of CME, well below the total capacity of the industry of 380 million as of 2009.
Carpio's remarks came amid the pronouncements made by the Department of Energy, that it was drafting a revised five-year biofuel program to increase by 2030 the blend of ethanol in gasoline to 20 percent (E20), and of CME in diesel products to 10 percent (B10) from the current 2 percent (B2).
Energy Undersecretary Jose M. Layug Jr. earlier said that under the new biofuel plan, the government would set realistiv targets and outline the program that needed to be implemented to attain its goals.
"Originally, when we passed the Biofuels Act in 2006, we said we would target to be the No. 1 producer of biofuels. More than five years later, we are hardly producing ethanol. So we revisited our biofuels program, we looked at some of the issues and problems of the industry, and then set a new target for the next five to 19 years," Layug had said.
According to the official, the new blending targets of E20 and B10 are more realistic since the government has looked at both sides of the food versus fuel debate.
FITCH MAINTAINS PH CREDIT RATING
Philippine Daily Inquirer
20 June 2012
Fitch Ratings, an international agency that evaluates the creditworthiness of countries and corporate entities, has maintained its main credit rating for the Philippines at one notch below investment grade, citing both favorable economic developments.
In a statement, Fitch said it was keeping the "foreign-currency issuer default rating (IDR)" - which is used as guide by foreign creditors and investors in evaluating a country's creditworthiness - at BB+. This score is one notch below investment grade.
It also kept the "local currency issuer default rating" - which applies to local creditors and investors - at "BBB" - which is an investment grade.
Fitch said the outlook for both ratings was "stable," which meant the ratings were likely to remain the same for about a year.
The decision of Fitch to keep its previous ratings for the Philippines and assign a "stable" outlook on said ratings has reduced the country's chances of getting an investment grade for its foreign-currency IDR within this year.
The Philippines, which is losing to its neighbors in terms of foreign direct investments, has been pitching for an investment grade for its foreign-currency IDR.
Economic managers believe that an investment grade will help the Philippines attract more job-generating foreign investments.
Growth rate next to China
"The ratings and outlook are supported by strong external finances, a track record of macroeconomic stability, favorable economic prospects, and falling public debt ratios," Philip McNicholas, director in Fitch's Asia-Pacific Sovereign Ratings group, said in a statement.
The Philippine economy grew by 6.4 percent in the first quarter of this year, the second-fastest rate in Asia for the period, next to China's 8.1 percent.
Moreover, the Philippine government's outstanding debt has fallen to just about 50 percent of the country's gross domestic product (GDP) from over 80 percent in 2004.
The decline in the government's debt burden indicate its improved ability to service its liabilities, Philippine economic managers said.
Nonetheless, Fitch said there were also factors that drag the country's creditworthiness and thus offset the impact of the favorable indicators.
Needs improvement
"However, structural weaknesses, including low average income, a weak business environment, and a low fiscal revenue take weigh on the credit profile," Fitch's McNicholas added.
Although there are improvements in the government's fiscal standing, Fitch believes these are still not enough to merit an investment grade. It said the government's revenue collection should increase at a faster pace so its debt burden can decline further.
Household incomes in the Philippines are also lower than most Southeast Asian countries. This makes the country less attractive for business.
"Average incomes are low and the level of human development is poor," McNicholas said.
Poverty incidence in the Philippines stood at 26.5 percent in 2009, one of the highest in Asia, according to the latest poverty statistics.
It takes time
Fitch expressed optimism on the ability of the Aquino administration to improve the country's creditworthiness. It said however, that the reforms of the current administration would take time before significant benefits are derived.
"The Aquino administration's reform agenda has focused on tackling perceived shortcomings in governance and poverty has the potential to address longstanding structural weaknesses. However, it will likely take time to feed through to the sovereign credit profile," McNicholas said.
JAPANESE GROUP TO BUILD $200M LED PLANT IN PH
19 June 2012
A Japanese group plans to build a $200-million light-emitting diode (LED) light factory in the Philippines by the end of the year.
Once developed, it is expected to become one of the world's largest LED light factories, according to Japan Environment Technology Development Co., Ltd. (Jented).
Jented said the plant's planned output is around one million units a year of LED lights.
LED lights are more expensive but technologically superior to conventional lighting systems in the market.
They are more efficient (more lumens per watt), radiate less heat, shoch resistant (compared to the fragile nature of both incandescent and flourescent lighting), and last longer (up to 50,000 hours lifetime compared to incandescent's 2,000 hours and flourescent's 15,000 hours), according to jented country representatived Rod Cabrera.
Cabrera also said Jented's lighting system is much lighter than other brands and is easy to install.
"We're glas that we can offer the best production lighting technology that is made in the Philippines and powered by Japan," he said.
Cabrera said the Jented will partner with Tagaytay Mountain Peak Corp (TMPC), a local development company, to complete the project.
TMPC chairman Lee Jong Hoon said the group was exploring a potential factory site in Laguna.
Yoshiyuki Ikeda, president of GEM of Japan, and Kumihiko Kitahara, Jented executive director, said that they were bullish on the prospects of the LED lighting business, not only in the Philippines but also in the United States, Europe and Asia where they plan to export their products.
They also said the project would not only generate local employment but also help put the Philippines on the lighting industry map.
EXPORTS UP 7.6% IN APRIL
ABS-CBN News
14 June 2012
MANILA - Philippine exports recovered in April from a year earlier from a slight drop in March, but the main electronics shipments dropped for the first time in four months, highlighting the risk on growth for the Southeast Asian nation amid global headwinds.
Exports, which account for about two-fifths of the country's GDP based on expenditure terms, rose 7.6 percent in April, and the value of shipments was $4.64 billion.
Electronics and semiconductor shipments, which dominate exports fell 23.8 percent from a year ago, the statistics office said, the first drop since December.
Electronics made up 35.3 percent of April export revenues.
Exports to Japan, the country's top export destination in April, fell 0.4 percent from a year earlier.
Exports to the United States, the second-biggest market rose 19.2 percent from a year earlier.
Shipments to Korea, the third-biggest market, climbed 211 percent from a year ago.
Exports to Eastern Asia - the top export destination by economic bloc, accounting for 53 percent of total shipments -- climbed 17.6 percent from a year earlier. Southeast Asia and the European Union were the second - and third - biggest economic blocs.
PHILIPPINES GIR UP 10% YEAR ON YEAR IN MAY
Philippine Daily Inquirer
07 June 2012
MANILA, Philippines - The country's foreign exchange reserves climbed in May from a year ago, buoyed by sustained rise in remittances and recovery in export revenues even in the wake of a prolonged debt crisis in the eurozone.
The gross international reserves (GIR) - the country's foreign-exchange wealth that determines its ability to buy imported goods, pay debts to foreign creditors, and engage in other financial transactions with the rest of the world - hit $76.02 billion by the end of May, up by about 10 percent from $68.85 billion in the same period last year.
According to the central bank, remittances continued to be a key driver of foreign exchange inflows into the Philippines. This is because of the diversified labor markets for Filipino workers that make total remittances almose immune from the crisis in the eurozone.
Moreover, the export sector registered higher revenues this year, thus recovering from last year's earnings contraction, as global demand, although still fragile, slightly picked up.
The latest GIR, nonetheless, fell on a month-on-month basis. It was down by 0.7 percent from $76.54 billion by the end of April due largely to withdrawals by the national government.
The BSP said the government paid foreign currency-denominated debts that were about to fall due, thereby causing the drop in the reserves.
"The slight decline in the GIR level (from that in April) resulted mainly from disbursement arising from payments by the national government for its maturing foreign exchange obligations as well as revaluation losses on the BSp's gold holdings," the central bank said in a statement.
A small portion of the country's GIR is composed of gold holdings. A decline in the price of gold, therefore, pulls down the GIR. Of the latest amount foreign exchange reserves, gold accounted for $9.7 billion.
The drop in gold prices was blamed on uncertainties in the global economy resulting from the debt woes in the eurozone. Analysts said that in times of uncertainty, investors would sell gold, thereby causing its prices to drop, and hold on to the US dollar for safety.
The latest GIR, according to the central bank, was enough to cover for 11.4 months worth of imports. It was also 6.6 times the country's foreign currency-denominated debt maturing within one year.
These facts, monetary officials said, indicated that the GIR has remained at a very comfortable level since foreign exchange reserves worth at least four months of imports are considered already comfortable.
They said the fact that the GIR has been way more than the country's short-term foreign debts indicated a favorable level of credit-worthiness.
Government officials are pitching for an investment grade for the Philippines. The BSP said the comfortable GIR would be one good basis for a more favorable credit rating for the Philippines.
The country is rated two notches below investment grade by Moody's and Standard & Poor's, and one notch below investment grade Fitch Ratings.
MOODY'S UNIT RAISES PHILIPPINES GROWTH FORECAST
Philippine Daily Inquirer
07 June 2012
The research arm of Moody's Investors Services has raised its economic growth forecast for the Philippines this year to 4.7 percent from 4 percent, citing the government's anti-corruption drive and big push for infrastructure development that will aid efforts to attract investors.
The revision of the forecast came after the Philippines posted a 6.4-percent growth in its gross domestic product in the first quarter, beating most expectations. It was the second-fastest growth rate for the period in Asia after China's 8.1 percent.
"The Philippines kicked off 2012 at a blistering pace. This prompted an upward revision to the growth forecast," Moody's Analystics, the economic research unit of credit watcher Moody's, said in its latest paper of the country.
It said the Aquino administration's focus on good governance was tickling the interest on the Philippines, which used to be out of the radar screen of most foreign firms.
The research firm also expressed confidence that the promotion of public infrastructure among potential investors from the private sector would significantly boost investments in the remainder of the year. The Aquino administration has promised to speed up the implementation of its Public-Private Partnership (PPP) program this year.
"The investment environment in the Philippines has improved over the past year as President Aquino's plan have begun to take effect, with a focus on infrastructure development, stamping out corruption, and the seemingly obligatory chastisement of his predecessor, Gloria Arroyo, who now sits in jail on charges of electoral sabotage," Moody Analytics said.
It credited the business confidence resulting from good governance for the recent favorable performance of the Philippines' stock market. It said that the Philippine Stock Exchange index (PSEi) was so far up 12 percent this year and this growth was faster than most Asian stock market indices.
"These twin policy arms, lifting infrastructure and reducing corruption, should also help to shore up both domestic and foreign direct investment, lifting the economy's long-term growth prospects," it said.
The 4.7-percent growth projection of Moody's Analytics, however, was below the government's official target of 5 to 6 percent. It said the gap between its projection and the government's was the view on exports and remittances.
DTI TO REEL IN PHP870B WORTH OF INVESTMENTS IN 2012
Philippine Daily Inquirer
07 June 2012
The Department of Trade and Industry aims to reel in as much as PhP870 billion worth of investment commitments this year as it moves to further strengthen the government's promotional activities.
Trade Undersecretary Cristino L. Panlilio said the target represented the aggregate investment commitments of the different investment promotion agencies (IPAs).
The Board of Investments alone is targeting commitments worth PhP405.82 billion, while the Philippine Economic Zone Authority is looking at PhP322.8 billion.
To achieve these targets, the country's investment promotion agencies recently signed a memorandum of agreement to pursue an integrated, collaborative and harmonized investment promotion program.
Arnel Paciano D. Casanova, who is currently president and chief ecxecutive officer of the state-run Bases Conversion Development Authority (BCDA), was also elected as the new head of the Philippine Investment Promotion (PIPP) steering committee.
The PIPP is the blueprint for all IPAs to synchronize strategies to promote investments in the country. The medium-term plan (from 2010 to 2014) covers image building, investment generation and investment servicing designed to build up the country's brand image.
"The PIPP has been successful in putting the country as one of the major investment destinations in the global terrain. This plan harmonizes our marketing efforts and focuses on ... investment promotion strategies," Panlilio explained.
The investment promotion efforts of IPAs will be reconciled to maximize the use of the country's marketing resources. At the same time, a focused promotional approach will be carried out to inform the international business community of the investment opportunities in the country, he added.
The IPAs have alreadu agreed to implement their investment promotion program, interlink their information systems, and develop common investment promotion collaterals.
They also agreed to contribute and provide support in funding the development and production of common investment promotion collateral and common investment promotion activities.
The implementation of this agreement will be carried out by the PIPP Technical Working Group composed of representatives of the IPAs, under the direction of the PIPP steering committee.
Also, the PIPP Technical Working Group under Casanova will develop and produce common investment promotion collateral as well as craft the roadmap for an investment promotion strategy.
$500 E-TRICYCLE PROJECT TO START THIS YEAR
Philippine Daily Inquirer
06 June 2012
The Asian Development Bank is set to start implementing this year the $500-million electric tricyle project, which will see the rollouty of as many as 100,000 units within the next four years.
Of the funding, $300 million will come from the ADB, $100 million from the Philippine government, and another $100 million from the Clean Technology Fund.
Sohail Hasnie, principal energy specialist at the ADB, told reporters that the prequalification of suppliers and/or manufacturers for the project was expected to start next month.
Before the end of this year, Hasnie said he was expecting at least 100 of these e-trikes to start plying Philippine roads.
The main plan was to initially roll out 20,000 units on key islands, such as Boracay and Puerto Princesa, and in some parts of Metro Manila. After this, a study will be conducted to determine whether the use of e-trikes works according to the project objectives and yields the benefits targeted by the ADB and the Philippine government.
Only after the initial batch is proven successful will the ADB proceed with the rollout of the remaining 80,000 units, he added.
According to Hasnie, the ADB is also looking into putting up five pilot charging stations to ensure the viability of the e-trikes project. The target, he added, was to make sure that the cost of power used by the e-trikes would be much lower than the cost of fuel used by regular tricycles.
At present, more than 3.5 million motorized tricycles are operating in the country, producing more than 10 million tons of carbon dioxide and using nearly $5 billion worth of imported fuel yearly.
GOV'T STARTS BIDDING PROCESS FOR PHP30B LRT 1 EXTENSION DEAL
Philippine Daily Inquirer
05 June 2012
The process to find the private contractor for the biggest project in the government's pipeline has finally begun, as the Aquino administration tries to live up to expectations of faster growth and lower poverty through higher infrastructure spending.
The Department of Transportation and Communications (DoTC) on Monday published its invitation for interested parties to prequalify to bid for the PhP30-billion Light Rail Transit (LRT) Line 1 Extension contract. The project aims to extend the 21-kilometer Roosevelt-to-Baclaran line by 12 more kilometers to Cavite.
The contract to be bid out will have four compenents: the operations and maintenance of the existing line; design and construction of the new viaducts and stations for the extension; the integration of the existing system with the new section, operation and maintenance of the integrated line; and system enhancement works covering "whole-of-life investments" for the integrated system.
The five compenents to be handled by the private sector will cost PhP30 billion. This excludes the acquicition of electromechanical components such as train tracks, power supply units and new coaches to accommodate the expected increase in traffic. This part of the project - worth another PhP30 billion - will be handles by the government.
"The project will be awarded through a competitive bidding following the procurement rules and procedures under the Philippine BOT (build-operate-transfer) law," the DoTC said.
The department, led by former Senator Mar Roxas, has appointed International Finance Corp. - the World Bank's private sector investment arm - and state-run Development Bank of the Philippines (DBP) as its advisers for the transaction.
The existing line from Baclaran to Roosevelt serves an average of 488,000 passengers per day. The highest passenger traffic record was 659,000 passengers.
Interested parties were given until 22 August to secure bid documents from the DoTC. Both local and foreign groups are welcome to join.
PHILIPPINES CLIMB 20 NOTCHES UP IN BUSINESS DESTINATION RANKING
Philippine Daily Inquirer
05 June 2012
MANILA, Philippines - The Philippines has improved its standing as a business destination, particularly in terms of market access, ranking 72nd out of 132 countries on the World Economic Forum's enabling trade index.
According to "The Global Enabling Trade Report 2012," the Philippines climbed 20 notches up the index from the previous 92nd spot in 2010, reflecting what was perceived as a reduction in trade barriers.
The Global Enabling Trade Report 2012 measures the factors, policies and services that facilitate the trade in goods across the borders of 132 countries. It includes the areas of market access, border administration, transport and communications infrastructure, and business environment. Each area consists of pillars and indicators that assesses the different aspects of a country's trade environment.
The Philippines, in particular, showed a remarkable improvement in the area of market access, where it jumped 50 notches to No. 14 from being No. 64 in 2010.
The market access sub-index measures the extent to which the policy framework of the country welcomes foreign goods into the country and enables access to foreign markets for its exporters, according to the report.
In terms of efficiency of import-export procedures, the country took the No. 48 spot, also an improvement from the No. 55 position posted in 2010.
The Philippines, however, fell six places to No. 62 out of the 132 countries, in terms of efficiency of customs administration, from its previous record of No. 56 in 2010. Based on the trade report, among the most problematic factors for trade in the Philippines includes access to imported inputs at competitive prices; identifying potential markets and buyers; and corruption at the border, among other concerns.
The country continues to lag in terms of transparency of border-administration, ranking a dismal 117th out of 132 countries. This was, however, an improvement compared with the 119th position of the Philippines in 2010. This particular pillar was measured in terms of irregular payments in exports and imports and Corruption Perceptions index.
Meanwhile, Trade Secretary Gregory L. Domingo, in a statement issued on Tuesday, assured the public that the government would continue its efforts to reduce trade barriers and further improve the business environment in the Philippines.
It's been a long time coming, we're happy with the results, it shows that all our efforts this past two years are starting to pay off," Domingo said in response to the results of the 2012 Global Enabling Trade Report.
The trade chief attributed the country's improvement in rankings to the Department of Trade and Industry's efforts to facilitate trade across borders such as the Doing Business in Free Trade Access (DBFTA), an awareness campaign that has aimed to help various stakeholders understand the emerging and new markets, as well as instruments such as free trade agreements (FTAs).
More DBFTA sessions will be held in key cities in the country this year, and each session will include presentations on market opportunities, including non-tariff measures, country's FTA markets, tariff rates of top exports for sectors under the FTAs, rules of origin, an open forum, as well as business testimonials.
Help desks would also be made available after each session to provide assistance to interested exporters and importers, he said.
Other initiatives are already in place to bring down trade barriers, according to Domingo, who cited the Asean Single Window (ASW) - a component of the progressive schemes on customs development shared by the 10-member Asean bloc. It is tasked with the formulation and implementation of rules and procedures for trade facilitation.
Recently, the Philippines was chosen to chair the Asean Single Window Steering Committee to supervise ASWs upcoming projects and activities.
The DTI is also pursuing reforms to improve the ease of doing business in the country through the Philippine Business Registry (PBR) and the Business Permits and License Streamlining (BPLS) program for the local governments.
The Philippine Business Registry was launched last January to speed up the business registration process in a matter of hours as against the weeklong wait under the previous system.
The streamlining of business permits and licensing systems, on the other hand, is a joint project of DTI and the Department of Interior and Local Government (DILG), which targets to reduce the number of days, steps, documents and signatures required to get a permit from the local government units.
PETRON NAMED TOP PHILIPPINE FIRM IN SUSTAINABILITY
Philippine Daily Inquirer
04 June 2012
MANILA, Philippines - Petron Corp., the country's largest oil refiner and retailer, was named again as the top Philippine company in the 3rd Asian Sustainability Ratings (ASR) because of its efforts to combine profit goals with sustainability.
The oil firm also ranked seventh out of 29 Asian companies in the energy sector surveyed by the ASR.
It also placed in the top 10 percent of the 750 companies surveyed in 10 Asian countries, namely Australia, China, Hong Kong, India, Japan, Malaysia, Pakistan, Philippines, Singapore and Thailand.
This is the second time that Petron topped the ratings board, which measures a company's performance in key areas such as environment, social and governance (ESG).
"In a world where transparency and accountability are increasingly important, the ASR is the first ESG benchmarking tool to analyze the largest listed companies in Asia," said a report prepared by CSR Asia, the body that conducted the survey.
"The ASR allows companies, investors and other stakeholders to understand the economic, social and governance activities of listed companies. It also encourages listed companies to address ESG performance through disclosure and realistic target setting," the report said.
Petron chairman and CEO Ramon S. Ang noted that as Petron's business grows, its initiatives in the areas of sustainability and corporate social responsibility likewise increase.
"We believe that adhering to sustainability across our operations is essential to the long-term viability of our business," Ang said in a statement.
"If you take a look at the leading companies across the region, they have overcome business challenges by doing the right things. A strong company does right by its employees, customers and other stakeholders," Ang added.
Launched in 2009, the ASR examines the publicly available information of leading listed companies in 10 Asian countries and provides investors, companies and other stakeholders with a view of the strategic sustainability of these companies.
Earlier this year, Petron also received two distinctions from the Management Association of the Philippines for integrating corporate social responsibility and sustainability into its daily business operations.
COCONUT WATER SALES JUMP 260%
Philippine Daily Inquirer
31 May 2012
The value of coconut water exports rose by 260.55 percent to $1.32 million in the first quarter of 2012, the Philippine Coconut Authority (PCA) said in a statement.
PCA Administrator Eucildes Forbes said the Philippines sold 4.49 million liters of coco water in the first quarter, a 300-percent jump from the 1.1.2-million liters sold in the same period last year.
Forbes said that since this year's volume of coco water export will exceed the 2011 total of 16.68-million liters. This was equivalent to $15.11 million in receipts, the PCA said.
Just like last year, the United States was the main buyer of Philippine coco water. Export earnings from the US increased by 426.75 percent to $3.94 million in the first three months of the year. Americans bought 3.72 million liters of Philippine coco water in the first quarter of 2012, against 796,887 liters in 2011.
When he visited the United States last year, President Benigno Aquino III promoted coco water, meeting with US businessmen who had put up a coconut water processing firm in Camarines Sur.
Coco water was also made strong showing in the Netherlands, which bought 189,000 liters, from 32,000 last year, and Australia, which registered a 362.55-percent volume increase to 65,291 liters.
Forbes said coconut water had become a popular energy drink abroad because of its natural qualities and lack of chemical preservatives.
Coconut water is rich in potassium and magnesium, and contains a considerable amount of vitamin B which aids in strengthening the muscles, delaying fatigue and maintaining normal heart function.
It is also regarded as a good source of electrolytes and glucose and has been found suitable for intravenous rehydration. It is also as healthy and effective treatment for urinary stones.
Forbes stressed that the country needs to plant more coconut trees to be able to meet the growing demand for coconut products. He said the PCA is currently implementing an aggressive program to replace mature trees and fertilize coconut plantations.
PH CAN BE ASIA'S CREATIVE HUB, SAYS LEO BURNETT MALAYSIA EXEC
Philippine Daily Inquirer
31 May 2012
The Philippines has not has a serious branding effort until late last year when it launched a successful media campaign, "It's More Fun in the Philippines."
Prior to that, its advertising had no focus.
It was by sheer luck that previous campaign had brand retention. As advertising with no focus and sustained drive, awareness must eventually dissipate and wrong perceptions return.
The country's tourism advertising was treated more like a seasonal thing and aired whenever people felt like doing it. At one point, it had to tie up with a big advertiser just to keep it from sputtering.
Like a small cottage industry, it has not really taken off like some of its more aggressive neighbors, which viewed tourism not as a mere government cabinet social function but as a brand deserving better marketing and creative packaging.
Philippine tourism today seems to have taken on a serious tone. It's beginning to create ripples, and many are hoping that it rides on the crest of a wave to attract more visitors to our shores.
By having an advertising expert as head of the tourism department and acquiring the services of an ad agency whose output is consistently impeccable, there's no reason why the world shouldn't focus its "Eye on the Philippines."
Will it work?
As of the first quarter of 2012, the country has surpasses percentage targets and its poised to exceed its forecast: 4.6 million tourist arrivals (Indonesia's own goal more than a decade ago.)
While it is a modest target, it is realistically possible, some observers say.
"The Philippines deserves much more. It's mind-boggling why the world's third-largest English speaking country with one of the world's most hardworking people is not up there side by side with Malaysia and Thailand," says Eric Cruz, head of Creative of Leo Burnett Malaysia.
"The Philippines' main export is human power and talent. And if we look at some of the most memorable things in the history of the Web, the Filipino prisoners dancing to Michael Jackson was one of the pioneers of online content," he says.
"The 'love virus' was created by a Filipino - clearly that tells me the Philippines has talent," Cruz adds.
While there are capable post-production houses in Manila, he laments that some ad agencies still go either to Bangkok or Hong Kong just for color grading or simple effects online work.
Way back, the Philippines used to attract many creative people throughout the region. We once had the best facilities, editors and technicians. Sad to say, a number of them have left to look for greener pastures overseas.
According to Cruz, the Philippines can be Asia's creative hub.
"We can be better than Thailand and Hong Kong in film processing if only the government can help provide the vibrant atmosphere, modernize and infuse incentives to help our creative industries," he says. "What's lacking is the infrastructure and know-how ... how to apply the talent and energy."
Cruz notes that the creative industry in the Philippines is picking up, having won prizes in Clio, Cannes, Asia Adfest, London.
"The government could learn from other global economies, with regards to how countries like Japan, South Korea, Singapore and now China are turning to the creative industry to reinvent its economies," he says.
Cruz took over the Malaysian advertising firm when Yasmin Ahmad, a Clio Lifetime Achievement awardee, passed away.
Cruz has won the prestigious Tokyo Art Directors Club, a Cannes Cyber Lion, One Show Gold and Silver, and The Japan Media Arts Festival Excellence prize.
He values real work and his views on scam ads will unnerve those who perpetuate them.
Born in the Philippines, Cruz grew up in Crame with his grandmother.
His aunt was an art director who put him in a Klim TV commercial. (Klim was a powder milk drink for kids, and is no longer available.)
In 1983 he saw Benigno Aquino Sr. get assassinated on TV. Three months later, his family migrated to the United States.
His parents, who owned a dry cleaning shop in Ohio, discouraged him from pursuing a career in the arts. But he figured, if he could do what he wanted, he would give it his best shot.
He ended up going to School of Visual Arts in New York.
He discovered graphic design and gravitated it because one could fuse the language of art, illustration and design. He did album covers and books, among other things.
Cruz then started his career in San Francisco, working at Studio Archetype, owned by digital pioneer Clement Mok, who was also the founder of Front Page, a Web design program, which was later sold to Microsoft.
After a short stint with Wieden & Kennedy, Cruz moved back to LA and joined Imaginary Forces.
There, he learned how to do motion graphics and make design move, as well as how Hollywood movie magic was done, shooting and producing TV commercials and music videos.
Cruz went to Cranbrook to "de-professionalize." It was during this time that he dug up his roots, trying to find out why we are who we are and how we came to be.
On the internet, he found out that Filipinos actually had their own form of alphabet called Alibata or Baybayin, which the Spaniards made extinct.
Cruz created a modern version of the Filipino alphabet, what Alibata could look like if it were alive today. This exploration led him to create a body of work, a film and print piece, titled "Bahala Na", a portrait of the Philippines, which featured the Mangyans of Mindoro, one of the last two tribes that still use this ancient form of writing.
While backpacking in China, he sent John Jay, Wieden & Kennedy (WK) global executive creative director, his reel. He rejoined WK, where he made the best work of his career. He lived in London for 14 months.
Later, he was offered a job in Malaysia.
Cruz was recently in Manila to give a lecture about his work.
Last week marked the first time Cruz was professionally connected with the Philippine creative community.
Over an interview, he says, "I would love to one day return and teach other Flips what I know how to do. I want to give back one day. I would love to have more of an ongoing interaction with the ad industry in the Philippines. I also want to do more personal projects here sometime soon," he says.
His advice?
"Learn the craft and pump something original in the global broadcast. The rest will work itself out. People worldwide will find those who do something great. I'm a firm believer that everything exists, waiting to be discovered," he says.
PH 6.4% ECONOMIC GROWTH IN 1ST QUARTER BESTS EXPECTATIONS
Philippine Daily Inquirer
31 May 2012
MANILA, Philippines - The Philippine economy grew 6.4 percent in terms of gross domestic product in the first quarter of 2012, driven mainly by a robust services sector and higher domestic consumption, government officials said at a press briefing on Thursday.
National Statistical Coordination Board secretary-general Romulo A. Virola said that services contributed the most to GDP growth with 4.7 percentage points (the highest since the third quarter of 2004), followed by industry with 1.6 percentage points and agriculture, fisheries, and forestry with 0.1 percentage point.
Socioeconomic Planning Secretary Arsenio M. Balisacan said the first-quarter growth was well above the market's consensus forecast of 4.8 percent.
"Also, the Philippines posted the highest growth among Asean and other neighboring countries except China," said Balisacan, who is also the director-general of the National Economic and Development Authority (NEDA).
Growth for the quarter was supported by accelerated government spending (including for infrastructure and conditional cash-transfer spending), low prices which supported household consumption, better-than-anticipated exports performance, continued credit expansion, overseas remittances, tourism, and business and consumer confidence, Balisacan said.
According to NEDA, growth in the first quarter of 2012 translated to an increase in employment of 1.101 million, mainly in services and industry. Tourist arrivals reached 1.15 million in the same period. Overseas Filipino remittances increased to 5.4 percent to reach $4.84 billion in the first three months of 2012.
Balisacan said growth in the January-March period may be sustained in the second quarter and may even accelerate for the rest of the year.
As the first-quarter growth numbers exceeded most expectations, there comes the inevitable question of whether the growth is sustainable or at least translates to job creation and poverty reduction.
"The continued strong inflows of remittances, robust inbound tourist receipts and low inflation environment contributed to significant increases in employment creation, particularly in the services sector, which fueled consumption," Balisacan said.
However, Dr. Benjamin E. Diokno of the UP School of Economics said via e-mail that the better-than-expected economic growth may not necessarily be sustainable.
"Is the better-than-expected economic growth the result of playing around the price deflators? For example, agriculture shrank by 3.1 percent in nominal terms; yet it increased by 1 percent in real terms. That's silly unless food prices fell during the period, which they didn't," he said.
Diokno also pointed out that exports growth exceeding imports growth, as shown in government figures, is "unusual" considering the small growth of exports. He said this may indicate that imports, especially electronic products that make up the bulk of shipments, must really be low given the recent growth in petroleum imports.
"Certainly, the positive net export is not sustainable and perhaps not even consistent with strong growth in the future. the global market is shrinking and volatile. The growth of the Philippine economy should be based on domestic demand," Diokno said.
Diokno also noted that there was a "worrisome" trend in construction which, he said, grew on base effect.
"Public construction in the first quarter of 2011 was horrendous. The worrisome trend is the behavior of private construction, which started to stall in the second half of 2011. Private construction plummeted 9.9 percent in the first quarter of 2012 from a strong expansion of 23 percent in the first quarter of 2011. Private construction accounts for the 2/4 of total construction. This suggests that the government has to step up its public-private partnership projects and the implementation of its infrastructure program," he said.
GDP growth in the first quarter of 2011 was 4.9 percent. Growth for full-year 2011 was 3.9 percent.
For full-year 2012, the "fighting target" for GDP growth is still 5 to 6 percent although there is a possibility that actual growth may exceed this level, said Balisacan. Higher growth would help the Philippines meet its target average annual growth of 7 to 8 percent from 2010 to 2016.
4 PH BANKS GET POSITIVE OUTLOOK FROM MOODY'S
Philippine Daily Inquirer
30 May 2012
Moody's Investors Service improved its outlook on the country's four biggest banks from "stable" to "positive", indicating a probability of better credit ratings in the near term given their generally sound financial performance.
The banks given a positive outlook included the Bank of Philippine Islands, Banco de Oro, Metropolitan Bank and Trust Co., and Land Bank of the Philippines.
A positive outlook means an existing credit rating may be upgraded within the short term if favorable trends are sustained.
Moody's also revised its rating outlook for Philippine Long Distance Telephone Co. (PLDT) after the debt watcher sugnaled that the country's sovereign debt was in for another upgrade. PLDT's long-term foreign currency debt is currently rated at minimum investment grade or two notches higher than the Philippine soveraign counterpart.
BPI, BDO Metrobank and Land Bank all have a rating of Ba2 for their foreign currency deposits (which reflect the ability to keep safe the foreign-currency denominated deposits entrusted to it) and their foreign currency senior unsecured debt (which reflects the ability to meet obligations to bond investors). A Ba2 rating is two notches below investment grade, similar to that of the national government.
Moody's decision to improve its outlook on the four banks' ability to service foreign currency-denominated liabilities came after it did the same for the Philippine government.
For BPI, however, Moody's downgraded its loca-currency deposit rating from Baa2 to Ba1 to make its rating closer to that of the national government. The former local-currency rating of BPI was two notches above investment grade, while the new one is a notch below investment grade.
The move to downgrade the local currency rating of BPI came following a recent general review by Moody's of local currency ratings of banks that had higher ratings than their respective governments.
BOARD OF INVESTMENTS OKAYS P1.2-BILLION MEDICAL TOURISM PROJECT
The Philippine Star
29 May 2012
MANILA, Philippines - The Board of Investments (BOI) has approved tax incentives for the PhP1.2-billion medical toursim project of Providence Hospital Inc (PHI) in Quezon City.
In a statement, trade undersecretary and BOI managing head Adrian Cristobal Jr. said PHI is putting up a hospital with a capacity of 500 patients daily.
"We aim to make the Philippines an attractice medical tourism destination. Our well-trained medical staff and competitive medical services put the Philippines in a strong position to develop its medical toursim market," he said.
The Philippines targets to collect $3 billion in revenues from the medical tourism sector by 2015.
Cristobal said the Philippines is developing a strong medical tourism market because of the highly-skilled and English proficient workers in the sector, sophisticated private hospitals, and competitive pricing in medical services.
Based on the Asian Medical Tourism Analysis 2008-2012, Asia's medical tourism market is expected to grow by 18 percent between 2007 and 2012.
"The project supports the tourism department's investment-driven strategy to increase the number of tourists and tourism revenues in the country," Cristobal added.
DTI said that the PHI project is accredited by the Department of Tourism (DOT) and would create 278 jobs once operations start in December.
Under the 2011 Investment Priorities Plan (IPP), investments in tourism is part of the mandatory list for investment promotions.
This covers investment in tourist transport services; establishment and operations of tourist accommodation and amusement facilities such as convention and exhibition halls, amusement parks, ecotourism venues, sports centers, theme parks, health and wellness clinics. It also covers investments in retirement villages.
JAPANESE FIRM INVESTS IN LEADING PH BPO ENABLER
Philippine Daily Inquirer
24 May 2012
MANILA, Philippines - The Japanese telecom giant NTT Communications Corp. has acquired as major platform in the Philippine information technology business process outsourcing (IT-BPO) industry by buying into the Diversified Technology Solutions International Group, the country's leading IT enabler for the outsourcing industry.
NTT Com announced in Manila and Tokyo on Thursday that it had struck a deal to buy a 50.1 percent stake in Freedom Resources Holdings Corp., the holding company of the DTSI Group, thus making the local firm part of the NTT Group of Companies, one of the largest and most respected telecom and IT companies in the world.
NTT Com is a wholly owned subsidiary of global telecom leader NTT Corp., which ranked 31st on Fortune's Global 500 list in 2011.
Founded and led by local entrepreneur Miguel Garcia 15 years ago, DTSI Group has a strong track record in building systems and providing services for IT-BPO operators, accounting for 60 percent of all seats in contact centers currently operating in the Philippines. Anthem, Inc., a DTSI Group company, is also forecasting high growth for its business of building and leasing contact center platforms to companies looking to start up IT-BPO businesses in the Philippines.
"Through the tie-up, NTT Com expects to strengthen its contact center capabilities in the Philippines by creating operational synergies with DTSI Group, including by leveraging their respective customer bases," NTT Com said in its press statement.
After NTT Com's entry, Garcia will keep management control of DTSI, a systems integrator that designs, builds, deploys and manages end-to-end business communications systems, IT services and hosted, managed and premise-based contact center services.
"From our inception, my vision for DTSI Group was to create a global company. Today, I am happy to announce that we will soon achieve that vision," Garcia said.
"As many of our friends in the industry know, over the past several months we have evaluated a relationship with a potential strategic partner. We wanted a feel for alignment with our culture, our objectives, and our commitment not just to DSTI Group, but to our clients' clients, and our country," he said.
NTT Corp.'s roots go back over 100 years to the introduction of the telegraph in Japan. Since privatization in 1985, it has diversified into new markets, forming new subsidiaries and developing leading-edge technologies. The NTT Group had operating revenues of $130 billion for the fiscal year ending March 31. The group operates in 78 cities in 30 countries outside Japan.
Garcia said this deal meant that in the past 15 years, DTSI Group has built an organization worthy of investment by a global industry leader.
"It means our new strategic partner recognizes the potential of our organization, its prospects for strong growth, and the opportunities our country offers to grow their investment in a substantial and sustainable way. It means they see the potential in our people," Garcia said.
DTSI Group, which has an annual consolidated revenues of about PhP2 billion, has about 243 employees. It has grown by a compounded rate of over 20 percent in the last few years. It has helped set up most of the BPO operations in the Philippines like those of Convergys, Teleperformance and JP Morgan and likewise acts as IT enabler to other sectors outside BPOs like financial institutions AIG, schools and hotels.
The Philippines is also becoming a center for global shared services in the banking, insurance, energy, engineering, and other industries. Global companies have been increasingly attracted to the Philippines' abundance of fluent English speakers and incentives offered by the government.
In 2011, total BPO sales revenues in the Philippines increased by 24 percent year-on-year to $11 billion, accounting for 5 percent of the nation's GDP. The contact center industry was particularly vibrant, generating revenues of $7.4 billion, the highest revenue of any country in the world, surpassing even India.
UK FIRMS EYEING PHILIPPINE INFRA PROJECTS
Philippine Daily Inquirer
23 May 2012
Companies based in the United Kingdom are keen on taking part in the Philippines' public-private partnership projects on infrastructure, London's top official said Tuesday.
David Wootton, the Lord Mayor of London, said in a briefing that he himself was upbeat about the prospects of the Philippine economy, especially after he met Malacanang officials on Monday and sat down with British businessmen who have interests here on Tuesday.
According to Wootton, who also serves as ambassador for the UK's financial services industry, the Philippines is headed in the right direction, considering that economic indicators are all up.
"There are an increasing number of opportunities for UK businesses in the Philippines, particularly on investing in infrastructure," as well as the provision of services and expertise, such as design and engineering for such projects, the UK official explained.
Wootton said he had meetings with officials of the Departments of Foreign Affairs, Trade and Industry, Finance, and Transportation and Communications. He also met with officials of the Securities and Exchange Commission and the Insurance Commission.
"All those meetings gave me the confidence about the management of the economy and the stability of the financial regulatory regime," he said. "The Philippines is keyed on UK companies doing projects here."
Asked what particular projects the British companies were looking at, Wootton mentioned railways, including the light rail systems in Metro Manila, as well as seaports, airports and roads.
"The focus is on transportation at the moment," he said. "But they are also interested in water management (or flood control) and energy projects like power plants, and renewable energy resources like wind, solar and biofuels."
Manila was the London official's first stop in his three-country Southeast Asian tour.
He left for Thailand on Tuesday, and would soon be on his way to Singapore.
Already, the UK government has beefed up its embassy in Manila, in line with its policy to strengthen trade activities in Asia.
According to the embassy, the Lord Mayor's mission comes at a special time for the UK as London will host the 2012 Olympics while the country celebrates the Queen's Diamond Jubilee.
NEDA COMMITTEE APPROVES 5 PROJECTS WORTH PHP32.7B
21 May 2012
The Investment Coordination Committee (ICC) of the country's highest development planning and policy coordinating body has approved five projects on transportation, infrastructure and health worth PhP32.67 billion, the National Economic and Development Authority (NEDA) said in a statement Monday.
These are the Light Railway Transit (LRT) Line 2 East Extension Project; modernization of the Philippine Orthopedic Center; upgrading and rehabilitation of the Navotas Fish Port Complex; Bridge Construction Acceleration Project for Calamity-Stricken Areas Phase II (covering 7,958 permanent birdges), and the National Roads Bridge Placement Project (covering 133 bridges).
The ICC CabCom's approval of these five projects will be endorsed to the NEDA board for its confirmation, the NEDA said.
The NEDA board, chaired by President Aquino, comprises various Cabinet secretaries, the president of the Union of Local Authorities of the Philippines, the governor of the Autonomous Region in Muslim Mindanao, and the deputy governor of the Bangko Sentral ng Pilipinas.
The ICC, one of the seven interagency committees of the NEDA board, evaluates the fiscal, monetary and balance-of-payments implications of major national projects. The ICC's powers and functions resides in its CabCom, which is headed by the country's finance secretary. , The ICC is supported by an interagency technical board, with NEDA as ICC secretariat.
ECONOMY SEEN TO HAVE GROWN 4.8% IN Q1
Philippine Daily Inquirer
20 May 2012
The Philippine economy likely grew at a faster pace of 4.8 percent in the first quarter of 2012 from 3.7 percent in the previous quarter mainly on the back of recovery in export earnings, international financial services firm HSBC said.
In its latest report on the Philippines, HSBC said the growth in exports in the first three months will provide a boost to the overall economy, which last year suffered from contraction of earnings from sale of goods to foreign markets due to sluggish performance of Western economies.
HSBC said the slowdown in the growth of remittances in the first quarter might have dragged the pace of increase in domestic consumption lower, but this was more than offset by the rebound in export revenues.
"As such, we expect GDP [gross domestic product] to accelerate in the first quarter on the back of stronger growth contributions from net exports and government spending," it said in the report.
Data from the National Statistics Office showed that in the first quarter, the country's merchandise exports amounted to $12.86 billion, up by 4.6 percent from $12.29 billion in the same period last year.
Economists said the single-digit growth in exports was already a welcome development especially since the country suffered from exports contraction in 2011.
They said the outlook for exports this year remains uncertain given problems still hounding the US and eurozone economies, but HSBC said the growth in the first quarter would be enough to help the economy post accelerated growth.
On remittances, the BSP earlier reported that these grew year on year by 5 percent in the first quarter to $4.5 billion. Monetary officials said the rise in remittances was an indication that overall income of overseas Filipino workers is not significantly affected by the debt crisis in the eurozone and the sluggish performance of the US economy.
HSBC noted, however, that the rise in remittances reflected a slowdown after a 7-percent rise registered for 2011.
Remittances from the estimated 10 million Filipino based offshore - a closely watched economis indicator - help fuel at least 10 percent of households in the Philippines.
The government has set a goal for the economy to grow between 5 and 6 percent this year, with budget officials saying public spending is being boosted to help achieve the target.
The consensus among economists from the private sector, however, is that the Philippines will manage to post a decent growth rate that will likely fall short of 5 percent.
Last year, the economy grew by an average of 3.7 percent, thus slowing down sharply from the 7.6 percent registered in 2010. The slowdown, which the government wants to reverse this year, was blamed on the anemic spending and on drop in export revenues.
DTI REPORTS HIKE IN BUSINESS REGISTRATIONS
Philippine Daily Inquirer
18 May 2012
The Department of Trade and Industry reported an 8-percent increase in business name registrations last year with the automation of its sign-up processes, leading to a faster and more efficient handling of transactions.
In a statement, the STI said that there were 318,920 registered businesses last year compared to 294,410 in 2010.
"The significant increase in registrations last year was attributed to the DTI's Electronic Business Name Registration System or EBNRS which was launched in October 2010. The EBNRS is one of the department's anti-red tape initiatives in line with the government's policy of stremlining the bureaucratic processes and curbing in the frontline agencies," said Trade Secretary Gregory L. Domingo.
Domingo had emphasized the government's effort to ease business processes by undertaking reforms such as automation of business registration processes to attract more investments in the country.
"We are continuously studying our processes to simplify businss registration and license applications to improve the Philippine business environment. We are closely working with other government offices and the local government units or LGUs to make business easier in the country," Domingo explained.
The EBNRS only takes 15 minutes, and a one-page application form and one signiture compared to the previous scheme. This has drastically improved the process by cutting the length of time, number of documents and signatures required to register a business name.
With the EBNRS in place, entrepreneurs can get their DTI business name registration certificates in less than 30 minutes.
"The automated system not only made the transactions easier for business but also for the department," Domingo added.
Registration of business name with FTI is the first step for an entrepreneur to start a business. Other regulatory agencies require businesses to register with them, while also obtaining permits and other licenses from LGUs before being allowed to operate.
That was why the DTI initiated in January this year the Philippine Business Registry in order to link the EBNRS with the registration process of other line agencies such as the Bureau of Internal Revenue, Social Security System, Home Mutual Development Fund, Philippine Health Insurance Corp., Securities and Exchange Commission and local governments such as Quezon City, to provide a seamless transaction for entrepreneurs.
BOI MAKES PITCH FOR 200 PROJECTS WORTH PHP60B
Philippines Daily Inquirer
17 May 2012
The government plans to tap the financial clout of Metro Manila investors in funding 200 provincial projects worth a combined PhP60 billion, bulk of which will be in Mindanao.
In a forum on the Philippine consumer market hosted by the Philippine Stock Exchange and Asiamoney on Thursday, Board of Investments (BoI) assistant secretary for investment promotion Felicitas Agoncillo-Reyes said local investors based in Metro Manila had been missing out on some "very good" projects that had fallen below their radar.
Under a program called "Invest-Mart", the BoI has put together a total of 200 projects, 91 of which are in Mindanao, which the government will make a pitch for in a road show scheduled before the year's end, Reyes said.
"In November, we'll bring all those projects and we'll be inviting finance groups...to participate and take a look at these projects," Reyes said. "They will be brought to Manila and presented to potential partners."
At the sidelines of the forum, Reyes said the projects' costs were typically small - about PhP100 million or so - but there were many of them.
Because of their small size, she said, such projects would not usually generate a lot of attention especially from institutional investors.
The 91 projects in Mindanao range from energy to agribusiness with some heavy industries, she said. Other opportunities involve palm, coconut and rubber plantations as well as some manufacturing projects.
Domestic investors are the ones being tapped to participate in the projects, either as partners or funders. Based on investment registration data at the BoI, Reyes noted that 95 percent of registered investors are Filipinos.
"We're less dependent on foreign money," Reyes said, adding that the investments would likewise flow to other growth areas outside of Metro Manila.
This program is being pursued with the help of the regional cooperation group of the Department of Trade and Industry.
Even on a global basis, it is now a good time to attract more investors to the Philippine consumer market, Reyes pointed out.
"Investors are convinced that the Philippines is worth putting money into. The world attention is on us, and the biggest challenge is to come up with more and more projects that we can offer to investors," she said.
Agribusiness, real estate and tourism will be among the key sectors that will attract investors.
This year, investments committed through registration may increase by 10 percent, the BoI said.
Last year, the volume of BoI investment registration rose by 38 percent.
"There's more appetite (this year)", Reyes said. "But it's best to err on the conservative [side]."
SUTHERLAND TO INVEST $50M IN CARMONA BPO CAMPUS
Philippine Daily Inquirer
10 May 2012
MANILA, Philippines - Business process outsourcing firm Sutherland Global Services has broken ground on a new corporate campus south of Metro Manila as part of its expansion plans in the country.
According to officials of the US-based firm, it will invest $50 million to build the new BPO and information technology hub in Carmona, Cavite, which will add 8,000 personnel to its existing roster of 13,000 contact center agents nationwide.
"When the current expansion is completed and once the campus becomes fully operational, Sutherland would have had a significant expansion to its headcount in the Philippines," the company said in a statement.
Globally, Sutherland is one of the world's largest "pure play" BPO companies with over 30,000 people working out of its 35 operations centers and 10 countries, namely the US, Philippines, India, UAE, Egypt, Bulgaria, UK, Canada, Mexico and Colombia.
The ground-breaking ceremony for the campus was held last Wednesday in the presence of President Aquino and Sutherland Global Services chairman and CEO Dilip Vellodi.
Since its launch in the Philippines in 2005, Sutherland has seen a rapid ramp up of its BPO operations, growing to 13,000 staffers in seven years.
Currently, over 70 percent of the company's services are delivered from cities outside Metro Manila, as part of its BPO initiative in the provinces in partnership with the government.
Vellodi said that "a favorable economic environment, availability of high-quality talents, as robust infrastructure and business-friendly government policies" have been prime drivers for the company's rapid expansion in the Philippines.
"The Carmona campus will be an integrated delivery center for our global clients," he added.
Established in 1986, Sutherland is a global BPO and technology-abled services company and is one of the largest, independent BPO companies in the world serving major corporations.
"Sutherland's exponential growth in the Philippines has been marked by a drive to be best in the industry," President Aquino said during the ground-breaking ceremonies. "We truly appreciate the rapid growth Sutherland has achieved in our country over the last seven years providing significant employment opportunities to our talented young workforce."
In his speech, the president emphasized his administration's focus on aiding the growth of the local BPO industry, which has surpassed India in the call center sphere.
"By the time I step down in 2016, we are looking at revenues that will have more than doubled to $25 billion and 4.5 million jobs - 1.3 million directly as a result of the BPO sector and 3.2 million indirect jobs," Aquino said.
AGRI SECTOR POSTS 1% GROWTH IN 1Q
Philippine Daily Inquirer
10 May 2012
MANILA, Philippines - The agriculture sector grew by 1% in the first quarter of 2012, buoyed by gains in the poultry, livestock, and crops sector. Bu the growth was tempered by the fisheries sector, which contracted by 4% due to the disclosure of sardines and tuna fishing grounds.
Agriculture Secretary Proceso Alcala on Thursday said the country is on track to meet its 2012 growth target, which is 4% to 5%.
Alcala noted that the crops, particularly the palay (unmilled rice) sector, and the fishing industry will play catch up in the second and third quarters of the year due to the lifting of the closed season and increase in palay plantings.
Alcala said the palay sector was slightly lower at 3.99 million metric tons, a slight dip from the record-breaking harvest 4.037 million metric tons in the first quarter of 2012. In the first semester of 2012, the Department of Agriculture forecast to harvest 7.838 million metric tons. This is 3.4% more than the first semester 2011 output.
"Our palay production target remains on tract, as we expect to harvest 3.846 million metric tons in the 2nd quarter based on standing crop, and another 3.413 million metric tons in the 3rd quarter based on planting intentions," Alcala said.
Corn production grew significantly in the January-March period to 2.02 million metric tons, 5.4% higher than the gains in the same period last year.
The fishing sector is seen to recover after contracting in the past years. The 3-month closed season on sardine fishing in the Zamboanga peninsula was lifted last March. Filipino commercial tuna fishers will be able to harvest tuna in the Pacific high seas in June or July, he said.
Meanwhile, the livestock sector registered 3.17% increase in production, accounting for 15.5% of the total agriculture output. Hog production fueled the gains in this sector, whose total value was placed at PhP49.86 billion. Fowl breeders also performed well in the first quarter, expanding by 7%. The sector's value amounted to PhP41.64 billion.
ALLIANCE SELECT UNIT SECURES PERMIT TO FISH IN INDONESIA
03 May 2012
MANILA, Philippines - A unit of Alliance Select Foods International Inc., a leading canned tuna manufacturer in the Philippines, has secured a license from the Indonesian government to capture fish in its waters.
In a disclosure to the stock exchange, Alliance Select Foods said its tuna processing subsidiary PT International Alliance Food Indonesia (PTIAFI) set up PT van de Zee, which recently received the license and allocation for capture fishing in Indonesia's exclusive economic zone.
Alliance Select said it was the first foreign investment company to be granted a capture fishing license and allocation in Indonesia.
The Indonesian Ministry of Fisheries and Marine Resources gave PT Van de Zee an initial allocation of 5,000 metric tons of tuna for 2012. Upon fulfilling a 5-year vessel acquisition program, PT Van de Zee will have a potential allocation of 30,000 metric tons of tuna by 2016.
The allocation not only gives PTIAFI a very high competitive advantage in an industry whose biggest challenge us access to raw material resource," Alliance said,
The company expects PT Van de Zee's yield of 30,000 metric tons of tuna a year to translate to an annual gross revenue of $66 million, based on a present value of $2,200 per metric ton.
PTIAFI owns 80% of PT Van de Zee, the maximum holding allowed for foreigners under Indonesia's capture fishing law. PT Van de Zee's operations will be integrated with the tuna processing activities of PTIAFI.
Alliance Select, formerly known as Alliance Tuna International, Inc., began commercial operations in General Santos City in 2004. The company is engaged in tuna processing and canning, and the export of canned tuna products to Europe and North America.
P27.3 ADB GRANT TO FUEL BPO SECTOR'S GROWTH
Philippine Daily Inquirer
03 May 2012
The Asian Development Bank (ADB) has extended a grant of $650,000 (PhP27.3 million) to the Philippines to help sustain the continued growth of its business process outsourcing sector, one of the country's top dollar earning industries.
The grant was formalized Wednesday with the signing of a memorandum of agreement (MOA) between the ADB and the Department of Finance (DoF) at the opening day of the four-day 45th ADB Governor's meeting.
Through this three-year program, it is hoped that more college graduates will have skills that industry players need through the establishment of "a replicable and sustainable model of (a) knowledge hub for improved teaching and learning of (a) BPO industry-based curriculum.
Under the MOA, at least three hubs will be established - one each in Luzon, Visayas and Mindanao. The hibs will provide "online training" to teachers and "digitized learning modules and study guides" for students.
Based on MOA's text, the BPO sector is recognized as the fastest-growing source of jobs and revenue for the country.
According to the DoF, BPO revenue have consistently shown double-digit growth rates in the past decade, with earnings for 2011 increasing 24 percent to about $11 billion. At the same time, there were 638,000 people holding full-time jobs in the industry.
"In 2010, the country surpassed India in terms of voice-related outsourced work to become the global leader in this area," the MOA said. "The industry is now moving up the value chain from voice-based services toward knowledge-based activities.
With the BPO sector in the list of the Aquino administration's priority areas, the government wants to help bring up industry revenue to $25 billion by 2016, mainly through the promotion of higher-value BPO services.
The grant is expected to benefit at least 900 faculty members and 3,000 college-level students from institutions that will be chosen to participate.
Alsom the program will provide funding for a "standard industry-based" instrument and "assessment tools" that will measure student and teacher competencies and progress while disparate BPO courses that are currently available will be accredited and integrated.
PH SEEN BECOMING PREFERRED INVESTMENT DESTINATION OF MNCs
Philippine Daily Inquirer
03 May 2012
The Philippines is emerging as a favored investment destination of large multinational corporations seeking to diversify their global manufacturing operations as factory costs rise in China, an official of investment banking giant BofA Merrill Lynch said.
James Quigley, New York-based executive vice chairman for international corporate and investment banking at BofA Merrill Lynch, said in a briefing on Wednesday that 20 years ago, chief executive officers of big multinational corporations would say it was difficult to do business in the Philippines because everything would depend on who you know and whom you were connected to.
"But now I think there is greater transparency, higher fundamental comfort level of doing business in the country. As companies around the world diversify their manufacturing footprint, given the Philippines' centralized location in Asia, its historical close ties with the United States, and because of its highly regarded free democracy that works, with its strong demographics, it is a place where you can move your manufacturing operations to toehr than China," said Quigley, who is in town to attend the Asian Development Bank meetings.
"Should it continue to do the right thing - that will increase its share of FDI [foreign direct investment] flows," he said. "I feel very strongly that as MNCs look to move labor-intensive manufacturing operations to emerging markets, the Philippines can increasingly become the preferred destination of those FDIs."
Based on feedback from corporate leaders around the world, Quigley said investors were becoming "uniformly comfortable" with the actions of the Philippine government.
The BofA Merrill Lynch executive said investors were happy to see public fiscal sector surpluses, more equity and fixed capital formation and a sound local banking system.
"The demographics are compelling with a growing middle class, a need for significant infrastructure and the increasing world-class multinational companies based in Manila," Quigley said.
The investment banker added that Manila was likewise logistically well situated within Asia. Today, he said worker remittances were still important but in the context of overall economy, it was becoming less important.
"There's real growth locally. People are focused on demographics, on politcal stability and the success of the democracy and local policies," he said.
At present, the investment banker said many multinational corporations were diversifying out of China in the same way that financial institutions spread out risk assets to mitigate earnings volatility or that asset managers invest in a pool of assets to temper volatility in returns.
Gone are the days of over-concentration of manufacturing in one jurisdiction, and CEOs, from the standpoint of good governance and business practice and risk management, are looking to diversify their manufacturing facilities. I think the Philippines stands ti benefit from that," he said.
Other emerging markets in Asia that were attracting a lot of interest from those setting up overseas factories were India, Indonesia, Vietnam and Thailand.
GARMENT COMPANIES IN CHINA RELOCATING TO PH: PURISIMA
ABS-CBNnews.com
26 April 2012
ADB meeting is "coming out party" for Aquino administration
MANILA, Philippines - Finance Secretary Cesar Purisima sees more foreign investments coming into the Philippines.
In an interview on ANC Headstart, Purisima said some garment companies are starting to relocate from China to the Philippines, due to rising labor costs in China.
He added electronics companies, which have been affected by the earthquake and tsunami in Japan and the flooding in Thailand last year are starting to look at the Philippines.
"The stock market is getting a lot of investments from foreign funds. Obviously, we want the more productive type of investment and we're starting to see it. For ecample, garment companies that are starting to relocate from China, where the wages costs are increasing, back to the Philippines. Electronics companies realized last year that they cannot be just in one place... they're starting to look at the Philippines. The Department of Trade and Industry is managing a lot of inquiries right now. There are concrete plans for plants to be built in the Philippines," Purisima said.
This is why, Purisima said, the government has to improve the country's infrastructure to meet the standards of foreign investors.
"We are accelerating our efforts to build our infrastructure because infrastructure is important to make sure we're as efficient as our neighbors - our ports, airports, power, mass transit, the whole work," he said.
"Coming out party"
Infrastructure will be the main topic in the upcoming 45th Annual Meeting of the Asian Development Bank (ADB), which will be held in Manila next week. Purisima said there will also be discussions on poverty alleviation, disaster management and climate change, which are all relevant for the Philippines.
Purisima said a record number of participants are attending the ADB event, which will be a "coming out" party for the Aquino administration.
We're going to make this more fun," he said, referencing the Philippines' tourism slogan "It's more fun in the Philippines."
The ADB Meet in Manila, Purisima said, will be more personal than previous conferences.
"We're also going to make it true knowledge-sharing. I've attended other ADB conferences, and its very impersonal. We want this to be personal, an experience for all attendees... So far, we have 4,300 participants -- a record. This is the highest ever so far and over half will be coming from abroad. These are not just ordinary tourists, these are decision-makers, leading bankers, fund managers, leaders in the NGO community converging in Manila", he said.
The Finance Secretary expressed hope these opinion leaders, who will visit Manila, will spread the good news about the Philippines.
"When they go back home, hopefully they will spread the good word that finally, the Philippines has gotten its act together. We have a leadership that believes in good governance, truly cares and want to build a better Philippines," he said.
COBONPUE IS LONE PINOY IN WORLD'S BIGGEST FURNITURE FAIR
ABS-CBNnews.com
26 April 2012
MANILA, Philippines - Furniture designer Kenneth Cobonpue continues to make his mark in the international scene by joining thousands of exhibitors at the Salone Internationale del Mobile in Milan, Italy.
Cobonpue is the only Filipino among the big designer labels to participate in Salone, which is considered as the most important modern furniture fair in the world.
At Salone, Cobonpue proudly showcased his "cabaret" outdoor furniture collection made from steel frame and umbrella cloth.
"Most outdoor furniture is made out of plastic. This one is different because it's softer," Cobonpue said.
His furniture designs earned the praise of some European customers.
"All the technique he used and the materials are new. Everything is brand new compared with what you can see. Even the Italians, they all basically look a little bit like the same," said Sergio, a customer from Portugal.
About 1,400 exhibitors joined this year's Salone exhibit.
Cobonpue's creations have been seen in popular American television shows as "CSI: Miami," as weel as in the home of Hollywoods's most popular couple, Brad Pitt and Angelina Jolie.
Queen Rania of Jordan has also bought his award-winning Bloom chair, which takes the shape of a flower.
Aside from appearances in film television, Cobonpue's creations deck the interiors of some of the world's most plush and modern hotels and resorts in Greece, Spain, Mexico and Maldives.
OUT OF POVERTY WITH JOB CREATION
Philippine Daily Inquirer
25 April 2012
VIEWED HISTORICALLY, the recent performance of the Philippine economy has actually been reassuring: Favorable trends include a declining public debt and fiscal deficit, recurring current account surpluses, low inflation, a healthy banking sector, and recent and forthcoming credit rating upgrades. Throughout the latest global economic shocks, remittances from oversees Filipino workers and revenues from the country's vibrant business process outsourcing (BPO) services have helped the Philippines maintain a healthy growth rate. Remittances have also been the backbone of the strong, sustained growth of private consumption, domestic trade, and real estate, among others.
So far so good. But while one would normally expect such solid economic growth to lead to sizable poverty reduction, this has not been the case. Between 2003 and 2009 the number of people living in poverty actually rose by 3.3 million to 23.1 million overall.
Identifying and addressing that languid link between economic growth and poverty reduction is the primary development challenge facing the Philippines.
Job creation is the cornerstone of the country's pathway out of poverty. Limited job opportunities do not afford many occasions for people to create a better life for themselves and their families. But how can the Philippines find the right road to inclusive growth?
The key to the success of many high-performing Asian economies has been dynamic structural transformation where the composition of output shifts from low-productivity to high-productivity goods, where labor moves from agriculture to industry, and exports become more diversified. These economies have maintained productivity gains by systematically upgrading technology and manufactured products, boosting labor productivity, raising household incomes, and fostering inclusive growth.
The Philippines' economic transformation has been unique, however. Rather than move from agriculture to industry, output and employment shifted dramatically away from both agriculture and industry into services, especially in low-productivity branches as retail, trade, transport, personal services, etc. Why this has happened is a story too long to narrate here; too-protracted agrarian reform, over-regulated industrial relations, a degraded infrastructure, fragmented policymaking, and an overvalued currency are part of a familiar list. In any event, low-productivity services have been the easiest outlet for the poor and the unskilled.
The growth of services has been further accentuated by the rapid expansion of the BDO sector, allowing the Philippines to take advantage of the global service revolution. Over a short period, the country has emerged as a top destination globally of the BPO industry has provided an important boost to the economy, it cannot be relied on to deliver inclusive growth. This is obvious from the type of education and skills the BPO industry requires - college level abilities that many of the poor cannot realistically access. To provide employment for the growing mass of skilled and unskilled working-age population, the Philippines cannot dispense with developing a stronger and more diversified industrial base. This is the only way to better ensure that the benefits of growth are shared by all.
While the country's industrial sector has historically grown at much slower rates than its regional peers - inhibiting GDP growth and resulting in the slow poverty reduction - this does not have to be the case moving forward.
It has already made notable progress in resolving some longstanding challenges that affect all economic sectors. These include addressing the tight fiscal position, weak business and investment climate, cumbersome business procedures, property right concerns and rigid labor market conditions. It has also recognized that the current tax incentives for investment, export, job creation and regional development are not sufficient to draw enough investors, particularly foreign ones, or spur local entrepreneurs in industry. This situation suggests that broad stroke "horizontal" approached to promoting industry may be necessary but perhaps not sufficient to spur an industrial revival, and there may be a need for a new approach, or at least a supplemental one.
Such a view and approach are suggested by a recent report of the Asian Development Bank. Titled "Taking the Right Road to Inclusive Growth," the report shows how promising lines of manufacturing can be developed with relative ease, mainly because they use capabilities already available in the Philippines' current export products. These product lines can be chosen either because they use labor intensively, or carry some technological potential, or provide beneficial "spillovers" to other industries. The report suggests that by paying closer attention to the characteristics and problems of specific industries - primarily through close consultation and problem-solving sessions with broad industry councils - practical bottlenecks can be cleared to pave the way for an incipient industrial revival, even while broad economy-wide reforms are still in progress.
To be sure, institutional challenges will remain formidable, and exact mechanisms of coordination are something scholars can study but only Philippine society and polity themselves can transact. After all, the Philippines has not had a fortunate history of industrial planning. On the other hand, especially now that governance capacities are improving through an approach that avoids the excesses of heavy-handed planning or cronyism, there is a real chance of unlocking the Philippines' enormous potential as a key production base in this region. With tightening labor markets in some countries, recovery from natural disasters in others, and the appreciation (again) of the Japanese yen, there are growing opportunities for the Philippines to draw foreign investors as well as entice domestic players to take a second look at the manufacturing industry.
Once the country develops robust industry and modern services, many more job opportunities will be generated for a much wider cross-section of society. Only then can there be hope that the country can find its way out of the thickets of poverty much faster - because it would be walking on two legs.
Kunio Senga is the director general for the Asian Development Bank's Southeast Asia Development.
Emmanuel de Dios is a professor of economics at the University of the Philippines.
CURBING CORRUPTION WILL RESULT IN PH ECONOMIC FREEDOM - REPORT
Philippine Daily Inquirer
18 April 2012
Continued reforms in the rule of law, regulatory efficiency and governance in the Philippines are the keys to that country's economic growth, a US think tank report said.
The 2012 Index of Economic Freedom said financial reforms in the Philippines as well as overseas remittances have allowed the country to weather the global financial crisis.
"Further progress, however, is vital in the areas of rule of law, infrastructure modernization, regulatory efficiency, and governance," the annual report from Washington-based Heritage Foundation said.
The report lauded the efforts of President Benigno Aquino in combating corruption since he assumed office in 2010.
"President Aquino is right to focus on corruption in his quest to reform government, although he will have to do so in an even-handed and productive manner," the report said.
The Index of Economic Freedom is a series of ten economic measurements created by the Wall Street Journal along with the Heritage Foundation. The report defines economic freedom as "the fundamental right of every human to control his or her own labor and property."
The index scores nations on ten broad factors of economic freedom using statistics from the World Bank and the International Monetary Fund.
In its 2012 report on the Philippines, it stated, "There are other institutional challenges that will require President Aquino to maintain a deep commitment to reform."
Saying corruption continues to be a serious cause for concern, the 2012 report's "Freedom from Corruption" indicator showed the Philippines had the lowest score the country received in any index category. It ranks only 136th out of 179 countries.
"Clearly, corruption is undermining the Philippines' long-term economic development," the report stated.
The Philippine Index score was also hampered by several other factors including judicial institutions, which remain susceptible to political interference, it said. Other factors cited were the country's failure to protect property rights and law enforcement that lacks sufficient strength and transparency.
The report said these "lingering shortcomings" caused the Philippines to lag behind other countries in Asia.
"The Philippines - pnce home to one of the emergent Asia's more advance economies - has been eclipsed by its neighbors' higher rates of economic growth," it said.
"(But) successful reforms during President Aquino's term should result in improved scores for the Philippines in future editions of the Index of Economic Freedom", the report also said.
PHILIPPINE BOURSE HITS NEW HIGH
Philippine Daily Inquirer
18 April 2012
MANILA, Philippines - The local stock market soared to a new all-time high on Wednesday as investors across the globe took heart from encouraging developments in the United states and Europe.
The main-share Philippine Stock Exchange closed at a new record high of 5,186.20, gaining 28.92 points or 0.56 percent, and continuing its winning streak to a fifth session in a row. The index breached the 5,200 level in intraday trade.
"The confluence of positive news from Europe and the US was a strong incentive for buyers," said PNB Securities deputy chief Manny Lisbona.
"Spain was still able to auction treasury bills, reducing fears that it lacks the ability to raise funds, at least for the short term. In the US, strong earnings results from the likes of technology and financial sector (stocks) boosted investor confidence," Lisbona said.
Overnight, the Dow Jones Industrial Index surged by 194.13 points, or 1.5 percent to 13,115.54.
Ramon Garcia, president of RTG & Co., said the PSEi was now moving toward his target of 5,500 by the second semester.
"Expect a more active market in the coming days with the entry of GT (Capital Holdings) coupled with investors' interest on the issue," Garcia said.
GT Capital is set to list on the local bourse this Friday.
The index was led higher by Megaworld (+3.45 percent), BDO (+1.43 percent), AGI (+3.74 percent), SM Investments (+1.49 percent), URC (+1.95 percent), DMCI (+3.14 percent), ALI (+1.62 percent), AEV (+2 percent) and First Gen (+1.88 percent).
Other second liners like GMA Holdings, Security bank and Puregold also advanced, respectively rising by 3.45 percent, 2.48 percent and 3.75 percent.
GMA was benefiting from continuing interest from the group of businessman Manuel V. Pangilinan to take over a controlling stake in the broadcasting giant.
Turnover for the day increased to PhP7.5 billion, closer to the record-high daily average volume in the first quarter. There were 102 advancers versus 75 decliners while 31 stocks were unchanged.
Among the index stocks that buckled that day's upswing were PLDT, EDC, AC and ICSTI. There was likewise profit-taking on Dizon.
MANUFACTURING OUTPUT IMPROVED IN FEB
Philippine Daily Inquirer
18 April 2012
Annual growth in manufacturing improved to 5.1 percent year on year in February from the 0.5 percent observed the previous month, the National Statistics Office reported Tuesday.
Thirteen major sectors reported higher production in February, with furniture and fixtures ahead, posting a 167-percent growth rate. Other big gainers were footwear and wearing apparel (73.2 percent), tobacco products (40.1 percent), non-metallic mineral products (21.9 percent), beverages (15.2 percent), wood and wood products (11.9 percent) and food manufacturing (10.4 percent).
Also, volume of production increased 4.7 percent in February, rising from a decline of 7.2 percent in January. Six of the 13 major sectors that reported double-digit increases were: tobacco products (27.6 percent) furniture and fictures (19.1 percent), transport equipment (18.4 percent), chemical products (12.9 percent), footwear and wearing apparel (12.4 percent) and non-metallic products (11.1 percent).
In terms of utilization, manufacturers were said to use up to an average of 83.3 percent of capacity.
The NSO said that, of the manufacturers surveyed, 20.3 percent operated at full capacity (90 percent to 100 percent) last February.
About 55.5 percent of the establishments operated at 70 percent to 89 percent capacity while 24.2 percent worked below 70 percent capacity.
Ruperto P. Macuja of the National Economic and Development Authority (NEDA) said that the improvement in factory output bodes well for economic expansion.
The manufacturing uptrend parallels the recent improvement in exports, he added.
"Many of the export subsectors are tied to manufacturing," Macuja said. "We anticipate that the production uptrend will continue and strengthen in the coming quarters [as] exports continue to strengthen its momentum."
PH CHICKEN SOON ON KOREAN TABLES
Philippine Daily Inquirer
16 April 2012
MANILA, Philippines - Bureau of Animal Industry Director Efren Nuestro and South Korea has agreed to open its market to Philippine poultry products after declaring them safe.
"Chicken from triple-A slaughterhouses may start entering South Korea. [Seoul's] decision to start accepting our chicken products means that we have complied with their requirements," Nuestro said.
South Korea's poultry industry has been affected by the dreaded avian flu or bird flu, which is caused by viruses that occur naturally among birds. The Philippines is one of the few countries in Asia that remains free from avian flu, which has led to multibillion-dollar losses in the global poultry industry.
The opening of South Korea to local chicken products is one of the important points discussed during the Philippine - South Korea bilateral meeting on agriculture held in Manila in November last year. The Philippine government said it wanted to start the export of local chicken products before the end of the first semester.
The Department of Agriculture noted that the South Korean market was as big as the Japanese market which had relied on the Philippines for its poultry products after Thailand was hit by the avian flu. So far, Japan remains the top importer of Yakitori chicken from the Philippines.
ELECTRONICS. GOLD LED EXPORT SURGE IN FEBRUARY, SAYS NEDA
Philippine Daily Inquirer
12 April 2012
Philippine exports grew by a double-digit rate in Febrtuary, from the 3-percent increase reported in January, with electronics and gold leading the charge, according to the National Statistics Office.
Export earnings in February this year rose by 14.6 percent to $4.431 billion from $3.865 billion recorded in the same month last year. On a monthly basis, outbound shipments increased by 7.4 percent from the $4.123 billion posted in January 2012, the NSO report showed.
The National Economic and Development Authority (NEDA) said that exporters' performance during the month came as a "pleasant surprise," especially after the sector went through eight months of contractions since May 2011 before it slightly recovered in January.
"Electronics also achieved double-digit growth, faster than we've expected. This bodes well for our GDP (gross domestic product) growth numbers." Neda assistant director-general for policy and planning Ruperto P. Macuja said in a text message.
Weak exports were a major drag to GSP growth in 2011.
It's too early to tell if exports are building momentum, but the modest growth gives "some glimmer of hope," Benjamin E. Diokno of the UP School of Economics said via email.
"Exports grew by 8.8 percent during the first two months of the year. The exports growth performance is much less than BSP's (Bangko Sentral ng Pilipinas) 15 percent growth forecast, and closer to the exporters' revised forecast of 10 percent. But on the positive side, the two consecutive months of modest exports growth suggest that Philippine exports might be finally out of the negative territory - the bottom was reached in September 2011 when exports contracted by 27 percent," Diokno added.
Electronics accounted for 52.7 percent of total revenue in February, making it a major driver for higher overall exports. This product category earned $2.333 billion, up 15.8 percent year-on-year.
Gold extracted from copper ore and concentrates raked in $63.4, marking a 1,414-percent year-on-year rise. It was the runaway winner in terms of sales growth.
Japan took up 18 percent of total Philippine exports with billings amounting to $796.56 million (up 19.7 percent yearly).
Other top export markets were the United States ($687.64 million, up 11.5 percent) and China ($588.89 million, up 35.7 percent).
The Philippines needs an export boom to help spur growth by an annual rate of 7 to 8 percent from 2010 to 2016 and reduce poverty incidence in the country.
IT-BPO REVENUE REACHED $11B IN 2011
Philippine Daily Inquirer
11 April 2012
The Philippines generated $11 billion in revenue from the fast-growing information technology and business process outsourcing (IT-BPO) industry last year - 24 percent higher than a year ago.
In a statement on Wednesday, the Business Process Outsourcing Association of the Philippines (BPAP) also announced that the industry employed 638,000 by the end of 2011 - 22 percent more than that of the previous year.
"We hit the targets projected in our Road Map 2016," said new BPAP president Benedict Hernandez. "This is a good start to our five-year plan to grow at an average of 20 percent a year - above the projected annual growth rates of 10-15 percent.
At a compounded annual growth rate of 20 percent, the Philippine IT-BPO sector is set to become a $25 billion industry by 2016, contributing about 9 percent to the Philippine economy and capturing 10 percent of global demand, Hernandez added.
The biggest component came from voice outsourcing, which accounted for 65 percent of total business. The Contact Center Association of the Philippines (CCAP), also headed by Hernandez, reported that the sector ended 2011 with 416,000 employees providing $7.4 billion in services to the world. Already the largest contact center hub in the world, the Philippine sector grew by 21 percent in 2011.
Also, the Healthcare Information Management Outsourcing Association of the Philippines reported that as much as $277 million worth of HIMO services were provided to global end-users from the Philippines. The group reported that this segment employed 24,700 workers.
Another segment, Philippine Software Industry Association, reported a 37-percent growth in revenue from IT outsourcing, while employment expanded by 11 percent in 2011.
Another segment, the Game Developers Association of the Philippines, announced that the game development grew by 13 percent in 2011, with revenue reaching $8 million while employed workers topped 1,400.
Companies providing engineering services also saw a 5-percent increase in revenue and employment ending 2011, with more than 9,000 employees providing $172 million worth of services.
This was the second consecutive year of positive growth for the segment after a contraction in 2009, reflecting a recovery in global markets for construction and engineering design.
Also, the non-voice business process and knowledge process services grew by 24 percent in 2011 to over $2 billion in revenue. The segment employed a total of 130,000 by the end of the year.
RISE IN INFRA SPENDING SEEN TO ACCELERATE GROWTH
Philippine Daily Inquirer
11 April 2012
The Asian Development Bank expects a spike in infrastructure investments in the Philippines over the next two years, saying this will help the economy bounce back to its potential growth rate after a slowdown last year.
Neeraj Jain, country director of the ADB for the Philippines, on Wednesday expressed confidence that projects lined up under the Public-Private Partnership (PPP) program of the government would already be implemented starting this year.
Under the PPP program, private enterprises are invited to invest in key public infrastructure projects such as roads and airports.
"The government has reached the point where it can already implement sustainable projects," Jain said in a press conference on Wednesday on the ADB's latest economic outlook on Asian countries.
The ADB believes the government can deliver on its commitment to fast-track the implementation of the projects now that it has completed the review of project proposals and that a system that can help prevent corruption-related leakage of funds is already in place.
ADB said in its latest report that it was keeping its economic growth forecast of 4.8 percent for the Philippines for this year, citing the likelihood that various infrastructure would be implemented.
The projection is in line with the 4- to 5-percent growth range - which economists said is actually the country's potential growth - that the Philippines had been hitting yearly for a decade until 2011.
Last year, the Philippines grew by only 3.7 percent growth range - which many said was below its potential, partly due to under-spending by the government and delays in the implementation of infrastructure projects.
The country's economic managers claimed that PPP suffered from delays because of the review of the project proporals and the systems for their implementation.
Besides an increase in infrastructure investments, growth in remittances-backed household consumption, and positive sentiment of investors are also seen driving economic growth this year.
In the meantime, ADB senior economist Norio Usui said in the same press conference that the Philippines should hurdle bottlenecks in its economic structure to be able to accelerate economic growth to the desired level of 7 to 8 percent.
Usui said the Philippines should attract more investments in the industry sector, especially in manufacturing, to be able to grow faster.
The ADB economist said while investments in the services sector had helped the country post decent growth rates of between 4 and 5 percent, investments in the industry sector would help speed up growth to 7 to 8 percent.
This is because the industry sector, compared with the services sector, is more capital intensive and provides more jobs.
DOE GETS 69 BIDS FOR 39 COAL AREAS
04 April 2012
MANILA, Philippines - The Department of Energy recently received 69 bids for 38 coal areas in its fourth Philippine Contracting Round (PECR4) for coal.
Energy Undersecretary Jay Layug, chairman of the DOE Review and Evaluation Committee, oversaw the opening of the 69 bids from various companies who are interested in investing in coal exploration in the Philippines.
"The number of applicants is overwhelming and is obviously a testament to the confidence of investors in the Aquino administration. We look forward to harnessing our ingenous coal resources to reduce our reliance on imports," he said in a statement.
Old and new players that submitted applications included PNOC Exploration Corporation, Semirara Mining Corporation, Benguet Corporation, Blackstone Mineral Resources, Inc., Altura Mining Phils. Inc., South Peak Coal Resources, Inc., Superfine Mines and Minerals, Inc., Empire Asia Mining Corp.
The DOE committee is tasked to examine, evaluate and review the qualifications of the applicants. The bids will be evaluated on legal qualification, technical capability, financial credentials and work program.
The DOE hopes to award the winning bidders their coal operating contracts within 150 days from the opening of the applications.
Multiple bids were received for certain coal areas, particularly Areas 18-A and 18-B in Bislig and Lingig, Surigao del Sur.
At present, the Philippines imports 70% of its coal requirements. Only 30% comes from local sources. Coal accounts for 25% of the country's energy mix.
GOV'T ABOLISHES TAX CREDIT CERTIFICATE SYSTEM
The Philippine Star
03 April 2012
MANILA, Philippines - The Aquino administration has decided to abolish the tax credit certificate (TCC) system as it hopes to prevent a repeat of the controversial TCC scam which occurred in the mid-1990s and defrauded the government some PhP2.5 billion in revenues.
The government is introducing the new value added tax (VAT) refund program and is allocating PhP9 billion for the first year of implementation of the new scheme, Budget and Management Secretary Florencio Abad said yesterday.
Abad said the Aquino administration would allocate funds for the VAT refund scheme yearly starting this year to 2016.
President Aquino has issued Executive Order 68 which mandates the implementation of a five-year monetization program for VAT tax credit certificates issued by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC)
The program gives taxpayers the option to exchange their outstanding TCCs with cash at a discounted rate when collected in advance or the full cash value upon a particular maturity date.
The BIR and the BOC would verify outstanding VAT TCCs and would issue Notices of Payment Schedule to TCC holders.
With the EO, the two revenue agencies would no longer issue TCCs for VAT refunds.
A TCC serves as proof of a company's claim for tax credits, which are granted either to exporting firms that are entitled to duty-free privileges or to those that have tax refunds. Holders may use these certificates in paying taxes. Fraud is committed when companies acquire the certificates illegally.
Under the existing system, the TCCs are issued to tax payers to indicate their tax credits in lieu of cash refund.
However, the system has been susceptible to irregularities.
Abad said the VAT credit monetization scheme would help address the problem of corruption that hounded the old system.
The new scheme would also encourage businesses to diligently and accurately pay their taxes.
"Businesses, especially exporters, have been crying out for government to refund their VAT credits in an expedient manner. The outmoded TCC scheme traps their liquidity for as much as three years and exposes them to certain unscrupulous practices," he said.
KUWAIT FIRM TO INVEST $3B IN CLARK PROJECT
Inquirer Central Luzon
28 March 2012
CLARK FREEPORT - A company based in Kuwait has signified its commitment to pursue its $3-billion investment by renaming the logistics and business center it is developing in a 177-hectare land in this economic zone to honor the country's amir.
In a dedication ceremony on Tuesday, the marker of Global Gateway Logistics City (GGLC) was changed to Sabah Al-Ahmad GGLC in honor of Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, the amir of Kuwait.
Sheikh Sabah, who arrived in the Philippines on March 23 for a five-day state visit, was scheduled to grace the ceremonies here but had to leave the country to attend an emergency meeting called by the Arab League.
He was represented by Dr. Yousef Al-Zalzhala, his personal adviser.
In his speech, Al-Zalzhala, who was accompanied by Kuwaiti Ambassador to the Philippines Waleed Al-Kanderi, noted the strong bilateral relations between the two countries, as Kuwait is considered among the 130,000 Filipino workers as their second home.
"We are here today to show Kuwait's commitment to support the Philippines in executing its goals, as presented in Kuwait and Gulf Link's (KGL) efforts to transfer its industry expertise in infrastructure and logistics development to the people of the Philippines in partnership with the financial investment support from Kuwait," Al-Zalzhala said.
KGL Groups's investment arm, KGL Investment Co. (KGLI), is the owner and developer of Sabah Al-Ahmad GGLC.
The firm has infused an initial $30 million into the project and is set to pour more to complete the $3 billion in seven years.
The project features a 72-ha logistics park, a 57-ha business park, a 27-ha aero park, and a 21-ha town center for commercial and residential buildings.
It was conceived and presented to KGLI Co. in 2006 by Peregrine Development International Inc., an American company engaged in project development, engineering and construction.
KGLI accepted the project and signed a memorandum of agreement with Clark International Airport Corp. in April 2008.
The groundbreaking ceremonies, led by former President Gloria Macapagal-Arroyo, were held in August that year.
Al-Zalzhala said the project, which is set to be completed in 2017, would generate 200,000 jobs for Filipinos.
"Our efforts and contribution to the Philippine economy do not stop here. We have invested in the largest shipping company NN-ATS that is successfully servicing the market in passengers and cargo movement," he said.
Al-Zalzhala said Kuwait's direct investments in the Philippines have exceeded $75 million.
"Together with our partners from other countries whom we brought to co-invest with us, the aggregate amount of foreign investment that we have brought to the Philippines to date is close to $200 million," he said.
FOREIGN INVESTMENT PLEDGES SURGE 249%
Philippine Daily Inquirer
19 March 2012
Investment commitments from foreign investors surged 249 percent in February this year to PhP3.22 billion from only PhP924 million during the same month last year, boosted largely by sustained confidence in the Philippine economy.
In a statement issued Friday, the Board of Investments (BoI) said Thailand ranked highest among the Philippines' top investors for February with investments amounting to PhP2.2 billion, followed by Japan with pledges amounting to PhP703 million and different nationalities including Taiwanese and Americans with a combined PhP182 million.
"Our February figures show more jobs for every peso of investments. The projects are expected to generate 3,250 jobs once operational, an increase of 24 percent compared to 2,335 projected jobs for February 2011 approvals," said Adrian Cristobal Jr., trade undersecretary and BoI managing head.
Key investment projects approved were the aqua feed production project in Bataan of Thailand's Charoen Pokphand Foods Phils. Corp. (CP Foods); Toyota Motor Philippines's production of the Vios model at its Laguna plant; Quadriver Energy Corp.'s hydroelectric power-generation project in Bohol; the Zanorte palm-rubber plantation in Zambianga; and Pueblo de Oro Development Corp.'s venture in Batangas.
CP Foods, a major transnational conglomerate in Thailand's agribusiness industry, will construct a modern aqua feeds plant with an annual capacity of 114,000 metric tons. The approved project will help supply aqua feeds for the local aquaculture and fishiries industries. It will also source raw materials from local and foreign suppliers and will need local supply utilities.
The Zanorte project is expected to harness the potential of rubber as a new growth industry in the country. Initial target buyers for dried rubber are Dunlop, Bridgestone and Yokohama.
The approved Toyota project will strengthen the country's foothold in the production od compact sedans. SME suppliers are also expected to benefit from the project through Toyota's cluster development program "Big Enterprise Small Enterprise" where Japanese firm monitors and cascades supply development program to SMEs.
The February approvals brought total investment commitments from foreign investors in the first two months of the year to PhP12.4 billion, or 11.7 percent higher than the average investment pledges usually received during the January-February period. Over the past five years, pledges in the first two months of the year averaged PhP11.1 billion, according to BoI.
KOREAN INVESTORS SEEN EXPANDING PRESENCE IN PHILIPPINES
Philippine Daily Inquirer
15 March 2012
South Korean investors are coming to the country late this month to explore business opportunities here, particularly in the infrastructure, agriculture and natural resources sectors.
A South Korean business delegation will attend the Philippines - Korea Development / Business Partnership Forum, which is hosted by investment and trade agency Korea Trade - Investmenr Promotion Agency (Kotra), business publication Financial News Inc, and the Embassy of the Republic of Korea in the Philippines.
The forum is aimed at developing mutually beneficial partnership and further increase trade and investment between the Philippines and South Korea.
In a statement, Kotra Manila director general and Korean Embassy Trade Commissiober Johwan Choi said the bilateral relations between South Korea and the Philippines had already taken great strides.
Choi said Korea was now the Philippines' fifth-largest trading partner and third-largest investor. Also, the Philippines is Korea's third-most attractive investment destination in South Asia, she added.
As of end - 2011, Philippine exports to Korea reached PhP3.7 billion, while Philippine imports from Korea amounted to PhP7.6 billion.
According to Choi, investments made by South Korean companies in the Philippines were mostly in the areas of shipbuilding, power generation, manufacturing and electronics.
EXPORTS ROSE BY 3% IN JANUARY
Philippine Daily Inquirer
14 March 2012
Philippine exports grew by 3 percent year on year in January to $4.121 billion, turning around after eight straight months of contraction.
Electronics, the country's biggest export earner, also recovered following 11 consecutive months of decline.
Compared to exports in December, when earnings reached $3.407 billion, January shipments marked an increase of 21 percent, more than 10 times the previous month's 2-percent growth.
HSBC said in a research note that the sharp increase in January's exports was "a pleasant surprise," adding that the unexpected recovery was likely due to the similar upside surprise in economic activity globally toward the end of 2011.
"Looking ahead, the electronics exports' recovery will only be sustained if demand in the US, Japan and China continues to strengthen," said Trinh Nguyen, author of the report.
"Given the steady decline of outbound shipments from this sector for most of 2011 (due to both lackluster demand and loss of competitiveness), it is still too early to suggest that the struggle is over," Nguyen added.
In January the value of electronics products shipped - which accounted for 52.2 percent of total outbound cargoes - grew by 0.4 percent year on year to $2.152 billion.
Electronics shipments grew despite a 1.8 percent decline in the exportation of semiconductor components and devices, which accounted for more than a third of total exports for the month.
NSO data further showed that receipts from the country's second top export, woodcrafts and furniture, increased by 79.5 percent to $189.62 million.
Articles of apparel and clothing accessories placed third, rising by 5.2 percent to $170.87 million.
Fourth on the list were cathodes made of refined copper, which jumped by 269.4 percent.
Fifth were automotive wiring sets, which rose by 9.6 percent to $105.12 million.
Also on the list of top 10 earners were coconut oil, down by 45 percent to 88.11 million; metal components, up by 21.9 percent to $75.9 million; other products made from imported inputs, up by 52.7 percent to $54.21 million; petroleum products, up by 14.9 percent to $47.28 million; and pineapple and pineapple products, up by 116.2 percent to $31.99 million.
In January, Japan remained the Philippine's top export market, accounting for 18.9 percent of total outbound shipments. The value of shipments to Japan, however, decreased by 7.7 perceny to $629.27 million.
JANUARY EXPORTS POST FIRST RISE SINCE APRIL 2011
ABS-CBN News
13 March 2012
MANILA, Philippines - Merchandise exports rose for the first time in nine months in January, supported by a slight pick-up in electronics shipments, reflecting a recovery in global demand.
Exports climbed 3% in January, and the value of shipments was $4.12 billion, the highest in five months, data showed on Tuesday.
Electronics and semiconductor shipments, which accounted for the bulk or 52.2% of exports, rose 0.4% in January from a year ago, the statistics office said.
Electronics export growth is the first rise since January 2011's 5.3% growth. Electronics exports value of $2.15 billion is highest since $2.25 billion in July, 2011.
Exports account for about two-fifths of the country's GDP based on expenditure terms.
Japan remained the country's top export destination in the month, with export receipts rising 11.3% in January from a year earlier.
Exports to the United States, the second-biggest market, were up 23.5% from a year earlier.
Shipments to China, the thirs-biggest market, rose 26.2% from a year ago.
Exports to Eastern Asia -- the top export destination be economic bloc, accounting for 48.1% of total shipments -- were up 18.6% from a year earlier. Southeast Asia and the European Union were the second and third top economic blocs.
PHILIPPINE FOOD EXPORTS HIT $2.6B IN '11, UP 21%
Philippine Daily Inquirer
06 March 2012
Philippine food exports rose by 21 percent to $2.57 billion in 2011, from $2.12 billion the previous year, due largely to increased sales to key markets of fruits and vegetables, processed food and beverages, and marine products.
But even with these gains, Philippine Food Processors and Exporters Organization Inc. (Philfoodex) president Roberto C. Amores noted in a statement that "much can still be done to enhance our export performance."
"The Philippine food export turnover is far from behind our Asian neighbors. For example, Thailand's food exports reached $24.38 billion in 2010 and increased to $27.65 billion in 2011 despite the protracted financial crisis in the US and Europe and the recent great flood in Thailand," Amorea said.
For the Philippines to catch up, there must be "increased investments in the agro-food sector focusing on the development of the export competitive products and supporting small and medium enterprises (SMEs)," Amores said.
Amores noted that the PhP80-million funding support for export promotions and other development activities would help boost the local export industry.
Of the amount disbursed last year, PhP20 million was allotted for export promotion, while the remaining PhP60 million was used to put up common service facilities for the SMEs.
"We look forward to benefiting from the Deparment of Trade and Industry's common service facilities, which were a result of the PhP60-million government export development fund. Expectations are also high for the institutionalization of export competitiveness fund under the Philippine Export Development Plan (PEDP) as approved by President Aquino last year," said Sergio Ortiz-Luis, president of Philippines Exporters Confederation Inc. (Philexport).
According to Ortiz-Luis, strong emerging markets like the Middle East and North Africa (MENA) region are seen to provide huge business opportunities for the Philippine food exporters.
As stated by a sector brief of the World Bank on agriculture and rural development, more than half of the food consumed in the MENA region is imported, making it the largest fast-importing region in the world. The estimated size of global halal sector for 2011 is $661 billion, according to the World Halal Forum.
GOV'T TO AUCTION IDLE MINING ASSETS
Philippine Daily Inquirer
05 March 2012
Mining assets with cancelled applications and permits will go on auction after President Aquino signs mining reforms, according to Mines and Geosciences Bureau director Leo L. Jasareno.
Within three months of the approval of the mining policy, he said the government could start the bidding process for the vacant mine assets.
There are about 1,600 mining areas with cancelled applications and permits. Of the total, 400 are under appeal. That would leave 1,400 areas that are ready for bidding, Jasareno said.
Without the mining reforms to be implemented under a still unsigned executive order, the existing moratorium on new mining applications would stay as well.
"The [moratorium] will be lifted when the EO is signed," he said.
The auctioned assets would be developed under a new scheme, Jasareno said. At present, medium-sized mining projects fall under Mineral Production Sharing Agreements, or MPSAs, and large-scale projects fall under the Financial or Technical Assistance Agreements, or FTAAs.
The mining assets to be bid out after the signing of the EO on mining reforms would be developed under a joint venture agreement between the government and the winning company.
"The sharing [arrangement] will be different. The government can negotiate a higher share of the mining revenue," Jasareno said. He stressed that the government was not simply referring to taxes when it was talking about getting a share of mining revenues.
"Everyone pays taxes but the mining industry is different in the sense that the government must get a share of revenue aside from the taxes paid by the mining company. Some see royalties as a way of getting the government's share, some see the removal of incentives as one way and so on. All of these will undergo consultation in Malacanang," Jasareno said.
He stressed that this meant consultations would not be with the Department of Environment and Natural Resources - MGB, as announced by Environment Secretary Ramon Paje.
Miners, on the other hand, have said that the government was already getting more than 50 percent of mining revenues through taxes.
If the Philippines implements the Mining Act of 1995 well and plugs tax leaks in the small-scale mining sector, there would be no need for additional levies since the country has the same higher level of taxes compared to other countries, according to the Chamber of Mines of the Philippines.
Environmental risk mitigation and rehabilitation would also be addressed during consultations in Malacanang before a final draft is presented for signing to President Aquino, Jasareno said.
Miners said the industry was accorded only two hours of consultation with the mining study group while 18 hours were accorded to anti-mining organizations, Chamber of Mines president Banjamin Philip G. Romualdes said in an earlier briefing.
ADB EXPECTS PHILIPPINE ECONOMY TO GROW BY 5% IN '12
Philippine Daily Inquirer
02 March 2012
The Asian Development Bank expects the Philippine economy to grow by five percent this year and by "six to seven percent over the medium term."
ADB President Haruhiko Kuroda made the remarks Thursday shortly after he met with President Aquino.
Kuroda also described the Philippines as having "a quite balanced economy."
"It has a very strong services sector," the ADB executive said, adding that the outsourcing, financial, distribution, and real estate sector apprear to be doing fine.
Robust
"The Philippines' remittances ... continue to increase in a very robust way," he added.
As a result, the ADB believes that Philippine growth will hinge on consumption and investments, Kuroda said.
The Philippine economy grew 3.7 percent in 2011. The government expects economic growth to range from five to six percent this year.
But Kuroda pointed out that something must be done about the significant slowdown in exports.
"As you know, the Philippines' major items are electronic goods. The Philippines is part of the East Asian supply chain of electronic goods (which had been upset by) the earthquake in Japan, the flood in Thailand. Both of them disrupted the ... supply chain ... and this affected the Philippine economy through the slowing down of exports," Kuroda explained.
Cautious
Kuroda said the ADB was optimistic about the short-term economic outlook of emerging economies in Asia, "although there could be some slowdown compared with 2010 and 2011."
"But still we expect a very robust growth in Asia, particularly emerging nations or developing nations. Average growth rate could be around seven percent or seven percent-plus - quite a respectable rate of economic growth," he said.
"There are, we feel. a few downside risks so we have to be cautious," he added.
"Another potential downside risk is rising oil prices. At this moment, despite some slowdown in the global economy, oil prices are at relatively high levels," Kuroda said.
Infrastructure
"If oil prices go up sharply, then Asia would be seriously affected. Still, we are optimistic about the short-term economic outlook growth in Asia," he added.
Kuroda said the Philippines would also need to improve its governance and its infrastructure to accelerate economic growth.
"ADB is cooperating with the government of Philippines to improve governance and infrastructure ... because infrastructure is the basis of sustained economic growth in the transport, energy, water, telecommunications (sectors) ... The Philippines must have better and more infrastructure in order to accelerate economic growth," Kuroda said.
"The potential of the Philippine economy is very strong and, in the coming years and decades, the Philippines can maintain and even accelerate economic growth," he added.
PHILIPPINES SITS ON $840-B OF MINE - US
Philippine Daily Inquirer
01 March 2012
With untapped mineral wealth worth more than $840 billion, the Philippines is "one of the world's most highly mineralized countries," according to a US Department of State report on the Philippine economy.
Despite its rich gold, copper and chromate deposits, however, "the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s when the country ranked among the 10 leading gold and copper producers worldwide," the Washington-based agency said.
"Low metal prices, high production costs and lack of investment in infrastructure contributed to the industry's overall decline," the State Department said in the report, which the US Embassy in Manila has posted on its website.
It noted that "a December 2004 Supreme Court decision upheld the constitutionality of the 1986 Mining Act, thereby allowing up to 100 percent foreign-owned companies to invest in large-scale exploration, development and utilization of minerals, oil and gas" in the country.
Local mining bans
"Some local government units have enacted mining bans in their territories, citing concerns over environmental degradation, unequal distribution of tax revenues, unemployment caused by displacement of small-scale miners, and marginalization of indigenous people," the agency said.
According to the State Department report, "Philippine copper, gold and chromate deposits are among the largest in the world."
"Other important minerals include nickel, silver, coal, gypsum and sulfur. The Philippines also has significant deposits of clay, limestone, marble, silica, and phosphate. Natural gas reserves discovered off Palawan have been brought on line to generate electricity," it said.
In the same report, the agency said the Philippine economy "proved comparatively well-equipped to weather the recent global financial crisis, partly as a result of the efforts to control the fiscal deficit, bring down debt ratios and adopt internationally accepted banking sector capital adequacy standards."
Slow growth
"After slowing to 3.8 percent growth in 2008 and sputtering to 1.1 percent in 2009, real year-on-year GDP growth rebounded to 7.6 percent in 2010, a 34-year high fueled in part by election-related spending, optimism over the peaceful transition to a new government, and an accommodating monetary policy," the report said.
However, "growth slowed in 2011 and is likely to be in the 3.5 percent to 4 percent range," it said.
According to the State Department, "the portion of the population living below the national poverty line increased from 24.9 percent to 26.5 percent between 2003 and 2009, equivalent to an additional 3.3 million Filipinos."
The agency also reported that the Philippines' busines process outsourcing (BPO) industry "currently accounts for about 15 percent of the global outsourcing market and has been the fastest-growing segment of the Philippine economy."
MORE COMPANIES TO BID FOR OIL, GAS PROSPECTS
Philippine Daily Inquirer
01 March 2012
Local and foreign investors remain unfazed and have even continued to express keen interest in exploring for oil and gas in the Philippines despite the territorial claims and mounting protests from China.
Proof of this, according to Energy Secretary Jose M. Layug Jr., was the number of companies that have sought prequalification with the Department of Energy (DoE) to allow them to participate in the actual bidding for 15 highly prospective oil and gas blocks under the Philippine Energy Contracting Round 4.
As of Wednesday, 38 companies have submitted prequalification documents - a record high compared to the past bidding rounds conducted by the government. The DoE is even anticipating a few more applications before the submission deadline at 5 p.m. Wednesday, Layug said in a briefing.
"We have received an overwhelming number of parties who wanted to prequalify for PECR. We have received 36 submissions so far and that's more than 15 areas we're offering. That's a good indication that we have attracted sufficient investor interest. We've never had so many interested parties, notwithstanding the issue on [China claims for areas within the] West Philippine Sea," Layug said.
Layug was referring to the territorial claims on Areas 3 and 4, which are both located at offshore northwest Palawan. These two oceans are less then 80 nautical miles away from Palawan and are thus well within the country's exclusive economic zone (EEZ).
However, China on Tuesday continues to reaffirm its "indisputable sovereignty over the Nansha Islands and its adjacent waters and protested against the Philippines' plan to explore for oil and natural gas in the area of the South China Sea," according to the website of the newspaper China Daily.
It quoted China Foreign Ministry spokesman Hong Eli as saying that the plan of the Philippine government to proceed with the PECR 4 was "unlawful." The article further noted that China has already "protested the plans to invite foreign companies to explore in the two areas last year, saying they are part of the South China Sea region in waters where it has historic titles and sovereign rights and jurisdiction."
Lei was reacting to earlier pronouncements made by Energy Secretary Jose Rene D, Almendras that what the Philippine government was offering under PCR 4, specifically those oil and gas blocks in the northwest Palawan area, were all within its territories.
Layug also maintained that despite China's claim, for which he said no local or foreign investor has even shown concern, the DoE would push through the bidding of all 15 petroleum blocks in pursuit of the mandate of the President.
The energy official was also optimistic that these issues would not derail or delay the awarding of the petroleum service contracts before the end of the year, which is being highly anticipated by companies wanting to bid. These include big players like French multinational Total, Eni S.p.A, of Italy, US firm CalEnergy, GDF Suez of France, Shell Philippines Exploration BV (Spex), NorAsian Energy Ltd., Australian firm Nido Petroleum Cor., Malaysia's Mitra Energy Ltd., Australian firm Tap Oil Ltd., Minergy Corp. Ltd., Pitkin Petroleum plc. and Esso, a subsiduary of exploration giant Exxon Mobil Corp.
CLARK FREEPORT ATTRACTS PHP22.9B IN INVESTMENTS
Philippine Daily Inquirer
01 March 2012
State-run Clark Development Corp. signed last year agreements for 207 lease and sublease projects worth PhP22.9 billion that are expected to boost further the development of the freeport zone into one of the most complete investment destinations in Asia.
CDC President Felipe Antonio B. Remollo said the projects could generate 8,200 jobs as soon as they begin operations within the year. This figure is seen to increase should the proposed expansion program of the locators push through for 2012.
According to Remollo, the bulk of the new jobs to be generated in 2012 would come from some of the biggest committed investments signed last year, led by Korea's Hae O Rum Development Corp., which has committed PhP1.5 billion for its tourism-related projects. The company plans to put up a hotel, dormitory, business center, specially restaurant and international school within Clark.
Also expected to boost employment opportunities would be Haitima Clark Corp., which has committed more than PhP1 billion for the establishment of a manufacturing plant for all kinds of valves, flanges, pipes, fittings and accessories for export to Asia, Europe and North America; and Spectrum Blue Steel-San Fernando Corp., which has committed to invest PhP868.4 million.
The expansion programs of Yokohama Tire Phils. Inc. Dongwang Clark Corp. and several business process outsourcing (BPO) firms in Clark were also expected to generate a number of workers should they start expanding their operations in 2012, Remollo added.
As of December 2011, Clark has logged 64,055 workers, up 6 percent from the previous year's employment figure og 60,6012.
GOV'T ASKS EU TO DEVELOP OCEAN ENERGY IN PHILIPPINES
Philippine Daily Inquirer
27 February 2012
The Philippines is one of the best places where companies can harness ocean energy, Energy Secretary Jose Rene D. Almendras said Monday, as he urged European countries to develop technologies that could tap this renewable resource.
During the first Meeting on Energy between the European Union and the Philippines on Monday, Almendras said he would want to tap European countries for best practices and technology transfer, such as France, which currently has the largest existing ocean power facility, and Scotland, which is now developing a similar plant.
The energy chief has asked representatives from these European countries to consider the Philippines as a country where they can "experiment" on ocean technology - an area where the European Union and the Philippines can cooperate.
In fact, the Philippine government has already made a pitch to host a global research and development center for existing and emerging ocean technologies. Almendras said, explaining that this particular resource is seen to provide an alternative source of energy for island nations and archipelagic states.
Almendras said he made the push before the United National Industrial Development Organization to establish an ocean technical center that would be funded by more advanced economies.
"There has to be more impetus, and we're asking the multilateral [institutions] to [persuade] the First World countries to come in and help because none of us have the money for this," Almendras explained. "In essence, I made a pitch to Unido...to put up an ocean technology (research and development) center .... in the Philippines."
The energy chief noted that most developed countries are not supplying enough funds for research and development of ocean technology.
"Why? Because they don't have oceans. It's the poor countries, the small islands, archipelagic countries [that can benefit from ocean energy]. So, in the Vienna Energy Forum, I made a pitch."
In the Philippines, the first ocean energy facility is set to start commercial operations by 2018. The government hopes the facility will help spur the interest of investors in exploring and developing the untapped potential of the country's ocean resource.
Data from the National Renewable Energy Plan book show that the first project to come online will be the 10-megawatt Cabangan ocean energy thermal conversion (Otec) project in Zambales. Records show that the project is being handled by Bell Price Pirie Power Corp.
The Cabangan Project, however, is one of only 20 indicative power projects submitted to the Department of Energy.
According to the NREP book, only 70.5 megawatts of additional capacity from ocean resources are expected within a 20-year period to 2030. Investments for these projects are seen to reach PhP11 billion.
A study conducted by the Mindanao State University indicated that the country, being an archipelago, may theoretically draw arounf 170,000 megawatts in capacity from over 1,000 square kilometers of ocean resource.
BRITISH AMERICAN TOBACCO BACK IN PHILIPPINES
Philippine Daily Inquirer
27 February 2012
British American Tobacco (BAT) is again active in the Philippine market after pulling out in 2009, this time in league with the Department of Finance (DoF) in pushing for "sin tax" reforms.
BAT general manager James Lafferty said Monday that the company is raring to take on a "monopoly", referring to PMFTC, which combines local tobacco giants Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco.
PMFTC claims to have cornered 90 percent of the domestic market since combining their operations a year ago, but BAT puts the number at 94 percent.
"We support (Cavite) Rep. Joseph Abaya's bill (pending at the House committee on ways and means) that we think will level the playing field," Lafferty said, referring to the proposed law that the DoF itself is pushing.
He said another bill, drafted by Ilocos Sur Representative Eric Singson, would not bring meaningful change to the industry as it retains the contentious provision of an amendment to the Tax Code that exacts lower taxes on cigarette brands that were already in the market as of 1996 than those imposed on new entrants.
The London-based company carried the brands Dunhill, Kent, Lucky Strike and Pall Mall, which are post-1996 brands.
Last week, PMFTC president Chris Nelson said the Abaya bill would encourage illicit trade while "ravaging" legitimate business, citing DoF projections of a 50-percent drop in industry revenues if the proposal becomes law.
Lafferty, on the other hand, said that the Abaya bill "will not necessarily result in massive loss of jobs and devastation to livelihood of tobacco farmers, as alleged." "Competition is good - it generally results in more jobs and more income opportunities."
"Smuggling thrives when (black market) prices are lower (than legal prices)." Lafferty said, "How can you even lower when prices here are already very low?"
He said that BAT is back in the Philippines in suport of President Aquino's call for foreign investments and is encouraged by the government's reform agenda.
"We left because (the market) is unfair", he said. "Now, we believe that change is in the air."
DOE ASSURED INVESTORS 2 PETROLEUM BLOCKS WITHIN PHILIPPINE TERRITORY
Philippine Daily Inquirer
27 February 2012
MANILA, Philippines - Energy Secretary Jose Rene D. Almendras stressed that the two petroleum blocks off northwest Palawan that are being offered under the current Philippine Energy Contracting Round 4 are both well within Philippine territories, despite the recent claims made by the Chinese government.
Almendras made the assurance to investors on Monday, as the Chinese government filed a request for clarification as to which country had jurisdiction of Area 3 and Area 4, specifically.
"They filed a request to clarify because they feel that Areas 3 and 4 are part of the Spratlys. It is up to the Department of Foreign Affairs to discuss this. The Department of Energy has no commont on these things. As agreed, the DFA takes the lead in all the diplomatic issues," Almendras said on the sidelines of the 1st EU-Philippines Meeting on Eenrgy on Monday.
The energy chief noted that he was not alarmed by the filing made by the Chinese government, stressing that "there is no uncertainty as far as the Philippines is concerned."
"We offered 15 service contracts for oil and gas blocks, which the Philippines believes are within its territorial claims," Almendras said, adding that there would be no complications if the government starts awarding these contracts by the middle of the year.
The filing made by the Chinese government, Almendras further said, would not make a dent on the interest of investors to bid for any of the 15 oil and gas blocks being offered under the PECR 4, as they were expecting to award all the contracts. Interested bidders, he added, have all been aware of these claims.
As of last week, 25 local and foreign petroleum exploration companies have firmed up their interest in acquiring the 15 oil and gas blocks, located at Cagayn, Central Luzon, Northwest Palawan, Mindoro-Cuyo, East Palawan, Cotabato and the Sulu Sea.
Energy Undersecretary Jose M. Layug, Jr. last week identified the big-ticket players that submitted prequalification documents as the French multinational Total, one of the world's leading oil and gas groups; Eni S.p.A., and Italian multinational oil and gas company; US firm CalEnergy; and GDF Suez of France.
The PECR 4 was envisioned to address the security of the country's energy supply through the exploration of local indigenous resources. Harnessing local resources is expecrted to help the country meet its daily demand and reduce the importation of petroleum and petroleum products.
More importantly, developing country's own resources is deemed to be a long-term plan of action that will reduce the country's dependence on imported petroleum and mitigate the effects of oil price volatility.
According to the DoE, it expects at least $7.5 billion worth of initial investments to be infused in the local oil and gas sector over the next several years, should all the 15 contracts offered under PECR be awarded to investors. This amount approximates the maximum investments required during the exploration stage alone.
25 FIRMS VIE FOR 15 OIL, GAS AREAS
Philippine Daily Inquirer
27 February 2012
At least 25 local and foreign petroleum exploration companies have firmed up their interests in acquiring the 15 oil and gas blocks being offered by the Aquino administration under the Philippine Energy Contracting Round 4 with the submission of documents prequalifying them to the bidding.
Energy undersecretary Jose Layug, Jr. identified the major players as French multinational Total, one of the world's leading oil and gas groups; Eni S.p.A., an Italian multinational and gas company and that is present in 79 countries; American firm CalEnergy, an international leader in the development and production of energy from diversified fuel sources like geothermal, natural gas and hydroelectric; and GDF Suez of France, which is currently the No. 1 independent power producer in the world and the top importer of liquefied natural gas (LNG) and supplier of energy and environmental services in Europe.
The other companies that submitted prequalification documents, according to Layug, were shell Philippines Exploration BV (SPEX), NorAsian Energy Ltd., Australian firm Nido Plc. and Esso, a subsidiary of oil giant Exxon Mobil Corp.
Based on the initial list as of last Friday, the more notable local firms that submitted the requirements were PetroEnergy Resources Corp., PNOC Exploration Corp., Monte Oro Resources and Philex Petroleum, which is owned by businessman Manuel V. Pangilinan's Philex Mining Corp.
Other companies that submitted their respective prequalification documents were Golden Dragon, Kris Energy, KRX Energy, Caranarvon Energy, Planet Gas, Forum Pacific, Southernpec Pte., Ltd., Mindanao Asia International Energy Corp., and Dilmoro Energy Corp.
Layug said they expected more companies to seek prequalification to the PECR4 until the deadline of submission this Wednesday (February 29). Once these companies have been found to be qualified to join the bidding, they will be given between April and July this year to submit actual bid proposals for the areas of their choice.
In June last year, the Department of Energy launced the PECR 4 for petroleum, during which it offered 15 prospective oil and gas blocks in Cagayan, Central Luzon, Northwest Palawan, Mindoro-Cuyo, East Palawan, Cotabato and Sulu Sea.
PHILIPPINE ECONOMY SEEN HEADING TOWARD HIGH-GROWTH PATH
Philippine Daily Inquirer
27 February 2012
The Philippines is undergoing a renaissance that looks all set to bring the economy to a higher trend growth and power stocks to new heights, according to regional investment house CLSA Asia-Pacific.
In a research titled "The Eagle Flies Again" dated February 20, the CLSA report written by ananlyst Mitzi de Dios said that like the rare endangered Philippine eagle, a private sector investment cycle was a rare sighting in the country. But now, it said the country was on the cusp of another investment cycle for the first time in 15 years driven by politcal stability, rising business confidence, low interest rates, robust balance sheet and the country's long-term demographic potentials.
"The Philippine soars like an eagle, again," the research said, adding, however, that this time around, there was hope that this nascent recovery would not be as endangered as that rare eagle.
After years of false starts and missed opportunity, there was a real sense of optimism building in the business community, the research said, suggesting the time was right for the Philippines to shed the stigma of being the "sick man of Asia." Beyond the huge remittances from overseas Filipinos, CLSA said the country could now count on other major growth drivers.
"The transformation continues for Asia's most promising. The service sector continues to grow with the BPO [business process outsourcing] segment underpinning rising employment and per capita spend. Toursim and gaming are other drivers," the research said.
Well known globally for the Philippines' quality service sector, CLSA said the BPO sector would likely see its employment doubling to 1.2 million and generating revenues of $25 billion by 2016. The employment opportunities will keep more locals at home while per capita income should improve and the middle class continue to grow, the research said.
The country's middle class was growing at 9 percent a year and by 2015 could well represent a fifth of the Philippines' population, the research said.
"For sure the country's middle class is still nascent, especially in areas such as investment. Most have their savings in fixed income and have yet to invest in equities in a big way," it said.
CLSA recounted that the last investment cycle in the Philippines took place in the early 1990s under President Ramos, who deregulated the telecom and banking sector, which coincidentally laid the foundations for the growth and development of the BPO industry over the past decade.
In the past 12 years, the country's gross domestic product growth averaged 5.54 percent with population growth of 2.6 percent in the past 10 years. CLSA said trend GDP growth should be higher starting 2013.
"The country's economic growth has lagged its regional peers. But, without much fanfare, the economy has transformed itself into an emerging services center, laying the foundations for today's growth," it said.
What all this meant for stock market investors, CLSA said, was that old reliable names and upcoming companies would be the ones investors should own. By sector, it said conglomerates, banks, construction and infrastructure firms would likely outperform.
CLSA has recommended a "conviction buy" on Ayala Corp., Metro Pacific Investments Corp., Cebu Air, Philippine National Bank, Security Bank and Robinsons Land Corp.
For specific infrastructure play, CLSA also has "buy" ratings on construction firms Megawide Corp. and EEI Corp. and a buy rating on Metrobank.
Bonifacio Global City was cited as a "microcosm" of the change afoot in the broader economy. "Fifteen years ago it was a military camp most famous for the incarceration of Sen. [Benigno "Ninoy"] Aquino. Today, it is home to high offices, luxury residential towers and upmarket shopping centers catering to the emerging middle class," the research said.
The CLSA report also noted that local tourist arrivals hit an all-time high of 3.9 million in 2011 and was forecast to grow at double-digit rates over the next few years, eventually hitting more than eight million in 2016. The tourism industry employs 3.7 million people and tourism receipts accounts for 2 percent of GDP.
CDC EYES 19 MAJOR PROJECTS
Philippine Daily Inquirer
24 February 2012
Clark Development Corp. (CDC) expects 19 projects that have pledged investments ranging from PhP100 million to PhP1.5 billion each to be implemented at the Clark Special Economic Zone starting this year.
In his report to the Board of Investments, CDC president Felipe Antonio B. Remollo said these included tourism, residential and commercial development, manufacturing and aviation related projects.
Of the 19 projects, 10 are related to industrial manufacturing. This, Remollo said, was proof that "Clark's industrial cluster is and will continue to be the free port's most robust sector."
Remollo said that the biggest of these projects was Eagle Sky Amusement and Gaming's (Estag) PhP1.5-billion hotel and casino complex, which will be put up in a 1.5-hectare property near the Clark International Airport.
Robinsons Land Corp. also plans to spend PhP300 million to append Clark in its growing list of locations for its successful Go-Hotel chain.
To diversify its real estate development business, Hausland Development is eyeing Clark for a 5,000-square-meter area, which it plans to develop into a mixed-use complex that will house restaurants, shops and other commercial establishments.
Other major projects in Remollo's report were the PhP106.4-million 3-hectare warehousing project of the MSK Group Work Inc., which planned to establish facilities for the suppliers of Chitai Industry Philippines and Muti-Tek Fasteners, two of Clark's most active industrial exporters.
In the meantime, Venzon Manufacturing plans to put up a PhP107-million light manufacturing facility for the manufacture and distribution of wrought iron products such as decorative lighting fixtures.
Also expected to start this year are the expansion projects of Japan-based tire manufacturing plant Yokohama Tire Philippines Inc (YTPI), Korean firm Donggwang;s recreational and leisure estate projecta and the Philippine Academy for Aviation Training (PAAT), which broke ground last month.
The expected entry of the 19 projects and the expansion of existing companies in the free port will enable CDC to increase its remittance to the national coffers this year.
FARM PRODUCTS DISTRIBUTOR PLANS PhP540-M PUBLIC OFFERING
Philippine Daily Inquirer
24 February 2012
Calata Corp., a leading distributor of agricultural products in the country, is planning to debut on the Philippine Stock Exchange this year through a PhP540-million share sale.
In a prospectus submitted by the company's chair, Joseph Calata, to the Securities and Exchange Commission dated February 22, Calata seeks to offer to the public 72.02 million shares evenly split between primary and secondary shares at an offer price of up to PhP7.50 each.
This exercise will bring to public hands about 20 percent of the company's total stock after the initial public offering. Local investment house Unicapital Inc. was mandated as issue manager and issue underwriter.
Given that half of the offer shares or 36 million shares will consist of primary shares, the exercise will generate gross proceeds of PhP270 million, bulk of which Calata plans to use for a nationwide expansion program to reatail agricultural products directly to consumers, farmers and other small dealers in the Philippines.
Of the proceeds, PhP132.89 million will be used to establish new outlets as an estimated cost of PhP1.33 million per outlet. Another PhP109.52 million was planned to boost working capital.
Calata claims to be the biggest combined distributor of agro-chemicals, feeds, fertilizers, veterinary medicines and agricultural products coming from manufacturers or business partners such as San Miguel Corp., for B-Meg Feeds. It also distributes veterinary products Syngenta, Bayer, Jardine, Dupont, Sinochem. For agrochemicals, it carries East West Feeds, Monsanto and Planters Products as well as Swire and Viking for fertilizers.
Calata said it would not use any proceeds to settle any debt or reimburse officers, directors, employees or shareholders. The company has seven directors including its chair. The other board members are Benison Paul de Torres, Jaime Laya, Baltazar Endriga, George Nava, Jose Zalde and Harvey Keh.
Formerly known as Planters Choice Agro Products Inc., Calata was incorporated in 1999. It reported a net profit of PhP100.17 million in 2011, tripling the PhP33.84-million level a year ago while sales turnover surged to PhP2 billion from PhP1.8 billion over the same period.
The company ended 2011 with PhP1.05 billion in assets, up from PhP661 million a year ago.
PH EXCISE TAXES LOWER THAN OTHER COUNTRIES: WB
23 February 2012
MANILA, Philippines - The Department of Finance (DoF) insisted that excise tax reforms will increase government revenues, in response to tobacco and liquor companies claims it will have a negative impact on the economy.
"What they are saying against this vital reform is exaggerated. Things were definitely taken out of context," said Finance Undersecretary Jeremias N. Paul, Jr. said, in a statement.
Paul cited a World Bank report which showed the Philippine excise taxes are lower than neighboring countries such as Thailand, India and Pakistan.
Data provided in the study showed as of 2009, excise tax as a percentage of retail sales price (RSP) of tobacco was at 32.9% for the cheapest brands and 37.5% for both the most sold and premium brands.
For liquor, World Bank noted the low excise tax-RSP ratio for the Philippines: 26.1% for beer, 5.5% for wine and 35.8% for distilled spirits. This is lower than the ad valorem rates in Thailand (55% for beer, 60% for wine and 25-50% for distilled spirits); and Laos (50% for beer, 60% for wine, 60-70% for distilled spirits).
"The real revenue yield from excises on tobacco and alcohol has declined significantly since 1997. As a result, from 1997 to 2009, excise collection as a share of GDP fell by about 0.6% from an already low yield of 1,2% of GDP. Quite alarming, Philippine tobacco excise tax rates and burden are among the lowest in South East Asia," the World Bank said.
The World Bank pushed for a shift to a uniform excise tax rate for all brands, saying this will remove production distortion, discourage consumption. "The current multi-tier price classification system has no clear policy rationale and its unique internationally. It therefore should be abolished," it said.
The House Ways and Means Committee is discussing House Bill 5727, which calls for the adoption of a unitary tax system for tobacco and liquor and indexation of taxes to inflation. The World Bank added that given inelastic demand, the excise tax rates should be set as high as possible to generate adequate revenues and discourage consumption.
If the DOF proposal for excise tax reforms are implemented this year, tobacco taxes will rise from 0.35% of gross domestic product (GDP) last year to 0.53% this year, 0.73% in 2013 and 0.90% un 2014.
Revenues from liquor taxes are likely to increase to 0.46% of GDP this year, 0.52% in 2013, and 0.64% in 2014. Liquor excise tax accounted for 0.27% of GDP last year.
"As shown by the World Bank report, price elasticity lof demand is inelastic, meaninf, as price rises, consumption falls but by less than the percentage rise in price. Because of this, tax revenues will still increase," Paul said.
"Clearly, there will be substantial increase in revenues should the excise tax reform be implemented contrary to claims from various tobacco and liquor firms... The bill's essence lies on the fact that while we slowly discourage smoking and too much drinking, we are shoring up more revenues to provide quality healthcare tl all Filipinos."
PPP SCHOOLS PROJECT ATTRACTS 15 FIRMS
Philippine Daily Inquirer
22 February 2012
The government's Public-Private Partnership (PPP) for School Infrastructure Project has attracted an initial pool of 15 companies, accoridng to an official of the Department of Education (DepEd). The three-phase project is estimated to cost PhP10.5 billion initially and the government intends to pay for the infrastructure construction over 10 years using staggered appropriations from the national government.
Education Undersecretary Francisco M. Varela said at a conference in Makati City Wednesday that as of this week, 15 companies have purchased bid documents for the PPP project. The 15 are apparently a mix of local and foreign companies, some of them listed or affiliated with listed companies. It remains to be seen whether they would partner with other companies later Varela, who declined to disclose other details this early in the process.
The first phase of the PPP for School Infrastructure project has three packages: Northern Luzon (660 schools, 2,050 classrooms), Central Luzon (745 schools, 2,999 classrooms) and Calabarzon (1,097 schools, 4,283 classrooms). The DepEd will accept bids for each package, which means there may be three different winners for the first phase. It is also possible that there may be one winning company for its bids turn out to be the lowest for each package.
The DepEd published in January the invitation to pre-qualify and aims to bid out the first phase of the project, which covers Luzon, in June. The department want all the classrooms under the three-phase project delivered by July 2013, in time for the start of the school year.
The second and third phases will cover the Visayas and Mindanao.
Education Secretary Armin A. Luistro told reporters on the sidelines of the conference that the department was starting to identify target sites and was aiming to bid out the next two phases within 2012.
Public Works Secretary Rogelio L. Singson said the Philippines was new to using the PPP mode for school projects but said he hoped this would gain traction as a new business model so that his department could focus on upgrading the country's roads and related infrastructure. Singson said the government was committing about 30,000 classroooms under the PPP School Infrastructure Project.
PHILIPPINES CONTRIBUTE $500M TO IMF-FACILITY
Philippine Daily Inquirer
22 February 2012
The Philippines has pledged to contribute $500 million to the International Monetary Fund's latest lending facility aimed at addressing crises such as volatility in the eurozone.
Diwa Gunigundo, deputy governor of the Bangko Sentral ng Pilipinas, said that the entry of the Philippines into the expanded New Arrangements to Borrow (NAB) program of the IMF as a creditor country is currently being processed by the IMF.
Should the entry be finalized, the Philippines will make available $500 million, which the IMF can tap in its efforts to provide financial assistance to crisis-stricken, such as those in the eurozone.
The IMF puts up lending facilities such as the NAB to ensure there are sufficient resources that can be tapped in case of significant threats to global monetary stability.
The NAB has $579 billion worth of total pledges from various creditor countries, including the $500 million from the Philippines.
The pledge from the Philippines to the NAB program of the IMF is on top of the country's contribution of $251.5-million to the Financial Transactions Plan (FTP), another lending facility of the IMF.
Of the Philippines' contribution to the FTP, over half were actually used by the IMF as part of the overall financial assistance recently extended to debt-ridden Ireland, Portugal and Greece.
The Philippines used to be a net borrower from the IMF until 2006, when the country prepaid all its outstanding obligations to the multilateral institution.
By 2010, the Philippines became a net creditor to the IMF when it participated in the FTP.
PH INTERNATIONAL AIR TRAVEL SECTOR GREW IN '11
Philippine Daily Inquirer
22 February 2012
The country's international air travel sector grew by nearly a tenth in 2011, outpacing the growth of the global aviation sector, which suffered from economic crises and volatile fuel prices.
Data from the Civil Aeronautics Board (CAB) released this week showed the number of passengers going in and out of the Philippines growing to 15.65 million passengers, up by 9.6 percent over the previous 12-month period.
Combined with the domestic sector, the country's total air travel industry grew by 11.57 percent in 2011.
This came despite challenges experiences in the rest of the world, where passenger traffic grew by a modest 6 percent.
"Overall, 2011 was a year of contrasts. Healthy passenger growth, primarily in the first half of the year, was offset by a declining cargo market. Optimism in China contrasted with gloom in Europe. Ironically, the weak euro supported business travel demand," International Air Travel Association (IATA) CEO Tony Tyler said in a recent statement.
"Improving business confidence is good news, but 2012 is still going to be a tough year," he said.
For the Philippine market, the expansion in international traffic in 2011 was slower than the 2010 year-on-year growth rate of 12.45 percent, dragged dwon partly by the dismal performance of flag carrier Philippine Airlines (PAL).
OFW REMITTANCES SEEN TO GROW 6% THIS YEAR
Philippine Daily Inquirer
22 February 2012
Metrobank expects remittances to the Philippines to grow by 6 percent this year despite the prolonged crisis in the eurozone, saying sustained demand for Filipino workers in other labor markets will boost the amount of money they send home.
In its latest paper containing its economic views, Metrobank said the money sent by overseas Filipino workers in the Middle East and Asia was seen to lead the growth in overall remittances as the expanding economies in those regions required more workforce.
Metrobank also said that OFWs in the United States, which remains fragile despite recovering from a recession since 2009, were in recession-proof industries led by healthcare and education and were thus seen to continue contributing to growth in remittances to the Philippines.
"This likely decline (in remittance growth due to the eurozone crisis) is seen to be offset by the expected growth in remittances especially coming from the Middle East and Asian countries," Metrobank said in the paper written by research analyst Pauline Revillas.
Metrobank said remittances, given its ability to fuel household consumption, were likely to support faster economic growth for this year compared with 2011.
It said the Philippine economy would likely grow 4.6 percent this year following its 3.7-percent expansion last year.
"The outlook (on remittances) supports our view that GDP growth will be higher at 4.6 percent this year, underpinned by still robust consumption spending and a vibrant services sector," Metrobank said.
Last year, remittances to the Philippines amounted to $20.1 billion, rising 7.2 percent from the previous year's $18.3 billion.
The Philippines is the fourth-biggest recipient of remittances after China, India and Mexico. Of the estimated 94 million Filipinos, about 10 percent are believed to be working offshore.
CEBU PACIFIC PURSUES EXPANSION TO EUROPE, MIDDLE EAST
Philippine Daily Inquirer
22 February 2012
Budget carrier Cebu Pacific has signed a lease for four Airbus A330 long-range aircraft, set to arrive starting late next year, as it prepared to extend its network to routes in Europe, United States and the Middle East.
In a statement on Wednesday, Cebu Pacific said it has signed operating lease agreements for the new Airbus A330-300 aircraft with CIT Aerospace, a unit of the New York Stock Exchange-listed CIT Group Inc.
The new planes will be delivered from 2013 to 2014, and will be powered by RollsRoyce Trent 772B engines. The new planes will allow Cebu Pacific to mount flight outside the current range of its fleet of Airbus A320 jets.
"These Airbus A330-300 aircraft will allow us to offer our trademark low fares to an even wider market. With the introduction of wide-body aircraft into our fleet, we could offer non-stop services into Australia, India, the Middle East and part of Europe and the United States," said Alex Reyes, general manager of Cebu Pacific's long-haul group.
The company's optimism comes despite the dark clouds that have been cast over the low-cost, long-haul air travel market.
Earlier this year, Malaysia's Air Asia X, one of the pioneers of low-cost, long-haul travel, announced the suspension of flights to Paris, France and London in the UK, among other key routes, due to escalating costs.
BULLISH INVESTORS BOOST PHILIPPINE STOCKS TO NEW HIGH
Philippine Daily Inquirer
21 February 2012
The local stock index on Monday surged closer to 5,000 regional sentiment turned bullish over hope for a second bailout package for Greece as well as fresh monetary easing in China.
The main-share Philippine Stock Exchange index closed by 63.13 points, or about 1.3 percent, to close at a new record high of 4,943.84. A new intra-day peak at 4,966.94 was also reached during trading.
"The market's rally close to the critical 5,000 level can be seen as a vote of confidence by investors on the positive direction of the global economy. Likewise, investors are anticipating improved earnings results from our listed companies in the coming weeks, coupled with rosy expectations of another banner year in 2012," PSE president Hans Sicat said in a statement.
Joseph Roxas of Eagle Equities Inc. said there was a lot of foreign money looking for investment outlets, and their confidence was spurred by a string of favorable offshore developments.
"The financial system is very liquid. America is also picking up, and China is easing monetary policy, trying to stimulate their economy also," Roxas said.
The financial and property counter led the day's upswing, rising by 2.5 percent and 4.4 percent respectively. Trading was likewise buoyant on the mining counter, which increased by 2.7 percent.
Only the services counter ended in the red as investors locked up gains from PLDT and shifted to other blue chips.
Among the key contributors to the PSEi's rise where Metrobank, Ayala Land, Banco de Oro, Ayala Corp., DMCI, Megaworld, Aboitiz Power, Metro Pacific Investments and Cebu Air.
Value turnover for the day amounted to PhP10.58 billion. Advancers beat decliners 105-63 while 41 stocks were unchanged.
Frances Cheung of investment bank Credit Agricole CIB described the trade as a "rish-on-day, with expectation for a final sign-off of the second bailout package for Greece, and with China cutting the reserve ratio confirming an easing trend."
The central bank of China announced during the weekend a 50-basis point reduction in the reserve requirement on banks effective February 24.
Since the start of the year, the PSEi has rallied by 571.88 points, or 13 percent, from its end-2011 level of 4,371.96
BOI APPROVES PHP14.9B NORTH HARBOR PROJECT
21 February 2012
The Board of Investments (BoI) has approved the registration of the PhP14.89-billion investment by the Manila North Harbor Port Inc., for the development and management of the largest domestic port in the Philippines.
Trade Undersecretary and BoI Managing head Adrian S. Cristobal Jr. said the proposed Manila North Harbor Port Project would involve equipping the port with new cargo handling machinery and the upgrade of information technology systems.
"Over the next five years, the project is estimated to provide 49 percent net value added for the services they will provide. Commercial operations of the North Harbor project began last month and are estimated to create 1,448 jobs," Cristobal said in a statement.
Cristobal added that the project, which would address foreign and domestic loading and unloading of goods and passengers, would boost the country's cargo capacity.
Cargo volume at Manila North Harbor Port, located at Tondo, Manila is growing at an average 5 percent a year.
SEAFOODS FIRM CONSIDERING 2 MORE OFFSHORE ACQUISITIONS
Philippine Daily Inquirer
20 February 2012
Fish processing firm Alliance Select Food International is studying two new potential offshore acquisitions, one in North America and another in South Pacific, in line with its bid to become a key regional seafoods producer.
The company is confident its net sales would rise by at least 50 percent this year on the back of a much-improved tuna catch, resilient offshore demand for its tuna and salmon products and the full-year contribution of Massachusettes-based salmon smoking and curing firm Spence & Co. Ltd., Alliance president and CEO Jonathan Dee said in an interview.
Dee said Alliance likely met its revised net sales guidance of $50 million for 2011, which would be at least 50 percent up year on year. The one-time business expense incurred in acquiring Spence late last year, however, may temper bottom-line results.
The company is upbeat on its prospects for this year, with salmon likely increasing its contribution to total business to 30 percent from less than 20 percent last year, Dee said.
"We're focusing on Japan and the US for salmon. It will be our two biggest markets," Dee said. In the United States, he said, salmon sales were not affected by the economic woes.
Tuna, being a low-cost source of protein, is likewise resistant to economic declines, Dee said, noting that a rebound in tuna catch this year would benefit the company.
For most part of 2011, tuna supply was erratic and resulted in a drop in revenue to $26.4 million in the first nine months from $30.8 million a year for Alliance's two tuna plants - one in General Santos City in Mindanao and other in Bitung in Indonesia. The decline was, however, offset by the increase in revenue from salmon sales.
"We feel that this year will be a better year for tuna. The catch will likely improve from last year," Dee said, noting that tuna catch historically rebounds the year following a very bad year.
Dee said Alliance was hoping to expand the capacity of its processing plant in Indonesia from 60 to 90 tons per day within the year. This expansion will eat up the bulk of the company's capital spending this year.
$3-B INVESTMENTS IN SEWERAGE PROJECTS SEEN
Philippine Daily Inquirer
17 February 2012
The Philippines is set to get about $3 billion in investments in water sewerage projects alone as is keen on public-private partnership projects for new water sources besides Angat Dam.
This was disclosed by Ramon Alikpala, chair of the Metropolitan Waterworks and Sewerage System, during the Japan External Trade Organization workshop on private-public partnership (PPP) projects organized in cooperation with the PPP Center.
Metro Manila's water services concessionaires Manila Water Co. Inc. and Maynilad Water Services Inc. will invest the $3 billion under their current concession programs, Alikpala said. Asked whether the government would still consider developing the Laiban Dam project in Rizal, for which San Miguel Corp. had submitted an unsolicited proposal, Alikpala said it was still one of the options but the scale might be different.
The project was initially estimated to produce 1,900 million liters a day. Alikpala said several other new water sources were also being considered, including the Pampanga River, Wawa River, Laguna Lake and even Sierra Madre.
Manila Water and Maynilas are exploring such options together with MWSS, according to Alikpala.
"From a supply perspective, we may not really need a new water source until 2029. Previously we thought it was 2015 but a new study with the World Bank says otherwise. Yet from a water security perspective, we need to develop alternatives. Angat Dam is near a fault line and it supplies 97 percent of Metro Manila's water source," Alikpala said.
Manila Water's concession in the so-called East Zone of Metro Manila and surrounding provinces covers Manila (San Andres and Sta. Ana only), Quezon City (east of San Juan River, West Avenue, Edsa, Congressional and Mindanao Avenues, districts of Tandang Sora, Pasong Tamo and Matandang Balara), Makati City (east of South Super Highway), Mandaluyong City, San Juan, Marikina City, Pasig City, Pateros, Taguigm - all in Metro Manila and the province of Rizal.
Maynilad serves the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, Edsa, Congressional and Mindanao Avenues, the northern part starting from the districts of the Holy Spirit and Batasan Hills), Makati (west of South Super Highway), Caloocan, Pasay, Paranaque, Las Pinas, Muntinlupa, Valenzuela, Navotas and Malabon, all in Metro Manila; Cavite City and the towns of Bacoor, Imus, Kawit, Noveleta and Rosario in the province of Cavite.
GOV'T EARMARKS PHP19.6B FOR PPP THIS YEAR
Philippine Daily Inquirer
15 February 2012
Malacanang has earmarked PhP19.6 billion in counterpart funding to help rev up its public-private partnership (PPP) infrastructure initiative this year, an amount higher by 57 percent than the PhP12.5 billion allotted last year.
Budget Secretary Florencio B. Abad said in a statement that with the increased funding, the government hopes to gain more traction for the PPP scheme this year and boost its ability to respond to high-demand public services.
"We also expect to see concrete results for our private sector partnership earlier this year," Abad said. "The multiplier effect of successful PPP projects will certainly be felt in the economy."
Of the total budget for PPP this year, PhP8.6 billion will go to the Department of Transportation and Communications (DOTC), of which PhP6.6 billion will be used for six projects, including the Panglao Airport in Bohol, the Puerto Princesa Airport in Palawan and the New Legaspi Airport in Albay.
Also covered are the LRT Line 1 South extension and privatization, the MRT/LRT common ticketing project and the DOTC's project development fund.
The DOTC will use the remaining PhP2 billion for its strategic support fund for PPP Projects.
Another PhP4 billion will go to the Department of Education to support efforts with the private sector to build classrooms.
The Department of Health will get PhP3 billion for the construction and maintenance of health centers and hospitals.
Another PhP3 billion will go to the Department of Public Works and Highways for right-of-way costs, feasibility studies and independent consultations for projects like the Tarlac-Pangasinan-La Union Toll Expressway, Daang-Hari-South Luzon Expressway Link Road, Ninoy Aquino International Airport Expressway, the Cavite side of the Cavite-Laguna-East-West National Road Project and the Manila North Expressway.
Lastly, PhP1 billion will go the the Department of Agriculture to help its Corn Bulk Handling and The Trans-Shipment System project; the establishment of rice centrals, processing and service centers, and the establishment of a cold chain system for strategic areas in the country.
The Aquino administration is banking on the PPP Program to provide momentum to the economy, which is expected to be affected by the weak markets in the United States and Europe.
PhP12-B BUDGET TERMINAL TO RISE IN CLARK
ABS-CBN News
10 February 2012
MANILA, Philippines - A PhP12-billion budget terminal will rise on a 40-hectare area at the Clark Freeport in Pampanga that can handle about 10 million passengers a year. If all goes well, it will start operating in 2015.
The feasibility study on it will be finished by the end of next month or early April, at the latest, according to a top official of the Clark International Airport Corp. (CIAC)
The study will then be turned over the Department of Transportation and Communications transportation department.
"I will then brief Secretary Roxas about it," CIAC President Victor Luciano said in an interview.
The Asian Foundation was tapped to conduct the study, at no cost to the government, said Luciano.
This new terminal will be linked to the existing passenger terminal. "The terminal itself will cost only PhP4 billion. But the civil works, new software system, and equipment are going to be expensive. We need a huge area where the airplanes will be parked. The pavement is going yo be expensive." Luciano said.
He said the need was for a new passenger terminal for budget carriers flocking to Clark. "Our existing terminal is not going to handle the rising number of passengers. It is being expanded, yes. But it may not handle future traffic." Luciano said.
The volume of passengers within the Diosdao Macapagal International Airport (DMIA) is expected to jump to 1 million this year from 765,000 last year. "Budget airlines are coming in and adding more planes. That's where the growth will come from," said Luciano. He added that the DMIA handled 600,000 passengers in 2010.
The DMIA in Clark, Pampanga, is being considered to replace the Ninoy Aquino International Airport (NAIA). There are three Naia terminals, all of which are expected to reach and exceed their designed capacity soon.
In line with its plan to build a budget terminal, CIAC is also mulling over a city air terminal in Metro Manila to transport passengers with scheduled flights at the DMIA. This project will also be spearheaded by the DOTC and could be included among the Public-Private Partnership (PPP) Programs of the administration.
"We are looking at TriNoma, Centris or Mindanao Avenue for the city terminal in Metro Manila. They can check in there and there would be shuttle buses to transfer them to Clark. This way, passengers would no longer have to bring their cars to Clark. They can be transported at a very minimal cost," Luciano said.
A feasibility study will be done by a third party before the project is auctioned off sometime this year.
"The important thing here is that we get a location. That's why we will hire a third party for the study. The DOTC has set aside PhP120 million for this and if more funds are needed, then the participation of the private sector will come in." Luciano said.
But as a necessary pre-requisite, Clark needs a high-speed train to the mainland, possibly in the central business district of Makati City so commuters will have a direct access going to the DMIA.
"The study does not include the high-speed train. When it comes to connectivity, it is the project of the DOTC. It is good that we have been placed under the DOTC," Luciano said.
The CIAC used to be under the supervision of the Office of the President.
LRT-1 REHAB CONTRACTS MAY BE AWARDED IN APRIL
www.bworldonline.com
08 February 2012
The Light Rail Transit Authority, spokesman Hernando A. Cabrera said, has set bidding deadlines to February 16, 17 and 27. from January 16 previously, for five projects worth a total of PhP1.062 billion.
"The bidders request for an extension, citing constraints brought by the holidays in December," Mr. Cabrera said in a phone interview. "Assuming that we have one month to review the bids, we could start awarding by [the] first week or second week of April," he said adding that project schedules might have to be moved.
Based on the current schedule, Project 1, which involves rail replacement and is estimated to cost Php381 million, should run from February 2012 to September 2013. The new bid submission deadline for this phase is February 17.
Project 2, worth PhP150 million and entailing the replacement of gantry anchor bolts, has a March 2012 to February 2012 schedule. The bid deadline is February 16.
The PhP184-million Project 3 for the procurement of modified boogie frames has an April 2012 to January 2015 schedule and a new bid deadline of February 27.
Project 4 involves the PhP150-million rehabilitation of 21 dilapidated units, set to be implemented from March 2012 to February 2013. The bid deadline is February 16.
Project 5, lastly, involves the PhP197-million restoration of another 14 units, targeted for April 2012 to September 2013. The bid deadline is February 27.
Mr. Cabrera said that as of February 2, eight firms has submitted bids for Project 1; five for Project 2, four for Project 3, eight for Project 4 and five for Project 5. He declined to identify the bidders.
DOTC LISTS PRIORITY PROJECTS FOR PPP
Philippine Daily Inquirer
06 February 2012
The government plans to bid out a contract to extend southwards the Light Railway Transit - 1 from Baclaran to Cavite by March or April this year, adding a crucial mass transportation project worth around PhP45 billion to this year's pipeline of public-private partnership (PPP) infrastructure projects.
The LRT-1 project is among the big-ticket infrastructure projects to be contributed by the Department of Transportation and Communications (DoTC) to the much awaited PPP agenda apart from large-scale projects to be funded by the government itself to help pump-prime the economy, Transport Secretary Mar Roxas said in a briefing Monday.
The DoTC is also fast-tracking the construction of a modern international airport in Puerto Princesa, Palawan, to accommodate an increased influx of tourists following the inclusion of the Underground River among the world's "New Seven Wonders of Nature." The PhP4.46 billion project will be funded using bilateral assistance from South Korea. The bidding for the construction of the airport will be held in the third quarter of the year.
One big-ticket infrastructure projects under DOTC's responsibility that investors hope to see auctioned this year are the Laguindingan Airport operation and maintenance ($34.9 million), automatic fare collection system for LRT ($7 million), Mactan-Cebu airport new terminal development ($180 million), construction of a new Bohol airport ($158 million) and LRT-2 east extention ($206 million).
Those are indeed the "PPP examples", Roxas said, adding that other projects could also be added to the pipeline, such as the rehabilitation of Sasa Port in Davao and the passenger terminal buildings in Tacloban and Cebu.
Roxas said the blueprint for LRT-1 is now with the National Economic and Development Authority and likely to hurdle approvals soon. He added that the government was now working on the terms of reference and might be able to bid out the PPP project for the design and construction of the railway extension to Cavite.
The vision is to harness private sector money to build the railway extension with the help of land right-of-way acquired by the government, which will separately procure the additional fleet that will run on the expanded railway.
"Subsequently, the government, through ODA [official development assistance], will then bid out the rolling stock and once that's completed, it will be added to the inventory of vehicles that will ply the route," Roxas said.
"Whoever wins the design and construction contract will also win the O & M [operation and maintenance] of the entire 28-kilometer railway," he said.
LRT-1 the oldest elevated railway in the metropolis, runs a 16-kilometer stretch from Monumento to Baclaran, while the expansion will involve an additional 12 kilometers to reach Cavite. Overall, the LRT-1 rehabilitation, including the acquisition of new fleet, will cost PhP80 billion, of which the railway construction alone will cost PhP45 billion.
Roxas said the country's railways would soon be rebranded to follow a color scheme, adopting popular global practice and thus making it easier for tourists and first-time passengers to use the mass transportation system. LRT-1 will be known as the "green line", LRT-2 as the "blue" line and LRT-3 (also known as the Metro Railway Transit - 3 along EDSA) the "yellow" line.
EDC CLINCHES PERU, CHILE POWER CONCESSIONS
Philippine Daily Inquirer
03 February 2012
Energy Development Corp., the country's largest geothermal producer, on Thursday sealed its acquisition of a 70-percent stake in each of the four geothermal projects in Chile and Peru as part of its effort to expand operations globally.
In a statement issued Friday, EDC said it signed a joint venture agreement with Australian firm Hot Rock Ltd., to develop the Calerias and Longavi projects in Chile, and the Quellaapacheta and Chocopata projects in Peru.
The four concession areas were among the 23 geothermal tenements across Chile, Peru and Australia that Hot Rock was able to acquire previously. The company reportedly was among the first to identify and obtain some of the most attractive concession areas in Latin America.
Hot Rock's partnership with the Lopez affiliate is now expected to accelerate the development of the four projects in Chile and Peru, allowing them to offer clean, reliable and indigenous source of energy.
"We are pleased with the speedy conclusion of the negotiations with HRL as we now look forward to starting exploration work in what we view as attractive geothermal concessions in both Chile and Peru," said EDC chair CEO Federico Lopez. "The acquisition of these concessions in Latin America are the first steps in realizing our vision to establish a global presence."
According to EDC, the two parties are continuing discussions to look at the possibility of expanding the scope of partnership by including the other geothermal concession areas owned by the Australian firm.
The Chilean Ministry of Energy had already confirmed the awarding of the Newen, San Rafael and Batea geothermal exploration concessions to EDC.
With a portfolio of geothermal exploration projects in Chile, EDC is set to deploy within the month a team of geothermal scientists to start the development of the projects.
EDC is currently the world's largest integrated producer of geothermal power. It is now looking at opportunities to develop projects in Indonesia and Kenya.
MINER REPORTS COPPER DISCOVERY IN SURIGAO
Philippine Daily Inquirer
03 February 2012
Lindian Resources Ltd. of Australia said in two reports posted on its website that it has discovered copper mineralization within its flagship Masapelid island project in Surigao del Norte.
Copper, silver and gold were traced in variably mineralized rock drilled at the Layab deposit on the east coast of Masapelid, the company report said.
The company said it will conduct follow-up work to assess the discovery site's full potential.
Lindian managing director Steve Leithead called it a "tremendous result" and expressed management support for the ongoing exploration focus on the Masapelid project.
Drilling for the Masapelid project started in June 2011. Lindian said it aims to announce an initial resource within a year or sometime June 2012.
The company's objective is to rapidly advance the project to mining studies "within 24 months."
In another report, Leithead said that Lindian, through its Philippine subsidiary Bundok Mineral Resources Corp., reached agreements with local firms on the extension of options to acquire a number of mining assets in Luzon and in Bicol.
BRAZIL MINER TO PUT UP TRANSSHIPMENT HUB IN RP
Philippine Daily Inquirer
03 February 2012
SHANGHAI/ SINGAPORE - Vale is readying an alternative iron ore distribution base in the Philippines as China has barred the world's largest dry bulk ships from its ports, halting the Brazilian miner's plan to send its giant vessels to its top market.
China's transport ministry said on Tuesday its decision not to allow giant ships was in part a result of the severe downturn in the shipping industry that has hurt several leading domestic companies, as well as maritime safety issues.
Ships exceeding approved capacities were previously assessed on a case-by-case basis, but the ministry said in a statement on its website that giant dry bulk vessels and oil tankers were prohibited with immediate effect.
Vale is counting on a fleet of 35 giant ships called Valemaxes, each at 40,000 deadweight tons, to slash shipping costs to China to help it better compete with Australian rivals BHP Billiton and Rio Tinto.
"At the end of the day, they (China) want to support their own. They are not interested in whether Vale will be able to provide cheap imports in comparison to Australian imports," said George Lazardis, analyst at Greek broker Intermodal. "They are interested in giving support to their shipowners, which are starting to become a significant force over the past couple of years, and to help that part of the industry grow."
With access to China closed, Vale has been forced to build a transshipment hub in the Philippines to ensure its mega-ships, each costing arounf $110 million, remained employed.
The world's largest dry bulk floating storage vessel, Ore Fabrica, owned by Vale, has docked in the Philippines' Subic Bay Freeport, a spokeswoman for the port told Reuters. The 280,000 deadweight-ton vessel will serve as a platform to transfer iron ore from the so-called Valemaxes to smaller ships for transport to China and other Asian markets such as Japan and South Korea.
Previously a crude oil tanker was converted by a Chinese shipyard to a floating storage vessel to be based in Subic Freeport, located in the Philippines' main Luzon island, according to shipping data.
The 388,000-ton Berge Everest was the first and only Valemax allowed into China, docking at Dalian Port on December 28 to unload iron ore that has yet to be sold. Strong opposition from the China Shipowners Association has helped keep further ships from arriving at its domestic ports.
The group fears the fleet will give Vale a monopoly on both the shipping and iron ore markets at China's expense.
"China is so dependent on imported raw materials that it has a structural incentive to destroy freight prices as much as possible," said Macquarie commodity analyst Graeme Train. "And Vale's strategy with the VLOC's [Very Large Ore Carriers] was a direct threat to that because Vale would take the lower freight cost themselves, when really what China wants to do is to ensure there's oversupply in the freight market and to take advantage of that for itself."
INVESTORS SEE 'HIDDEN GEMS' IN PHILIPPINES
ABS-CBN News Channel
02 February 2012
MANILA, Philippines - Bank of America - Merrill Lynch says investors are bullish on the Philippines because many stocks here have little or no exposure to the weak economies of Europe and the U.S.
The bank helped organize an ongoing 3-day roadshow in HongKong for 30 companies to meet potential investors.
"A lot of the underlying companies don't have much of a correlation or connection with what's happening in Europe and the U.S.," Clemente Antonio Puno IV, global corporate and investment banking director at the Bank of America - Merrill Lynch (Singapore), said in an interview on ABS-CBN News Channel.
"That's true for a lot of ASEAN markets as well but I think in the Philippines there are a lot of hidden gems."
Puno said investors find the country attractive because of economic fundamentals, strong banks, companies with low debt, and the prospect of a boom in infrastructure and mining.
He also said investors are confident the government will boost spending, after underspending, and the delayed start of its public-private partnership projects, helped damped growth last year.
"Investors understand there was a lot of cautiousness to begin with but the government has shown at least toward the end of last year and early this year that the spending will pick up and that's aimed at truly moving forward the PPP program."
"We saw one project getting awarded and that's encouraging for a lot of investors. Same as in other countries in the world, investors will be focused on how the program is implemented and how easy it is to come on shore and do business under onshore regulations."
Bank of America said investors are looking at the fast-growing Southeast Asian region as a whole, picking less between countries such as the Philippines and Indonesia, and more among companies across the region.
"A lot of investors are looking at ASEAN as a block when they look at investing and they really pick the companies where they see a lot of growth and a lot of returns going forward."
BPO SECTOR SETS SIGHTS ON HIGH-VALUE SERVICES
Philippine Daily Inquirer
30 January 2012
After shrugging off a pending anti-outsourcing bill in the US Congress, the government said the country's business process outsourcing (BPO) industry has set its sights on higher-value areas of the industry to sustain the growth started by call centers.
The country's Information and Communications Technology Office (ICTO), an agency attached to the Department of Science and Technology, said the local BPO industry aims to establish itself in the fields of healthcare information management, finance and accounting, human resources and creative processes.
Efforts to promote these sectors would go hand in hand with the continued development of the country's call-center industry now tagged as the biggest in the world.
"We the world's number one call center provider and we intend to attain market leadership in the United Kingdom and Australia as well," ICTO Deputy Executive Director Alejandro Melchor said in a statement.
"With our new development programs for the BPO industry, we also intend to position the Philippines as a world leader in Healthcare Information Management Outsourcing, Finance and Accounting Outsourcing, HR Outsourcing, and Creative Process Outsourcing. Our goal is to double our market share by 2016 in Information Technology Outsourcing, Engineering Services and Multiligual BPO," Melchor said.
The industry posted over $9 billion in revenues in 2011, or an estimated 5 percent of gross domestic product (GDP).
The ICTO said the government target was for this to increase to 8.6 percent of GDP by the end of the Aquino administration.
This translates to about $25 billion in revenues by 2016.
"We are expecting BPO not only to contribute significantly to the GDP in the next five years; its most significant impact would be on employment," ICTO Executive Director Louis Casambre said.
He said the government, through the ICTO, would launch several new initiatives that aim to improve the quality of college graduates in the country who can eventually seek employment in BPO companies.
"Our programs are not limited to that of industry but also improving the quality of our graduates and improve their chances of landing jobs not only in the BPO sector but in other industries as well," he said.
The Business Processing Association of the Philippines (BPAP) was equally optimistic about the industry's prospects, noting that the sector could create over four million jobs - 1.3 million direct and about three million in support industries such as construction and retail - in the country in five years.
This will be possible, however, "only if the industry can further step up its partnership with government," BPAP chairman Alfredo Ayala said.
DTI, DA JOIN HANDS TO BOOST AGRI EXPORTS
Philippine Daily Inquirer
30 January 2012
The Departments of Trade and Agriculture are designing a product traceability system that will allow local agro-industrial products to meet international standards.
Adoption of this system is expected to help the country grab a bigger share of the global market for agro-industrial products, the DTI said Monday in a statement.
"Through this traceability system, the movement of food products in the supply chain will be tracked to document distribution and production inputs and processes. Hence, the system will help identify the cause of any food safety concern or quality problem for stakeholders to take prompt corrective measures," the agency explained.
According to the DTI, a three-year, $5.8 million joint project, dubbed "Program on Philippine Traceability for Revitalized Agricultural Competitiveness Enhancement (P-TRACE)," is currently being crafted with the help of other national government agencies such as the National Economic and Development Authority, Department of Foreign Affairs, Department of Agrarian Reform, Food and Drug Administration and Department of Finance, with the technical cooperation of United Nations Industrial Development Organization (Unido).
The project will likely be funded under a "debt-for-development swap" agreement with the Italian government, through the Italian Cooperation Agency.
"We hope to implement P-TRACE within the year. We already identified five priority projects in the agriculture and fisheries sector. These projects cover banana chips and crackers, fresh and processed pineapples, dessicated coconut, chilled tuna and dried mango," said Merly M. Cruz, DTI Undersecretary for Regional Operations and Development.
"With P-TRACE in place, we expect our farmers and food producers to meet international food quality, safety and traceability standards, warranting that Philippine products are safe and do not run into barriers to trade," Cruz added.
Agriculture Undersecretary Bernadette Romulo-Puyat added that the "P-TRACE will not only benefit our local consumers but also our exporters."
AYALA BACKS GOV'T BIDDING FOR MRT 3
Philippine Daily Inquirer
30 January 2012
Conglomerate Ayala Corp. has backed the government's plan to bid out a contract to manage ang upgrade the existing capacity of the elevated railway Metro Transit 3 along EDSA and is now in talks with prospective strategic partners to join the auction.
Fresh from its victory in the first public-private partnership (PPP) project auctioned by the government late last year, the Daang Hari link toll road, Ayala welcomed Manuel "Mar" Roxas II's announcement last week of an open competitive bidding to operate and develop the MRT 3 line, Metro Manil's busiest elevated railway.
"Firstly, we are encouraged by the seeming progress on PPP projects across the transport infra sector," Ayala managing director and head of corporate strategy Eric Francia said in an e-mail to the Inquirer.
He said Ayala would be prepared to participate in any competitive tender for MRT 3 once the bankable terms of the PPP tender were issued. Corporate rivals San Miguel Corp. and Metro Pacific Investments Corp. are also vying for the MRT 3 project.
However, the government's plan to bid out a new MRT 3 contract is being questioned by MPIC, arguing that the current concessionaire, Metro Railway Transit Corp., already had the expansion rights under the existing build-lease-transfer deal with the government. MPIC, led by businessman Manuel V. Pangilinan, earlier obtained a foothold in MRTC after signing a "cooperation" agreement with the Fil-Estate group and other MRTC shareholders to either buy their shares or take their voting rights, giving it an equity control of at least 48 percent and voting rights of more than 70 percent in the concession.
The Fil-Estate-led consortium no longer holds economic rights to MRT 3 as the cash flow from the railway has been committed to creditors under a securitization deal. Bulk of the debt paper of MRTC is now held by the state-owned Development Bank of the Philippines and Land Bank of the Philippines.
For its part, the Ayala group has expressed interest in reinvesting in MRT 3 since last year. Its property unit Ayala Land, used to be a minority stakeholder in the railway consortium.
"Ayala is, at this point, exploring strategic partnerships with local and foreign companies. We are currently in talks with groups that would add value and technical competence to the development and operations of the MRT 3," Francia said.
One way for a new investor to make money out of MRT 3 is to create new cash flow by expanding capacity, something that Ayala is eager to participate in.
"The most immediate investment where the private sector can participate in is to increase the number of trains to increase the capacity of the whole line," Francia said.
"Given the recently announced policy of the DoTC [Department of Transportation and Communications] to rationalize train fares across all lines, the MRT 3 project would likely be bankable, given the robust ridership Line 3 has demonstrated over the years," Francia said.
MRT 3 has a current daily capacity of at least 350,000 passengers but foot traffic goes up to about 400,000 daily. Its capacity can be expanded with the purchase of new cars, upgrading of signaling equipment, increasing the frequency of train departures and lengthening the number of cars per train.
"The impact to the riding public could be quite fast and tangible, if the project is tendered to financially and technically qualified investors and O & M (operations and management) companies. A competitive tender on the right to develop the existing line is critical to ensure that the riding public gets the best level of service for their train fares," Francia said.
INFRA SPENDING BOOM SEEN UNTIL 2015
Philippine Daily Inquirer
30 January 2012
The Philippines is on the cusp of an infrastructure spending boom that may attract record-high annual investment levels of PhP200 billion to PhP400 billion starting this year through 2015 as the public-private partnership (PPP) finally gains momentum, a research by investment firm CLSA Asia - Pacific said.
"Investments in infrastructure should jumpstart the next phase of high economic growth in the Philippines, from more efficient travel to encourage domestic tourism, to stronger growth in loan growth due to financing requirements, the economy stands to benefit greatly," according to CLSA's special report on Philippine infrastructure.
The report, titled "Laying the Groundwork" dated January 9 and written by CLSA analyst Raf Mercado and CLSA head of transport and infrastructure research Robert Bruce, said the direct stock market beneficiaries from this infrastructure push would include conglomerates with sound balance sheets and funding as well as construction firms and airlines. CLSA's top picks on this theme were Ayala Corp., Metro Pacific Investment Corp. and Cebu Air.
DMCI Holdings and SM Investments were also seen benefiting from the PPP play, either by obtaining concessions outright or winning construction contracts or subcontracts. Meanwhile, it noted that there were only a handful of local contractors with the scale and expertise to take on large infrastructure projects, thus predicting that growth in the sector would mainly focus on companies like DMCI, Megawide Corp., and EEI Corp.
"Construction companies have also been declining order books since 2010, but we expect that to reverse with a flow of new infrastructure contracts, which will continue for the next two to three years. Local airlines and tourism will benefit especially, both in bringing in international travellers and in shuttling tourists domestically. Other indirect winners include the cement, consumer, bank and property sectors," the research said.
Despite "tweaks and delays," CLSA said it was relieved that things were finally underway with the award of the first PPP project, the Daang Hari toll road project, which was awarded to the Ayalas late last year. For the 15 projects scheduled for 2012, CLSA said it expected total spending of $2.6 billion. Auctioning off eight to 10 projects would already be a success, the research added, especially if that would include big-ticket items like the North-South Luzon Expressway Connector Road and the provincial airports. Annual infrastructure spending through 2015 could range between PhP200 billion and PhP400 billion, the research said.
The PPP requires a transparent and fair environment, which most business people agreed the administration has provided, CLSA noted. "The government is willing to offer provisions protecting against regulatory risk - this is important in ensuring project stability outlasts the Aquino administration."
CLSA estimated that the government would allow an average project internal rate of return (IRR) of 13.5-15 percent. "However, in a sign of their aggressiveness, most conglomerates are positioning to bid lower," it said.
It also noted that while unsolicited bids could speed up the investment process, the government viewed this as less competitive than a straight auction, which meant it would still entertain them but the 60-day challenge period might be extended to at least 90 days to allow greater competition.
ODA loans may not necessarily be a cheaper source of funding on an absolute-cost basis, it said. But ultimately, "ODA funding does not kill the PPP story. It will allow foreigners to participate in the construction, but the 40 percent foreign-ownership limit for concessions will still apply. The only negative would really be to local construction companies, which might lose or share some contracts with foreigners."
It said establishing the PPP Center was a step in the right direction but all projects were still segregated on an agency level. Designing a secretary for the PPPs, which Malacanang has so far resisted, could shorten the implementation schedule and establish more consistent rules to streamline the entire process.
It also noted that long-term planning was still an issue as unlike other countries, the Philippines has no equivalent of a five-year plan. Agendas change everytime a new President is elected every six years, resulting in poor urban planning.
Other legal issues, such as obtaining rights of way, add risks to the successful execution of the PPP program, it said, noting that getting local government units on board with the PPP plans remained a critical step in reducing political risk.
PH PROPERTY MARKET TO REMAIN UPBEAT IN 2012: CBRE
25 January 2012
MANILA, Philippines - Demand for residential condominiums will remain strong in 2012, while the office market will continue to be driven by the business outsourcing industry, according to the CBRE Philippines.
High-end condominiums will still be in demand, but property developers will start focusing on developing condominiums aimed at the middle market.
"Developers agree that while there is a market for high-end condominiums selling at an average of PhP100,000 per square meters, the bigger market and greater opportunity is with the pent-up demand for affordable condominiums selling at a price range of PhP45,000 to PhP80,000 per square meter depending on the project location," CBRE said, in a statement.
Affordable condominium developments will cater to the broad mid-income market, which includes young professionals and families who want homes in Metro Manila, Metro Cebu and Davao.
"The shift from horizontal style housing to more practical condo type development, with pricing now suited to a much wider range of buyers, shows the progress we are making towards becoming a more competitive economy. We are now getting more value out of each square meter of land, as well as lessening reliance on private transportation brought by developments in the residential market, much in the same way as Hong Kong and Singapore have done before us," said Lui Matti, executive director for CBRE Asset Services.
A total of 105,722 units are expected for turnover this year, while at least 14,112 residential condominium units (around 743,438 square meters of saleable area) estimated to enter the market in 2012.
"We see 2012 as another buy year for shoppers, with a wide choice of projects each with unique amenities, and access to the right kind of financing," Matti said.
The past decade has been good for the residential condominium market in the Philippines. CBRE Philippines noted a total of 259,380 residential condominium units were launched from 2000 to 2011. Except for 2005 and 2008 when the number of units launched dropped, the total number of condo units has been increasing steadily.
Office Space
Business process outsourcing companies have been driving the demand for office space. Rental recovery in major business districts, such as Makati, Alabang, Quezon City, Fort Bonifacio and Ortigas, has been observed in 2011.
"Increasing rental rates in 2011 have been largely a result of increasing demand for office space by BPOs (business process outsourcing), traditional offices, and the lack of new office supply in 2011," CBRE said.
Despite the higher rents, the Philippines remains the top outsourcing destination because of its lease rates are one of the cheapest in Asia.
"The Philippines is one of the most cost effective outsourcing destination in Asia, and we see that the office sector will sustain growth in 2012. The country provides a conducive environment for foreign investors - having an excellent pool of skilled labor, outstanding customer service, one of the cheapest rents, and highest yields elsewhere in Asia," said Rick Santos, chairman and CEO of CBRE Philippines.
CBRE Philippines said the takeup of leasable office space in 2012 may reach a high of 400,000 square meters in 2012.
IFC PLANS INVESTMENT IN BANKS, INFRA PROJECTS
Philippine Daily Inquirer
23 January 2012
International Finance Corp., the private sector funding arm of the World bank plans to pump in more investments in the local financial and infrastructure sectors this 2012.
IFC country representative Jesse Ang said in an interview Friday night that these two sectors would continue to be attractive in the Philippines in terms of equity investment even if the local stock market was now trading at record highs.
"I think there' still more we can do in the financial sector particularly with the government wanting to accelerate Basel 3 (implementation). That needs additional capital, particularly tier 1 capital," Ang said. "But we also want to do infrastructure because we can see a gap in infrastructure."
Basel 3 refers to a more stringent global framework for measuring capital adequacy versus risk assets.
IFC has about $1 billion in investment exposure to the Philippines, making this its 10th - biggest portfolio globally. Half of this in the power sector, including a minority stake in geothermal energy crown jewel Energy |Development Corp.
The multilateral funding institution is keen on further increasing its equity exposure in banking and infrstructure, not necessarily limiting its option to publicly listed companies. "When we invested in Manila Water, they were not listed yet," he said.
In any deal, especially in infrastructure projects, however, IFC can also participate as lender and financial adviser.
Given the opportunity, he said IFC could overshoot its annual budget. The all-time high investment made by IFC in a single year was in 2008 when it plowed in $564 million in the Philippines. Last year, its local deals reached only $186 million, lower than the usual annual budget of $300 million.
"But of course our business is not just lending. We're doing advisory work," Ang said, noting that IFC was currently working with the Development Bank of the Philippines to structure the Department of Public Works and Highways' NAIA tollway project. There is also an existing project with land Bank to help the Department of Agriculture.
In case of equity investments, Ang said IFC was looking at a long-term horizon.
In Manila Water, we invested in 2004 and we're still there. In EDC, in 2006 and we're still there. In BDO, we invested in 2002 then reinvested in 2010 and put in a bigger amount," he said.
In banking, IFC likewise has investments in Rizal Commercial Banking Corp. and Planters Development Bank.
GOV'T GETS $1.1B FROM MALAMPAYA GAS PROJECT
Philippine Daily Inquirer
20 January 2012
MANILA, Philippines - The Philippine government received $1.1 billion as its share of the income from Malampaya gas-to-power project.
President Benigno Aquino received the symbolic check for $1,134,669,157 representing the project's revenue contribution to the national government from Shell Philippines country manager Edgar Chua.
The amount is equivalent to more than PhP43 billion.
"The project is a joint venture so that government has a share and its given every year. The US$1.1 billion is the total for 2011," said Energy Secretary Jose Rene Almendras, who was among the officials who witnessed the ceremonial turnover.
The energy secretary expressed optimism that the government will be receiving the same return in the coming years if the price and quantity produced would be stabilized.
"Hopefully, the supply will continue so that's the same amount of shares and if the price stays as it is that should be the quantity that we should be getting," Almendras said.
"The only time that it will go down is when we reinvest, because we have to invest for the Malampaya Phase 2 and Phase 3 .... There's a Phase 2 and 3 which will require us to invest so that we can get more gas and prolong the supply of gas because we need gas as much as we can," he added.
Almendras said the amount would go directly to the Malampaya fund managed by the Department of Finance.
According to Budget Secretary Florencio Abad, the Malampaya Fund has specific purpose in law, which is to fund energy development, or for other purposes as duly approved by the President.
"We really have to be prudent whenever charging against the Malampaya Fund because of its impact on our fiscal health. Under the government of President Benigno S. Aquino III, this fund will be used reasonably and rationally," abad said in a statement issued in May 2011 on the status of the fund.
"So far under the Aquino Administraqtion, we have charged PhP2.87 billion from the fund for necessary energy-related expenditures," he said.
These expenditures as of May 2011 include PhP2 billion for fuel requirements of the National Power Corporation - Small Power Utilities Group, to avert a power shortage in the off-grid areas; PhP450 million for the Pantawid Pasada program, as direct support to jeepney and tricycle drivers affected by the recent spate of oil price hikes; and PhP423 million for the purchase of the USS Hamilton cutter marine vessel to strengthen the security perimeter of the Malampaya Natural Gas Project.
According to the records of the Department of Budget and Management as of May 2011, PhP105.95 billion has been collected from the Malampaya proceeds since 2002.
Also as of May 2011, PhP26.47 billion has been disbursed so far; PhP3.95 billion to the provincial government of Palawan; and PhP22.52 billion to national government agencies. Out of this amount, PhP2.87 billion was released in 2011.
The Malampaya Feep Water Gas-to-Power project is a joint undertaking of the Philippine government and the private sector.
The project is spearheaded by the Department of Energy, developed and operated by Shell Philippines Exploration B.V. on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.
Also present during the ceremonies was Finance Secretary Cesar Purisima, PNOC chair and Chief Executive Officer Gemiliano Lopez, Shell Philippines managing director Sebastian Quinones, Jr. and Shell Philippines assistant manager Sabino Santos.
PHILIPPINES PUSHES TOBACCO FOR FISH FARMING
ABS-CBN News
19 January 2012
MANILA - The Philippines has launched a new campaign promoting tobacco - not for smoking but for fish farming, a government tobacco agency official said Thursday.
Over six months, about 400 fish-farmers in the northern coastal province of La Union will be using "tobacco dust" to kill mollusks and other predators that prey on fish, said Rex Teoxon of the National Tobacco Administration.
"We are going to train the fisher folk and the whole community on sustainable aqua culture using the tobacco dust," said Teoxon, head of the agency's corporate planning department.
The drive is part of an effort to find alternative uses for the crop in the face of the global anti-smoking campaign.
The dust, made of pulverised and processed waste tobacco leaves, is a safer alternative to the "long-banned, highly-toxic chemicals" that the fish farmers have been using, Teoxon said.
Tests have found the tobacco dust kills the predators but does not affect the fish raised in the farms, with the active ingredient nicotine evaporating in two to three days, he said.
Additionally, it helps fertilise the waters, promoting the growth of algae that the farmed fish feed upon, he added.
The tobacco dust will be provided free to the fish-farmers but if proved to be effective, it will be marketed commercially, said the tobacco official.
In the past, the agency has experimented with using tobacco seeds for human and animal food and it still promotes the use of tobacco stalks for paper and particle boards.
Although the Philippine government has imposed strict controls on smoking cigarette advertising, the tobacco industry still plays a huge part in the economy and the livelihood of thousands.
Teoxon said that a government survey found that in 2010, as many as 2.9 million people were dependent on the tobacco industry including 680,000 farmers and their family members.
COCO OIL SEEN GROWING 12.3% IN '12
Philippine Daily Inquirer
19 January 2012
The Philippine Coconut Oil (CNO) exports may grow by 12.3 percent to 925,000 metric tons in 2012 from 823,381 metric tons in 2011. The growth will come from the recovery in the production of copra, the raw material from CNO, according to the United Coconut Associations of the Philippines Inc. (UCAP).
Philippine coconut production in copra terms may reach 2.487 million metric tons this year from 2.062 million metric tons in 2011.
The 20.6 percent increase in output will come from higher production as trees are expected to recover from stress due to drought in 2010 and high production in prior years, UCAP executive director Yvonne Agustin said in a phone interview.
The United States and Europe are expected to remain the top markets for SNO, along with Japan and China.
The Philippines fell short of its CNO export target of 900,000 metric tons for 2011 as production dropped due to prolonged effects of drought. Coconut trees also suffered from stress due to high production in 2008-2010.
Palm kernel oil was also much cheaper in 2011 at $100 per ton CIF, but this difference narrowed to $50 per ton CIF.
Philippine Coconut Authority administrator Euclides Forbes said demand for CNO declined in 2011, as buyers shifted to the cheaper palm oil.
The Philippines, which ships out about 80 percent of its production, is at present the world's biggest exporter of coconut oil.
AQUINO CITES LABOR GAINS, OPENS LUXURY BAG FACTORY
Inquirer Central Luzon
17 January 2012
CONCEPCION, Tarlac - President Benigno Aquino III spent Monday, the start of the impeachment trial of Chief Justice Renato Corona, inaugurating a 10-month old luxury bag factory and giving his perspective about the economy for shich he received a failing grade from a predecessor and former teacher.
While "doing what is right is the fundamental thing to do," such as exacting accountability from public officials, the President said his administration was able to generate 2.1 million jobs in 2011 despite the global economic slowdown.
Mr. Aquino also highlighted the growing number of tourists coming to the Philippines. He said tourist arrivals, which increased from 3 million to 4 million last year, would jump to 10 million in 2016 when his term ended.
In a paper she released last week, detained former President and now Pampanga Representative Gloria Macapagal-Arroyo chastised Mr. Aquino, her former student in economics for the supposedly lackluster performance of the economy.
Taking off from the number of tourist arrivals and job creation, Mr. Aquino assured D'Luxe Bags Philippines and the Luen Thai Group that they made the right decision by bringing their investments to the country.
The President arrived here with his economic team composed of Labor Secretary Rosalinda Baldoz, Finance Secretary Cesar Purisima, Trade Secretary Gregory Domingo and Transportation and Communications Secretary Manuel Roxas II.
"Their presence here empowers them to open up opportunities for our people that had been lacking for such a long time," Mr. Aquino said.
Shifting to Kapampangan, he told Tarlac residents, "I can open doors for you and when I do, it is all up to you if you will keep it open."
D'Luxe Bag Philippines is one of three investments promised to Mr. Aquino by the Luen Thai Group during his official visit to the United States last year. Employing 1,200 workers, the Tarlac factory produces Coach, a luxury brand.
The first investment of the Luen Thai Group was an Adidas Factory, which was inaugurated in Mactan, Cebu province, in August 2011. The third investment is being set up at the Clark Freeport.
William Tan, Luen Tahi chief executive officer, said the Tarlac factory's expansion would increase the workforce by 500 this March. By 2014, the factory is expected to employ 5,000 workers.
In its first nine months of operations, the Tarlac factory was able to produce 220,000 bags which Martyn James, vice president of Coach International, described as unprecedented.
PHILIPPINES MAY BECOME KEY GLOBAL GROWTH DRIVER
Philippine Daily Inquirer
16 January 2012
The Philippines has the potential to become one of the top 10 countries that can greatly contribute to gloabl growth within the decade, Goldman Sachs said.
According to the investment bank, the Philippines is among the N-11 [Next 11] economies that are likely to advance to the stage of "growth countries", or nations that account for at least one percent of global gross domestic product.
The N-11 economies are Mexico, Korea, Indonesia, Turkey, Iran, Eqypt, Nigeria, Bangladesh, Pakistan, Philippines and Vietnam.
Goldman Sachs said that, except for Vietnam and Bangladesh, all N-11 economies could advance to the "growth" classification.
The investment bank's projection is anchored on the relatively low incomes observed of most N-11 economies in the past. As a result, the countries have much room for growth and may improve their economic fundamentals significantly.
The nine economies from the N-11, along with the so-called BRICs (Brazil, Russia, India and China), are expected to contribute the most to global growth from 2011 to 2020.
"Growth markets have the potential to be among the top ten contributors to global growth over the next decade," Goldman Sachs said.
The Philippines grew by 3.6 percent in 2011. In past decade, it posted an average growth of close to 5 percent.
Goldman Sachs said the growth rate of N-11 countries and BRICs could accelerate further in the decade to 2020, driving much of the global economy.
For 2012, the investment bank expects the global economy to grow by 3.4 percent. Over the next eight years, the growth rate may average at 4.3 percent, led by the N-11 nations and BRICs.
"Average growth rates suggests that global growth is likely to be much stronger in the current decade, at 4.3 percent, than in the past 30 years. This is due to the impetus from the BRIC economies and the other growth markets," Goldman Sachs said.
HEAVY INFLOW OF FOREIGN INVESTMENTS SEEN
Philippine Daily Inquirer
16 January 2012
The Philippines is expected to see a heavier influx of foreign direct investment this year as its robust consumer market offers a fertile ground for cross-border merger and acquisition (M&A) deals, an investment banking expert from Citibank said.
Kristine Braden, head of Citibank Philippines' global banking unit, said many offshore investors were increasingly interested in plowing funds into the domestic economy, particularly in the financial and consumer sectors. Such investments could be executed this 2012 on top of portfolio investments likely flowing to a good pipeline of bond and equity offerings by local corporations, she added.
At the same time, Braden said a number of cash-awash Philippine corporations were on the prowl for offshore investment opportunities. She said they were looking for overseas acquisitions complementary to existing businesses, citing power generation companies wanting to gain a foothold in coal mining.
"We're starting to notice an increased interest in cross-border M&As and I'm happy given that FDI in 2011 was actually relatively low compared to 2010," Braden said in an interview with the Inquirer last week.
In the consumer sector, for instance, Braden said that at least once a week, a new investor would touch base to scout for domestic opportunities. She said these prospective investors would like top ride on the country's resilient consumer market, which continued to be supported by overseas remittances and business process outsourcing revenues.
"If you're looking at growing population, continued strength of consumers as a driver of the economy, there aren't that many countries where you can find those dynamics today," Braden said, adding that such strong underlying fundamentals plus abundant liquidity were very attractive for investors. "So we expect to attract several inflow consumer transactions in 2012," she said.
Like the case of Malaysian banking giant CIMB in talks to buy into Bank of Commerce, Braden said regional banks could find opportunities in investing in medium-sized banks.
Other sectors like infrastructure, tourism and mining were also becoming interesting, she said. In the local power sector, she said there could be some minor M&A deals involving the entry of strategic minority partners to fund a new round of capital expansion or undertake something related to off-take requirements.
On the bond market, Braden said some new deals might come through in the second quarter and toward the end of the year following the Philippines' successful return of the offshore bond market and again doing the region's curtain-raiser.
"The interest rates offshore are just compelling at the moment. For the ROP [Repunlic of the Philippines] to raise 25-year money at 5 percent (a year), this creates a great benchmark for other issuers," Braden said. "The thing is, at the end of last year, US dollar rates spiked so it became less attractive to raise debt offshore but now with the interest rate so low, I think people may go back and reconsider doing dollar bonds."
She said the government's recent return to the US dollar bond market after focusing on peso-denominated global bonds in the past was still a good fit to the sovereign's liability management strategy. "They will always need to maintain a relationship with foreign investors and they did it with such a low rate for such a long term. It was a blowout success," she said.
Citi was among the arrangers of the Philippines' recent $1.5-billion global bond issue.
With the Philippine stock market outperforming all its peers in the region and remaining buoyant this year, Braden said equities would remain interesting this year. With the requirement of the Philippine Stock Exchange for listed companies to maintain a minimum of 10-percent public float, she said this would spur some follow-on offering.
"But I think that beyond that, with the domestic exchange doing relatively well and again the Philippines being one of the better-performing economies, it will pique the interest of investors and issuers to go the market," Braden said.
"The key is to define from what part of the world the investments are coming from and I suspect that a lot of the interest will still be anchored off Asia liquidity, US investors are interested in the Philippines as well," she said.
Finally, Braden said she expected hybrid instruments like convertible bonds (SB), debt paper that the holder can convert into common stocks or cash of equal value, with the presence of two factors that traditionally fuel interest in these instruments - volatility in equity markets and low interest rates.
She noted that the Philippines market has not seen any CB issuance lately and instead favored preferred shares.
PHILIPPINE EXPORT SECTOR SEEN TO RECOVER THIS YEAR
Philippine Daily Inquirer
13 January 2012
The country's exports are seen to recover this year from last year's contraction amid prospects of an improving US economy and still robust demand from China.
According to The Market Call, the joint publication of First Metro Investments Corp. and the University of Asia and the Pacific, exports are likely to grow between 5 and 7 percent this year as global demand gradually picks up.
In 2011, the Philippine export sector saw declining earnings as demand for electronics, the country's major export product, fell due to the sluggish performance of the US and euro zone economies.
The United States and the euro zone are two of the biggest markets for intermediate electronics exported by the Philippines.
Economists said that during tough times, consumers tend to focus spending on basic goods and forego consumption of non-essentials such as electronics.
Electronics account for more than half of the total exports of the Philippines.
Whether the euro zone can implement measures that will significantly ease its debt woes remain to be seen, The Market Call said indicators of improving US economy may be indicating improving demand for imported goods - such as those from the Philippines - in the months ahead.
The US employment rate fell to 8.5 percent in December, the lowest in nearly three years, signaling a potential rise in consumption in the world's biggest economy this year.
Meantime, The Market Call added that China was seen to still have significant demand for imported goods such as those from neighboring countries like the Philippines.
Although China, which was earlier feared to suffer from overheating due to sharp growth rates over the past few years, was seen to decelerate this year, The Market Call said the slowdown would likely be modest and so demand would still be strong.
The United States accounts for about 15 percent while China takes up about 14 percent of total Philippine exports.
The Market Call said improving exports should help accelerate growth of the Philippine economy this year after a slowdown last year.
In the first quarters of 2011, the Philippines economy grew 3.6 percent year-on-year. This elicited projections of a full-year growth that was less than 4.5 percent target of the government.
The Market Call said that for this year, the domestic economy was poised for faster growth, adding that the government's target of 5 to 6 percent was realistic.
FOREIGN BROKERS DOMINATED PH TRADE IN 2011
Philippine Daily Inquirer
13 January 2012
Foreign brokerage houses led by Maybank ATR Kim Eng Securities topped trading at the Philippine Stock Exchange in 2011, reflecting buoyant foreign investor appetite for local equities despite extreme volatility in global financial markets last year.
Maybank ATR Kim Eng led the rankings with a market share last year of 9.32 percent, followed by Deutsche Regis Partners' 8.65 percent, CLSA Philippines' 7.36 percent, UBS Securities Philippines' 6.47 percent and Macquarie Capital Securities (Philippines') 5.76 percent.
The top five foreign brokers last year, when PSE emerged as the best performing market in the region despite a modest index gain of 4 percent, had a combined market share of 37.56 percent.
Coming in the next rankings were Philippine Equity Partners (4.7 percent), BDO Securities (4.49 percent), Citiseconline.com Inc. (4.3 percent), JP Morgan Securities Philippines (3.62 percent) and Papa Securities Corp. (3.37 percent).
Rounding up the list of top 20 brokers are: DBP Daiwa Capital Markets Philippines Inc., Abacus Securities Corp., SB Equities Inc., Asiasec Equities Inc., Credit Suisse Securities (Philippines) Inc., Wealth Securities Inc., BA Securities Inc., First Metro Securities Brokerage Corp., RCBC Securities Inc. and BPI Securities Corp.
The PSE's total market value turnover for 2011 reached PhP2.85 trillion, up 18 percent from the previous year, while the main index rose by 4 percent to 4,371.96 awt yearend, outperforming other markets in the region.
"The market saw an increase in trading volume [in 2011] compared with 2010, and reached record highs in terms of equity raised," said Maybank ATR KE Securities chair and president Lorenzo Roxas. "Our extensive local and international distribution networks, as well as our experienced sales and research groups keep us in the position to capitalize on these opportunities each year."
Maybank STRKE Securities, the stock brokerage arm of financial conglomerate ATR KimEng Financial Corp., was named the country's "Best Broker" by financial publication FinanceAsia in its 2011 Country Awards for Achievement.
It recorded a total turnover value of PhP265.13 billion last year.
Based on PSE figures, foreign investors had gone into net buying territory in 2011 in the amount of PhP56.52 billion, higher than the 2010 comparative net buying figure of PhP35.62 billion.
Capital raised at the local bouse reached PhP107.5 in 2011, the highest total amount raised in a single year. This figure was 26.6 percent higher than the amount raised in 2010 and also breached by 19.3 percent the previous record posted in 2007.
Capital raising activities included initial public offerings, stock rights and private placements.
Five companies conducted their maiden listing in 2011 - Megawide Construction Corp., Puregold Price Club Inc., Cirtek Holdings Philippines Corp., Calapan Ventures Inc. and Touch Solutions Inc - raising a total of PhP9.04 billion from market.
Meanwhile, capital proceeds from private placement, stock rights offerings and follow-on offerings amounted to PhP42.85 billion, PhP40.61 billion and PhP15 billion, respectively.
The combined market capitalization of listed issues in the PSE at yearend came in at PhP8.7 trillion, supported by the 5-percent improvement in domestic market capitalization, which finished the year at its highest recorded level of PhP7.24 trillion.
In terms of sectoral indices, the mining/ oil index emerged as the next performer in 2011 as it surged 68.5 percent
This was followed by the holding firms index, which grew by 3.4 percent.
DRUG INDUSTRY MADE A KILLING IN '11
Philippine Daily Inquirer
13 January 2012
The Philippine pharmaceutical industry managed to recover last year with a growth of 2.29 percent to PhP126.04 billion, from the previous year's negative growth of 21 percent.
According to the Pharmaceutical and Healthcare Association of the Philippines (PHAP), the industry's recovery last year was driven largely by national companies and providers of generic medicine.
The trend is likely to continue this year, as "familiar products lose their patents and as generic medicine take the place of originator brands among physicians, pharmacists and patients," said PHAP president Carlito M. Realuyo.
Citing analysts, Realuyo said that the future of the global and Philippine pharmaceutical markets are now "less certain as a consequence of patent cliff and constant pressures related with cost containment initiatives by both the private and public sectors."
Despite this scenario, PHAP and its 44 members will continue to push for universal healthcare that is envisioned to "provide every Filipino the highest possible quality of healthcare regardless of one's economic status," said Realuyo, who is also general manager for Sanofi-Aventis.
As the newly named president of PHAP, Realuyo has committed to continue the close collaborations and partnerships with the government and stakeholders as they push forward quality healthcare for all.
In particular, the group's members have taken on the challenge to find better preventive and treatment options for diseases, despite the increasing risks and costs of research and development.
Meanwhile, PHAP executive director Reiner Gloor emphasized that the organization would continue to lead the campaign for ethical marketing and promotion of pharmaceutical products in light of recent legislation that seeks to improve transparency and accountability in the industry.
Apart from the enforcement of the internationally aligned PHAP Code of Pharmaceutical Marketing Practices, the organization is also supporting the adoption if the "Mexico City Principles for Voluntary Codes of Business Ethics in the Biopharmaceutical Sector" recently endorsed during the Asia Pacific Economic Cooperation (Apec) CEO Summit.
PHAP is also gearing towards partnerships aimed at helping the country achieve its health related Millennium Development Goals by 2015, Gloor added.
PHILIPPINES TO LEAPFROG TO BE 16TH LARGEST ECONOMY IN 2050
Philippine Daily Inquirer
13 January 2012
The Philippines and Peru are among emerging economies that would become much more prominent in the next few decades, helped by demographics and rising education standards, with the Philippines set to leapfrog 27 places to become the 16th largest economy by 2050, according to a prediction of international bank HSBC.
The bank expected China to overtake the United States as the world's biggest economy by 2050, and said strong growth rates in other developing countries would help drive the global economy.
"Plenty of places in the world look set to deliver very strong rates of growth. But they are not in the developed world, which faces both structural and cyclical head winds. They are in the emerging world," the bank said in the report "The World in 2050."
HSBC based its forecasts on fundamentals such as current income per capita, rule of law, democracy, education levels and demographic change.
The bank said the Philippines would become a "star performer" in terms of its economic leap in the global rankings.
HSBC said the Philippines was likely to post an average growth of 7 percent in the next 40 years.
Breaking down the average growth forecast, the bank said the country would likely grow by 8.4 percent from 2010 to 2020, by 7.3 percent from 2020 to 2030, and by 6.6 percent from 2030 to 2040, and by 5.8 percent from 2040 to 2050.
It said the advantage of the Philippines was its favorable macroeconomic fundamentals and improving governance.
Economic officials of the government often harp on what they call the country's positive macroeconomic fundamentals that include stable inflation, sustained growth over the years (it grew even when the global economy shrank in 2009), stable banking and financial system, and improving fiscal position.
Growing population a plus
HSBC said the Philippines was also put at an advantageous position by its growing population, which, if properly educated and trained, should help the economy generate more income over the next decades.
The fact that the Philippines has relatively low income gives it much room for growth, and that its favorable fundamentals will help the country maximize that room, the bank said.
"The most potent recipe for growth is a country that scores highly on the fundamentals discussed but currently has low income per capita. These economies should deliver the highest growth in income per capital as they 'catch up' with those with similar fundamentals," HSBC said.
Top 20
According to HSBC's forecast, the Top 20 largest economies by 2050 will be China, United States, India, Japan, Germany, United Kingdom, Brazil, Mexico, France, Canada, Italy, Turkey, South Korea, Spain, Russia, Philippines, Indonesia, Australia, Argentina and Egypt.
The Philippines' 16th rank by 2050 in terms of economic size marks a 27-notch improvement from its performance in 2010, said HSBC.
The bank thus said that the Philippines was expected to post the biggest leap in terms of economic ranking over the next four decades. "The Philippines looks set for a multidecade run of strong growth."
HSBC said Peru should average annual growth of 5.5 percent over the same period.
The sheer pace of population growth in countries such as Nigeria and Pakistan means that these economies will swell in size to be included among the 100 biggest economies even if their incomes on a per-capita basis remain low.
HSBC said lower scores for rule of law in Latin America constrained its per capita income projections for the region though it noted Brazil was making headway in this aspect.
Losers
"The losers are the small population, aging economies of Europe," added the bank, which said the demographics in much of Europe underscored concerns about the debt problems faced by many of the continent's governments.
If sufficiently open to modern technology, developing countries could enjoy many years of robust GDP growth although they could struggle for growth drivers once thay have adapted to technological advances, HSBC said.
"The initial years of development could be described as 'copy-and-paste' growth, as countries open themselves up and adapt to the world's existing technologies. Once the 'copy-and-paste' growth is complete....many economies struggle and get stuck in what is often known as the middle-income trap."
"But many of the countries we are considering are still at such an extremely low level of development that there are years of this 'copy-and-paste' growth ahead," it added.
China
It was here that many of the pessimism about China was misplaced, the bank argued.
"One of the most commonly cited reasons for concern about China is the high rate of investment as a percentage of GDP...(But) we believe the strong rate of investment is entirely justified - providing China with much needed basic infrastructure," it said.
The bank said high levels of education in Central and Eastern Europe meant that regions could enjoy strong income per capita growth in the coming years before weak demographics eventually sap economic growth.
"While education rates are similar (to the West), the average income per capita in the central and eastern Europe block is just one fifth that of the developed world. For this reason...economies have great scope to catch up in income per capita," HSBC said.
"Some of the smaller Eastern European countries - Romania, the Czech Republic and Serbia - (should) all do extremely well, particularly in the coming decade, before demographics prove to be more a drag.
PHILIPPINES SEEN AMONG TOP 20 ECONOMIES IN NEXT 4 DECADES
Philippine Daily Inquirer
12 January 2012
MANILA, Philippines - The Philippines, aided by currently favorable macroeconomic fundamentals, is projected to register one of the fastest growth rates in the next four decades to become the 16th largest economy in the world by 2050.
This is according to international bank HSBC, which said Asian countries have been seen to significantly improve their economic standing and outperform many advanced economies over the next four decades, with the Philippines becoming a "star performer" in terms of the margin of its leap in the global rankings for the size of the economy.
"Asia is a standout region - with a notable showing by the Philippines," HSBC said in its outlook for 2050 presented in its report titled "The World in 2050."
HSBC said the Philippines would likely post an average growth of 7 percent in the next 40 years.
Breaking down the average growth forecast, the bank said, the Philippines would likely grow by 8.4 percent from 2010 ro 2020, by 7.3 percent from 2020 to 2030, and by 6.6. percent from 2030 to 2040, and by 5.8 percent from 2040 to 2050.
The bank said in the report that its growth projections for countries in the next four decades have been based on various factors led by current trends in macroeconomic fundamentals and governance structure.
It said the Philippines had the advantage in terms of solid and favorable macroeconomic fundamentals and the government's drive to further improve governance.
Economic officials of the government often harp on what they call positive macroeconomic fundamentals of the country that include stable inflation, sustained growth over the years (it grew even when the global economy posted a recession in 2009), stable banking and financial system, and improving fiscal position of the government, among others.
HSBC said the Philippines has also been at an advantage position by its growing population which, if properly educated and trained, should help the economy generate more income over the next decades.
The Philippines' relatively low income gives it much room for growth, and its favorable fundamentals will help the country maximize that room, according to the HSBC.
"The most potent recipe for growth is a country that scores highly on the fundamentals discussed but currently has low income per capita. These economies should deliver the highest growth in income per capita as they 'catch up' with those with similar fundamentals," HSBC said.
According to HSBC's forecast, the Top 20 largest economies by 2050 will be the following (starting from the largest): China, United States, India, japan, Germany, United Kingdom, Brazil, Mexico, France, Canada, Italy, Turkey, South Korea, Spain, Russie, Philippines, Indonesia, Australia, Argentina and Egypt.
The Philippines' 16th rank by 2050 in terms of economic size would mark a 27-notch improvement from its performance in 2010, said HSBC. The bank thus said that the Philippines would post the biggest leap in terms of economic ranking over the next four decades.
"The Philippines looks set for a multi-decade run of strong growth," HSBC said.
HSBC explains, however, that the projection it made on countries for 2050 take into account the assumption that ongoing trends on governance and macroeconomic fundamentals would be pursued.
"We are clearly assuming governments continue to improve the underlying economic infrastructure, implementing reform, increasing education and so forth," HSBC said.
NICKEL ASIA SHIPMENT JUMP 51% TO PHP12.1 BILLION
The Philippine Star
12 January 2012
MANILA, Philippines - Nickel Asia Corp., the country's biggest nickel producer, said its nickel ore shipments amounted to PhP12.1 billion last year, up 51 percent from PhP8 billion in 2010 on the back of robust demand from China and higher metal prices.
In a disclosure to the stock exchange, Nickel Asia said the total volume of nickel ore sold and delivered from its four operating mines reached a record 10.4 million wet metric tonnes (WMT) as against 8.3 million WMT in 2010. "This is the highest volume of ore shipments achieved by the group in its history," Nickel Asia said.
Of the total volume of ore shipped in 2011, 3.4 million WMT was saprolite ore and seven million WMT was limonite ore, of which three million WMT was shipped to the Coral Bay hydrometallurgical plant. The corresponding figures for 2010 were 3.2 million WMT, 5.1 million WMT and 2.7 million WMT, respectively.
The average realized exchange rate last year was PhP43.15 to the dollar compared to PhP44.86 in 2010.
The balance of the shipments, mainly the low and medium grade variety ore sold to Chinese customers, was sold on the basis of a negotiated price per WMT of ore which averaged $24.51 per WMT compared to $18.15 per WMT of ore in 2010.
During the year, Nickel Asis concluded price negotiations with its key Japanese customers, namely Pacific Metals Co. Ltd. (Pamco) and Sumitomo Metal Mining Co. Ltd. (SMM) with respect to the sales of high and medium grade saprolite ore.
The upward adjustment, which is retroactive to Sept. 1, 2011, was largely the result of strong competition from the China market and will help cushion an expected lower LME nickel price in 2012.
The volume of ore shipments to both Pamco and SMM reached 832,000 WMT and accounted for 19 percent of total revenues last year.
For this year, Nickel Asia expects its estimated volume of ore shipments to both customers to reach 1.3 million WMT.
Nickel Asia likewise disclosed it signed an agreement with Mitsubishi Corp. (Shanghai) Ltd. (SSL) for the sale of 800,000 WMT of saprolite and limonite ore to the Chinese market in 2012. SSL is a wholly-owned unit of Mitsubishi Corp., Japan's larhest general trading company.
"We consider this to be a major step forward with respect to NAC's marketing strategy in China, as this would enable the company to tap SSL's strong network and access to market intelligence in China," Nickel Asia said.
To date, Nickel Asia has executed contracts with various customers for the delivery of 8.9 million WMT of saprolite and limonite ore for the current year, including about 2.8 million WMT of limonite ore to the Coral Bay nickel processing plant. The company also intends to sell an additional 1.5 million WMT of ore of various grades through spot sales.
Nickel Asia reported a 131 percent jump in net earnings in the nine months ending September 2011 to PhP3.26 billion from only PhP1.41 billion in the same period a year earlier.
ENERGY DEP'T SEES PHP15B IN INVESTMENTS IN BIOETHANOL PLANTS
Philippine Daily Inquirer
12 January 2012
MANILA, Philippines - The Department of Energy expects PhP15 billion in fresh investments in the local ethanol industry following the issuance of guidelines setting reference prices and an assurance that all local production will be purchased by the oil companies.
On the sidelines of the First Philippine International BioEnergy Conference, Energy Undersecretary Jose M. Layug said the amount was expected to come in for the construction of nine bioethanol plants, each having the capacity to produce at least 30 million liters annually.
These nine ethanol plants, which are expected to be put up by companies that have expressed interest in such a venture, such as San Miguel Corp., will help address the supply shortfall of about 320 million liters.
BPO FIRM OPENS 2ND SITE IN PHILIPPINES
Philippine Daily Inquirer
10 January 2012
New York-based business process outsourcing (BPO) firm EXL is growing its local workforce before the end of 2012 as it takes advantage of the large supply of talent the Philippines has to offer.
The company is opening it second site in the country at the SM Mall of Asia's Two E-Com Center in Pasay City Wednesday, in a ceremony that is expected to be attended by President Aquino.
The new facility will initially have 500 seats, which will bring the company's total capacity to 2,000 seats. The company also has the option to double the size of its new facility if need arises.
The opening of the facility comes just days after US President Obama's allies on Capitol Hill filed a bill to discourage the outsourcing of work to countries like India and the Philippines.
EXL transformation services head Rembert de Villa said that while the measure should be a cause for concern for the Philippines, the country's BPO industry was also no stranger to such calls.
"Mr. Obama is up for reelection. But in our experience, this is very typical in a political environment," De Villa said.
Incidentally, he said EXL's most recent expansion would help support one of the Obama administration's key projects: universal healthcare.
The new site would serve as an "international care center" from where the company will offer "healthcare advocacy" work for its newest client: a US-based health insurance firm that De Villa declined to identify.
He said the new health care laws in US were forcing insurance companies to keep their costs down to be able to take in more customers without increasing premiums.
In the meantime, he said the company was also considering putting up another facility either in Cebu or Davao.
"We are also looking at other cities in the Philippines, but there's a large supply of talent in Cebu and Davao," he said.
PHILIPPINE CREDIT RATING ON TRACK FOR UPGRADE
04 January 2012
The Philippines' global credit rating may be raised to investment grade within a year following five "positive actions" from credit watchers in 2011, according to the central bank.
Diwa Gungigundo, Bangko Sentral ng Pilipinas deputy governor, said Wednesday that in six months to a year, it is possible for the country to attain an upgrade of "a notch or two", especially after Standard and Poor's improved outlook on the country from "stable" to "positive" last month.
For borrowings from foreign lenders, Moody's Investor Service and S&P rate the country "BB" and "Ba2" respectively, both indicating two notches below investment grade.
But Fitch Ratings marks the country with "BB+", which is just a step away from the level where a country's capacity to pay off its debts is perceived to be "adequate".
A two-notch upgrade would bring Moody's and S&P ratings to investment grade, as a one-step uptick will do with Fitch ratings.
"If the direction of the country's economy stays on course, I think we have sufficient basis to be confident that we shall receive a credit upgrade that we deserve," Gunigundo said.
He said the domestic economy continued to grow in 2011 despite problems elsewhere in the world that affect the Philippines, such as the fiscal predicaments of the United States and certain countries in the European Union.
He also said that the inflow of funds from abroad remained strong with remittances from overseas-based Filipinos reaching some $16.5 billion in the 10 months to October and gross international reserves hitting $76 billion.
Gunigundo said the Philippines has been accorded "two slots" for a possible upgrade, which a positive outlook- such as that of S&P - makes all the more seemingly attainable.
"Fitch was almost immovable but they moved," he added. "Whatever improvement from the current (ratings) is welcome, but we deserve investment grade based on our assessment."
A credit rating upgrade would mean lower borrowing costs for the country, which would translate to easier access to funds for companies and individuals.
Last December when S&P changed its Philippine outlook to positive from stable, company analyst Agost Bernard said the move was meant to reflect the assessment that the Philippines' external vulnerability had diminished.
GOV'T SEEN TO REV 'ALL ENGINES OF GROWTH'
Philippine Daily Inquirer
03 January 2012
The central bank has room to lower its policy rates should the global economy slow down further, but Malacanang must spend wisely to maximize a "limited policy space", according to monetary officials.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. on Tuesday said that, along with an "appropriate" monetary stance, targeted government spending and the participation of the private sector would set "all engines" of growth [to] fire up".
In the Monetary Board's meeting on policy rates last December, it was decided that the overnight borrowing rate and the overnight lending rate be maintained at 4.5 percent and 6.5 percent, respectively.
The BSP said the decision was based on the assessment that the inflation outlook would continue to be manageable.
"The global growth picture has indeed turned more negative since mid-2011", Tetangco said. "But if policymakers and the private sector are able to harness these buffers, our country will be able to meet the challenges of 2012 head-on."
The government will have to ensure that spending is targeted at sectors that will lead to greater job generation, apart from infrastructure projects that will solidify the base for sustained growth, the BSP chief said.
According to Budget Secretary Florencio B. Abad, the government has already started the ball rolling by allocating PhP438.8 billion, or about a quarter of this year's national budget, to five priority areas for job generation and economic development.
This is "on top of the established drivers of growth like semi-conductor and electronics, business process outsourcing", Abad said, adding that emphasis would be placed on tourism development, agriculture and fisheries development, and general infrastructure.
He said this year's budget for the economic sector covers PhP182.2 billion for the government indrastructure program, and PhP22.1 billion for public-private partnership (PPP) infrastructure projects.
Also, there is a total of PhP10.9 billion for programs related to the production of rice, corn, high-value crops, livestock and fish.
Further, PhP24.5 billion has been earmarkef for the construction, restoration and rehabilitation of irrigation systems.
PH's MOST ANTICIPATED PROJECTS OF 2012
Philippine Daily inquirer
31 December 2011
With 2012 just one more day away, perhaps, it's time to raise our champagne glasses and offer a toast to all the wonderful new structures as well as residential developments we will be anticipating in the coming months.
These are no ordinary projects as they are set to become iconic if not meaningful for a country that seeks solutions to sustainability challenges as well as international acclamation.
While there are several grand projects that will see completion or turnover in 2012, these four are perhaps worthy of our attention.
1. Philipines' most eco-responsible high-rise building. The bamboo-and-flowing-water-inspired Zuellig building located at the corner of Makati Avenue and Paseao de Roxas in Makati City is scheduled to be completed in 2012.
Within this 33-story building lie several innovative technologies that enabled it to become the country's first to be precertified as Gold level under the Leadership for Energy and Environmental Design Core and Shell (LEED-CS) program of the United States Green Building Council.
Upon completion, the Zuellig building is even aiming for the LEED Platinum certification, the highest level granted by the USGBC.
Compared to other conventional Prime and Grade A buildings in the country, tenants of the Zuellig building are set to enjoy cost savings of at least 15 percent in energy consumption or a minimum of 4.3-million kilowatt hours saved per year.
Productivity of employees working in "green" buildings may increase by up to 18 percent, considering that in the case of Zuellig, 90 percent of the tenants' interior spaces will use natural daylight and that the structure will employ carbon dioxide monitoring system (pump fresh, conditioned air whenever necessary) that could ensure occupants' health and safety.
As a results, tenants are set to gain from a boost in their image and branding, which may even contribute to stronger business in the long run.
2. The country's tallest building. Towering near the intersection of Makati Avenue and Kalayaan Avenue is the newly crowned tallest building in the Philippines.
Launched in 2007, the Gramercy Residences at Century City rises 73 stories or 302 meters beating the previous title holder, the 52-story-and 259-meter Philippine Bank of Communications Tower on Ayala Avenue.
The Gramercy Residences at Century City, which is the first residential tower to rise at the 3.4 hectare mixed-use Century City, is set to be completed and turned over to its residents in 2012.
John Victor Antonio, COO of the building's developer, Century Properties, is specially proud of the structure considering that the topping off of Gramercy Residences at Century City early in January 2011 coincided with the company's 25th anniversary.
Aside from the prestige that the building offers its future residents, Gramercy Residences at Century City will feature three floors of hyper-amenities called the Skypark.
Located 36 stories above the ground and traversing the entire width of the building, the breathtaking Skypark will feature waterfalls, infinity pools, a designer restaurant, health club and more.
3. Philippines' latest international caliber indoor arena. With a full house capacity of 20,000 the SM Mall of Asia Arena is 5,000 more than the benchmark in sports and concert venues, the Smart Araneta Coliseum.
Set to open in May 2012, the SM MOA Arena is set to become the new home of the University Athletics Association of the Philippines and the National Collegiate Athletic Association.
The MOA Arena in Pasay City features world-class standards of operations and premium facilities - considering that even plans to invite teams of the National Basketball Association to hold its games here - including seats that feature cup holders and those that could be retracted.
The MOA Arena also offers 40-room corporate suites that could accommodate 20 persons (each room has its own mini-bar, couches, restroom and viewing area).
It is connected to a 2,000-capacity car park.
4. The country's most exclusive yet affordable enclave. For a minimum of just PhP2.3 million and with payment terms of up to 48 months, The Groove by Rockwell is perhaps the best offer that emerging professionals, newly weds and starting families may be able to enjoy as they aspire for the most luxurious and most exclusive life.
Located on E. Rodriguez Jr. Avenue (C5) near the corner of Ortigas avenue in Pasig City, The Grove by Rockwell is the first foray in the middle upper middle-income market of high-end real estate developer Rockwell Land Corp.
Early buyers must be celebrating as Rockwell Land is set to turn over the two of the six 24-story towers in June 2012. These two towers will feature units made up of a mix of garden units, flats, lofts and Z-lofts.
Designed to bring the Rockwell lifestyle to Ortigas, The Grove by Rockwell is designed for those who demand luxury and comfort.
Seventy-five percent of 5.4 hectares property was devoted to open space and landscaped greenry. Rockwell Land Corp. even partnered with Dallas-based architect Dan Wilder and world-class landscape artist Karl Princic to create secluded pocket gardens, winding trails and landscapes that will give its residents the feeling of being far away from the city (despite the fact that the place is just right across the shopping mecca, the Tiendesitas).
GOV'T TO BID 16 PPP PROJECTS IN 2012
26 December 2011
The government's public-private partnership (PPP) program will gain momentum in 2012 with 16 projects expected to be bid out.
The PPP Program is the cornerstone of the Aquino administration's Philippine Development Plan 2011-2016, which aims to achieve "inclusive," high-level growth averaging 7 to 8 percent a year.
Ronaldo F. Corpus, project development service director at the PPP Center, said the 16 projects were undergoing pre-investment studies. Of these, 10 were being supported by the government's PhP550-million Project Development and Monitoring Facility (PDMF).
The PPP Center, an attached agency of the National Economic Development Authority, manages the PDMF and leads the government's PPP efforts.
Corpus said the target was for the bidding on the 16 projects to start around the second or third quarter of 2012.
So far, about 50 percent or more of the PDMF has been used. When the projects get awarded, the money spent on pre-investment studies would be charged to the winning bidder, thus replenishing the PDMF, Corpus said.
So far, the PPP Center has lent PDMF support to the Department of Health's Vaccine Self-Sufficiency Project (VSPP) Phase II and the Philippine Orthopedic Center modernization project, and the Department of Education's (DepEd) classroom program.
The Department of Transportation and Communication's Laguindingan Airport development project (operation and maintenance), Common Automatic Fare Collection System, Mactan Cebu International Airport New Passenger Terminal and the new Bohol airport development project also received PDMF support.
The Metropolitan Waterworks and Sewerage System's new water supply source project and the operation and maintenance of hydropower plants are also beneficiaries as well as the Department of Agriculture's establishment of cold chain systems.
PDMF is open for access to government agencies and local government units for projects that can be specifically undertaken through the PPP scheme.
The PPP Center said it continued to receive expression od interest from various agencies wanting to avail themselves of the PDMF.
ECOZONE LOCATORS TO GET DISCOUNTED POWER RATES UNTIL 2012 - PSALM
Philippine Daily Inquirer
23 December 2011
MANILA, Philippines - State-run Power Sector Assets and Liabilities Management Corp. will continue to provide discounted power rates to economic zone locators up to next year, a move seen to help boost competitiveness of Philippine manufacturers.
PSALM President and CEO Emmanuel R. Ledesma Jr. in a statement Friday explained that the corporation has finally decided to extend its transition supply contract with power distribution Manila Electric Co. for a maximum period of one year or until three months after the introduction of open access and retail competition, whichever comes earlier.
The supply contract, which is being implemented under the Ecozone Rate Program, was supposed to have lapsed by December 25 this year.
According to Ledesma, the decision to extend the transition supply contract with Meralco was made to ensure stability of electricity prices charged to consumers.
The decision was reached with the approval of the PSALM Board of Directors which consists of the heads of the Department of Energy, the Department of Finance, and the Department of Trade and Industry, he added.
Ledesma clarified that PSALM decided to reconsider its decision due to various factors, which include the deferment of the implementation of open access and retail competition to October next year.
Also, Meralco is still in the process of securing the approval of the Energy Regulatory Commission for its bilateral power supply contracts with private generating companies that are intended to replace the original five-year transition supply contract with PSALM, which was supposed to have expired this month.
Ledesma added that without the approved bilateral contracts and the transition supply contract, Meralco will be exposed to volatile market risks as Meralco has no recourse but to acquire its power supply from the Wholesale Electricity Spot Market where prices tend to be higher at times, Ledesma said.
Meralco will then have to pass on the higher costs to its estimated 5 million customers - a situation that the government wants to avoid, he further said.
"The extension of the TSC is mainly for the benefit of the companies operating in the economic zones enjoying discounted power rates," Ledesma said.
This decision addresses the request of the Philippine Economic Zone Authority and the Semiconductor and Electronics Industries in the Philippines, Inc., to retain the power rate discount inside the economic zones so as not to hamper the investment climate in the country and displace millions of workers employed in these companies.
Ledesma also pointed out that the extension of the TSC for the benefit of the ecozone locators is also part of an investment stimulus package that the national government is finalizing.
The discounted power rates offered to locators under the ERP is said to be benefiting 279 Meralco customers in industrial areas, which account for 43 percent of the country's total merchandise exports or about $19 billion.
JAPAN FUNDING P47B WORTH OF PH INFRA PROJECTS
Philippine Daily Inquirer
23 December 2011
Japan is funding about PhP46.88-billion worth of flood control, irrigation and road transport projects nationwide, according to the National Economic Development Authority (NEDA).
The projects were programmed for funding during Japan's current fiscal year, which ends on March 30, 2012.
Neda Deputy Director-General Rolando G. Tungpalan told reporters that seven projects had been "endorsed" for funding, affirming the Japanese government's "strong commitment" to support the Philippines.
Documents show that seven projects with a combined cost of about PhP46.88 billion will be supported by funding from the Japan International Cooperation Agency (Jica). One of the sevem projects, PhP6.15-billion Malitubog-Maridagao Irrigation Project Phase II of the National Irrigation Administration (NIA), covers an agricultural component (farm inputs, training and marketing assistance for farmer-beneficiaries as well as post-harvest equipment) and a social component (construction of potable water supply facilities, classrooms, barangay health stations, day care centers, and farm-to-market roads).
The PhP4.7-billion Mindanao Sustainable Settlement Area Development Project Phase II of the Department of Agrarian Reform covers agribusiness, environmental, and social development activities in Northern Mindanao, Davao Region, and Soccksargen.
The nearly PhP4.3-billion National Irrigation Sector Rehabilitation and Improvement Project of NIA, which involces the rehabilitation of irrigation facilities and support for irrigators associations, is seen to help the country attain rice self-sufficiency.
The PhP5.41-billion Flood Risk Management Project for Cagayan River, Tagoloan River and Imus River of the Department of Public Works and Highways (DPWH) aims to mitigate flood damage in vulnerable areas through the implementation of structural and nonstructural measures for the improvement of rivers in high risk flood prone areas and to facilitate development of the core areas in the three rivers.
The PhP7.95-billion Pasig-Marikina River Channel Improvement Project Phase III of the DPWH aims to implement river channel improvement works along the stretch of Lower Marikina River and the remaining portions of Pasig River, which are not covered by the ongoing Phase II.
The PhP15.11-billion Central Luzon Link Expressway Phase I of the DPWH involves the construction of a 30.7-km four-lane expressway from Tarlac City to Cabanatuan City.
The PhP3.26-billion Arterial Road Bypass Project Phase II of the DPWH involves the construction of Contract Packages III and IV, Plaridel Bypass (Bustos-San Rafael, Bulacan).
Contract Packages III and IV are the remaining sections to complete the entire stretch of the ARBP with an aggregate length of 24.6 kms and 10 bridges. The proposed road bypass, covering about 9.96 km. includes the construction of four new bridges, drainage facilities, slope stabilization works and furnishing of miscellaneous items.
BOI HITS FULL-YEAR INVESTMENT TARGET IN JUST 11 MONTHS
The Philippine Star
21 December 2011
MANILA, Philippines - Investments approved by the Board of Investments (BOI) amounted to PhP362 billion in the first 11 months of the year, exceeding the full year forecast of PhP360 billion.
The January to November 2011 figure was 42 percent higher than the PhP255 billion recorded during the same period a year ago.
The BOI approved 312 projects during the 11-month periof up from 214 a year ago.
These projects are expected to create employment for 63,325 workers, up from 28,400 a year ago.
Domestic investors accounted for the bulk with PhP340 billion while foreign investments reached only PhP23 billion. Japanese businessmen were the biggest foreign investor with PhP6 billion. This was a big jump from last year's PhP178,000.
The manufacturing sector took the biggest investment with PhP104 billion.
BOI has also recorded four wind power projects, three of which are located along the coast line of Ilocos Norte. The investment of the Energy Department Corp. (EDC) for wind energy is worth PhP14.447 billion, Northern Luzon UPC Corp. invested PhP11.214 billion and Trans Asia invested PhP6.453 billion. Also, Citinickel Mines has invested PhP51.464 billion.
Another big investment is by New Carcar Manufacturing owned by the Yao family, the same people behind SteelAsia Manufacturing Company. New Carcar will be investing PhP10.570 billion for three billet manufacturing facilities in Luzon, Visayas and Mindanao.
EARNINGS OF FCDUs UP 16.5% TO $1.05B IN H1
The Philippine Star
21 December 2011
MANILA, Philippines - Total earnings of banks' foreign currency deposit units (FCDUs) climbed 16.5 percent in the first half of the year on strong non-interest income and net interest income, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Data released by the central bank yesterday showed the earnings of FCDUs reached $1.05 billion from January to June this year or $149.71 million higher than the $904.75 million income booked in the same period last year.
FCDUs refer to units of domestic banks or local branches of foreign lenders authorized by the BSP to engage in foreign currency-denominated transactions such as accepting deposits and issuing loans.
The central bank said the improvement in net profit was brought about mainly by the substantial enhancement in non-interest income as well as the growth in net interest income.
The BSP said the operating income of FCDUs went up by 17.8 percent to $1.24 billion from $1.05 billion after their net interest income posted a double digit growth of 11.1 percent to $709.1 million from $638.35 million while non-interest income surged 28.1 percent to $531.7 million from $415.1 million.
On the other hand, the non-interest expense of FCDUs jumped 32.1 percent to $146.7 million in the first semester from a year-ago level of $111 million while loses on financial assets plunged 52.6 percent to $10.93 million from $23.1 million.
Universal and commercial banks accounted for 98 percent or $1 billion of the total earnings while thrift banks cornered the remaining two percent or $50 million.
The BSP reported yesterday that the total resources of FCDUs went up by 9.5 percent to $31.12 billion in the first half of the year from $28.41 billion in the same period last year after its financial assets surged 16.9 percent to $16.48 billion from $14.1 billion while gross loans jumped 21 percent to $6.45 billion from $5.33 billion.
Data showed universal and commercial banks accounted for 95.9 percent of the total FCDU assets with $29.8 billion followed by the thrift banks with 4.1 percent or $1.3 billion as well as rural and cooperative banks with less than one percent or $1 million.
Total liabilities of FCDUs increased by 9.66 percent to $30.25 billion from $27.6 billion after their deposit liabilities inched up by 3.87 percent to $25.5 billion from $24.5 billion.
The BSP said non-performing loans (NPL) ratio improved to 0.7 percent in the first half of the year from 1.8 percent in the same period last year while the non-performing assets (NPA) ratio eased to 0.2 percent from 0.3 percent.
However, the NPL coverage ratio doubled to 288.3 percent from 136.9 percent while the NPA coverage ratio surged to 287.3 percent from 136.3 percent.
PHL URGES WTO MEMBERS TO PRIORITIZE SMEs
The Philippine Star
21 December 2011
MANILA, Philippines - The Philippines has urged the World Trade Organization (WTO) to prioritize small and medium enterprises (SMEs) and small farmers in the ongoing trade talks as they are most vulnerable to market uncertainties.
At the WTO bennial meeting in Geneva, Switzerland, Trade and Industry Secretary Gregory L. Domingo pointed out that SMEs and farmers should be at the center of negotiations in trade policies and agreements.
"SMEs and small farmers should not just be an afterthought. Instead, they should be the primary concern in our policies and agreements. We need the establishment of the overarching framework of the Doha Development Agenda to drive us towards sustainable development," he said.
According to Domingo, the institutionalization of such framework is very important given that developing countries comprised mainly of SMEs and small farmers who "are most vulnerable to market uncertainties and who would most benefit from a harmonized trading system and open and fair markets."
Statistics show that as of 2009, there are 780,437 business enterprises operating in the Philippines. Of these, 99.6 percent are micro, small and medium enterprises (SMEs) and the remaining 0.4 percent are large enterprises. In addition, MSMEs generated a total of 3.6 million jobs in 2009 as against 2.1 million for large enterprises. This indicates that MSMEs contributed almost 63.2 percent of the total jobs generated by all types of business establishments that year. MSMEs account for 25 percent of the country's total exports revenue. It is also estimated that 60 percent of all exporters in the country belong to this category. MSMEs are able to contribute in exports through sub-contracting arrangement with large firms, or as suppliers to exporting companies.
Small farmers, meanwhile, mainly comprised the Philippine agricultural sector. The agriculture sector accounts for about 35 percent of total employment, but only contribute 15 percent of gross domestic product in 2009.
Another area gaining more relevance for developing countries like the Philippines is "food insecurity." Domingo called on WTO member-countries to craft agreements and policies "that will provide support system to its farmers including an appropriate trade and non-trade policy environment that is conducive for their survival, and for food security."
"While food aid and trade play roles, there is no substitute to bringing investments back to developing countries for productivity and greater production to meet the ever growing demand for food," he said.
In the same meeting, Domingo underscored the Philippines' commitment to ensure the functioning and sustained enhancement of the multilateral trading system. "In a time of global economic uncertainty, we should remain committed to resist taking protectionist measures and continue to take action that is consistent with the rules and disciplines of the system," he said.
CONSTRUCTION OF PUERTO PRINSESA INTERNATIONAL AIRPORT TO START 2012 - ROXAS
Philippine Daily Inquirer
19 December 2011
MANILA, Philippines - The construction of a new international airport in Puerto Prinsesa, Palawan, will start by late 2012, boosting the province's aim to become one of the country's most visited tourist destinations
Transportation and Communications Secretary Manuel "Mar" Roxas II on Monday announced Malacanang's approval of the project, so far the biggest project being handled by President Aquino's former running mate.
"P-Noy (Aquino) just OK'd our PhP4.5 billion Puerto Princesa airport project," Roxas said in a "tweet" on social networking site Twitter.com. Roxas is one of several Aquino cabinet secretaries that maintain official accounts on the site. Roxas goes by the Twitter handle "@MARoxas".
The construction of a new airport will be funded using overseas development assistance (ODA) or aid financing from foreign government leaders.
Roxas said the Department of Transportations and Communications would bid out the contract to come up with an engineering design in January and finalize details about the project's financing with the Korean government by the middle of 2012.
He said his target for the start of construction of the project is late 2012.
"(I) feel big responsibility to deliver this. Tuloy-tuloy na 'to (This will surely proceed)," he said.
Funding the project using ODA capital is a departure from the government's original plan of including the airport on the list of public-private partnership (PPP) contracts.
The term PPP refers to the administration's thrust of encouraging more private sector participation in the development of big-ticket infrastructure projects.
Roxas, who was appointed less than six months ago, has said his department would favor accessing ODA financing to take advantage of cheap loans offered to the Philippine government.
The Aquino government has been criticized for the slow implementation of its infrastructure program, which was earlier touted as the centerpiece of the state's economic agenda.
This has been tagged as among the reasons for the slowdown in economic growth. The Philippines' gross domestic product, which is a sum of all goods and services produced within a certain period, grew by only 3.2 percent in July-September period.
Under the government's PPP website, the project aims to develop the Puerto Princesa International Airport into a facility that conforms to safety standards set by the International Civil Aviation Organization (ICAO).
Despite hosting several popular tourist destinations in Palawan, including the Puerto Princesa Underground River, which was recently named one of the new Seven Wonders of the World, the province is bugged by poor infrastructure including roads, making travel within it an agonizing experience.
PHILIPPINE RANKING IN FINANCIAL DEV'T INDEX IMPROVES
Philippine Daily Inquirer
15 December 2011
The Philippines improved its global ranking on financial development by six notches to 44th out of 60 countries from 50th last year.
In a report titled "Financial Development Index 2011", the World Economic Forum (WEF) said the Philippines got a score of 3.13 (out of 7) points this year, up from 2.96 points last year.
Despite the country's improved ranking, however, it still was behind many of its Asian neighbors.
Hong Kong grabbed the top position with a score of 5.16 points. Singapore was third with 4.97 points; Malaysia was 17th, 4.24 points; Korea was 24th, 4.13 points; China was 22nd, 4.12 points; and Thailand ranked 34th, 3.32 points.
The Philippines ranked better than Vietnam, which ranked 46th with a score of 2.98 points, and Indonesia, which was 51st with 2.92 points.
WEF said a country's "financial development" was determined based on seven pillars: institutional environment, business environment, financial stability, banking and financial services, non-banking financial services, financial markets, and financial access.
In the area of "institutional environment" - which covers prudent regulations, corporate governance and financial sector liberalization - the Philippines got a score of 3.73 points, ranking 42nd.
In the area of "business environment" - which encompasses human capital, taxes, infrastructure and cost of doing business - the Philippines got a score of 3.39 points, landing on 56th spot.
The Philippines ranked 44th with a score of 4.13 points in the area of financial stability, which covers capacity to cope with risks of currency, banking and sovereign debt crisis.
The country ranked 36th with a score of 3.41 points in the area of banking financial services.
In the area of non-banking financial services - which covers insurance, securitization and services that aid in initial public offerings, and in mergers and acquisitions - the country ranked 20th with a score of 2.53 points.
In financial markets - which cover foreign exchange equity, and bond markets among others - the country ranked 33rd with a score of 2.04 points.
In financial access, the country was 50th with a score of 2.66 points.
The Top 10 are Hong Kong, United States, United Kingdom, Singapore, Australia, Canada, The Netherlands, Japan, Switzerland and Norway.
PPP FINALLY GETS ROLLING WITH PHP1.96B ROAD PROJECT
Philippine Daily Inquirer
13 December 2011
The Ayala and San Miguel Groups are vying for the PhP1.96 billion Daang Hari - South Luzon Expressway link toll road, the very first infrastructure project to be auctioned by the Aquino administration under the public-private partnership (PPP) framework.
The two conglomerates participated with their respective foreign partners during the bidding conducted by the Department of Public Works and Highways last Monday for Daang Hari, a four - kilometer, four - lane paved toll road that will pass through the New Bilibid Prison reservation and connect the town in Cavite to the SLEX through Susana Heights.
Al Vitangcol III, director of the PPP Center - an observer during the contract bidding - confirmed that Ayala and San Miguel were the only two parties that submitted bids. The PPP official added that another prequalified bidder, Consunji-led contruction firm DMCI Holdings, backed out of the bidding, but he declined to give details.
Industry sources said Ayala Corp. submitted a bid in partnership with Spanish group Getinsa Ingineieria while San Miguel Corp. teamed up with the tollroad operators Citra Lamtoro Gung Persada and Star Tollway Corp.
The government will pick the better offer with the goal of immediately getting compensation for its initial expenses on the project. The floor price for the takeout of the government's interest was set at PhP370 million before the value-added tax.
The winning bidder will invest between PhP1.5 billion and PhP1.7 billion to complete the toll road and operate it under the 30-year concession.
The government is doing the evaluation of the technical proposal and is expected to open the financial bids within the week.
Some potential investors were initially lukewarm on the Daang Hari bidding but industry sources said the DPWH had since then improved the terms of the toll road concession. What was seen crucial for investors to make a decent return from the project was to involve the Tollway Regulatory Board in the process.
PHILIPPINES' JAN-SEPT METAL OUTPUT HITS PHP90B
www.abs-cbnnews.com
09 December 2012
MANILA, Philippines - The Philippines produced precious and base metals worth PhP90 billion (2.1 billion) in January to September, up 15% from a year earlier, state agency Mines and Geosciences Bureau said.
The Southeast Asian country's output of gold was 25.249 kilograms during the period, valued at PhP50.55 billion. The volume was down 14% from a year ago but value is up 3% on higher prices.
The government has said it would investigate the cause of the drop in gold production and sales to the central bank.
GROWTH OF FDIs SEEN TO SLIGHTLY PICK UP IN '12
Philippine Daily Inquirer
09 December 2011
Foreign direct investment being channeled to developing economies like the Philippines may slightly pick up in 2012 and accelerate over the medium term.
According to a report titled "World Investment and Political Risk," challenges confronting the global economy, including the debt crisis in the eurozone, may moderate the growth in FDIs to developing countries next year.
According to the report, which was published by the Multilateral Investment Guarantee Agency (MIGA), a unit of the World Bank, FDIs to developing economies will start growing rapidly by 2013.
Next year, FDIs to developing countries may grow moderately from the $507 billion registered in 2010.
"High economic growth [even if moderating], rising domestic demand, improving investment environments and infrastructure, and more attractive cost-productivity factors are expected to continue, rendering developing countries attractive locations," the report said.
Given the debt crisis in the eurozone that is expected to continue next year, as well as the weak performance of the US economy, the report said, developing countries will become more attractive locations for FDIs. However, the report also said the ability of developing countries to attract FDIs partly hinge on their efforts to solve domestic factors that serve as investment constraints.
In the case of the Philippines, net inflows of FDIs amounted to $180 million in January to August this year - down by 19 percent from $1 billion reported in the same period last year.
Government officials said the decline was due partly to uncertainties in the global economy that reduced risk appetite of investors.
But according to economists, the drop in FDIs to the Philippines - while investments have reportedly grown by a modest pace in other developing countries - shows there are domestic factors that tend to discourage investors from placing their funds in the Philippines.
According to the MIGA report, domestic factors that serve as the biggest constraints to FDIs, as far as developing countries are concerned, include insufficient infrastructure, political and regulatory risks, lack of access to financing and qualified labor and potential macroeconomic instability.
In the case of the Philippines, regulatory risks, insufficient infrastructure, and the tedious process of putting up a business are the usual factors cited by economists.
On risks, the report said foreign investors have expressed concern over actual cases of regulatory changes in the past that had adversely affected foreign investments - something that could deter the inflow of investments.
"MNE [multinational enterprises] concerns over governmental actions that negatively affect their investments are well grounded in reality," the report said.
The report said that addressing the concern of regulatory stability will be one way to help developing countries gather more FDIs over the medium term.
PHILIPPINES, EU EYE FREE TRADE DEAL
Philippine Daily Inquirer
9 December 2011
BRUSSELS - After a three-year lull, the Philippines and the European Commission are scheduled to restart exploratory discussions that could eventually lead to the signing of a free trade agreement between the country and the 27-member European Union.
Peter K.J. Berz, EC Deputy Head of Unit for Trade Relations with South Asia, Korea and the Association of Southeast Asian Nations, said in a briefing with a group of Southeast Asian journalists here that he was leading a delegation to the Philippines from the EC that would discuss trade and industry matters with the Department of Trade and Industry.
Possible measures to improve trade relations between the European bloc and the Philippines as well as increase investments by European companies in the Philippines are high on the agenda of the half-day meeting scheduled for December 12 in Makati City.
According to data from the EU, the European bloc has become the Philippines' largest single export market in the past five years, accounting for about 17 percent of total exports. Following the EU is ASEAN with a share of 17.2 percent followed by the United States (16.8 percent) and Japan (15.6 percent).
Philippine exports to the EU expanded by over 40 percent to 5.4 billion euros in 2010 from 3.8 billion euros in 2009. Electronics top the list of exports, followed by transport equipment, garments and textiles and agricultural products.
Philippine imports from the EU, on the other hand, grew by more than 26 percent in 2010 to over 3.7 billion euros from 2.9 billion euros in 2009.
Total two-way trade totaled over 9.1 billion euros in 2010, making the EU the Philippines' fourth-largest trading partner, accounting for 13 percent of total trade. Traditionally, the Philippines has enjoyed a trade surplus with the EU, which in 2010 increased to over 1.6 billion euros.
Berz said the Philippines, Vietnam, Thailand and Indonesia were the four members of the ASEAN that the EC - the executive arm of the EU - was considering exploring free trade realations with, as part of Europe's overall plan to expand its already significant presence in Asia.
The EU this year signed a free trade agreement with South Korea and it came into force in July. It was the first FTA to be entered into by the EU and an Asian country, and negotiations with Singapore and Malaysia are now in full swing to add to the list of trade deals between EU and fast-growing Asian nations.
The EC, which handles trade negotiations on behalf of the member-states of the EU, hopes to conclude the negotiations with Singapore by the middle of next year, to be followed by Malaysia at the end of 2012.
How soon the other four countries can sign similar trade agreements with Korea, Singapore and Malaysia will depend on the level of commitment and ambition of both countries, according to EU officials, considering that the new FTAs pushed by Europe cover more than just trade and industry to specifically include such concerns as sustainable development, environmental impact and even labor practices.
Laos, Cambodia and Brunei are not high on the priority list of countries, with whom EC wants to conduct trade negotiations with considering their samlla internal markets. Myanmar also ranked low because of the fluid political and economic situation there.
GOV'T RUSHES DOCUMENTS FOR 2 PPP PROJECTS
Philippine Daily Inquirer
7 December 2011
The Aquino administration is rushing to finalize documents for two public-private partnership (PPP) infrastructure projects as it tries hard to at least accomplish that within this year.
Economic Planning Secretary Cayetano W. Paderanga Jr. identified the two projects as the road that links Daang-Hari in Cavite and the Southern Luzon Expressway and a contract to build 10,000 classrooms for the Department of Education.
"We are trying hard to finalize the documents [for these projects] before the year ends," Paderanga said. "That would pave the way for the bidding process."
Paderanga - along with officials from the Department of Finance, Health, and Transportation and Communications - took part in a forum with officials of PricewaterhouseCoopers (PwC) from across the globe to discuss the government's long-awaited PPP program.
PwC has been tapped to advise the government in relation to the conduct of the PPP airport projects in Puerto Prinsesa City in Palawan and Panglao Island in Bohol.
Observers and analysts have lamented the snail-paced development of the PPP program, many of them believing that any results would not be seen until 2012.
Richard Abadie, global leader of PwC's capital projects and infrastructure network, said Wednesday's discussions included lessons learned internationally "which [the government] could replicate here."
Asked how long it normally took for a PPP project to take off in other countries, Anadie said this varies depending on the planning, needed approvals, design and acquisition of land.
"If government hands over an unprepared project to the private sector, that normally never progresses," the executive said.
PH SET TO OFFER 30 COAL PROJECTS IN EARLY 2012
abs-cbnnews.com
01 December 2011
MANILA - The Philippines said on Thursday it will offer 30 coal exploration projects that may need total investments of $600 million at a tender to be held in the first quarter of 2012, as it aims to boost local supply and reduce costly fuel imports.
The potential coal sites are located in the central and northern Philippine provinces, where mining is not yet banned.
"We have identified 30 coal blocks that are ready for exploration. Bids shall be submitted before the end of March," Energy Undersecretary Jose Layug told reporters.
He said the Energy Department will evaluate the bids within 90 days and exploring each block may require investment of about $20 million, although the figure needs to be verified.
The Southeast Asian country, which imports most of its oil requirements, produced a total 7.33 million tonnes of coal in 2010, inlcuding 7.02 million tonnes from Semirara mine in the central Antique province.
Semirara, owned by conglomerate DMCI Holding Inc <DMC.PS>, is the country's only large-scale coal producer.
With local output not enough to meet domestic demand, the country last year imported a total 10.97 million tonnes of coal, including 10.6 million tonnes from Indonesia.
The Philippines also bought coal last year from Australia, Vietnam, Russia and the United States.
Coal for power generation accounted for 72.5 percent of the Philippines' total coal consumption of 13.31 million tonnes last year. Coal is also used in cement production.
OTTO ENERGY EYES 4 MORE WELLS IN GALOC OIL FIELD
Philippine Daily Inquirer
30 November 2011
Australian firm Otto Energy Ltd. is planning to drill as many as four new wells in four potentially oil-rich locations within the Galoc oil field off Palawan.
The plan is aimed at increasing the reserves and extend the life of the field.
In his presentation at the World Independent Junior Oil and Gas Congress Asia 2011 in Hong Kong, Otto Energy chief executive officer Gregor McNab said the drilling of the new wells might help unlock up to nine million barrels of contingent resources in the Galoc oil field.
Based on previous reports, the Phase 2 development of the Galoc field was initially expected to increase oil reserves by five million barrels by drilling new wells. The new wells were estimated to yield about 4,000 barrels of oil per day and may be drilled in the northern portion of the Galoc structure.
Based on the timetable by Otto Energy, a final investment decision is expected to be made by the second half of 2012.
Phase 2 development has already started with the earlier approval by the Galoc joint venture to acquire 184 square kilometers a new 3D seismic data covering the Galoc field and the adjacent Galoc North exploration prospect.
"The resulting inversion and interpretation will be available in the middle of the second quarter of 2012," Otto Energy earlier said.
The new 3D seismic data acquisition is expected to support the placement of Phase II wells in the reservoir. It will likewise mature the Galoc exploration prospect, which may be included as part of Phase II or future phases of development at the field.
"The Galoc joint venture has approved the commencement of Front End Engineering and Design (FEED) work to determine the exact locations and number of additonal wells to be drilled for Phase II, with drilling likely to take place in 2013," Otto Energy said.
The scope of FEED work includes subsurface modeling of the reservoir, drilling and design, subsea engineering and tie-back design for the new wells, and joint venture financing considerations.
Production of the Galoc oil field, which started producing in 2008, has reached 8.14 million barrels. Production rate stood at 6,472 barrels of oil per day, according to McNab.
BPO DEMAND HIGH, TOP DEVELOPERS IN CONSTRUCTION 'FRENZY'
Philippine Daily Inquirer
25 November 2011
Exactly 35 days before 2011 bids adieu, Inquirer Property has asked analysts to assess the performance of the Philippine real estate industry in 2011. Their unanimous reply:
It has been a banner year for the business process outsourcing (BPO) sector.
The mid-income condo development is in the midst of "construction frenzy".
The demand for spaces in the Makati, Bonifacio Global City and Ortigas central business districts was even higher this year compared to last year.
The emerging growth centers like Eastwood and Bonifacio Global City have "arrived" this year.
Leading global real estate services company Colliers International, which claims its research team had been tracking all the residential condominium developments in Metro Manila since 2008, said that in 2010 preselling activities were able to sell 36,000 units, and that in 2011 that number is projected to be surpassed by more than 11 percent to breach the 40,000 units sold mark.
This was revealed by Paul Vincent Chua, associate director for valuation and advisory services and head of consultancy and research.
Top 5
"There are a lot of developers who performed well this year, however, in terms of condominium units sold in Metro Manila, SM Development Corp. remains to be number one. The top five include developers Ayala Land Inc., Century Properties, DMCI and Megaworld," said Chua.
Enrique Soriano, professor at the Ateneo Graduate School of Business and senior adviser at Wong+Bernstein Business Advisory, also cited Megaworld, ALI, SMDC and Robinson's Land Corp. (RLC) as the top-performing developers in 2011.
Soriano also added that the property sector in 2011 "was single-handledly fueled by private initiatives."
Soriano also observed "no movement in the high-end condominium segment, and aggressive construction frenzy in the mid-income condo segment representing 80 percent of all residential developments in 2011."
4% vacancies
Chua said that in terms of commercial space uptake, the demand from the BPO sector is still remarkably high.
"If you look at vacancies in Makati, Bonifacio Global City, and Ortigas, the average vacancy for the third quarter is now less than 4 percent compared to the same period last year, which had an average vacancy rate for more than 6 percent. Even with the (addition of a) number of planned office developments in the next couple of years, we expect vacancies to remain low as the demands for these spaces are still very high."
Soriano said the industry's strength was "focused on the vertical developments and the BPOs and the emergence of new growth centers following the success of Eastwood and BGC."
But have there been any downsides to this year's flurry of developments? "The singular focus on the mid-income segment, and neglecting other asset classes," replied Soriano. He reasoned, however, that the property sector was just keeping with "unmet demand, fueled by buyer demand, especially (from) overseas Filipino workers (OFWs) and overseas Filipino expats (OFEs).
Morale booster
The positive analyses for 2011 and the strength of the Philippine real estate industry this year come as a morale booster, coming at a time when the city of Manila has recently been tagged as "below fair" to "abysmal" by foreign investors in the Emerging Trends in Real Estate Asia Pacific 2011 survey conducted by Urban Land Institute.
Global real estate investors, who participated in the survey, gave Manila a score of 4.56 points out of a possible 9. Topping the survey in the Asia-Pacific region was Singapore with a score of 5.96 points, followed by Shanghai with 5.87, Mumbai with 5.79 and Hong Kong with 5.70.
Chua countered that the Philippines has been one of the few countries in Asia where foreign land ownership is limited to 40 percent. He urged the sector to look at the brighter side, particularly the lower rental rates compared to other Asia-Pacific countries.
He pointed out that for the office sector alone, with 25 Asia-Pacific cities covered by Colliers International, Makati City Offers the third lowest rent, ranking 22 on the list with an average net rent of $21.48/ square feet. The city that commands the highest rent, Hong Kong, has an average net rent of $185.91/ square feet. Looking at the capitalization rate or prime yield of these cities, Makati ranked second with 9.77 percent, following topnotcher Mumbai with 10.6 percent.
Soriano said the low ranking was a wake-up call, and that the Real Estate Investment Trust law must now be implemented in the country, citing Hong Kong, Thailand, Singapore and Malaysia significantly benefiting from REIT. He added that implementing REIT would open more opportunities for investment.
NGO BULLISH ON PH COCO FIBER INDUSTRY
25 November 2011
MANILA, Philippines - Coco coir, or fibers from coconut husks, can be a source of income for communities in the country's coconut-rich areas, according to the Foundation for a Sustainable Society (FSSI).
The FSSI warned against the long term strategy of exporting raw coco fibers, but instead suggested the export of high-value products with coco fibers.
"We have been in the coco coir business as a major social enterprise for 10 years. We need to do is to scale up, upgrade and involve more communities. So far, we have helped some 6,510 poor individuals as workers, subcontractors and craftsmen through our various social enterprises thereby stimulating local communities with sustainable use of available local resources," FSSI executive director Jay Bertram Lacsamana said, in a statement.
The government is also bullish on the coco coir industry, approving the Philippine Coco Coir Development Plan 2011-2016. The government projects $6.5 million in exports of coco-fibers to China and other countries in the next five years.
Lacsamana said the FSSI "does not fully encourage" the export of raw, unprocessed fiber to other countries as a long-term strategy, since this will give jobs to Chinese twinners and weavers.
The finished products are then used in Chinese infrastructure or exported as coco-nets or used as materials for infrastructure projects financed by Chinese development assistance in other developing countries. Exporting raw fiber to China provided employment to Chinese workers, denying work and value adding from our local twinners and weavers," Lacsamana said.
The potential for the Coir industry is indeed huge not only in terms of boosting our export receipts from the coco coir entrepreneurs, we hope that the industry will boost incomes of farmers and help in poverty reduction," he said.
The Philippines has 3 million hectares of coconut plantation in 68 provinces and 1,195 municipalities throughout the country, producing approximately 15 billion nuts a year.
The issues on coco coir industry will be discussed in a forum "Social Enterprises in the Coco Coir Industry: Nurturing Business Chains that Matter to the Poor," on November 28 (Monday) at the SM Megatrade Hall Function Room (5th Floor, Building B).
FSSI is a non-profit organization that provides investments for social enterprises and pioneered in developing the coco coir industry. Its subsidiary Pilipinas Eco-Fiber Inc. has been producing geonets, plant liners, bed liners for export and the local market.
TRADERS REMAIN UPBEAT OVER PHILIPPINE PROSPECTS
Philippine Daily Inquirer
25 November 2011
Business in the country remain optimistic about their ability to generate profit and the performance of the overall economy in the fourth quarter, results of the Bangko Sentral ng Pilipinas' latest survey showed.
In the Business Expectation Survey (BES) for the fourth quarter, the business confidence index for the period settled at +38.7 percent.
The index settles in positive territory when respondents who say they are optimistic about their prospects outnumber those who say otherwise.
According to BSP Deputy Governor Diwa Gunigundo, a positive index tends to support expectations that growth of the economy will accelerate from the 4 percent reported in the first half of the year.
Businessmen's positive sentiment normally translates to an increase in investments, he explained.
The index for the fourth quarter was higher than the +34.1 percent reported in the third quarter. But it was lower than the +50.6 percent seen the fourth quarter of last year.
Teresita Deveza, acting deputy director for central bank's department of economic statistics, said Thursday that the year-on-year increase in the confidence index was due to a rise in demand expected of the holidays, the sustained growth in remittances that fuel household consumption, the anticipation of higher government spending, and expected rise in public infrastrucure investments.
"The more bouyant outlook was broad-based, as it was seen almost across all business sectors," Deveza said in a press conference.
Also, the year-on-year decline in the business confidence index was said to be caused by development abroad. In particular, the debt crisis in the eurozone, as well as the weak performance of the US economy, has been weighing down on Philippine exports.
The continuing tension in parts of the Middle East and North Africa, the downgrade of the US credit rating, as well as the natural disasters in Japan, likewise dampened outlook of businesses this year compared with that of last year.
"The global situation this year has deteriorated relative to that in 2010. Our GDP [gross domestic product] was very high in 2010, and the economy was very resilient and promising then. Starting the first quarter of 2011, however, we have ssen a lot of bad news," Gunigundo said in the same conference.
Nonetheless, favorable indicators on the domestic economy have kept the overall business sentiment in the country from sliding to negative territory, Gunigundo said.
These factors include manageable inflation, the relative growth of the economy, and traders' increased access to credit.
Q3 GDP GROWTH SEEN AT MORE THAN 4%
Philippine Daily Inquirer
24 November 2011
The Philippine economy likely grew by over 4 percent in the third quarter of 2011, some of the country's top economists said Wednesday.
Gross domestic product, or GDP. for the third quarter may have grown "higher than four percent" on robust growth in the services sector and the fast-tracking of government expenditure, National Economic Development Authority (NEDA) assistant director-general for planning and policy Ruperto P. Macuja said in a phone interview.
Lower than anticipated inflation, "respectable" growth in remittances, real estate, banking and tourism also contributed to growth, he explained.
Simulation by the NEDA technical staff forecast year-on-year growth for the third quarter to be in the range of 3.8 percent to 4.8 percent, Macuja said.
Annual growth in the second quarter was 3.4 percent.
"It could even be a little bit higher, I feel, because of the leading economic indicators, Macuja said. "The services sector will be the main driver for growth."
The government trimmed its growth forecast to a range of 4.5 to 5.5. percent from 5-6 percent this year, but economists in a Reuters poll in October predicted growth would slow to 4.3 in 2011.
Before the simulation exercise, NEDA Director General Cayetano W. Paderanga Jr. had said in two interviews that third-quarter growth could be higher than four percent, mainly due to growth in the services sector.
Private economists were slightly more conservative with their outlook for the period at around 4 percent.
Midpoint GDP growth of 4.3 percent appears reasonable, Dr. Benjamin E. Diokno of the UP School of Economics said in a text message.
Diokno said agricultural production may be lower than first-semester expansion due to a series of typhoons, while the manufacturing sector may have contracted sharply as reflected in weak exports.
"Construction, especially public construction, might still be contracting as a result of government underspending. No PPP (public-private partnership) project has taken off. The catch-up plan has yet to gather momentum," Diokno said.
Cid L. Terosa of the University of Asia and the Pacific also said that third-quarter GDP growth could reach 4 percent.
"It could be between 3.5 and 4 percent. It's difficult for me to (give) a higher number," he said
Terosa noted that private investment and other investment inflows into industry and services could lift the economy up despite poor agriculture and exports showing," Terosa added.
PHILIPPINES SEEN AS AMONG GROWTH MARKETS FOR MOTOR VEHICLES
Philippine Daily Inquirer
23 November 2011
MANILA, Philippines - The Philippines is listed as one of the high-growth motor vehicle markets among the Association of Southeast Asian Nations which, as a group, is expected to be the eighth-largest automotive market in the world by 2015.
Vivek Vaidya, a vice president at research and consulting firm Frost & Sullivan (F & S), said in a report that manufacturers and suppliers should look at Asean as an alternative production base to China and India, currently considered as the places to be.
Vaidya's report dubbed "Asean: The Final Frontier," describes the region's untapped potential as a market for vehicles and parts.
The report also recognized the Philippines as a regional supply base of transmission and universal joints in Asean.
Vaidya said that Asean would climb up by a notch to become the eighth-largest market in the world with unit sales rising to 3.14 million in 2015 from 2.23 million in 2010.
By then, Asean will join the ranks of the so-called BRIC countries - Brazil, Russia, India and China - as well as traditional stalwarts United States, Japan and Germany.
Further, Vaidya said Asean would retain such rank for at least the next three years through 2018, when sales could reach 3.63 million units.
Asean has been an untapped region with Japanese original equipment manufacturers having more share of each country's market than in Japan itself, he said.
Vaidya pointed to Indonesia and Thailand as the key Asean growth markets, with Indonesia beling likely to become the low-cost hub thanks to strong government support aside from relatively lower costs of labor and manufacturing.
Even then, he added the Philippines to make up a three-country "rapid growth zone" in terms of the number of vehicles compared to population as well as per capita gross domestic product.
F & S data show that compared to Thailand and Indonesia, the Philippines has the highest vehicle penetration but the lowest average income per person.
In terms of affordability, Filipinos find it easier to purchase a vehicle than Indonesians but find it harder compared with Thais.
Vaidya said Asean has become a growth market for passenger cars, particularly sub-compact and compact sedans.
INVESTORS NOW EYEING PHILIPPINES
Philippine Daily Inquirer
23 November 2011
The Philippines is benefiting more and more from China's increasing wage inflation as companies in the region turn to other countries with their investments.
According to Trade Secretary Gregory Domingo, even native Chinese companies are keen on locating in the Philippines.
"There have been movements from China to the Philippines. We have gotten increased queries from Chinese, Japanese and Korean firms," he told reporters in a recent interview.
Domingo declined to give specific names, saying only that these potential investors were a mix of medium and large companies, some of them multinationals.
A survey conducted by Chinese media group Caixin a few months ago showed that labor costs in China continued to increase due to higher demand for labor and rising salaries.
Labor-intensive companies, such as those in the garments and textiles, are now feeling the pinch from this accelerated wage inflation, the Caixin survey found.
Some garment factories in China have already transferred their operations to the Philippines due to increasing labor costs in the mainland, Domingo said.
Meanwhile, the Philippine Economic Zone Authority (PEZA) is expecting to increase its investment haul for the year, and looks forward to another good year in 2012.
According to PEZA director general Lilia de Lima, the PEZA board has further increased its investment growth target for the year to more than 11 percent.
Initially set at 10 percent, PEZA has revised the target to 11 percent, due to the expected increase in investments, exports, and employment for the year, she said.
And given the success of recent investment missions, de Lima said PEZA's investment pledges for the year could grow more than 11 percent.
PEZA last year registered a little over PhP201 billion in investment, $40.47 billion in exports, and 735,672 in employment.
KOREAN FIRM TO PUT UP SUBIC POWER PLANT
Philippine Daily Inquirer
23 November 2011
Hanjin Heavy Industries and Construction Co. Ltd. - Philippines Inc. will put up a 200-megawatt (MW) power plant within the Subic Bay Economic Zone to supply its electricity requirements.
Energy Secretary Jose Rene Almendras said the planned facility was under the memorandum of understanding that the government signed with the Korean government last Monday for the establishment of a power plant in Subic.
The 200 MW that the plant would generate would be just about enough to cover all the HHIC-Philippines' power requirements he said. Anything in excess could be fed to the grid, "but I don't think that's part of Hanjin's plans at the moment."
The planned generation facility would most likely use coal as fuel, he said.
Almendras and South Korea Minister of Knowledge Economy Hong Suk Woo signed an MOU for the construction of a power plant within the Subic ecozone last Monday, on the sidelines of South Korea President Lee Myung Bak's three-day state visit to the country.
Almendras declined to say whether or not other generation plants would be put up under the MOU apart from the planned coal-fired power facility that HHIC-Philippines was planning to construct.
However, the MOU did state that a power facility using clean technology would be put up within the Subic ecozone to help augment the current capacity of the Luzon grid.
Lee, in a speech last Monday, committed to boost South Korea's partnership with the Philippines in various sectors, particularly infrastructure, agriculture, tourism and climate change mitigation.
He said Korean companies were keen on participating in the government's flagship public-private partnership program.
WORLD BANK PRESIDENT SUPPORTS PH REFORMS
27 October 2011
MANILA, Philippines - World Bank Group president Robert B. Zoellick on Thursday expressed support for the Aquino administration's programs for good governance and poverty reduction.
"My visit has helped me better understand the importance of President Aquino's program for good governance and the government's priorities to improve the business climate, develop infrastructure, increase investments in health, and education, and protect the most vulnerable people," Zoellick said, in a statement.
Zoellick made the comments on the second day of his visit to the Philippines, which included a meeting with President Benigno Aquino, the government economic team, businessmen and civil society representatives.
In a meeting with Aquino on Thursday, Zoellick also assured him of the World Bank's support, in the area of disaster risk management. The World Bank has extended a $500 million rapid response contingent line of credit that the government can use for emergency relief and recovery after a major disaster.
The Philippines will also receive a grant of $2 million from the Global Facility for Disaster Reduction and Recovery, Zoellick announced. This will fund a program that provides access to the global best practices on disaster risk reduction.
"I am impressed with the resilience the country has exhibited to recent external shocks, including the impact of typhoons and the El Nino effect.... The country's strong financial and trade resources and economic fundamentals have helped cushion the impact of the global economic turmoil on the local economy," Zoellick said.
For his part, Aquino said: "The World Bank has been a valued partner in our government's efforts to achieve inclusive and sustained economic growth."
Helping to empower the poor
On Wednesday, Zoellick visited a slum community in Brgy. Kalayaan, Pasay City to see firsthand how the government's conditional cash transfer (CCT) program, also known as the Pantawid Pamilya, has been helping families.
Accompanied by Social Welfare Secretary Corazon Soliman, Zoellick met families who have benefitted from the CCT, which provides cash to parents who send their children to school and comply with health checks.
"The best safety net programs are those that deliver efficiently and effectively to the people who need support the most. It was heartening to hear women speak about their commitment to meet the requirements and to send their children to school and to seek health care for their families," Zoellick said.
"While the program here is very young, the tangible benefits are evidence of the value of these programs and highlight that good governance matters - with better targeting helping to empower poor people."
The World Bank has been supporting the Pantawid Pamilya program, through the $405 million social welfare and development reform project with the Department of Social Welfare and Development.
The CCT program has increased people's annual incomes by an average of 12.6%, resulting in cuts in the incidence of poverty by about 6 percentage points, according to research by the Bank and the Australian Agency for International Development (AusAID).
By the end of 2011, the Pantawid Pamilya expects to cover 2.3 million households, or almost 62 percent of the poor households in the Philippines.
During his visit, Zoellick also met with government officials, including Finance Secretary Cesar Purisima. He was given a briefing on how the Philippine plans to improve its competitiveness, while cushioning the economy from more external shocks.
Zoellick cited the need for acceleration of public spending, especially in infrastructure and human capital investment. He also expressed support for the Public-Private Partnership (PPP) Program, saying the Bank is ready to assist.
HIMOAP PROMOTES PHILIPPINES AS TOP HEALTHCARE OUTSOURCING DESTINATION
22 October 2011
SANTA CLARA, California - The Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP) is setting new heights in the Business Process Outsourcing (BPO) arena in the world today. As the leading markets - United States, Canada, Europe - pose for a growing healthcare information management (HIM) sector, the Philippines is poised to be the emerging and leading destination for various outsourcing in health information management.
HIMOAP held its second annual conference last September 15, 2011 at the New World Hotel, dubbed as the Healthcare Information Management Outsourcing Services Congress 2011 (HIMOSC 2011) with this year's theme, "Driving Sustainable and Dynamic Business Growth in the Philippines through Education and Innovation."
The conference brought together BPO companies, providers, payers, regulators, academe, associations and professionals engaged in the industry to tackle the diverse opportunities and challenges in order to position the Philippines achieve a significant market share in HIM. HIMOSC 2011 is part of the national advocacy to create the right business environment for the HIM outsourcing to successfully thrive.
The Philippine has gained a good momentum in creating international awareness as HIMOAP member companies joined the 83rd AHIMA Conference and Exhibit on October 1-6, 2011 in Salt Lake City, Utah, where the delegates showcased the Philippine capability in HIM outsourced services such as medical transcription, coding and billing, pharmacy benefits management, electronic medical records (EMR) solution, medical research, etc.
Around 300 attendees visited the Philippine booth and several business meetings were held with a healthcare facility, HIM staffing agency and a HIM service provider. HIMOAP company delegates included representatives from RxSecure, CCK Network, MxSecure Philippines, Pointwest Technologies, Transcribe Media, Total Transcription Solutions, Inc. and Transkripsyo.
The country participation to AHIMA is supported by the Department of Trade and Industry and the Department of Science and Technology through the Information and Communications Technology Office. Since 2005, DTI has been supporting Philippine participation to AHIMA.
In a recent speech, Secretary Gregory Domingo acknowledge the IT industry (healthcare information management being part of it) as one of the key big industry winners which government will continue to push and support in a big way.
On October 25, HIMOAP will continue its international visibility during the Healthcare Forum at the Philippine Center in New York City. The forum is jointly organized by DTI, Philippine Consulate General - New York, Philippine American Chamber of Commerce NY and the Philippine BPO/IT Council.
Current health reforms and EMR implementation in the United States are creating career opportunities for Filipino nurses and medical practitioners as more and more functions are outcourced in the revenue cycle management involving specialized skills in healthcare, both on the provider and payer sides.
HIMOAP (www.himoap.com) is a non-stock, non-profit organization which aims to promote the Philippines as the outsourcing destination of choice for healthcare information management services. HIMOAP has arounf 45 member companies engaged in HIM outsourcing services.
GERMANS INVEST PHP2.5 BILLION IN POWER PLANT, EYEING MORE IN NEGROS OCCIDENTAL
The Visayan Daily Star
18 October 2011
A group of German investment advisers bringing about PhP2.59 billion ($60 million) in investments into the San Carlos BioPower Inc. 18-megawatt biomass plant to be built in the San Carlos City ecozone, are looking for two other areas in Negros Occidental to build similar plants, Jose Ma. Zabaleta, chairman of BronzeOak Philippines and SCBioPower, said last night.
BronzeOak Philippines is the proponent of San Carlos BioPower that aims to provide sustainable power to the local grid from renewable sources of energy on completion of its San Carlos plant in late 2013.
Eighteen German investment advisers from the Thomas Llyod Group, who are in Negros Occidental to explore areas of investment, especially in the production of renewable energy, met with top officials of the province led by Gov. Alfredo Maranon, Jr. last night.
T.U. Michael Sieg, chairman and chief executive officer of the Thomas Lloyd Group, told the Daily Star they are all part of the investment management team of Thomas Lloyd involved in the due diligence process, who are reviewing areas of potential investment.
He said they will be investing in the SCBioPower and are looking forward to other projects in Negros.
They are looking at facilities in southern and northern Negros Occidental for investment, Sieg said.
Zabaleta said the Germans are also looking at investing in two other 18-megawatt biomass plants possibly in the Cadiz and Bago areas provided there is available agricultural residue biomass, noting that each plant will need about 160,000 tons of it.
"The Germans were looking for renewable investments in Asia and we convinced them to focus on the Philippines and come to Negros that offers the future for biomass energy," Zabaleta said.
"They are interested in power from biomass and other renewable energies in Negros," Zabaleta said.
Before their arrival in Negros, the Germans met with leaders of the E|uropean Chamber of Commerce and Industry, Department of Energy, and the Department of Agriculture, Zabaleta added.
Maranon, who hosted a dinner for the German delegation at the Social Hall of the provincial capitol last night, informed the Germans that Negros Occidental is faced with a power shortage that needs to be addressed.
At the same time he outlined the other agricultural products of Negros and the thrust towards organic produce, potential areas of investment, and the tourists attractions of the province.
Roberto Montelibano, Philippine Chamber of |Commerce and Industry - Western Visayas governor, also stressed the need for more investments in power in Negros.
The Germans were met at the Capitol steps by Masskara performers, and entertained by 11-year-old singer Rhosben Jonota and the dancers of West Negros University's Kaanyag Dance Company mentored by Girlie Belzunce.
Also present at the dinner were Dr. Franz Siedenschwarz - honorary consul of Germany, Vice Governor Genaro Alvarez Jr. and the Negros Occidental Board Members, Representatives Alfredo Maranon III (Neg. Occ, 2nd District) and Mercedes Alvarez (Neg. Occ., 6th District), and Bacolod Vice Mayor Jude Thaddeus Sayson.
PHILIPPINES TO EXPORT PORK, SAYS DA
Philippine Daily Inquirer
17 October 2011
MANILA, Philippines - The Department of Agriculture (DA) on Monday said it would put up five triple "A" slaughterhouses in the country to provide hog raisers top quality facilities that would enable them to export their meats abroad.
Secretary Proceso Alcala said the government would spend at least PhP180 million to build abbatoirs in major hog producing regions, noting that this is a gap in the country's meat production chain.
"The President has expressed his willingness to finance a program (that will involve) the construction of triple A slaughterhouses and the installation of blast freezing equipment," said Alcala during his speech at the opening ceremony of the Meat Safety Consciousness Week held in Quezon City on Monday.
"We will be willing to spend more than PhP180 million if we have to," he added in an interview with the media after his speech. He noted that some buyers abroad are eyeing to buy Philippine pork products, but want these to be processed in AAA Abbatoirs.
Triple "A" slaughterhouses require more facilities and operational procedures, which ensure the cleanliness and safety of the meats. Meats from A and AA abbatoirs are fit for local markets, while meat products processed in triple "A" abbatoirs could be exported or sold to any market.
Alcala added that the government will work with the hog industry in two weeks to discuss the construction and operation of the slaughterhouses.
Jane Bacayo, chief of the National Meat Inspection Services (NMIS), said construction of the slaughterhouses could start in the first quarter of 2012.
The pork and storage industry urged the government to include them in the operation of the abbatoirs. The Pork Producers Federation (Propork) and the Philippine Association of Meat Processors, Inc. (Pampi) said their members should have a say on how the abbatoirs would operate.
Propork president Edwin Chen also noted that the government should provide slaughterhouses in major hog-raising areas such as Region III and IV in Luzon.
The Philippines, Propork noted, imported some 177,000 metric tons (MT) of meat products last year. Hog producers said this led to unfair competition in the market.
COCONUT WATER EXPORTS JUMP 315%
Philippine Daily Inquirer
17 October 2011
Coconut water exports jumped 315 percent in the first half of the year to 7.5 million liters, after the popularity of the refreshing beverage started to take off overseas, the Philippine Coconut Authority (PCA said.
Last year the country exported only 1.80 million liters in the same period.
The PCA said the natural product was exported to the United States, Europe, the Middle East and South America, all of whose markets saw a surge in coconut water consumption.
Americans were the biggest consumers, downing 6.19 million liters this year for a 387-percent increase over last year's 1.27-million liters.
Exports to Europe rose to 213,220 liters from last year's 72,280 liters. Asia and the Pacific bought 360,412 liters this year over last year's 145,778 liters, while Latin and Central America imported 483,338 liters from 190,990 liters the previous year, the PCA said.
PCA Administrator Euclides Forbes said coconut water had become a popular energy drink abroad because of its natural qualities and lack of chemical preservatives.
Coconut water is rich in potassium and megnesium, and contains considerable amount of vitamin B which aids in strengthening the muscles, delaying fatigue and maintaining normal heart function.
It is also regarded as a good source of electrolytes and glucose and has been found suitable for intravenous rehydration. It also a healthy and effective treatment for urinary stones.
Philippine coconut water was in the news recently after President Aquino returned from a visit to the United States where he met with American businessmen who had put up a coconut water processing firm in Camarines Sur.
To meet future demand, Forbes magazine revealed that the Department of Agriculture and the PCA will implement a massive replanting of coconut trees under the Participatory Coconut Planting Project.
The Philippines is the world's top exporter of coconut products, particularly copra. In the first seven months of 2011, coconut exports totaled $1.22 billion, a 34.74 percent jump over the $908.72 million in the same period last year, the PCA said.
UK TRADE SOFTWARE FIRM OPENS ASIA HUB IN PHILIPPINES
Philippine Daily Inquirer
14 October 2011
London-based ITRS Group, which was recently acquired by private equity giant Carlyle Group, launched Thursday its software development center in Makati.
The Makati facility is the firm's only software development center outside London.
ITRS chairman Stephen Bates said during the launch that ITRS had no plan to open any other software development hub and was in fact interested in establishing a global, 24-hour customer support center in the Philippines as well.
Bates also said he would not be surprised if more IT firms based in the UK would locate their centers in the Philippines.
"The Philippines is a good base for growing in Asia. We trust the economy and the government has been supportive. Aside from the excellent English, great talent, and work ethic, there is also a cultural fit and there are economic benefits, too. Not to mention the time difference, which would allow us to keep work going here when the London staff close up for their day."
UK Trade and Investment Director Derek Page, told reporters that other British firms are interested in the Philippines, especially in the IT, power and infrastructure sectors. "There is special interest in the public-private partnership projects. We will bring in two trade missions to link British companies with possible partners and locations in the Philippines. There is room for growth in the Philippines and with government reforms we trust there will be more interest."
ITRS COO Keith Waterton said the development center in the Philippines had started with 20 people and this talent pool would be initially expanded to 45, but more growth was expected moving forward.
PhP72B FOR POOR, INFRASTRUCTURE, EURO CRISIS CUSHION
(with a report from Norman Bordadora)
Philippine Daily Inquirer
13 October 2011
Spending from a PhP72.11-billion stimulation package, known as the Disbursement Acceleration Plan, will be fast-tracked to fortify the economy and cushion the impact of the global fallout from Europe's debt crisis, President Benigno Aquino III said Wednesday.
The President also assured the public that foreign investors were not packing their bags in the wake of the recent raid by communist rebels on three mining facilities in Claver, Surigao del Norte province.
Speaking before the Foreign Correspondents Association of the Philippines at the Mandarin Oriental Hotel in Makati City, Mr Aquino acknowledged that government spending had been running well behind target this year, which has been blamed for the slower-than-expected growth in the first half of the year.
He said the government would "not fold under the weight of these difficulties" and "instead will excel."
The President said the stimulus package was meant to "make certain that we do what must be done to maintain our economy's momentum" amid the slowdown in the global economy.
"(We) are not sure exactly what the negative effects of the world economic turmoil will have on us since it is a developing story. But the PhP72.11 billion will have its own multiplier effect and this pump-primes the economy to that extent." Mr. Aquino said in his speech.
Infra, poverty
He said the package would focus mainly on infrastructure and poverty alleviation.
The President gave a breakdown on some of the planned expenditures under the stimulus package:
> PhP10 billion to resettle and relocate informal settlers and families in danger zones.
> PhP6.5 billion as support fund for local government units.
> PhP5.5 billion for various infrastructure projects under the Department of Public Works and Highways.
> PhP4.5 billion for the improvement of the Mass Rail Transit on Edsa.
>PhP1.868 billion for the upgrade of the Light Rail Transit.
"The criteria we used to choose these projects were simple. The stimulus will be spent on projects that will have high macroeconomic impact and will help the poor," he said.
Of the total amount, PhP37.92 billion will be released to national government agencies, PhP7.25 billion to local government units and PhP26.90 billion to government-owned or-controlled corporations (GOCCs).
Funds from pooled savings
Mr. Aquino said the funds for the stimulus package would come from "money we saved and from our existing borrowing program."
A statement by Budget Secretary Florencio Abad said funds for the package would come from "pooled savings from unused appropriations in 2010 and 2011, windfall of revenue from dividends of GOCCs, and realignments within agencies in favor of fast-disbursing projects.
The President said the effects of the stimulus package would be felt not just at the end of the year but also in the first half of next year.
"We will do what we can within bounds of fiscal prudence to keep the economy growing and to make certain that the effects of this growth are felt more widely," he said.
During the question-and-answer part of the forum, the President acknowledged that the stimulus package would add to the government's effort "to reach the growth targets" which for this year set at 5 to 6 percent or what he said was the "low end of the forecast."
He said the growth target was lowered from 7 to 8 percent expansion projected in January partly because of the drop in the country's exports as a result of the earthquake, tsunami (and nuclear meltdown) in Japan and the political crisis in the Middle East.
Quick spending
Asked what steps the government was taking to ensure that the stimulus package would be spent expeditiously, the President indicated that he was taking a direct hand to ensure that the funds would be spent quickly.
"I keep talking to various Cabinet secretaries and inquiring into the status of major projects that are in their purview," the President said.
He said he talked the other day with Education Secretary Armin Luistro on the status of the school building program target of 8,300 classrooms by the end of December.
Houses for soldiers, cops
Mr. Aquino said he also had asked the National Housing Authority (NHA) about the construction of more than 21,000 houses for the police and soldiers. He was told that there would be a one-month delay on their completion because of the La Nina phenomenon.
The NHA will complete the houses in January 12 next year, he said.
The President said he had instructed Abad to monitor the expenditures and beef up the reporting system.
He assured the public that the Public-Private Partnership (PPP) Porgram was moving.
'Wrong assumptions'
Mr. Aquino said the Daang Hari-Southern Luzon Expressway (SLEX) project was expected to be awarded to the winning bidder by January.
This will be followed by the Northern Luzon - SLEX interconnection and the Department of Health-PPP project for vaccines, he said.
Mr. Aquino said the Malacanang was reviewing the whole PPP process and that it was "trying to compress the time element."
"But at the same time there has been rethinking - would it be more prudent for us to embark as originally announced with the wrong assumptions. What were the wrong assumptions?" he said.
Sumimoto
During the forum, Mr. Aquino said that he met the other day with officials of Japan's Sumimoto Metal Mining Co., the partner of Nickel Asia Corp., which in turn owns Taganito Mining Corp. and Taganito HPAL Nickel Corp. whose facilities and equipment were burned down by communist rebels on October 3.
The facilities and equipment of a third mining firm, Platinum Group Metals Corp., were also burned by the communitst New People's Army.
"They (Sumimoto officials) assured us they have no intention of pulling out.... So, if the main, shall we say, victim of this whole issue has not indicated a lack of interest or lessening of interest then, perhaps I don't foresee any other foreign investors undertaking the same," Mr. Aquino said.
He said Sumimoto officials, who requested the government to beef up security in Claver, Surigao del Norte, were assured that corrective actions were being undertaken.
Militias
The military has asked mining companies in Mindanao to hire military-organized militias to guard their facilities.
Mr. Aquino defended the military's plan to train militias of mining companies amid fears that the paramilitary forces could lead to the creation of anothe private army.
He said the special Cafgu (Citizen Armed Force Geographical Unit) would be under the supervision of the military and would not be in the control of private citizens.
"Cafgus or special Cafgus will be territorial-based, will be subject to all the rules and regulations; will be under the watchful gaze of our Commission on Human Rights (Chair) Etta Rosales. We do not foresee any abuses from them but rather they will augment the abilities of our security forces to preserve peace and order in our country," the President said.
PALACE: PHL NOT AGAINST EUROPEAN INVESTMENTS
The Philippine Star
12 October 2011
MANILA, Philippines - The Philippine government is not deliberately biased against European investments despite the cancellation or suspension of some projects as part of the Aquino administration's effort to ensure the success of its Public-Private Partnership program.
"We need to clarify. We're not against foreign governments. We are not against European governments. We looked into some of the projects and some of the projects were not in accordance with law," presidential spokesperson Edwin Lacierda said yesterday in a press briefing.
"We are looking into it and reviewing it and canceling it not because of who the personalities (involved) are or, for instance, they are European-based but more on the legality of each project," he added.
The government had earlier cancelled a Belgian project to dredge part of Laguna Lake and a French project to build 72 roll on/ roll off (RoRo) ports nationwide.
"So that's what we are looking into and we'd like to assure the French ambassador (Thierry Botja de Mozota), we'd like to assure the EU (European Union), that there is no concerted effort to do European bashing here in the country. We look into each specific project and we evaluate it accordingly," Lacierda said.
Lacierda also said four PPP projects of the government were on track and that not all of them would require official development assistance (ODA) from foreign governments.
"For instance, Daang Hari (South Luzon Expressway Road Project) has been bidded out - that did not require ODA. The DOH (Department of Health) vaccine program also will not require ODA. Some projects will require some ODA but not all the projects," Lacierda said.
"DOTC (Department of Transportation and Communications) Secretary Mar Roxas is looking into PPP project where there is an ODA component but not all PPP projects will require an ODA component", he said.
"It depends on the study made by the PPP Center and also eventually the review by NEDA (National Economic and Development Authority)," Lacierda said.
"The others are looking into reviewing. We have hired, for instance, advisers for some of the projects. But we believe that by next year we would be able to launch other PPP projects," Lacierda said.
During the President's official working visit to Japan, Finance Secretary Cesar Purisima told Japanese businessmen that the government would continue to consider both solicited and unsolicited projects for PPP.
In the latter category, Purisima said the main consideration would be the entry of new technology.
Roxas said there are two types of PPP projects being considered: the first is classic PPP involving concession agreement, while the second one is hybrid and supported by low-cost long term ODA or loans, possibly with one percent interest rate stretched to a 30-year period.
Roxas said that for rail and airport projects, the government would separately bid out their different components.
For the Light Rail Transit 1 extension project, the government might first bid out the construction component, then the rolling stock. There might also be separate bidding for operations and maintenance contracts.
Meanwhile, President Aquino said the PPP program might also be tapped for the construction of 6,000 more classrooms by the end of his term in 2016.
"The good news here is that we are going to acquire funds through the cooperation of DepEd (Department of Education) and the private sector under the Public-Private Partnership program to address the lack of classrooms in the country," Aquino said in his speech yesterday at the groundbreaking ceremony for Phase 3 of the Eulogio Rodriquez Integrated School in Mandaluyong City.
AQUINO SETS PHP72-B STIMULUS PACKAGE
Philippine Daily Inquirer
12 October 2011
President Benigno Aquino III plans to unveil Wednesday a PhP72-billion stimulus package that seeks to help Filipinos keep their jobs amid the slump in any Western economies and slowdown in the country.
"It was approved in principle (on Monday)," presidential spokesperson Edwin Lacierda on Tuesday said of the stimulus package.
A tight rein on expenditures was blamed for slower-than-expected growth in the first half of the year.
The latest poor news on the economy came on Tuesday, when August data showed exports had posted their biggest annual drop in two years.
Transportation Secretary Manuel "Mar" Roxas said the stimulus package was firmed up after the President's consultations with foreign leaders and businessmen during his recent travels to China, the United States and Japan.
"The President had sensed what analysts are already saying about the turbulence in the international financial markets and the weakening of Western economies," Roxas told the Philippine Daily Inquirer.
He said the President was seeking to protect the economy and jobs in the country by initiating the stimulus package. "He's trying to insulate our economy from the turbulence being experienced in the US Europe," Roxas said.
Roxas said the stimulus package would see an increase in economic activities in the country whose exports and tourism would be affected by the economic downturn abroad.
PhP6.5-B LGU fund
At a press briefing, Lacierda said the President would announce the stimulus package in his speech Wednesday before foreign media correspondents at the Mandarin Hotel in Makati City.
Lacierda said Mr. Aquino touched "some parts" of the government's stimulus package at Tuesday's celebration of the 20th anniversary of the Local Government Code at the Philippine International Convention Center (PICC) in Pasay City.
The Presidenty announced the "good news" at the PICC that the government would soon release the local government unit (LGU) support fund amounting to "not less than PhP6.5 billion".
Lacierda said the PhP6.5-billion fund was part of the PhP72-billion stimulus package.
Mr. Aquino said the government could not neglect the local government units which provide frontline services, especially during calamities.
"For demonstrating your skills and integrity the past year, I am sure that you will be able to provide big help to your constituents and your cities and municipalities," he said.
The President said the LGU support fund was being released in light of the reduction in the internal revenue allocation for LGUs since revenue collections slackened in 2009.
More changes
More measures are expected to be announced Wednesday and any changes to economic forecasts are also expected to be revealed this week.
The measures do not involve any extra budget requirements because government spending is running well behind target this year and this was cited as a factor in the economy slowing more than expected in the second quarter.
Since then, officials have said they would pump-prime the economy in the second half of the year, but repeated delays to the government's infrastructure program meant money allocated for those projects is unlikely to be fully used this year.
Instead, the government has identified other projects it can spend on in the final months of the year to make use of the extra spending room, one official said.
PhP20-B interest savings
"These are mostly infrastructure projects that were not included in the plan this year," said a senior government official who asked not to be named because the Office of the President has yet to make an official announcement.
"These projects will not require new debt," the official saidm adding the government could tap into interest savings of more than PhP20 billion this year.
The official said if these projects were realized, the country would have a better chance of meeting a growth target of 5 to 6 percent this year.
Expenditures for the eight months of the year amounted to PhP947.244 billion, just three-quarters of planned spending of PhP1.275 trillion for the first nine months of the year even after the pace of spending picked up in recent months.
The underspending has led to the deficit for the first eight months of 2011 being just 11 percent of the full-year total.
GROUPS BACK $5.9 MINING PROJECT
Philippine Daily Inquirer
10 October 2011
A number of business groups in Mindanao are throwing their support behind the proposed $5.9-billion Tampakan copper-gold project of Sagittarius Mines Inc., citing the many benefits that this could bring to Mindanao.
One of the groups, the Junior Chamber International - Durian City, noted that the mining industry could help spur economic growth in the country by attracting new investments, creating jobs and reducing poverty.
Mining companies just had to adhere to responsible mining practices that placed great emphasis on evironmental protection and preservation and on social equity, JCI Durian City said.
The Pagadian-ZDS Chamber of Commerce and Industry Foundation Inc. (PZCCIFI), on the other hand, noted that the $5.9 billion proposed mining project had the potential to generate $5.4 billion in additional national taxes and $2.2 billion in local taxes and royalties.
The group said it appreciated project proponent Sagittarius Mines Inc's (SMI) support for education, community health and environmental programs in the areas covered by its mining project.
JCI Durian City is part of the 6,000-strong Junior Chamber International Chapter in the Philippines while PZCCIFI is composed of business organizations and individuals in Zamboanga del Sur aiming to promote a positive investment climate in Mindanao.
Both groups are urging the Mindanao Development Authority to grant SMI's Tampakan copper-gold project flagship project status.
Other business groups supporting the call included the Regional Development Council XII, the Dipolog Chamber of Commerce and Industry, the Mindanao Development Council and the Metro-Cotabato Chamber of Commerce and Industry Foundation.
The proposed Tambakan project is covered by a financial and technical assistance agreement between SMI and the national government, through the Mining and Geosciences Bureau.
SMI documents showed that the Tampakan project area had the potential to produce 13.5 million tons of copper and 15.8 million ounces of gold.
The copper-gold mine was also projected to generate $37 billion in export earnings and 2,000 full-time jobs, based on SMI data. During the construction period, the project could provide employment to as many as 10,500 people, the majority of them members of the host communities.
PHILIPPINE ECONOMY SEEN TO DOUBLE BY 2020
Philippine Daily Inquirer
10 October 2011
The Philippine economy may grow 80 percent within nine years as anti-corruption efforts build momentum and tanslate into greater foreign direct investment inflows, according to DBS Group.
In a research titled "Asia 2020", the Singapore-based financial service group said that over the coming decade, economic growth will be respectable and trending toward 6 percent.
Such growth will depend much "on policy and whether the large labor pool and resource endowment - which include gold, nickel and copper - can be effectively tapped upon," the paper said.
"We hold a cautiously optimistic view of the economy and expect reform to proceed to a moderate rate," DBS added. By 2020, GDP will (in today's dollars) likely to be 80 percent larger, and income levels 45 percent higher than at present."
The group said that the Aquino administration has so far done a credible job in introducing reforms focused on fiscal discipline and public-private partnership (PPP) on infrastructure investments as well as population management and anti-corruption reforms.
Amid criticism that the government is not spending enough, Malacanang has limited deficit-spending to PhP34.5 billion in eight months to August, or about seventh of the PhP228.1 billion recorded in the same period of 2010.
Also, Malacanang expects to auction off the first of big-ticket PPP projects before yearend.
"A new structure for project approvals and impelementation is being established, which should complement the launch of PPP projects," DBS said. "Measures to counter corruption should raise investor confidence."
DBS noted that the savings rate has grown to 18 percent from 11 percent in 2004 adding that investment is beginning to follow the same path and that GDP should follow.
Further, DBS said the country's young population could prove to be an advantage although the still-high birth rate remains a challenge, with an additional 19 million people seen within the next nine years.
"To some extent, resources have been spent in accommodating a rise in population at the expense of other investment, and this may have imposed GDP growth," DBS said.
GOCC LAW BOOSTS PHILIPPINES' CHANCES TO GET RATINGS UPGRADE
Philippine Daily Inquirer
06 October 2011
The enactment into law of the bill seeking to reform government-owned and-controlled corporations (GOCCs) is seen boosting the country's chances of getting an investment-grade credit rising.
Bangko Sentral Governor Amando Tetangco Jr. said the GOCC Governance Act of 2011, which was expected to help improve the government's fiscal position through reduced losses by underperforming state firms, would also help improve investor confidence in the country's ability to meets its liabilities.
"The law will aid in the conduct of monetary policy as implementation of the law would reduce, it not totally eliminate, rent-seeking behaviour," Tetangco said in a statement.
On a similar note, Finance Secretary Cesar Purisima said the law would further strengthen the Aquino administration's push for good governance.
Purisima said the law would work well with the administration's anti-corruption, anti-tax evasion and anti-smuggling campaign.
The GOCC Governance Act of 2011, or Republic Act 10149, mandates the creation of the Governance Commission for Government-Owned and Controlled Corporation, which will evaluate the performance of state-owned firms.
The evaluation will cover various aspects, such as qualifications and compensation of staff, and efficiency of operations.
The commission has the power to pursue reorganization, privatization, merger, streamlining or even abolition of underperforming GOCCs.
Senator Frankilin Drilon is the bill's principal author.
Data from the government showed that subsidies granted to state-owned firms amounted to PhP17.4 billion in the first eight months of this year, rising by 87 percent year on year.
During the period, biggest recipients of government subsidies included National Food Authority and National Livelihood Development Corp.
The subsidies to supposedly self-sustaining GOCCs is causing a drag on the government's fiscal condition. With the GOCC Governance Act of 2011, the government is expected to limit its exposure to underperforming state-owned firms.
The country has been aiming at an investment-grade credit rating for years. Recently, the Philippines got two credit rating upgrades. First was by Moody's Investors Service, followed by Fitch Ratings.
GOV'T TO OPEN MORE INDUSTRIES TO FOREIGNERS
Philippine Daily Inquirer
03 October 2011
The government has committed to allow foreigners to invest in more industries and practice more professions locally by reducing the number of items in the Foreign Investment Negative List.
At the mid-year economic briefing last Friday, Economic Planning Secretary Cayetano Paderanga said this was one of the things that the government would be working on to make the local investment environment more attractive to foreign investors.
"Our aim is to make the Foreign Investment Negative List as short as possible. Those that will remain on the list are those that are covered by constitutional restrictions," Paderanga said.
National Competitiveness Council co-chairman Guillermo Luz agreed with Paderanga's statement, saying a shorter negative list would help jack up the country's competitiveness, and employment, saying this was not the right time to do so.
"We'll try to make the list as practicable as possible," he said.
American Chamber of Commerce of the Philippines senior adviser John Forbes further challenged the government officials on the panel, saying the negative list has not had changes in the past 20 years.
Finance Secretary Cesar Purisima countered this by saying that there had been some changes over the past years, including mining, which allowed 100-percent foreign ownership, and retail trade, which allowed full foreign ownership at a minimum paid-up capital of $2.5 million.
"Upwards of 90 percent of economic activities are open to foreigners. You keep looking at the 'empty' portion rather than the 'full' portion. The government does have to still work on this, but the list shouldn't stop foreigners from investing.," Purisima said.
Under the negative list, industries that did not allow any foreign ownership included mass media (except recording), retail trade enterprises with a paid-up capital of less than $2.5 million, cooperatives, private security agencies, small-scale mining, cockpits, firecrackers and pyrotechnics, and marine resource utilization in archipelagic waters, territorial seas, and exclusive economic zones.
The list also limited foreign ownership to 20 percent in private radio communications networks; 25 percent in private recruitment for both local and overseas employment, construction of defense-related structures, and repair of locally funded public works, except infrastructure or development projects covered by Republic Act No. 7718 and foreign-funded and foreign-assisted projects that undergo international competitive bidding; and 30% in advertising.
DEVELOPMENT OF NEW EXPORT MARKETS PUSHED
Philippine Daily Inquirer
03 October 2011
The Bangko Sentral ng Pilipinas urges Filipino exporters to intensify efforts in developing alternative markets and to invest more in enhancing the quality of their products, with demand in industrialized countries seen to remain weak for an extended period.
Demand for products from the Philippines and other emerging markets has slowed down this year as the United States and eurozone continue to suffer from the ill-effects of their fiscal problems.
Although the industrialized Western economies have implemented stimulus, the results fell short of the expected pace of recovery.
The BSP said Filipino exporters should step up efforts to improve competitiveness.
"They should be competitive both in terms of the quality of the goods they sell and in developing new markets for their products," BSP Governor Amando Tetangco, Jr. told reporters.
Tetangco made the statement as the inter-agency Development Budget Coordination Committee (DBCC), which sets the government's macroeconomic targets, started considering cutting the government's 10-percent export growth target for this year.
Latest export data from the National Statistics Office showed that the country generated $29.19 billion in export revenue in January to July this year, up by only 3.3 percent from $28.25 billion in the same period last year.
The slower-than-expected growth in exports in the first seven months was attributed largely to the soft demand from the United States and Europe, the Philippines' biggest export markets.
Export to the United States accounted for about 14 percent of the total, while exports to Europe accounted for about 17 percent.
Some exporters have asked the BSP to intervene more in the foreignn exchange market, specifically by buying more dollars to deliberately weaken the peso.
However, according to the BSP, its policy does not favor a weak or strong peso. What matters is that volatility of the peso is tempered so that disruptions to business are minimized, it said.
The BSP admits it buys or sells currencies in the market, but only to prevent a sharp and sudden drop of the peso.
DOTC UNVEILS 'HYBRID PPP' PLAN FOR BIG PROJECTS
Philippine Daily Inquirer
30 September 2011
The contract term for all future government infrastructure projects will become more "consumer friendly", making them more affordable for all Filipinos without compromising the quality of the structures, according to the Department of Transportation and Communications.
Because the government's fiscal situation has been improving, the state itself can now afford to take on major infrastructure projects without tapping funds from private companies that are out to make profits, DOTC Secretary Manuel "Mar" Roxas II said.
"We are reconfiguring the financing of projects so we can avail of long-term, low-interest capital available to the government," Roxas said Thursday.
The DOTC is the implementing agency for several of the Aquino administration's priority projects. These include the extension of Light Rail Transit (LRT) lines and the development of provincial airports in high-growth areas.
Assistance
Instead of asking private companies to spend for the construction of these big-ticket projects, the DOTC has decided to take official development assistance loans offered by multilateral lenders at low rates, Roxas said.
"Foreign lenders are competing with each other to lend us money. For the LRT line 1 extension to Cavite and the line 2 extention to Antipolo, JICA [Japan International Cooperation Agency] and Koica [Korea International Cooperation Agency] are both interested," Roxas said.
Contracts for the operation and maintenance of these facilities - once completed - will be auctioned off to private firms.
The scheme, which Roxas described as a hybrid public-private partnership program, would translate to significantly lower "user fees" such as highway toll or train ticket prices for consumers.
"This will be our default option," he explained.
Access to foreign capital
Early next year, Roxas said, the DOTC would bid out construction contracts for parts of the Laguindingan International Airport in Mindanao, and the Puerto Prinsesa Airport in Palawan.
Other projects will have to undergo feasibility and detailed engineering studies before being put on the auction block.
Roxas, speaking at the sidelines of the Association of Southeast Asian Nations (ASEAN) 100 Leadership Summit in Makati on Thursday said that because of the Philippines' good credit standing, the government now has access to large amounts of foreign capital.
According to latest government estimates, the government's full-year budget deficit may likely fall "well below" the state's self-imposed ceiling of around PhP300 billion, he said.
Roxas attributed the improvement in the country's finances to "prudent spending' by all government agencies following President Aquino's lead.
"Because of this we can borrow 30-year money at an interest rate of 1 percent," he said. "But if private companies take on the projects, they can't borrow money for interest rates that low. And of course, they'll have to make a profit as well."
Reconfigured
Roxas said adopting the "hybrid PPP" scheme would put an end to "sweetheart deals" where private firms would be guaranteed exorbitant profits by the government, regardless of whether the facilities are operated efficiently.
A prime example of these questionable projects is the current contract for the Metro Rail Transit line on EDSA. He said the consortium that built the train line was assured of hefty profits, even if revenue growth stayed flat.
As a result, instead of the MRT line being able to pay for itself, the government was forced to shell out about PhP7 billion a year in subsidies to the private consortium because passenger fares had to be kept artificially low.
The DOTC, under Roxas predecessor Jose "Ping" de Jesus, earlier tried to bid out a combined operations and maintenance contract for the LRT line 1 and MRT lines. But because all projects have been reconfigured, the combined operations contract for the two train lines has now been thrown out, Roxas explained.
PHILIPPINES' MANUFACTURING OUTPUT RISES
Philippine Daily Inquirer
29 September 2011
The growth in the value and volume of manufacturing output accelerated in July, reaching 6.7 percent and 6.8 percent on year, respectively, according to the National Statistics Office.
NSO data show that in July, growth in value improved from 3.5 percent in June while volume grew at a faster pace from 1.2 percent.
Results from the agency's latest monthly integrated survey of selected industries (MISSI) - which covers 20 major industries - showed that the index grew faster as eight industries recorded two-digit increases in output value.
Leading the gainers were furniture and fixtures with 46.6 percent and publishing and printing with 42 percent.
Also growing in two-digit rates were petroleum products (31.2 percent), paper and paper products (28.8 percent), rubber and plastic products (17.7 percent), beverage (14.3 percent), chemical products (13.1 percent) and basic metal products (11.1 percent).
Other gainers in July were food manufacturing, footwear and wearing apparel, transport equipment, miscellaneous manufactured items, and leather products.
On the other hand, seven sectors showed reduced output value led by non-electrical machinery (-34.7 percent), and wood and wood products (-28.1 percent).
Other losers were electrical machinery, non-metallic mineral products, textiles, tobacco, and fabricated metal products.
In terms of volume, significant increases were observed in seven industries led by furniture and fixtures (134.7 percent), and publishing and printing (42 percent).
Also showing double-digit volume growth rates were paper and paper products (32.9 percent), beverages (18.8 percent), miscellaneous manufactures (14.3 percent), chemicals (12.9 percent), and rubber and plastic products (12.8 percent).
Other volume gainers were electrical machinery, footwear and wearing apparel, petroleum products, transport equipment, leather and basic metals.
There were seven losers in terms of volume led by non-electrical machinery (-32.9 percent), wood and wood products (-28.1 percent) and textiles (-10.8 percent).
Other losers were food manufacturing, tobacco and non-metallic minerals, and fabricated metals.
PHILIPPINE TECH COMPANY EYES HUGE CHUNK OF ASIA-PACIFIC PIE
Philippine Daily Inquirer
25 September 2011
Homegrown software firm Morphlabs Inc. is poised for massive growth in the Asia-Pacific region after receiving an infusion of $5 million in capital from several foreign investmnet funds earlier this month.
In a recent briefing, the company said the region's bright economic prospects, combined with the relatively low adoption of state-of-the-art corporate information technology services, made for the perfect formula for growth of software firms like Morphlabs.
"Over the past year, Morphlabs has forged strategic partnerships to innovate, build and push the boundaries...in order to democratize access to enterprise-class efficient computing for IT organizations," the company's founder Winston Damarillo said.
Morphlabs, which is majority-owned by Filipinos but is based in California, specializes in delivering "cloud computing" services to companies around the world.
"We're thrilled to use this round of funding to grow our team and to deliver highly available cloud environments for enterprises that might not otherwise be able to benefit from the cloud because of the challenges associated with existing public and private cloud deployment options," Damarillo said.
Cloud computing services refer to software or infrastructure resources that are leased or rented out to corporations. These allow companies to access state-of-the-art technologies and high-powered computing services without investing in expensive equipment.
The company said it expects to raise more cash from investors that can be used to finance growth in Southeast Asia.
In a recent fund-raising exercise, the company gained $5 million in additional funding from strategic partners' BBT of Japan and a private Indonesia-based investor group.
"Morphlabs understands that organizations must make intelligent capital investments in an emerging market, and its pay-per-use model reflects a commitment to fueling growth for Southeast Asian companies," company president Singgih Tjahjono said in a statement.
Early this month, the company launched its mCloud Data Center Unit solution, "bringing the most modern dynamic infrastructure services to the fastest growing countries in the world."
The new mCloud service, Damarillo said, removes the complexities of implementing the best cloud computing solution on the market by leveraging an infrastructure blueprint and binding together mCloud software with the best-of-breed building blocks to deliver mission critical capabilities.
Morphlabs said it has partnered with hardware manufacturer Dell and local phone firm Globe Telecom for the launch of mCloud solution.
The company said its new service was recently hailed as one of the most advanced in the market today, after being named one of three finalists in the recent interop Awards in San Francisco. The company went up against global giants IBM and VMWare for the recognition.
PHILIPPINE ECONOMY SEEN TO WITHSTAND CAPITAL FLIGHT
Philippine Daily Inquirer
26 August 2011
The Philippines can withstand potential capital flight resulting from uncertainties in the global economy, aided by its reserves of foreign currencies that have grown significantly over the past few years.
This was the view of Citi, which cited the Philippines among other emerging Asian countries as having the resources needed to counter the ill-effects of a pullout of portfolio capital by foreign investors.
"China, Taiwan, Malaysia, the Philippines and Thailand have strong reserve coverage," the international financial institution said, noting that the reserves of the Philippines have registered notable improvement in recent years.
Citi gave this comment in a paper on its analysis of the strength of selected Asian economies in terms of weathering a speculated capital flight.
The bank cited growing reserves of foreign currencies of some countries in the region. In the case of the Philippines, its gross international reserves (GIR) stood at a new historic high of $71 billion as of end-July.
According to the Bangko Sentral ng Pilipinas, the amount was sufficient to cover 10.6 months' worth of the country's imports and was 6.1 times the country's foreign currency denominated debts maturing within a year.
A rule of thumb says that foreign exchange reserves equivalent to at least four months' worth of a country's import are considered comfortable.
In Citi's view, the Philippines and similarly situated emerging Asian economies would still be able to promptly meet their foreign currency-denominated obligations and import requirements even under a scenario of foreign capital flight because of their comfortable levels of GIR.
Since last year, the Philippines and other emerging markets in the region have witnessed a surge in inflows of foreign portfolio investments following the huge gap in the growth performance between industrialized countries in the West and developing economies in the East.
The fact that developing countries in Asia have driven global growth in recent years has enticed foreign portfolio investors to place funds in this part of the world.
In the case of the Philippines, net inflow of foreign portfolio investments reached $299.55 million in July, rising more than 20 times from the $14.33 million recorded in the same month last year.
However, some economists are of the view that the steep rise in foreign portfolio investments in emerging markets may be reversed given the lingering uncertainties in the global environment, led by the anemic growth performance of the United States and some countries in the euro zone.
The US Federal Reserve earlier this month said it might keep interest rates at record lows until 2013, citing the need for more stimulus for the American economy amid its lingering problems of high unemployment and anemic consumer spending.
Countries in the eurozone are confronted with burgeoning debts that have necessitated bailout packages from the European Union and the International Monetary Fund.
Some economists said that should these problems in the global economy persist, foreign portfolio investors might eventually decide to keep their funds safe by staying liquid by pulling out investments even from emerging markets.
NEDA CHIEF SEES Q2 GDP GROWTH AT 4.5% TO 5.5%
25 August 2011
MANILA, Philippines - The economy likely grew between 4.5% and 5.5% in the second quarter from a year ago, supported by strong farm output, the National Economic and Development Authority (NEDA) said on Thursday.
"The increase in crop production due to the recovery from the El Nino effects last year contributed to the strong growth in agriculture," NEDA director-general Cayetano Paderanga said in a statement.
Paderanga, however, said that growth of the industry and services sectors weakened compared to last year. he said the slowdown in manufacturing weighed on industry growth, while the services sector was affected by contractions in vehicle sales following supply chain disruptions in Japan.
Nonetheless, he said overall second-quarter growth was attained despite external shocks from the natural disasters in Japan, the debt woes in the US and Europe, and the social unrests in the Middle East and North Africal.
The government is targeting gross domestic product (GDP) growth of 7% to 8% this year after a 7.6% expansion in 2010, but many economists predicted growth would just be 5%. Annual GDP growth during the first quarter of 2011 was 4.9%.
PINOYS ABROAD TAPPED TO IMPROVE MSME IN PH
ABS-CBN News
19 August 2011
MANILA, Philippines - The Department of Trade and Industry (DTI) included overseas Filipinos in the recently-launched 2011-2016 Micro, Small and Medium Enterprises (MSME) Plan.
The inclusion of overseas Filipinos comes as the DTI's Philippines Trade Training Center began its weekly training sessions targeting overseas Filipinos.
According to the plan, overseas migration "is an important factor in economic development" but its potential "had not been tapped".
Thus, the plan said that overseas migration "creates opportunities for MSME development".
These opportunities come in three ways, the plan wrote, including the following:
>Migration raises potential capital for the establishment of MSMEs in the countryside. Remittances can be channeled towards entrepreneurial endeavors such as agri-business, while helping further develop the MSME sector.
>Migration can also improve the demand for products and services by MSMEs in both the Philippines and in host countries;
>The skills and talent of overseas Filipinos could lead to new forms of businesses, knowledge transfer, and raise the productivity and efficiency of MSMEs.
MSMEs make up 99.6 percent of total establishments in the Philippines, contributed 61.2 percent of the country's total employment and 35.7 percent of total value added.
The introductory part of the 2011-2016 MSME Plan, developed by the SME Development Council, admitted the "growth of the MSME sector has not been vigorous enough to propel the economy".
DTI-Philippine Trade Training Center and Department of Labor and Employment, through the National Reintegration Center for OFWs, are jointly training overseas Filipino workers to become entrepreneurs and exporters, thus explaining the weekly two-day training sessions of PTTC for overseas Filipinos.
"These free training sessions consist of key topics on how to start a business, entrepreneurial education activities where they learn the business cycle, market supply and demand, and selling as well as preparing the business plan," a DTI release wrote.
The remaining training sessions will be held on August 16 and 17; August 23, 24 and 31; September 1; September 6 and 7; September 13 and 14; and September 20 and 21.
Migration, in the MSME Development Plan, is one of the four thematic areas together with gender, corporate social responsibility, and climate change.
In 2010, a report by the Private Sector Promotion Program of the German International Cooperation (GIZ) recommended the inclusion of overseas Filipinos in the then prospective 2011-2016 MSME Development Plan.
"There is ample international evidence supporting the case that ... remittances from migrants can be harnessed for generating local investment opportunities,: the GIZ report titled "Integrating Migration as a Competitive Advantage in the MSME Development Plan," authored by political scientist Jean Franco, said.
Integrating overseas migration in the new MSME Development Plan will see the sector try to weave out interventions related to the four key "outcome portfolios' of the MSME Plan. These are improving the business environment, access to finance, access to markets and productivity and efficiency.
PHILIPPINES MAY SOON OWN VAST GAS-RICH AREA
Philippine Daily Inquirer
16 August 2011
BENHAM'S RICHES. The Philippines is the only claimant to 13 million hectares of an undersea region that contains huge natural gas deposits.
The Philippines will gain 13 million hectares in additional territory, an area slightly smaller than Luzon, should the United Nations approve nest year the government's claim on a region off the coast of Isabela and Aurora, Environment Secretary Ramon Jesus Paje said on Monday.
Paje said the undersea region, called Benham Rise, could turn the Philippines into a natural gas exporter because of the area's huge methane deposits.
Studies conducted by the Department of Environment and Natural Resources (DENR) for the past five years indicate large deposits of methane in solid form, Paje said after a Senate budget hearing.
The government is only awaiting a formal declaration from the UN Convention of the Law of the Sea (Unclos) that Benham Rise is on the country's continental shelf and therefore part of its territory, Paje said.
Legal Basis
Once the Unclos establishes that Benham Rise is part of the Philippines, "we would have legal basis to enter into exploration agreements with private companies to explore ....(the area's) resources," said Sen. Franklin Drilon, chair of the chamber's finance committee.
Drilon said a favorable Unclos declaration would mean "increasing our territory from present 30 million hectares to possibly 43 million" with the inclusion of Benham Rise.
Discussion over Benham Rise generated excitement especially after Paje said that Philippine representatives were just awaiting one more meeting "to answer questions" before a special Unclos committee.
Only Claimant
Paje said there was no reason for the Unclos committee not to issue a decision favorable to the country "since we are the only claimant, unlike in western side (where the Spratly Islands are)."
"We have submitted a claim under (Unclos) sometime in late 2008. We got a reply from the UN lately (asking us) to answer some questions. They intend to pass a resolution sometime in mid-2012 to approve our claim (that it is) part of the Philippine continental shelf," Paje told reporters after the hearing.
Records showed that the Philippine officially submitted a claim with the UN Commission on the Limits of the Continental Shelf in New York on April 8, 2009.
Davide Submission
Hilario Davide, then Philippine ambassador to the United Nations, filed the country's partial submissions with the commission.
The United Nations says the continental shelf is "the seabed and subsoil of the submarine areas that extended beyond its territorial sea" up to 370 km (200 nautical miles) from the archipelagic baseline. An extended continental shelf goes farther than 370 km.
The Philippines claims that Benham Rise is an extension of its continental shelf.
Paje said Benham Rise was within the country's 370-km exclusive economic zone.
Americal Geologist
The environment secretary said an American geologist surnamed Benham discovered the area that was between 40 and 2,000 meters below the waterline in 1933.
"But we are able to define categorically that it is attached to our continental shelf only recently. We have proven (to) Unclos that it is attached. So now the UN is considering it for decision sometime in 2012," Paje said.
He said gas deposits in the area would enable the country to achieve energy sufficiency.
"Benham Rise is very relevant because of its gas deposits (which have been) confirmed particularly by (the) National Mapping Resource Information Agency. It has given us the data that (the area) contains solid methane. We have not explored it but we have found nodules of methane in the surface and this is very important to us," he said.
Kalayaan, Scarborough
The Kalayaan Island Group, which is part of the disputed Spratly Islands and Scarborough Shoal, both located in the West Philippine Sea (South China Sea) and claimed by the Philippines, are also believed to contain oil and natural gas.
Paje said there was the possibility that the country could export gas in the future.
The secretary added that there would be a demand for gas deposits in Benham Rise "because it's much cleaner than (other) fossil fuels."
The DENR formally submitted its proposed PhP16.99-billion budget for 2012 to the Senate finance committee.
3% GROWTH IN POWER DEMAND OPENS MARKET FOR NEW IPPs
03 August 2011
MANILA, Philippines - Projections that the Philippines will need an additional 1,200 megawatts of generating capacity in Luzon, coupled with official estimates that demand would exceed supply two years before President Benigno S. Aquino III end his six-year term, open opportunities for new independent power producers (IPPs) to enter the market, analysts said Wednesday.
Brokerage firm Philippine Equity Partners Inc. analyst Edser Trinidad said projections by the University of the Philippines National Engineering Center that electricity demand in Luzon would grow by 3% annually justify further investments in the generation business by IPPs in the next five years.
Trinidad said the additional investments in the generation business were needed to ensure reliability and least cost-power supply even under moderate GNP growth assumptions of only 5 percent annually, well below the government target of 7-8 percent.
Power outages would occur if the government meets its GNP growth targets, thus justifying decisions made by new IPPs such as Aboitiz Power Corp., PNOC-Energy Development Corp., San Miguel Corp., First Generation Power Corp. and Semirara Corp. to invest in the generation business.
Energy Secretary Rene Almendras said the government is also concerned over the tight electricity supply situation in Mindanao especially because reserve energy margins remained below the targeted 21 percent, which could plunge the island into daily brownouts again if a power plant or unit breaks down.
In 2010, a dry spell brought by El Nino caused water levels to go critical in Mindanao's hydro plants, causing a rotating daily brownout that stunted a three-fold increase in its economy in the last years of the Arroyo Administration.
Even with plans by Conal Holdings Inc., owned by the Alcantara-led Alsons, Inc., to put up two 200-megawatt coal-fired power plants in Sarangani and Zamboanga, and a PhP25-billion plan by Aboitiz Power, owned by the Aboitiz family which divested its maritime cargo business to go into the energy industry, to construct a power plant in Davao, power demand in Mindanao is expected to exceed supply by 2014.
Almendras said the Department of Energy is considering the transfer of oil-fired power barges and the re-commissioning of a 35-megawatt thermal plant in Iligan to offset a very tight electricity supply situation in Mindanao as power supply margins last summer had breached the required 21 percent despite the full generation performance of its hydro-electric power plants.
Local economists have already bewailed the current high electricity costs in the Philippines as the major contributor to the rapid decline in the country's competitiveness in the world market, with neighbors like Vietnam, Malaysia and Thailand offering rates as low as 5-7 US cents per kilowatt-hour against the Philippines' 23 US cents.
PHILIPPINES IMPROVES CHANCES BEING CHINA ALTERNATIVE
Philippine Daily Inquirer
31 July 2011
The government's aggressive stance against corruption and the country's recently upgraded credit ratings have made the Philippines a stronger contender in the race to become a viable investment alternative to China.
Ralph Timmermann, counselor and deputy head of mission at the Embassy of the Federal Republic of Germany in Manila, said there had been some inquiries from German firms regarding investing in the Philippines as part of their quest for an alternative investment destination.
"We see interest coming from these companies. The first wave of investments went to China, being the most important destination in Asia. But there's now an increasing interest to diversify to other countries and not depend solely on China," Timmermann said in a recent interview.
Locations being eyed, he said, included Vietnam, Indonesia, Malaysia and the Philippines.
Due to recent positive developments in the economy, Timmermann said the Philippines has increased its chances of being picked as a China alternative.
"The Philippines have very good chances because of its size and its population. It has an interesting market and it has well educated English speakers, so it's a good place to invest in," Timmermann said.
German-Philippine Chamber of Commerce and Industry Inc. president Reiner Allgeier said one concrete example of German firms' interest in the country was the ongoing $30-million expansion program of Lufthansa Technik Philippines Inc.
A new hangar is now being built to enable the company to service Airbus 380s, which have wing spans of almost 80 meters. Once completed, this facility will make the Philippines one of only a handful of locations in the world that can service such large jets.
Allgeier said most German companies were also looking at the renewable energy and business process outsourcing sectors as the most viable industries for their investments.
The Philippines' thrust to increase the share of RE in the power mix had piqued the interest of German investors, specially those in the solar sector, he said.
In the BPO sector, Timmermann said the Philippines had the potential to host more centers with agents taking calls in languages other than English, possibly including German.
"Filipinos are very capable of learning languages, and when they do speak in another language, there's almost no detectable accent. That is ideal for BPO services," he said, adding that the government should capitalize on such innate competitive advantages to expand the local BPO scene to beyond United States-based clients.
CITI: PPP STILL KEY TO GOV'T INVESTMENT THEME
Philippine Daily Inquirer
26 July 2011
President Aquino may have left out the Public-Private Partnership (PPP) program for infrastructure-building when he delivered his State of the Nation Address (S0NA) before Congress on Monday, but it remains a key investment theme for the Philippines in 2012, according to American banking giant Citigroup.
In a research paper issued Tuesday, Citigroup said the President's speech during the opening of the 15th Philippine Congress was consistent with the popular broad themes of his administration: curbing corruption; poverty reduction; and fiscal prudence and efficiency.
"The SONA, however, was surprisingly silent on the PPP infrastructure agenda, [Mr. Aquino's] centerpiece program and one of the key catalysts for a continued market rerating," the bank said.
Citigroup believes that the President may have been exercising caution when he omitted the PPP in his speech because the Transport and Communications secretary has just assumed office.
"Meanwhile his reference to the setting up of new infrastructure project approvals and implementation to avoid anomalies at the Department of Public Works could be taken as a reason for the PPP delay," the research said.
Also noted in the speech was the "strong" interest of 140 companies in oil and energy exploration projects.
"This appears to imply that once the structures are in place, the PPP can move at a faster pace. The past month saw the announcement of a new timetable for the bidding and awarding of two road projects under the PPP, which are becoming to be more a 2012 story," Citigroup said.
Despite the delays, Citigroup said the private sector remained proactive in pursuing projects, which indicated that infrastructure was still a key investment theme.
"We find Metro Pacific (Investments) as most proactive in pursuing opportunities within and outside the PPP. It has submitted an unsolicited bid for the (South North Expressway) connector road and has offered to acquire the government's stake in the MRT (Metro Railway Transit) concessions," the research said.
Meanwhile, Citigroup said the speech highlighted the administration's stance on corruption and poverty, which had led to positive outcomes including cost savings. The bank in particular cited the government's anti-poverty initiatives, such as expanding conditional cash transfers to marginalized segments, health care and education programs.
"We note that these are key factors that enabled President Aquino to maintain his 'good' public net satisfaction rating (based on the Social Weather Station survey), well above the rating of past administrations," the research said.
Bu the bank noted that pending fiscal legislation received a less than healthy push from the President. Aside from the 2012 budget, it observed that the President had asked Congress' support on legislation that would improve social services, environmental management, disaster preparedness, compensation for martial law victims and strengthen selected agencies.
"No mention was made on the urgency to pass fiscal reforms, such as the excise tax reform and rationalization of fiscal incentives," the research said.
OFW INFLOWS UP 6% TO $6.2 BILLION IN 4 MONTHS
The Philippine Daily Star
16 July 2011
MANILA, Philippines - Remittances from overseas Filipino workers (OFWs) climbed six percent in the first four months of the year after recovering from a steady slowdown since November last year on the back of strong demand for skilled Filipino workers, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
BSP Governor Amando M. Tetangco, Jr. said that remittances from OFWs reached $6.21 billion during the first four months of the year or $350 million higher than the $5.86 billion recorded in the same period last year.
Tetangco said major sources of remittances in the first four months of the year were the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, and Italy.
The year-on-year growth in OFW remittances slowed down for four straight months after posting a 10.5 percent growth in November; 8.1 percent in December; 7.6 percent in January; 6.2 percent in February, and 4.1 percent in March due to disruptions caused by the tensions in the Middle East and North Africa (MENA) states as well as the disasters in Japan.
The monthly growth recorded in March was the slowest since August 2009 when remittances posted a monthly growth of 2.8 percent.
However, remittance growth finally improved to 6.3 percent to $1.615 billion in April from $1.52 billion in the same month last year.
Tetangco reported that remittances from sea-based OFWs jumped 12.2 percent whole remittances from land-based workers increased by 4.4 percent due to the steady demand for skilled Filipino workers as well as the expanding remittance centers abroad.
"Remittance flows continued to draw support from the steady overseas demand for Filipino skills and expertise and the continuing efforts of banks and other financial institutions to extensively promote and improve upon the financial products and services they offer in the remittance market," the BSP chief stressed.
Data obtained from the Philippine Overseas Employment Administration (POEA) indicated that demand for Filipino workers abroad remained strong as job orders reached 269,386 in the first five months of the year of which 32 percent or 86,300 were already processed while 68 percent or 183,086 are still to be filled up.
The job orders were intended for the manpower requirements in Saudi Arabia, UAE, Qatar, Kuwait, Taiwan and Hong Kong among other countries.
Moreover, the POEA also reported that new rules have been issued to strengthen the Temporary Foreign Workers Program (TFWP) in Canada effective April 1 to better protect foreign workers and maintain the Canadian government's focus on alleviating temporary labor shortages.
Tetangco added that banks and other financial institutions have also been actively introducing innovative remittance products by adding a remittance feature to credit cards which was recently introduced in the market.
The new innovations provide reliable services to enable OFWs to transfer money swiftly and securely to relatives back home.
"These initiatives are expected to encourage the use of the formal channels to capture a bigger share of the global remittance market", he explained.
PHILIPPINE STOCKS NEAR RECORD HIGHS
Philippine Daily Inquirer
14 July 2011
MANILA, Philippines - Local stocks resumed their climb to nearly record-highs on Thursday, boosted by news about the strong economic growth in China and expectations of a third round of monetary easing by the US Federal Reserve.
The main-share Philippine Stock Exchange index added 19.55 or 0.44 percent to finish at 4,423.55 rising for the second consecutive session.
The index is now nearing the record high of 4,439.61 hit on July 5. Since the start of the year, the index has advanced by 223.55 points or 5.3 percent.
The day's upswing was led by the financial counter, which gained 1.2 percent. On the other hand, the mining/ oil counter succumbed to some profit taking, resulting in a 0.39 percent index decline.
Value turnover amounted to PhP5.26 billion. There were 76 gainers as against 63 decliners while 45 stocks were unchanged.
Metrobank, Philex, Meralco, ITCSI, DMCI, BDO, and AGI led the index higher, GERI, Lodestar, PNB and East Asia also gained in heavy trade.
On the other hand, the index was weighed down by profit-taking on Lepanto A and B, BPI, SM Prime, EDC and Megaworld. Manila Mining also declined.
Local equities shared in the optimism seen in offshore markets given rising hopes for a third round of quantitative easing through bond buy-backs by the US Fed as well as news of China sustaining strong domestic growth.
Overnight, the Dow Jones Industrial Index was up by 44.73 points or 0.36 percent to 12,491.61.
NOKIA SIEMENS OPENS R&D FACILITY IN QUEZON CITY
Philippine Daily Inquirer
11 July 2011
MANILA, Philippines - One of the world's largest telecommunications companies has opened a research and development (R&D) facility in Quezon City that is seen employing thousands of information technology (IT) professionals in the next three years.
The PhP2-billion research facility named NetworkLabs - owned by Nokia Siemens Networks (NSN) - will be the biggest of its kind in Southeast Asia. It is expected to make the Philippines, particularly Metro Manila, a major R&D center in the region competing with the likes of India and mainland China.
"NSN chose the Philippines for NetworkLabs in Asia among other countries because of its confidence in the country's vast resources of skilled engineering students and graduates from reputable universities," NSN Asia Pacific head Paul Tyler said on Monday.
Tyler said the company aimed to forge partnerships with the country's top engineering schools like Mapua Institute of Technology, De La Salle University, University of Sto. Tomas, University of the Philippines and Ateneo de Manila University.
This will be done to ensure the ample supply of talent that will drive NetworkLabs' growth in the years to come. "NSN aims to provide the opportunity for Filipino engineerings to showcase their skills and knowledge on a global scale without having to leave their families yet benefit from the training, work exposure and globally scaled challenges NetworkLabs has to offer," Tyler said.
Employees at the new facility will work on developing new technologies that will support advancement in third-generations (3G) and fourth-generation (4G) wireless network technologies. These are the main platforms used today to deliver high-speed wireless Internet and connectivity services by phone firms around the world.
Aside from developing new software solutions from NSN, NetworkLabs will also provide technical support for the group's customers around the world.
NSN says about five billion people will be connected to each, thanks largely to 3G and 4G technologies, by 2015.
"The establishment of NetworkLabs will further enhance the presence of NSN in the Philippines and heighten the company's thrust to solve the 4G challenge," NSN East Asia Customer Operations head Ashish Chowdhary said.
In a separate statement, NSN Philippines country director Cesar Castro said the NetworkLabs facility would promote and strengthen the Philippine IT sector by taking the lead and making a significant investment in the country.
He said the company would hire 500 workers by the end of this year and the count would double by 2012.
"By spearheading the effort, the NetworkLabs will encourage other companies to bring their R&D more to the Philippines. The company will be the pioneer in a Silicon-Valley like environment where IT incubation start-up companies provide new and innovative software solutions. This will help strengthen the Philippine IT and telecommunications industry," Castro said.
PHILIPPINE ECONOMY LIKELY GREW BY 6% IN Q2 - RESEARCH
Philippine Daily Inquirer
07 July 2011
The Philippine economy likely expanded by nearly 6 percent in the second quarter, and should grow even faster pace of 6.5 percent in the second half as the United States and Japan get back on track, according to a joint research by First Metro Investment Corp. and the University of Asia and the Pacific.
"We have become more bullish on the economy for the coming quarters, as both new economic indicators and business sentiment have turned positive," said the FMIC-UA&P research issues Thursday.
The study said that Philippine exports expanded at a double-digit pace in the second quarter given the strength in East Asia and the Association of Southeast Asian nations.
Export earnings are expected to further accelerate this second half as the economies in the region expand at a faster pace due to heightened domestic spending.
It added that US and Japan's healthy growth should also boost demand for Philippine products.
The research also expected remittances, a key driver of the domestic economy, to have grown by over 5 percent in the second quarter. Money sent home by Filipinos living and working overseas is in turn seen providing an additional boost to the economy, especially if the peso depreciates slightly or remains stable against the US dollar.
"The peso-dollar rate is likely to remain volatile in second half as a credible and lasting solution to the Greek debt problems is not expected to emerge; it will have a slight appreciation bias by the fourth quarter as more foreign investments get attracted to the robustness of the economy," FMIC-UA&P said.
The research also sees stable inflation for the year, even as the central bank;s 5-percent inflation ceiling may be breached this second semester.
Given the inflation outlook, the research said the Bangko Sentral ng Pilipinas may hike rates by another 50 basis points.
"The effect on long-term rates, as empirical evidence shows, will be minimal, and likely to be more than offset by continuing liquidity expansion driven by the sizable domestic savings," the research said.
Given this favorable view on the economy, FMIC-UA&P is upbeat on the fixed-income assets and equities.
On fixed income, it said the next few months should show better results as government starts to pump prime and borrow more funds from the money market, resulting in more supply in the market.
FITCH GIVES 'STABLE' OUTLOOK FOR PHILIPPINE BANKS
Philippine Daily Inquirer
07 July 2011
SECURE CREDIT RATINGS. The Philippine banking sector was assigned a stable outlook by Fitch Ratings on Wednesday, assured of no downgrade for at least a year.
Fitch Ratings assigned a "stable" outlook for the Philippine banking sector, citing the favorable impact of a growing economy on the industry's financial performance.
A "stable" outlook indicates security of credit ratings from being downgraded, at least within a year.
Fitch said an improving economy would drive demand for loans and other services provided by banks, in the process boosting their income.
"With a satisfactory economic backdrop, the agency expects banks' lending and fee-based activities to expand in 2011, although treasury gains may ease amid rising interest rates," Fitch said in its latest report on the Philippines.
The outlook on the banking sector was anchored on Fitch's projection that the Philippine economy would grow between 5 and 6 percent this year, consistent with the government's own forecast.
The credit rating firm also cited the comfortable level of liquidity of the country's banking sector, and this would help protect it from a crisis similar to that experienced in industrialized countries.
"In Fitch's view, capital and liquidity buffers are crucial in helping banks preserve their credit profiles in the event of a renewed global downturn, given the fragile economic recovery globally," Fitch said.
However, Fitch said the country's banking industry faces risks including the relatively low capital cover for foreclosed properties. It said improving provisioning for these assets is one area Philippine banks must focus on.
Still, Fitch recognized the country's banking sector for being able to survive the latest global turmoil.
"All the rated Philippine banks have weathered the global economic turmoil in 2008/2009 rather well, with credit costs easily covered by earnings and capital intact," Fitch said.
The "stable" outlook on the Philippine banking sector came amid continually rising resources of the banking sector and growing bank lending.
Latest documents from the Bangko Sentral ng Pilipinas showed that outstanding loans by commercial banks amounted to PhP2.4 trillion as of end-April, up 14.2 percent year on year.
Fitch's issuance of a "stable" outlook on the country's banking sector came after it decided last month to raise the country's credit rating on foreign debt from two notches to a notch below investment grade, or from BB to BB+.
The credit rating firm cited the Philippine government's improving fiscal situation and the growing economy for the improved ratings.
DOMESTIC TRADE UP 36.6% IN Q1
Philippine Daily Inquirer
07 July 2011
The value of goods traded within the country in the first quarter of 2011 increased by 36.5 percent year on year to PhP127.91 billion from PhP93.7 billion due to the modest growth of the local economy, according to the National Statistics Office.
Volume shipments during the period, however, increased at a slower pace of 6.4 percent to 4.51 million tons from 4.14 million tons in the same quarter of 2010.
NSO data on the flow of commodities among the country's regions are used as basis in the formulation and implementation of various regional development programs, like countryside development and port planning.
From January to March this year, when total domestic output or gross domestic product grew by 4.9 percent, 99.8 percent of the volume of goods was transported by sea.
In terms of value, commodities moved by ships accounted for 99.5 percent of the total during the quarter.
Of all goods traded in the first quarter, food and live animals contributed the largest value at PhP38.15 billion, or 29.8 percent of the total.
Other top traded goods were machinery and transport equipment, with a share of 20.8 percent, or PhP26.63 percent billion; manufactured goods classified by inputs, 13.4 percent or PhP17.1 billion; and mineral fuels and lubricants; 11.5 percent, or PhP14.7 billion.
The National Capital Region (NCR) accounted for the biggest share of domestic trade valued at PhP33.48 billion, or 26.2 percent of total.
Following the NCR were Central Visayas with PhP18.67 billion, or 14.6 percent; Western Visayas, PhP17.27 billion, or 13.5 percent; Eastern Visayas, PhP13.97 billion, or 10.9 percent; and Northern Mindanao, PhP13.02 billion, or 10.2 percent.
Cagayan Valley contributed the least to domestic trading with a value of PhP58,000 during the first quarter.
Further, Central Luzon continued to show the most favorable quarterly trade balance with a surplus of PhP11.06 billion, meaning it exported more to other regions than it imported.
Other regions that posted domestic trade surpluses above PhP1 billion were Eastern Visayas, PhP6.2 billion; NCR, PhP4.21 billion; Western Visayas, PhP2.5 billion; and Soccskargen, PhP2.11 billion.
Central Visayas reported the worst trade deficit with PhP9.27 billion while Zamboanga Peninsula had PhP4.53; Caraga, PhP4.28 billion; Calabarzon, PhP3.28 billion; Mimaropa, PhP1.74 billion; and Davao, PhP1.31 billion.
WORLD BANK HAILS STEADY PHILIPPINE GROWTH
06 July 2011
MANILA, Philippines - The World Bank on Wednesday praised the Philippines for its steady economic growth despite the global economic shocks and hailed reforms by the government of President Benigno Aquino III.
In its quarterly update, the bank said it expects Philippine economic growth to stabilize at 5 percent this year and rise to 5.4 percent in 2012. The economy grew 7.6 percent last year.
Manufacturing, construction, buoyant metal prices as well as a booming business process outsourcing industry are expected to be the main growth drivers, said World Bank senior economist Eric Le Borgne.
The body also cited potential gains from reforms put in place by Aquino who was elected in May 2010.
"Prospects on the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruption linked to Japan's post-disaster reconstruction," Le Borgne said in a statement.
The update also praised Aquino for his efforts to fight corruption, upgrade the country's infrastructure, and open up aviation to foreign competition to boost tourism.
World Bank country director Bert Hofman said the Philippines' recent performance, which saw 4.9 percent growth in the three months to March, suggests growth had become more robust and steady since the global crisis.
He cited a series of credit rating upgrades that put the Philippines' sovereign debt to within two rungs of investment grade last month.
Aquino's office said in a statement that the World Bank report showed that the Philippines' economic fundamentals had "significantly improved" and that the government's programs were sound.
Manila has an "aspirational target" of 7-8 percent GDP growth for 2011 but projects more modest growth of 5-6 percent.
PH STOCK MARKET SKYROCKETS TO NEW RECORD HIGH
Philippine Daily Inquirer
04 July 2011
MANILA, Philippines - Local stocks skyrocketed to an all-time high on Monday as investors loaded up on equities given positive tidings from the resolution of the Greek crisis and an optimistic outlook for the second half of 2011.
The main-share Philippine Stock Exchange (PSE) index surged by 69.93 points or 1.6 percent to finish at 4,421.56
Drawing momentum from last Friday's breakout past a critical barrier at 4,340 the index surpassed the 4,414 previous record high in early November last year to carve a new peak.
An upbeat trading on Wall Street on Friday likewise added to the bullish sentiment.
Also on Friday, the Dow Jones Industrial Index rallied by 168.43 points or 1.36 percent to finish at 12,582.77 on news that Greece had successfully passed in its Parliament the belt-tightening measured required to execute a bailout package.
At the local market, index heavyweight PLDT was back on the game on hopes that the Securities and Exchange Commission would soon be able to address uncertainties on the telco's foreign ownership structure.
Value turnover was heavy at PhP7.28 billion, suggesting conviction to run-up to a new record high. There were nearly three gainers for every single decliner.
Apart from PLDT, Metrobank, AGI, San Miguel, Atlas, EDC, PNB, Philex, BPI, Megaworld, ICTSI, FLI, Aboitiz Power, URC, RLC, Petron, BDO, Metro Pacific Investments and Ayala Land edged higher.
PNB, which was among the day's top gainers, rose by 6.17 percent on news that Chinese banking giant was in talks with principal shareholder Lucio Tan to come in a strategic investor in Allied Bank in exchange for opportunity to expand distribution network in mainland China. PNB expects to resolve the stumbling blocks to its planned merger with Allied Bank within this year.
Petron continued to sizzle on expectations that the oil company may undertake a secondary shares offering soon to comply with the minimum public float at the PSE. Parent firm San Miguel also continued to benefit from brisk trading.
Atlas, on the other hand, was buoyant on news that SM Investment had approved an equity investment in the mining firm, bringing tycoon Henry Sy's total equity position (including the shares held by Banco de Oro) to about a fifth of total stocks.
PPP WITH A DIFFERENCE
Philippine Daily Inquirer
03 July 2011
Last week, the Management Association of the Philippines (MAP), the Philippine Chamber of Agriculture and Food, Inc. (PCAFI), and the EARTH Institute Asia, Inc., together with several organizations, launched a new Private-Public Partnership (PPP) program that aims to reduce the impact of climate change and other risks while contributing to the sustainability and progress of our country.
MAP President Jun Palafox, PCAFI president Alex Escano, and I for EARTH, will coordinate this program with the help of the Working Groups, composed of representatives from our partners.
Numerous risks affect the four P's - person, people, plant and prosperity - of sustainable development. Some of the major risks are erosion of values, poverty, climate change, and uncertainties in the energy sector.
Most Vulnerable
Climate change can potentially wipe out from the world map some of our islands, if not our entire country.
This is not an exaggeration.
The climate change vulnerability map developed by Canada's International Development Research Center (IDRC, www.idrc.ca) shows the Philippines as one of the countries in Southeast Asia that are more vulnerable to climate change.
All islands of the Philippines are "particularly vulnerable to climate change hazards," according to IDRC study. Fortunately, some organizations and local government units are now involved in reducing the risk for disaster due to climate change.
Through our PPP program, we hope to contribute to disaster risk reduction with an integral risk communication, assessment and management strategy. This included developing a risk profile for a local community, which its members can understand and act on.
Risk assessment with the local people's participation, plus the more complicated hazard vulnerability and mapping efforts of scientists, can produce a risk profile for each local community - one that must be updated periodically.
Geodata Systems Technologies Inc. and Webcast Technologies Inc. have committed to help do this work for pilot communities in our program sites.
On risk management, we shall focus on deforestation, a major risk that leads to soil erosion and flooding. Our PPP Program will help reforest environmentally critical areas, such as watershed, with plants and trees that can also provide economic opportunities, first, to the local communities in and around those areas.
We are giving priority to using bamboo in reforestation for various reasons. One is the fact that some bamboos still stand in many areas needing reforestation. Bamboo can provide forest cover while giving significant economic benefits. China's bamboo industry is worth billions of dollars.
Business leader Wash Sycip, the first donor for our Aeta village in Tarlac, has suggested that I look at bamboo for our reforestation project in the village. Recently, with the help of the Philippine Bamboo Foundation headed by Ed Manda and the International Network on Bamboo and Rattan in Beijing, I got to see China's bamboo industry in the province of Zheijang.
What I saw impressed me, as well as other Filipinos who visited China's bamboo industry. Mountains that used to be denuded are now covered with beautiful green bamboo. Farmers live in nice houses. Companies are expanding their factories to process bamboo for food, textile, beauty and wellness, furniture and fixtures, and construction of buildings. Part of their production output is exported to the US and other developed countries that have high demand for bamboo products.
Making a Difference
In the Philippines, we have the needed elements for building a bamboo industry. First, we have vast tracts of land for bamboo plantations. For our PPP program, the Philippine Disaster Recovery Foundation Inc., which MAP member Manny Pangilinan set up to help reforest the Marikina Watershed, has identified about 4,000 hectares of the watershed for us to work on.
On the other hand, Gov. Aurelio Umali, through the help of MAP member Congressman Rene Diaz, has committed 2,500 to 8,000 hectares for reforestation with bamboo in Nueva Ecija.
The provincial government of Albay, headed by Gov. Joey Salceda, has just joined us. At least 2,500 hectares will be available there. The total of about 14,500 hectares in those initial sites is but a small part of the lands that need reforestation in our country. But they are enough to start a PPP Program that can potentially make a difference in our country.
Second, we have the scientific expertise on bamboo, UP and a few other schools, as well as the DENR's Ecosystems Research and Development Bureau have been doing research on bamboo. We also have engineers, like Romy Sta, Ana, who are well experienced in setting up industrial plants.
We have inventors, like engineer Julius Labrador, who can develop bamboo processing technologies. We have companies, like EasyEco LED Philippines, that can assist in research and development on technologies for disaster risk reduction.
At present, we must import most of the equipment for commercial bamboo processing.
But developing technologies for processing bamboo into products with ready markets, such as barbecue sticks, does not need rocket science. Our technologies should respond to this need.
Production of textile from bamboo requires more research. But we have challenged University of Houston Professor Rigoberto Advincula to apply his expertise on chemical and biomolecular engineering to address this need. We have other Filipino experts who can help develop other technologies for bamboo processing, as well as for plantation, e.g. bamboo tissue culture for commercial production.
Third, we have leaders like Ed Manda of the PBF, Conrad Perreras of the Bamboo Network of the Philippines, and policy makers in the Philippine Bamboo Council, the Philippine Council for Sustainable Development, the National Economic and Development Authority, and the line departments, such as the Department of Environment and Natural Resources, Agriculture, Energy, Interior and Local Government, Social Welfare and Development, and others to attend to policy and decision making.
Quadruple Bottom Line
Fifth, the DSWD has a sustainable livelihood for micro-enterprises. Secretary Dinky Soliman and her staff have committed to apply part of their fund for poor families that will join our PPP program.
The Development Bank of the Philippines and the Land Bank of the Philippines have loan and grant funds for environment-related projects. We hope they will allocate part of these funds to help farmers and entrepreneurs plant or process bamboo. DBP, through its president, Francisco del Rosario, Jr., is taking the initial step to do that by supporting the establishment of bamboo nurseries in our pilot sites.
In building a bamboo industry, we can learn from highly successful IT entrepreneur Dado Banatao who now chairs the Philippine Development Foundation (formerly Ayala Foundation).
Dado's five simple rules for start-ups in IT, which are also applicable in the case of bamboo, are:
Understand the requirements of your target market;
Have a differentiable or unique technology;
Develop a credible execution plan;
Have the right people to implement it; and
Have adequate funding support.
We are counting on the private and public sector organizations mentioned above to help our PPP program satisfy those rules.
The initial tasks include market analysis for specific products; development of specific plan per site, of an information, education, and communication program, and a monitoring and evaluation system; and the documentation of our PPP Program to produce guidelines for other areas.
We need the help of local and foreign funding agencies for these tasks. We now also invite investors to help in building our bamboo industry with a difference - one that aims at a quadruple bottom line that benefits the four P's of sustainability, especially the poor.
(The author is president of EARTH Institute Asia and chairs the MAP Task Force on Climate Change and Disaster Preparedness and the PCAFI Committee on Agriculture and Disaster Preparedness. Those interested in this PPP Program may contact her at [email protected]. Feedback at [email protected]. For previous articles, visit: www.map.org.ph.)
IN PHILIPPINES, DUTCH FIRM FINDS PERFECT FACTORY FIT
Philippine Daily Inquirer
03 July 2011
DAVAO CITY, Philippines - One of the first things that Onno Luitjes and his Filipino wife, Lyndy, noticed when they ordered certain machine parts for fabrication was that the workers in the small shop could not interpret their engineer's drawings.
But when the couple showed a sample of the stud bolts they wanted, the workers found the job quite easy to do.
The experience made Onno, Dutch president of HGG Profiling Specialist Philippines, Inc., and Lyndy realize they can actually trust and rely on Filipino skills when they opened the first overseas branch of the Dutch firm HGG in Davao.
The firm produces parts of its pipe-cutting Computer Numerical Control (CNC) machines for global export.
HGG stands for the initials of the first names of the three owners of a group of companies in Netherlands producing fully automated equipment that have serviced the world's biggest construction, shipbuilding and offshore industries in the last 25 years, Luitjes says.
"About 87 percent of the parts of these machines are now being produced here," Gil Dureza, chief of the Board of Investments (BOI) in South Mindanao, says.
Since starting its CNC production here in 2008, HGG has shipped out 28 pipe-cutting machines, including equipment that helped build the new airport in Hong Kong and a polo stadium in India.
Made in Davao
"To give an idea of the technology we are doing in the Netherlands, the pro cutter is the most basic machine the HGG group is producing," Luitjes says, referring to the pipe-cutting machine called PC600, which is being produced in Davao.
"The smallest equipment that our company produces in the Netherlands is up to 6.5 meters in height, weighing over 400 tons, which is even bigger than this bodega," he says of the nondescript warehouse in Bajada.
When HGG opened its Davao branch in 2008, its aim was to explore the growing demand in Asia.
"We are using these products to see the possibilities in the Philippines and explore the market in Asia," he says.
Near where we stood looms a yellow machine, the color of which stands out from among the blue ones in the room. He says the machine, which has Chinese markings, would be marketed in China, where people highly preferred bright colors, like yellow.
Close to Customers
By opening up the Davao branch, the company aims to come closer to the customers in terms of the delivery of the new equipment and servicing.
"There used to be a big time gap from Asia and our main factory in the Netherlands," he says. "We are about seven hours behind but the Davao plant will address the gap because right now, we are operating on the same time zone," Luitjes says.
HGG targets to service not only China and India from its plant here but also Brazil, the United States, Russia and South Korea.
Luitjes says the most promising Asian markets they're planning to tap are the oil rig building in Singapore, which would need a lot of piping, the robot lines and angle bar cuttings in China, where the demand will surge because of the bullish shipyard construction in that part of Asia.
"Everywhere, where there are steel structures being produced, there will always be a demand for our machine," he says.
To cut huge iron pipes, engineers traditionally draw the template, cut and print them out and fit them into the huge iron pipes to mark for manual cutting using hand torch, a process which is quite tedious and prone to human error, making the resulting product less accurate. Lyndy explains.
No Room for Inventories
Now, big shipbuilding companies use computers for precision cuts. Their main focus is to produce the machine and to dispose them just as fast.
"What gets in, should get out fast," Luitjes says, leaving almost no room for inventories. Their existing factory can produce five machines at a time, almost half of the 10-12 machines they produce in a year.
When the company was still scouting for a factory site in Asia, Luitjes admits he has initially thought of Singapore, Malaysia and even China as potential sites. Later, he quickly rules out China because of the language barrier, Singapore because of its high cost; and Malaysia because of its political condition at the time.
Luitjes says he has worked with a lot of Filipinos, whom he described as very facile with the language and who have the necessary skills and knowledge. He realizes it was easier to communicate with Filipinos so he decided to put up the project here.
"Language is very important," he says.
"The knowledge and skills are also there for us to tap," he adds.
Complete Copy
The Davao branch, the only one they have in the Philippines, is not just an assembly plant but a "complete copy of what we are doing in the Netherlands," he says.
Aside from tapping local skills, the company is sending Filipino software and electrical engineers and service people for a few months' training in the Netherlands.
Except for the amplifier motors, which translate the language of the machine to other parts of the equipment, most of the parts of the pipe cutter are already sourced in the Philippines, he says.
"They can actually copy it from existing samples although they have difficulty interpreting the drawings," says Lyndy, pointing out to the stud bolts fabricated by Deco Shop in Davao. "These are little things that we need that we can actually source out here," she says.
Luitjes says HGG hopes to produce "slightly bigger and more complex machine" than the PC600 model they are producing in Davao.
BILL TO REVIVE PHILIPPINE GARMENT INDUSTRY REFILED IN US CONGRESS
02 July 2011
MANILA, Philippines - A bill will revive the fading garments trade between the Philippines and the United States has been reintroduced in the US Congress amid a strong lobby by Manila.
The SAVE Our Industries Act or SAVE Act was re-filed as a "win-win" legislation expected to give the two countries textile and apparel industry as much-needed boost.
"It is critical to the survival of the Philippine apparel industry, and will result in a significant increase in US textile exports to our country. It is a genuine win-win for both countries," said Philippine Ambassador to the US Jose L. Cuisia, Jr.
The SAVE Act would allow for duty-free entry into the United States certain garments made in the Philippines using US textiles.
It is seen to generate US$3 billion in the Philippine apparel exports and create 600,000 jobs. US textile exports to the Philippines and other ASEAN countries, meanwhile, are expected to surge up to US$500 million, generating 2,000 jobs in the fabric mill sector.
In the US Senate, SAVE Act was reintroduced by Senators Daniel K. Inouye and Roy Blunt. Inouye, who was on an official visit to the Philippines in April, was urged by President Benigno Aquino to file the legislation and help revitalize the industry.
The garments and textile sector has been experiencing a steady decline in export growth since 2006. In 2010, the Philippine garment and textile exports amounted to US$1.2 million, a far cry from the US$2 billion export receipts prior to the end of the quota regime.
Before, the Philippines had exports quota of garments to the US and Europe.
The SAVE Act is expected to provide enough incentives for garments exporters in the Philippines to expand their operation through a grant of preferential treatment from the United States.
The bill supports the country's inclusion in the 809 Program, which gives various benefits to US trading partners that produce garments from the US-made fabrics or yarn.
Garment manufacturers from Mexico, the Caribbean and Andean countries already enjoy preferential treatment, with benefits ranging from lower duties to quota-free and duty-free entry into the United States.
Under the 809 component of the bill, US-made yarn formed in the Philippines, on the other hand, would be allowed to reenter the US at half of the most favored nation (MFN) duty.
Foreign Affairs Secretary Albert del Rosario, who was in Washington D.C. when the Senate bill was re-filed, said "this is a very important milestone in the relationship between our two countries."
Del Rosario expressed optimism that "with the leadership of Senators Inouye and Blunt, we are hopeful that Congress will enact the SAVE Act in the near future."
BOI, PEZA INVESTMENTS HIT PhP260B IN MAY
Philippine Daily Inquirer
01 July 2011
STEEP INCREASE. Investments registered with the BoI and the PEZA rose by 189 percent during the first five months from PhP90 billion last year to PhP300 billion.
The value of investments registered with the Board of Investments (BoI) and the Philippine Economic Zone Authority jumped 189 percent to PhP259.94 billion in the first five months, from PhP90 billion in the same period last year.
According to data from the Department of Trade and Industry, investment pledges at the BoI hit PhP191.35 billion in January-May period - a 338-percent surge from the previous year's PhP43.65 billion.
Investment commitments at the Peza, on the other hand, rose 48 percent as of end-May, to PhP68.59 billion from the PhP46.35 billion reported in the same period last year.
As of end-May, a total of 390 projects were approved by the two investment promotion agencies.
Once fully operational, the projects are expected to generate 74,266 jobs.
The manufacturing sector is still the top source of investment pledges for both the BoI and Peza, with total commitments in the sector reaching PhP120.79 billion - 439 percent better than the PhP22.41 billion posted the previous year.
Commitments in the electricity, gas, steam and air conditioning supply sector hit PhP70.17 billion, while those in the real estate activities category hit PhP51.77 billion.
The administrative support and service activities contributed another PhP5.55 billion, the accommodation and food service activities industry an additional PhP3.21 billion, the mining and quarrying sector another PhP2.3 billion, and the water supply, sewerage, water management and remediation sectors accounted for an additional PhP2.01 billion in the first five months.
Bulk of the registered investments came from domestic investors, with total commitments reaching PhP224.57 billion, or 86 percent of the pledges recorded from January to May.
The balance of PhP35.37 billion came from various foreign investors, led by the Netherlands, with PhP7.44 billion in total registered investments in the first five months.
American investors contributed another PhP7.13 billion in investment pledges, while Japanese firms added PhP6.45 billion to the mix.
The Board of Investments and the Philippine Economic Zone Authority also had PhP3.79 billion in investment commitments from South Korean investors, PhP1.3 billion from Singaporean firms, and PhP1.12 billion from British groups.
FOREIGN COMPANIES INTERESTED IN PH NATURAL GAS PROJECTS
Philippine Daily Inquirer
28 June 2011
MANILA, Philippines - Companies from Australia, Italy, China, including Hong Kong, and South Korea have signified their intentions to invest in the highly capital-intensive Philippine natural gas sector, expressing interest in building either a liquified natural gas (LNG) terminal, pipeline or a gas-fired power plant, the Department of Energy said.
Energy Undersecretary Jose M. Layug, Jr. identified these foreign companies as First Pacific Capital, and Energy World from Australia; ENN Energy Holdings from China; Synergy International of Hong Kong; ENI-Saipem of Italy; and SK Engineering and Construction Co. Ltd., Korean Western Power, BW Ventures and Hyundai Merchant Marine, all from South Korea.
GN Power Ltd. of the Netherlands, which is currently building a 600-megawatt facility in Mariveles, Bataan, also plans to participate in the local natural gas industry. There are also three Indian companies interested in helping the Philippine government put up the necessary LNG infrastructure, but Layug did not identify them.
Apart from the foreign companies, local firms are likewise seeking active participation, including the state-run Philippine National Oil Co.; listed firm Abacus Consolidated Resources, which will be partnering with ENI-Saipem of Italy; and the Lopez-led First Gen Corp., Layug disclosed.
"We are completing our Master Plan for Natural Gas through technical assistance from Japan International Cooperation Agency (Jica) and World Bank by yearend. After we complete the plan, and the results are favorable, then we will conduct public bidding for such infrastructures next year," Layug said.
The Department of Energy initially estimated that $5 billion in fresh investments would be needed to fully develop the country's downstream natural gas industry.
Based on the original master plan, investments were needed to construct 423 kilometers of transmission and 504 sq. km. of distribution pipelines. Priority projects include a 140-km pipeline from Bataan to Manila (BatMan 2); 40-km Edsa-Taft loop; 35 km from Sucat to Malaya; 40 km from Batangas to CAvite (BatCave); 35 km from Rosrio to Binan (RoBin); 100 km from Batangas to Manola (BatMan 1), and the 30-km Calaca-Spurline (CatLine). These investments also included greenfield power plant projects that could generate a combined 3,000 MW and power plant conversion projects that could generate some 600 MW.
The expected JICA-WB Master Plan for Natural Gas will re-evaluate these opportunities and identify which infrastructure will be deemed priority projects, and what kind of investments will be needed. It will also evaluate the viability of importing natural gas and the potential sources.
Possible LNG sources include Indonesia, Malaysia, Qatar, the United States and Australia, which is known to hold huge natural gas deposits, Layug said earlier. The Malampaya gas power project, which currently provides natural gas to three facilities in Luzon, will not be the main source of gas, he added.
"Malampaya will not have a role in the master plan other than what they are providing for currently. The master plan hopes to provide infrastructure for LNG imports which we expect to be much cheaper because worldwide, the price of LNG is going down. We will import LNG. There's a lot of supply and the Philippines is being looked at by the LNG industry as a potential market - that's why they're knocking on our doors." Layug said.
Energy Secretary Jose Rene D. Almendras has been pushing for alternative fuels such as natural gas given the global oil price volatility, to which the Philippines is highly vulnerable as it sources most of its fuel requirements abroad.
Natural gas is deemed to be among the more feasible alternatives that will allow the country to diversify its energy and transport fuel sources.
The country's natural gas resources are estimated at 2.135 trillion cubic feet of natural gas.
SEAFOOD FIRM ALLIANCE SEES PROFITS DOUBLING IN 2011
Philippine Daily Inquirer
28 June 2011
MANILA, Philippines - Seafood processing firm Alliance Select Foods International Inc. sees net profits this year doubling to $3.2 million from a year ago on higher export earnings from tuna and salmon products.
Massachusetts-based salmon smoking and curing firm Spence & Co. Ltd., which will be 100-percent owned by Alliance by August, is seen accounting for 20 percent of the company's net profit in 2012, company president and chief executive officer Jonathan Dee said in an investors' briefing on Tuesday.
Sales this year are expected to reach $78 million from $48.3 million in 2010.
The processing plant in General Santos in Mindanao is seen accounting for 58 percent of sales while the tuna factory in Indonesia is expected to contribute 17 percent.
In terms of net income, General Santos in Mindanao is also expected to bring in the biggest share of 65 percent while Indonesia is seen to contribute 23 percent. The burgeoning salmon business is seen contributing 13 percent of the bottom line this year.
For the future, Dee said Alliance would like to "keep moving up the value chain" and look at more products to introduce to the overseas market.
Premium salmon processor Spence is Alliance's third smoked salmon venture, which is seen helping the Filipino firm make inroads into the lucrative US seafood market. Its new factory Big Glory Bay will also supply food service products for US distribution.
Alliance's capitalization is expected to increase to $31.6 million from $22.8 million. To partly finance the acquisition of Spence, Alliance is selling PhP272 million worth of new shares to existing shareholders.
NEDA NAMES 3 MOVES TO DRAW IN MORE INVESTMENTS
Philippine Daily Inquirer
19 May 2011
MANILA, Philippines - The National Economic and Development Authority (NEDA) is undertaking three initiatives starting 2011 for investment programming, according to the lead agency to advise the rest of government on socioeconomic issues.
According to the NEDA statement, its first initiative is the completion of the Public Investments Program (PIP) 2011-2016 by the mid-year in order to identify pipeline projects for the next three years.
The PIP will contain the priority projects to be undertaken in line with the recently approved Philippine Development Plan 2011 - 2016.
Second is the streamlining of the appraisal and approval procedures for projects.
Third is the successful transfer of the Build-Operate-Transfer (BOT) Center (now the Public-Private Partnership or PPP Center) to NEDA to facilitate projects that can be carried out under PPP.
Secretary Cayetano W. Paderanga, Jr. whom the Commission on Appointments (CA) has confirmed as secretary of socioeconomic planning and director-general of NEDA, said in a statement that NEDA has also been spearheading extensions of the Philippine Development Plan 2011-2016.
One is for regional and area development plans to be more area-specific and program and project-oriented.
Another is a long-term vision and plan for the country over the next two decades.
During the CA deliberations, NEDA said, Paderanga also highlighted the important function of NEDA as the lead agency prtoviding policy advice and socioeconomic issues to President Benigno S. Aquino III and the rest of the government.
"We are guided by the president's objective of inclusive - not trickle-down and jobless - growth that produces employment and reduces poverty," he said.
In the course of improving these functions, the Cabinet official said the human resource development would be a crucial factor. "Also one of the goals of my program is to enhance the analytical, policy, ethical and working standards at NEDA. This would be done through scholarships, in-house and outside training and aggressive recruitment in order to reinforce the already competent staff we have," Paderanga said.
This is the second time that the CA confirmed Paderanga's appointment as the country's chief economist.
He was confirmed by the CA to the same position in 1990, serving until the end of the presidency of former President Corazon Aquino,
BSP SAYS ECONOMY MAY REPEAT 2010 FEAT
Philippine Daily Inquirer
Date Posted: 20 February 2011
MANILA, Philippines - The Bangko Sentral ng Pilipinas still believes that the economy will attain its growth target of 7 to 8 percent this year despite concerns that the rate of rise in consumer prices appears to be accelerating.
BSP Governor Amando Tetangco on Friday said that the central bank still held to its forecast that the economy could duplicate this year the robust growth witnessed in 2010.
"We still expect the economy to grow by 7 to 8 percent this year," Tetangco said in a speech during the induction of the 2011 officers of the Economic Journalists Association of the Philippines held in Makati City.
The economy grew by 7.3 percent last year - its fastest rate of rise in 34 years. However, expectations of accelerated inflation have elicited concerns that growth this year may slow down.
This is because the faster rate of increase in prices may drive demand for goods and services.
But Tetangco said that, while inflation could accelerate this year, average price movements would nonetheless fall within comfortable levels.
The BSP expects inflation to settle at 4.4 percent this year, within the government's target range of 3 to 5 percent, the central bank chief said.
When President Aquino assumed power in mid-2010, the government adopted what some called an ambitious target of making the economy grow by at least 7 percent annually over the medium term.
The goal was anchored on studies saying that the Philippines would need to grow by at least 7 percent annually for several years in order to reduce poverty incidence.
Foreign development institutions like the World Bank and the Asian Development Bank cited the Philippines for escaping a recession in 2009, but commented that growth did not make a difference in the country's effort to reduce poverty.
Latest government data showed that poverty incidence - the proportion of poor people to the country's total population - stood at 26.5 percent in 2009, rising slightly from the 26.4 percent reported in 2006 even though the economy grew during the period.
The poverty incidence survery is conducted once every three years.
Economists said that the benefits of the economy's growth has not been trickling down to the poor. This is because the population of poor Filipinos appears to be growing faster than the rise of middle-and high-income earners. Also the poor had little access to education, which could have helped them out of their hardship.
They said the economy should grow by at least 7 percent annually over the medium term so that there would be enough resources for education, health, and other social services.
Tetangco said the economy has the potential to grow by at least 7 percent again this year given the improved outlook of investors.
He cited rising inflows of foreign portfolio investments as an indication of the favorable sentiment toward the Philippines.
FDI NET INFLOW AT $304-M IN NOVEMBER
Date Posted: 10 February 2011
Manila, Philippines - Foreign direct investments (FDI) posted a net inflow of $304 million in November 2010, reversing the previous month's outflow of $23 million, the central bank reported on Thursday.
The November figure was more than 3 times the $92 million inflow recorded in the same month of 2009.
"Investors' continued risk appetite for emerging Asia's assets along with the brighter outlook on the Philippine economy helped boost the flow of capital into the country," said Bangko Sentral ng Pilipinas Governor Amando Tetangco, Jr.
For the 11 months to November, however, net FDI inflow amounted to $1.4 billion, 22.7% lower than the previous year's level of $1.8 billion.
"This can be attributed to investor concerns over the sovereign debt crisis in some parts of Europe, rising inflation in China, tensions in Korea, and the subdued economic prospects in the US," Tetangco noted.
The 11-month FDI was also dragged down by "markedly lower" inflow of equity capital, which fell to $477 million. In January to November 2009, equity capital amounted to $1.8 billion owing to "large investments arising from the privatization of a local power corporation and the acquisition of a number of shares of a local beverage manufacturing firm."
Meanwhile, other capital account, consisting mainly of lending between multinational firms and their subsidiaries or affiliates in the Philippines, recovered in the first 11 months of 2010. It posted a net inflow of $634 million, a turnaround from the $88 million outflow in the year before.
Reinvested earnings also increased by over 4 times to $263 million during the period.
The central bank was expecting the net FDI inflow to rise 5.3% to $2 billion in 2010 from $1.9 billiob in 2009.
FDI, portfolio inflows, and remittances from Filipinos working overseas help keep the country's balance of payments (BOP) in surplus.
The BOP surplus for the 11 months to November last year was $13.2 billion, higher than the central bank's upwardly revised estimate for 2010 of $8.2 billion.
2010 EXPORT GROWTH BEATS GOV'T TARGET
With a report from Reuters
Date Posted: 10 February 2011
MANILA, Philippines - Merchandise exports grew 33.7% in 2010, beating the government's target, on the back of strong demand for electronic products, the National Statistics Office (NSO) reported Thursday.
Data from the NSO showed last year's export bill rose to $51.4 billion from $38.4 billion in 2009. The government had forecast export growth of 15% last year, and import growth of 20%.
Shipments of electronics, the country's main export item, climbed 40.1% to $31.1 billion in 2010, outpacing industry forecast of a 30% jump to $28 billion.
In December alone, total exports climbed 25.3% to $4.16 billion, as electronic sales rose 19.4% to $2.26 billion. Electronics accounted for 54.2% of total receipts.
Japan was the Philippines top market for the month, accounting for 15.4% or $642.73 million of total export revenue.
China came in second, with $594.81 million or a 14.3% share, followed by the US ($563.92 million), Singapore ($449.94 million), and Hong Kong ($399.74 million).
Domestic economy regained momentum in the final quarter of 2010, pushing gross domestic product (GDP) growth to 7.3%, the fastest pace since at least 1986, when democracy was restored in the country.
The government is targeting 7% to 8% GDP growth in 2011, although it has a growth assumption of 5% in its budget. Officials have said the growth goal is attainable despite a slow global recovery and without the boost from election spending seen in 2010.
The government has forecast exports to grow 13% per year from 2011 to 2013.
BPO REVENUES SEEN SURGING TO $25B
Philippine Daily Inquirer
Date Posted: 08 February 2011
MANILA, Philippines - Business process outsourcing (BPO) companies operating in the Philippines will have to innovate and start offering higher-value services to clients if the country is to be able to maximize the industry's potential for growth in the next five years.
Maulik Parekh, president and CEO of SPi Global, said that despite the impressive performance of the offshoring and outsourcing industry in the Philippines, "BPO companies should not be complacent."
SPi Global is the biggest Filipino-owned BPO company employing 11,000 people in the country.
Speaking to industry executives at the recent Asia CEO Forum, Parekh said companies should be able to create value for their clients, nurture their leaders to their full potential and take advantage of the opportunity to employ many good employees because BPO is a people-intensive business.
"The Philippine offshore market size is expected to triple by 2016 with revenues growing from $9 billion to $25 billion. Globally, the revenues in the BPO sector may reach $124 billion in 2016, up from the $45 billion recorded in 2010," Parekh said.
But with competition growing, especially from neighbors in the region such as Malaysia and Vietnam, companies must be able to differentiate themselves and be able to offer services with increasing value for their clients.
"One of the trends that we should all watch out for is the shift on the level of business that's generated from voice to nonvoice. In 2016, the nonvoice sector is expected to grow to 58 percent from 2010's 43 percent. Nonvoice is the future," Parekh said.
For its part, Parekh said SPi was poised for the "next generation" in BPO.
Maulik said one of the firm's recent major initiatives was the establishment of a so-called SPi Healthcare Academy, which aims to train workers to fill a gap in the industry that has yet to be fully tapped.
"Knowing the huge potential of healthcare information management in the major markets and aware that the Philippines can play a key role in the sector, the academy aims to develop the required talent that can prepare Filipinos in the healthcare industry for high-value work," Parekh said.
He said other companies need to consider similar initiatives that would help the industry grow to the benefit of all firms that would compete against one another.
"I really believe that if a company creates more people-centric culture and create an environment that is sticky to the people, we won't have to worry about trying to bring in 100,000 people incrementally into the system every year, he said.
SPi is a unit of Philippine Long Distance Telephone Co (PLDT) through wholly owned unit ePLDT Inc.
MASSIVE DEPLOYMENT OF SOLAR PLANTS SEEN
Philippine Daily Inquirer
Date Posted: 03 February 2011
MANILA, Philippines - Local solar power producers are just waiting for word from regulators before they undertake massive construction of generating facilities that may provide the three main grids with an additional 350 megawatts over the next three years.
According to Philippine Solar Power Association (PSPA) president Tetchi Cruz - Capellan, members of the solar power industry plan to generate a combined 125 MW this year, 130 MW in 2012, and another 95 MW by 2013.
Depending on the capacity of the facility, investments in a solar power plant may range from $3.70 per watt (or $3.7 million per MW) to as high as $4.90 per watt. Based on economies of scale, a smaller facility will require a bigger investment, Capellan explained.
Industry leader told reporters that the PSPA is optimistic that the feed-in-tariff (FIT) rates will be issued within the first half of the year, after the National Renewable Energy Board announced that it would be recommended to regulators the approval of FIT rates no later than March 31..
"Given the 90-day review process of our regulators, the industry is optimistic that the FIT will be in place no later than June 30," Capellan said. "Having said this, we anticipate massive deployment of solar power in 2011. Solar energy is the only renewable energy technology capable of deploying (power) plants in less than a year."
FIT rates determine the economic and financial viability of renewable energy projects.
Under the feed-in tariff systerm, developers are assured of future cash flows, as electricity end-users will be charged fixed amounts to cover production of energy from renewable sources. With this in place, utilities may spread the cost of clean power among customers.
While investors are waiting for the issuance of FIT rates, most solar power producers are already preparing and constructing their respective plants, Capellan said. Those that have already put up their own solar power facilities are planning to sell their output to the wholesale electricity spot market (WESM), which is operational in Luzon and Visayas.
The Lopez-led First Philec Solar Corp. targets to sell the output from its 180-kilowatt solar facility to WESM, Capellan said. Located in the First Philippine Industrial Park in Tanauan, Batangas, First Philec's solar facility is considered as the country's first rooftop-installed solar facility of "utility scale."
Other investors that have begun preparations for their respective facilities include South Korean listed firm Youil Ensys, Filipino-Japanese venture Eco-Merge Philippines, Dutch-based SunConnex Projects BV, and local firm Cagayan Electric Power and Light Co. Inc. (Cepalco).
Youil Ensys wants to invest roughly PhP7.2 billion to put up two solar power plants with a combined capacity of 40 MW in the Visayas.
Eco-Merge will similarly invest around PhP7.4 billion for four facilities to be put up in Camarines Sur, Negros Occidental, Agusan del Norte and Zamboanga. The projects are expected to generate a total of 41 MW.
Cepalco, for its part, will put up more solar plants to produce another 30 MW over the next few years, to add to its existing 1 MW solar facility.
4 ASEAN MEMBERS PREPARING FOR CROSS-BORDER TRADING
Philippine Daily Inquirer
Date Posted: 02 February 2011
MANILA, Philippines - The stock markets of four Southeast Asian nations - the Philippines, Malaysia, Singapore and Thailand - expect to start cross-border trading by the end of this year.
The move is expected to help in efforts to make the regional block more attractive for global portfolio investments.
The Philippine Stock Exchange and the three other stock exchanges - Bursa Malaysia (BM), Singapore Exchange (SGX) ands the Stock Exchange of Thailand (SET) - jointly announced Wednesday the completion of the design study that would make such Asean (Association of Southeast Asian Nations) trading link possible. The four exchanges had worked with NYSE Technologies on the platform design.
The Asean trading link aims to electronically interconnect the participating markets and facilitate cross-border trading seamlessly.
"Shortlisted vendors who are able to provide the infrastructure have been invited to tender," the statement said. "Depending on the selected vendor, it is expected that the link will go live toward the end of 2011."
The PSE has prepared for an integrated regional trading with its migration to NYSE Technologies' NSC V900 platform, an innovative trading infrastructure that boosts the product range, trading performance and volume capacity of the local bourse. This system had been rebranded as PSEtrade.
Six months after the migration to the new system, which initially drew flak from some trading participants, PSE officials said the exchange was in a much better footing to boost stock trading liquidity, introduce new products and hook up with other neighboring exchanges as part of this cross-border trading.
PH ECONOMY GROWS AT FASTEST PACE IN 24 YEARS
Philippine Daily Inquirer
With reports from Agence France - Presse and Reuters
Date Posted: 01 February 2011
MANILA, Philippines - The Philippine economy grew at its fastest pace last year since the 1986 EDSA People Power Revolution, expanding 7.3 percent due to strong domestic demand fueled by the billions of dollars overseas Filipino workers sent home.
Government data showed gross domestic product (GDP) - the total value of goods and services produced in the country - rose a seasonally adjusted 3.0 percent in the final quarter of 2010, more than double market expectations and a turnaround of a third-quarter contraction.
The National Statistical Coordination Board (NSCB) said the strong performance of the Philippine economy - coming off growth of just 0.9 percent in 2009 - was achieved on the back of the world recovery from the global financial crisis.
"The global economic recovery which resulted in record growth rates of foreign trade...contributed to an economic performance in 2010 that well surpassed the government's target of 5.0 percent to 6.0 percent," the NSCB said.
Also boosting growth were higher remittance from the millions of Filipinos working abroad and the extra money that was pumped into the economy by politicians who campaigned in the national and local elections held in the middle of last year.
"Remittance have been pretty healthy and that has really helped to support private consumption in the Philippines," said HSBC economist Sherman Chan. Remittances from overseas Filipino workers are expected to top $20 billion this year.
The NSCB said industry delivered its best seasonally adjusted quarterly growth in at least 15 years, rising 6.7 percent in October to December from the previous three months, with food manufacturers and mining leading the way.
"This shows the economy is not losing steam yet. That is in large due to accommodative monetary policy, which has helped to sustain investments even though the government is pursuing fiscal consolidation," Chan said.
Strong growth from industry and recovery by the farm sector more than offset falling government spending, which fell an annual 7.6 percent in the quarter.
NSCB Secretary General Romulo Virol said the 7.3-percent full-year GDP expansion was the highest since 1986 when the dictator Ferdinand Marcos was toppled in the EDSA Revolution.
Growth by sector
Private sector investment in construction, machinery and equipment resulted in a robust 17-percent growth in gross domestic capital formation. This supported the healthy pace of growth in manufacturing and services, according to the NSCB.
Industry contributed 3.9 percentage points to total GDP growth on the back of brisk manufacturing, particularly electrical machinery, petroleum and coal products, and food - thanks to a strong pick-up in domestic demand and the rebound in external trade.
The services sector contributed to 3.5 percentage points to GDP growth, boosted by the strong performance of trade and private services. This was complemented by flourishing domestic investment, robust expansion in business process outsourcing, hotels and restaurants, wholesale and retail trade, and import and export trade.
Due to fewer typhoons, the agriculture sector managed to grow 5.4 percent in the fourth quarter. "Only two typhoons hit the country compared to seven in the last quarter of 2009," Socioeconomic Planning Secretary Cayetano Paderanga noted.
Nonetheless, full-year growth in agriculture, fishery and forestry was subdued due to the lingering effects of the El Nino weather phenomenon in the first half of 2010.
Inflation, interest rates
Robust domestic demand, and rising global food and fuel prices, however, are adding to concerns about inflation.
"We were expecting the central bank to hike rates by the second quarter. But given these strong growth numbers, I think there's scope for the central bank to normalize its monetary policy as early as the first quarter," said Euben Paracuelles, an economist at Nomura in Singapore.
The Philippines is one of only two countries in Southeast Asia - the other is Indonesia - not to have raised interest rates since the end of the global financial crisis. The policy rate has been at a record low of 4 percent since July 2009.
The Bangko Sentral ng Pilipinas (BSP), however, said inflation was manageable.
"Not necessarily inflationary because the economy has expanded, its absorptive capacity has grown," BSP Deputy Governor Diwa Gunigundo said in a text message to reporters.
Inflation is expected to rise up to the third quarter before stabilizing toward 2012, the BSP said on Friday. Annual inflation was 3.0 percent in November and December, after hitting a one-year low of 2.8 percent in October.
Exciting prospects
"We are looking toward exciting growth prospects," Gunigundo said.
Likewise brimming with optimism, Paderanga said "the 2010 economic performance bolsters confidence that the economy is on a path of strong recovery."
Arsenio M. Balisacan, dean of the University of the Philippines School of Economics, agreed that the rate of economic expansion in 2010 could provide momentum for future growth. But he added the challenges were many.
"Government has to raise revenue to sustain support for infrastructure development, investment in the social sector, particularly education and health, and institution building," Balisacan said.
John Forbes, an investment adviser with the local American Chamber of Commerce, said the promise of further political stability during President Benigno Aquino III's six-year term offered hope for a sustained period of strong growth.
He cited Mr. Aquino's anticorruption campaign, social welfare spending and multi-billion infrastructure upgrade plans as factors the Philippines could finally start to match its dynamic Asian neighbors.
"The Philippines is an economy in the world's fastest-growing region and it is surrounded by economies that have grown at very high rates for a very long period of time," Forbes said.
He said average GDP growth for the Philippines had been below 5.0 percent for the past decade.
"What this figure (2010 GDP growth) demonstrates is the potential of the Philippine economy to grow almost twice as fast (as 5.0 percent)," he said.
PHILIPPINES POSTS RECORD ECONOMIC GROWTH
With reports from AFP and Reuters
Date Posted: 31 January 2011
MANILA, Philippines - The Philippine economy expanded by 7.3% last year, the highest since democracy was restored to the country more than 2 decades ago, the government said on Monday.
Growth domestic product (GDP) growth in the last 3 months of 2010 also surpassed market expectations to reach 7.1%, the National Statistical Coordination Board (NSCB) said.
The recovery of the global economy played a big part in the strong performance by helping boost exports and revive key industries, while better weather towards the end of the year helped the struggling farming sector, it said.
"The global economic recovery which resulted in record growth rates of foreign trade...contributed to an economic performance in 2010 that well surpassed the government's target of 5% to 6%," NSCB said.
The 7.3% full-year GDP expansion was the highest since at least 1986, when dictator Ferdinand Marcos was toppled in a peaceful revolution.
The strong growth came during a period of peaceful political transition for the Philippines, as Benigno Aquino easily won presidential elections in May last year and succeeded Gloria Arroyo as the nation's leader the next month.
The economy grew by just 0.9% in 2009, the lowest in 11 years, as the country struggled amid the global financial crisis.
Rebound in exports, agriculture sector
Renewed global demand for the country's exports allowed industrial growth to accelerate to 8.3 % in the final quarter of 2010, up from 3.8% during the same period the previous year, according to the NSCB.
The agriculture sector also rebounded to grow by 5.4% in the 3 months to December after storms and drought led to negative growth in the previous 4 consecutive quarters.
The government agency said businesses were investing more in durable equipment, which boded well for future economic growth prospects, although it did not give up an official GDP forecast for this year.
Last week, the government said it expected the local economy had grown 7% to 7.4% in 2010, while growth in 2011 was seen to be "more modest" due to the absence of election spending.
Socioeconomic planning chief Cayetano Paderanga said they assumed a conservative 5% 2011 GDP growth in the preparation for the national budget. However, they are hopeful a growth of 7% to 8% would still be achievable.
Interest rates
The Philippines and Indonesia remain the only countries in the region that have not raised interest rates since the end of the global financial crisis. The overnight borrowing rate has been at a record low of 4% since July 2009.
Bangko Sentral ng Pilipinas Governor Amando Tetangco said on Friday there was no pressure on the central bank to raise interest rates despite market worries over rising food, oil and transport costs.
ECONOMY EXPECTED TO GROW BY 5.2% IN '11
Philippine Daily Inquirer
Date Posted 27 January 2011
MANILA, Philippines - Dutch financial giant ING Bank expects the Philippine economy to grow by 5.2 percent in 2011, while inflation remains benign. This in turn will allow the central bank to defer a hike in key interest rates until late this year.
In a briefing Thursday, ING economist Joey Cuyegkeng said the Bangko Sentral ng Pilipinas would likely keep its monetary policy steady until the fourth quarter. Only then would the BSP consider any hike in key interest rates. In that event, the regulator may probably raise the key rates by a sum of 50 basis points.
The economist said this "slightly delayed" policy adjustment would be due to looming inflation pressures from the supply side rather than demand - something that could not be addressed by tightening monetary policy.
Cuyegkeng said inflation fears would wane if the January rate were to show that consumer prices had increased at a manageable range of 3 to 3.2 percent.
The January inflation report will be released next week.
According to Singapore-based ING head on Asian research and chief economist Tim Condon, concerns that the BSP is "behind the curve" are overblown.
Those same concerns led to a selldown of Philippine bonds in the last two weeks.
Outside of food prices, there is little pressure on core inflation across the region, Condon said.
"I think central banks will be very cautious in raising rates as there is no real inflation risk," he said. "We will see food price spikes come and go, but core inflation will be steady."
Also, Asian markets may take comfort in the fact that the Organization of Petroleum Exporting Countries still has some excess production, alleviating fears that global oil prices will hit $100 per barrel, Cuyegkeng said.
But the economist expressed his concern that the recent flooding in the Visayas would affect local agricultural output - a development that could compel ING to downgrade its growth outlook for the Philippines this year.
Cuyegkeng said that a recovery in the agricultural sector had been factored in ING's growth forecast of 5.2 percent this year - higher than the 4.7 percent growth trend announced during the term of former President Macapagal - Arroyo.
"But if flooding affects agriculture output, there's downside risk," he explained.
He said that this year, there will be no election spending to help perk up the economy.
In its forecast, ING has yet to price in any upside that may come from infrastructure spending under the government's public-private partnership program, Cuyegkeng added.
Domestic spending is also expected to be aided by remittances from overseas Filipinos which Cuyegkeng said would sustain growth of around 6 percent this year.
On the exchange rate, Cuyegkeng said the peso would likely trade with a slight bearish bias but should recover afterward.
In the meantime, households funded by OFW remittances, exporters and business process outsourcing firms would benefit from a slightly weaker peso against the US dollar, he said.
PH ECONOMY GREW 7-7.4% IN 2010
Philippine Daily Inquirer
Date Posted: 25 January 2011
MANILA, Philippines - Economic growth likely surpassed the government's target in 2010 as services, industry and agriculture expanded strongly in the last quarter of the year, the National Economic and Development Authority said Tuesday.
The country's gross domestic product (GDP) expanded between 6.2 and 7.2 percent in the fourth quarter, Economic Planning Secretary Cayetano Paderanga told reporters.
With nine-month GDP growth at 7.5 percent (driven by election spending in the first half), the economy's full-year expansion was placed at 7 to 7.4 percent for the whole year. The government aimed for 5-6 percent GDP growth in 2010.
Services, which contributed nearly half of GDP, also performed well in the fourth quarter. Paderanga said the sector, which included the booming business process outsourcing, was estimated to have grown anywhere between 5 and 9 percent.
Industry growth, which comprised about a third of GDP, grew at a "high single-digit" rate.
Agriculture recovered in the fourth quarter, expanding by 6.35 percent, following crop losses in the previous quarters due to the El Nino dry spell.
The farming sector slightly contracted (-0.12 percent) for the whole year despite a prolonged drought since early in the year and the spate of typhoons in the latter part of 2010.
The agriculture sector, when combined with forestry, contributed almost 20 percent of domestic production.
Despite last week's reports that economic managers were set to review economic targets for 2011, Paderanga said the Philippines was still targetinga growth of 7-8 percent in 2011 despite the lack of election spending this year.
"We will try to attain as much as we can. With reforms coming in, perhaps it might be more achievable in 2012 than 2011, but we will still try to hit the target. Paderanga said. The official said that economic managers were to go over measures and projects geared to spurring production and see where improvements could be made.
"We will be missing the driver of election spending [but] the global environment is again improving and we hope that improves a lot. I think the numbers coming out of the US and Europe are slightly better than the numbers that were coming out in the last quarter," Paderanga said.
"Maybe sometime in the middle of the year, we will have a better idea of what else to do," he said.
Among the areas that might be evaluated were proposed public-private partnerships and their potential impact on economic growth.
"What we're actually trying to do is to try to raise investment rates, so we hope that will add to growth," Paderanga said.
PhP102.5B INVESTMENTS IN SEMI-CONDUCTORS, ELECTRONICS REACH ALL-TIME HIGH - REPORT
Philippine Daily Inquirer
Date Posted: 24 January 2011
MANILA, Philippines - Investments in the local semiconductor and electronics industry reached a staggering $2.318 billion, or about PhP102.5 billion, in 2010, posting the highest record so far in the industry's history.
Ernie Santiago, president of the Semiconductor and Electronics Industry in the Philippines Inc (Seipi), reported that last year's investment level represented a 380-percent improvement from the $484-million investments registered in 2009.
The year 2010, he further said in a statement, was also the seventh year that the local industry managed to breach the $1-billion mark for investments. This was last achieved in year 2007, 2000, 1997, 1996, 1995 and 1994.
According to Santiago, the $2.318-billion investment level was registered by 100 companies. Industry observers expect these investments to generate 24,552 new direct jobs for engineers, technicians and operators. For every one direct job, seven indirect jobs are created, according to Santiago.
Initially, the group estimated that investments in the sector reached $1.3 billion in 2010.
Santiago also reported that during the Seipi meeting with President Aquino, the industry expressed its desire to more than double the country's exports within a six-year period from the $22 billion posted in 2009 to a target of $50 billion in 2016.
"The electronics industry exports had a strong start and encouraging finish in 2010 and is expected to hit an export revenue (level) of over $31 billion - (reflecting a) $9 billion to $10 billion increase over its 2009 exports," Santiago said.
The official further said that the local semiconductor and electronics industry have remained bullish for this year and even reported that the electronic sector would continue to be the driver of growth of Philippine exports.
Seipi, the leading and largest organization of foreign and Filipino semiconductor and electronics companies in the Philippines, expects the industry to grow by another 10 percent in 2011.
"No global electronics 'crash' appears to be looming for early 2011," Santiago added.
Seipi is set to present the industry's strong performance in 2010 and its promising outlook for 2011 during the group's New Year's Fellowship Night on January 28.
BOI, PEZA TARGET PHP482B IN INVESTMENTS THIS YEAR
Philippine Daily Inquirer
Date Posted: 20 January 2011
MANILA, Philippines - The Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) are targeting a combined PhP482 billion in investments this year, setting their sights on new markets such as Europe and the Middle East to attain their respective goals.
At Thursday's launch of the Department of Trade and Industry roadmap, Peza director general Lilia de Lima said the agency hoped to increase economic zone investments by 10 percent this year to at least PhP224 billion.
This may be achieved by tapping new sectors and new markets for possible fresh investments, as well as companies seeking to expand. These companies usually account for around 60 percent of new infusions each year.
The new sectors Peza will focus on are agro-industrial and tourism, De Lima said. The new markets, on the other hand, are those in the Middle East for agro-industrial projects, Germany for manufacturing and renewable energy, and Australia and New Zealand for manufacturing, information technology, and business process outsourcing.
Peza will likewise pay more attention to investors from Japan, South Korea and the United States, which are all considered priority markets, she added.
In terms of ecozone exports, Peza is looking at growth of at least 10 percent to $44.62 billion from last year's $40.47 billion, she said. Direct employment at ecozone locators may also reach 809.239 this year, 10 percent higher than last year's 735.672.
From 2011 to 2014, Peza investments may total PhP1.24 trillion exports, $247.09 billion; and employment, 1,077,097. These cumulative numbers could be possible if growth of at least 10 percent were to be achieved each year over the next four years.
The BOI, on its part, seeks to register PhP258 billion in new investments - a decline from the previous year's PhP302 billion due to a reduction in the number of priority sectors and the delisting of independent power producer projects.
Of these new investments, the agency hopes that foreign investments will be at par with domestic infusions this year, Trade Undersecretary and BOI managing head Cristino Panlilio said.
Last year, BOI-registered investments came mostly from local sources with PhP280 billion. Only PhP22 billion came from foreign entities, Panlilio said in a separate presentation Thursday.
2010 BOP SURPLUS AT RECORD $14.4-B - C.BANK DATA
ABS-CBN News
Date Posted: 19 January 2011
MANILA, Philippines - The country recorded a balance of payments (BOP) surplus of $1.23 billion in December, bringing the full-year 2010 surplus to $14.4 billion, way above official estimates, central bank documents show.
The documents obtained by Reuters were dated January 11 but reflected preliminary data as of January 4. The central bank will release official December BOP data on Wednesday.
The central bank had set a BOP surplus estimate for 2010 of $8.2 billion, revised up from a previous forecast of $3.7 billion. The Philippines had a BOP surplus of $6.4 billion in 2009.
On Tuesday, central bank governor Amando Tetangco told Reuters he expected the country's 2011 balance of payments surplus to be substantially higher than the $2 billion set in October.
HSBC UPBEAT ON RP ECONOMY
Philippine Daily Inquirer
Date Posted: 18 January 2011
MANILA, Philippines - British banking giant HSBC is upbeat on prospects for the Philippines for 2011 and beyond as it sees the country joining the ranks of the world's 30 biggest economies by 2050.
"There are bright stars in Asia and they will be bigger contributions to the global economy in the coming years," HSBC senior vice president and head of corporate banking Junie Veloso said in a briefing Tuesday.
With a gross domestic product, or GDP, of close to $190 billion, Veloso said the Philippines - considered as a middle-income economy - ranks 46th highest in the world in terms of nominal output. He said there was no reason why the country could not join the top 30 as strong growth prospects could make such a leapfrog possible.
HSBC also sees China growing the fastest among emerging markets but India's growth rate may outpace China's by 2030.
Other bright stars in Asia seen by HSBC are Malaysia, Thailand and Indonesia, which are expected to grow rapidly as education and policy systems develop.
This year, Veloso said HSBC was expecting Philippine GDP growth to normalize at 5 percent from 6.8 percent last year, noting that the above-trend 2010 growth was also partly due to the base effect coming from a low growth rate of 1.1 percent in 2009.
"The growth rate of government consumption will slow but those of private consumption - buoyed by remittances - and industrial production will quicken," he said.
HSBC also sees a gradual monetary tightening by the Bangko Sentral ng Pilipinas this year to ward off inflationary pressures. Veloso said the BSP might start with a 25-basis-point increase in key interest rates in the second quarter, followed by another 25-point increase in the fourth quarter.
Business confidence, however, is seen remaining robust alongside good exports and remittance inflows.
"We expect 2011 exports to grow 8 percent as the US recovery continues to gather steam and infra-Asian linkages are likely to stay strong,' Veloso said.
This year, remittances from overseas Filipinos are also seen sustaining a growth of 8.5 percent on the back of robust demand from the Middle East and Asia.
MOODY'S UPGRADES PH OUTLOOK TO 'POSITIVE'
With a report from Ronnel W. Domingo
Philippine Daily Inquirer
Date Posted: 06 January 2011
MANILA, PHILIPPINES - The country may look forward to improved economic prospects this year after Moody's Investors Service decided to raise the country's credit rating outlook from "stable" to "positve".
In a statement Thursday, the credit rating agency said favorable indicators that ensured the country's ability to service its obligations greatly influenced its decision.
These indicators include the country's rising reserves of dollars and other foreign currencies, prospects for implementation of economic reforms, and prudent monetary policy.
A "positve" outlook indicates a country's rating is likely to be upgraded within the short term - a situation that may lead to improved investor confidence in the country, along with lower borrowing costs across the economy.
As this developed, the Bangko Sentral ng Pilipinas - mainly responsible for most of the gains cited by Moody's - said the credit watcher's vote of confidence would ultimately lead to improved economic environment for the country and more jobs for Filipinos.
A stronger influx of foreign investments may be expected this year as investors take heart from the outlook upgrade, BSP Governor Amando M. Tetangco Jr. said in an interview.
"We can expect greater confidence and more investments," Tetangco said. "That will lead to greater economic activity."
And as economic growth picks up stream, more jobs may be created, in turn, will provide more Filipinos with better sources of livelihood," the BSP chief added.
Moody's has assigned a Ba3 rating for the country's local - and foreign currency - denominated liabilities. The rating, which has stood since July 2009, is three notches below investment grade.
"Foreign investment reserves continue to accrue at record levels on the back of robust overseas foreign worker remittances, services exports, and sizable capital inflows," said Christian de Guzman, Moody's assistant vice president and lead sovereign analyst for the Philippines.
Also, the BSP's monetary policy has proved to be appropriate and helpful in keeping consumar prices in check, Moody's said. In turn, interest rates on government borrowings were seen to decline last year.
Moody's expressed optimism that the government's pronouncement of reforms would help maintain respectable growth for the country's economy. Prospects for political stability following the entry of the new administration bode well for the economy, it added.
BSP's Tetangco, meanwhile, said that the proverbial "man on the street" could also expect to experience the benefits of lower borrowing costs that the outlook upgrade would bring.
This would mean lower borrowing costs for the government which, in turn, would redound to the benefit of consumers through cheaper financing for big-ticket acquisitions and automobiles, and even consumer goods purchased on credit, he explained.
According to Finance Secretary Cesar V. Purisima, Moody's decision shows that the credit watcher recognizes the developments in the Philippibes.
"There is no question on our ability or willingness to pay, (and) we have always honored our debts," Purisima said. "But what is more important to us, is how the market prices the Philippines. At this time, we are able to borrow at rates a lot lower than other nations similarly rated."
PH EXPORTS SEEN GROWING BY 13% YEARLY UP TO 2013
Philippine Daily Inquirer
Date Posted: 04 January 2011
EXPORTERS CONTINUE to complain about the strong peso's adverse impact on the country's export sector, saying this is the primary reason for the conservative export growth projection of just 12 percent annually over the next three years.
Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. (Philexport), said the strong peso endangered the sustainability of the industry's growth.
The strong local currency, he said, was actually what prompted the Export Development Council to set a relatively "modest" target for 2011-2013.
In an earlier interview, EDC executive director and the Bureau of External Trade Promotion Director Senen Perlada said the draft of the 2011-2013 Philippine Export Development Plan set a growth target of only 13 percent a year for the period covered.
From January to October last year, the country's export receipts increased by 37.2 percent, recovering from a slump caused by the global financial crisis in 2008 and 2009.
Ortiz-Luis said the export sector had the potential to expand by at least 25 percent a year in the next three years, were it not for the strong peso.
Should the peso-dallar exchange rate remain within the 42-43 to a dollar, he said the industry's growth could be stunted to just around 10 percent a year from 2011 to 2013.
He said that at PhP46 to a dollar, many exporters, especially the small ones, were forced to downsize and even shut down their operations. At the PhP45 level, the electronics sector also began to squeeze, dropping some of their product lines, as exports became uncompetitive.
With the current exchange rate within the 43-44 to $1, even business process outsourcing firms were beginning to re-examine their expansion plans.
The peso closed at 43.84 to a greenback on Monday.
FOREIGNERS MAY NOW OWN 60% OF FINANCING FIRMS - DE LIMA
INQUIRER.Net
Date Posted: 28 December 2010
MANILA, Philippines - Financing companies are no longer covered by the Commonwealth Act 108, or the Anti-Dummy Law, which penalizes evasion of laws on the nationalization of certain rights, franchises or priveleges, the Department of Justice (DoJ) said.
Justice Secretary Leila De Lima, in a four-page legal opinion, concurred with lawyer Juan de Zuniga Jr., assistant governor and general counsel of Bangko Sentral ng Pilipinas (BSP), that the passage of the Financing Company Act of 1998 took financing instituions out of the coverage of Section 2-A of the Anti-Dummy Law.
Section 2-A of the Anti-Dummy Law prohibits Filipinos from allowing foreign nationals to use them as nominees or dummies to enjoy privileges reserved for Filipinos or Filipino corporations.
It also prohibits foreigners from interfering with the management, operation and administration of, or controlling nationalized business, whether as officers, employees or laborers, with or without remuneration.
Section 6 of R.A. 5980 (Financing Company Act) imposed a 60 percent Filipino-owned capital requirements, and Section 6 of R.A. 8556, amending the said Section 6 of R,A. 5980, reduced the percentage requirement for the firm's organization from 60 to 40 percent of the corporate stocks and changed the organization's requirement from 'capital' to 'voting stock'," De Lima said.
In effect, De Lima said such amendment liberalized the conduct of financing business in the Philippines by allowing foreign nationals to own up to 60 percent of the equity of financing company.
"Evidently, the new law effectively removed the limitation imposed under R.A. 5980, the original law, such that, as (De Zuniga) rightfully opined, financing companies may now be owned by foreign nationals up to 60 percent of the corporation's equity", she added.
At the same time, De Lima said the amendment also dispenses the requirement of prior authorization from the justice department for the employment of foreign nationals in financing companies.
PH GLOBAL BRANDING CAMPAIGN READIED
Philippine Daily Inquirer
Date Posted: 28 December 2010
MANILA, Philippines - With its previous attempts to secure funding for a global marketing campaign spurned, the Business Processing Association of the Philippines (BPAP) has changed tack and has enlisted the help of foreign business chambers in establishing global brand for the Philippines
BPAP chief executive Oscar Sanez related that instead of partnering with just the Semiconductor and Electronics Industries of the Philippines Inc., (SEIPI), the grouip would be working with the Joint Foreign Chambers (JFC) and other industry organizations to create a Philipine brand that would be recognized globally.
"We're reconvening the task force on country branding, and focusing on key industries such as service management, hospitality and tourism, and business process outsourcing," he told the Inquirer. "The other industries also believe we need a better country branding. With us banding together, we hope to get better attention from the government."
To jump-start the global branding campaign, he said the JFC and the other industry organizations involved would be revisiting BPAP's template for its own planned global marketing push.
SEIPI and BPAP, together with creative partner Ace Saatchi & Saatchi Philippines, last year sought PhP160 million of the PhP1-billion export support fund that Malacanang earmarked in late 2008 to help exporters stay afloat amid the recession.
Under the proposed campaign, ads about Filipino knowledge workers would be released in the United States, Japan, Western Europe and Australia. These ads would be placed on cable channels such as CNN and CNBC, as well as prominent publications such as Forbes, Fortune and Time Magazine.
SEIPI and BPAP never got the funding for this, however, forcing the two groups to shelve the planned campaign.
Now BPAP, together with the foreign chambers and other industry groups, would be reviving the planned campaign, he said, but on a larger scale.
"It's not just advertising we're looking at. We also want to get into publications by way of white papers. We want to tell the world the good things that we're doing here, what the Philippines has to offer. If we don't do that, we'll lose out. We're losing out even now by not adveritising," he said.
"We know that this kind of campaign needs a big chunk of money, but the returns are huge. The government should see this as an investment. It's one form of (public-private partnership). We'll also be investing in this by paying to attend conferences and promoting the country. We have to convince the government to do a paradigm shift," he added.
He said that while the Philippines is already one of the top BPO destinations in the world, the country cannot afford to rest on its laurels.
The country still needs to promote itself, particularly in non-traditional markets such as Europe and Australia, to ensure a steady stream of investments in the sector, he said.
"We're actually losing ground in the BPO sector because we have not been aggressive in our marketing. You'll probably be surprised, but the level of awareness about the Philippines is still quite low," he said.
In Europe, for example, when offshoring is mentioned, he said the top-of-mind destinations are India and countries in Eastern Europe.
Awareness about these countries, he said, came mostly from ad materials found in global publications and TV networks.
"(Investments) will not just fall on our lap. We have to work to get them," he said.
11-MONTH BOP SURPLUS SWELLS TO $13B
Philippine Daily Inquirer
Date Posted: 20 December 2010
MANILA, Philippines - The balance of payments registered a record-high monthly surplus of $3.9 billion in November as the country continued to receive bigger foreign portfolio investments, remittances and infusions in the business process outsourcing sector.
Documents from the central bank showed that the BOP surplus was a stark reversal of the $93-million deficit registered in the same month in 2009, when the global economic turmoil was believed to have peaked.
The November figure brough the BOP surplus in the first 11 months to $13.18 billion, the highest ever recorded by the Philippines.
The BOP is the difference between the inflow and the outflow of dollars and other foreign currencies. A surplus adds to the country's total foreign exchange holdings - or the gross international reserves (GIR) - an indicator of the country's ability to engage in commercial transactions with the rest of the world for such activities as payments for imports and foreign currency - denominated debts.
The Bangko Sentral ng Pilipinas earlier reported that the GIR breached the $60-billion mark in November to hit an all-time high of $61.3 billion.
The BSP said the latest GIR was enough to cover 10.7 months' worth of the country's usual imports. The foreign exchange reserves were at a very comfortable level, the central bank said, as international standards set a comfortable reserves level as being equivalent to at least four months' worth of imports.
Central bank officials said the rise in the dollar inflows was brought by a host of factors, including foreign investments in local stocks and bonds, remittances and investments in the domestic BPO industry.
The inflows of dollars, particularly those in the form of foreign portfolio investments, were attributed to the optimistic view of investors on the economy of the Philippines and those of other emerging markets in Asia.
Other developing Asian countries have also witnessed a steep rise in foreign "hot money" inflows this year as profit-seeking investors expected a robust expansion in this part of the world as interest rates in the United States remained very low.
In the first 11 months, foreign portfolio investments registered a net inflow of $4.2 billion, up more than nine times from only $431 million in the same period last year.
Remittances from overseas Filipinos have likewise grown robustly this year as the recovery of many countries from the global economic crisis led to an increase in their demand for labor.
Money sent by Filipinos abroad reached $15.5 billion in the first 10 months, up 7.9 percent from $14.32 billion in the same period last year.
The BSP has been buying dollars heavily this year to stem from the peso's appreciation, which has been a consequence of the huge inflow of dollars. The peso, which currently hovers in the 44-to-a-dollar territory, has gained about 5 percent since the start of the year.
FORD EXPORTS HIT $950M IN 11 MONTHS TO NOVEMBER
Philippine Daily Inquirer
Date Posted: 16 December 2010
MANILA, Philippines - Ford Motor Co. Philippines - the local vehicle assembler that sells locally made cars overseas - has reached the 75,000-unit export milestone last month, chalking up more than $950 million in export revenues in the first 11 months of the year.
In a statement issued Thursday, FMCP President Randy Krieger said the company's export volume in the January-November period was 42 percent higher at 9,092 units. These included Ford and Mazda models.
This year's exports accounted for around half of the total output of the carmaker's Sta. Rosa, Laguna plant.
"Everyone at FMCP is proud to continue building on the success of our export program here in the Philippines, and passing the 75,000th unit is a significant achievement for all of us," Kriger said.
"The continued export demand for Ford and Mazda vehicles from our Sta. Rosa facility is driven by the world-class quality and safety that our Filipino workforce delivers, and an ongoing commitment to excellence."
In an earlier interview, Krieger said the company's Sta. Rosa factory was now running at a robust capacity, churning out a combined 15,000 units of the Focus, Escape and Mazda's 3 models, which are shipped to various parts of Asia.
Of the total output, as many as 10,000 units went to the export market.
By 2012, however, production of the Focus, FMCP's best-selling model in the Philippines, would be transferred to Thailand, he said.
While he said the company's parent, Ford Motor Corp. based in Dearborn, Michigan, was studying what possible new models could be manufactured in the Philippines, he did not say with absolute certainty whether or not a new model be brought into the country once production on the Focus is transferred to Thailand.
The company earlier said the investment in the Focus manufacturing plant in Thailand would have no impact on "current" manufacturing operations.
PH SEEN TO STAY NO. 1 IN CALL-CENTER INDUSTRY
Philippine Daily Inquirer
Date Posted: 15 December 2010
MANILA, Philippines - The Philippines is expected to hold on to its position as the world's top call center destination as more companies from markets like the United States look to subcontract more of their requirements to help cut costs.
Nasdaq-listed InContact Inc. said the Philippines workforce's good English communication skills, coupled with the population's strong cultural affinity to the US, gave the country an edge that would be hard to replicate anywhere else in the world.
"Labor rates may be cheaper in countries like China and Vietnam, but their skills are also less," InContact vice president for sales and global alliances Frank Maylett said in a recent interview.
The Philippines earlier this month was cited as the call center capital of the world, overtaking India as the number one player in the global business outsourcing market, based on industry and government data.
The local business process outsourcing (BPO) sector is expected to end the year with $9 billion in revenue. By 2015, industry revenue is expected to hit $25 billion, or about 10 percent of the global $250-boillion pie.
"The Philippines has a good base of quality labor and I don't think it will be unseated as the world leader for call centers in the next five years," he said.
He said most call centers in the Philippines today were serving clients mainly in the US. Other growth markets that can be explored include the United Kingdom and Australia.
Byt Maylett warned that high attrition rates, due mainly to poaching of employees by call center companies, might lead to artificial rise in salaries, which might make the Philippines less competitive.
He said the high demand for employees had caused salaries to rise as they were paid higher as they hopped from one company to another. He said this highlighted the need for the country's education system to continue producing a steady supply of college graduates who were proficient in English to support the booming BPO sector.
Utah-based InContact provides internet-hosted software for BPO companies, particularly, call centers. Its main sales office in the Asia Pacific region is located in Manla.
InContact has clients in countries like China, Vietnam, South Korea, Japan and Thailand, where the BPO sector is also growing.
By hosting software applications via the internet under the software-as-a-service business model, InContact allows its clients to cut costs by reducing their need to invest in programs that need to be replaced every few years.
The Philippine BPO sector employs about 600,000 workers, with about half of these workers are in call centers. By 2015, industry estimates show the sector's workforce growing to 1.3 million people.
BPO BOOM PROMPTS BUILDING OF MORE OFFICE SPACE
Philippine Daily Inquirer
Date Posted: 15 December 2010
MANILA, Philippines - The local property sector is in for another boom year in 2011, as the increasing demand for business process outsourcing services drives the need to put up more new office buildings.
In a statement issued on Tuesday, Rick Santos, chair of real estate advisory firm CB Richard Ellis, said the local property sector performed very well this year due to the expansion of BPO companies here.
"The Philippines remains the India of the Southeast Asian region and even the Indian BPOs are piling into the Philippines," he said, adding that this development would lead to the need for more office space.
Some developers, he said, had expressed their intent to put up new buildings to meet the future demands of the BPO industry. These new buildings would most likely be located outside the usual obvious choices, such as Makati and Ortigas business districts.
According to industry data, the Fort Bonifacio business district registered a decrease in vacancy to 6.45 percent, from 7.6 percent in the third quarter, despite the opening of 24,000 meters of space at the McKinley Hill area.
The vacancy in the Alabang business district had likewise gone down to just 7 percent in the fourth quarter from the previous quarter's 10.9 percent. BPO firms were not the only ones fueling this offce space take-up, as various developments in the area had also jacked up interest in doing business in Alabang.
Despite the availability of huge spaces for lease by BPO firms and other types of companies in Quezon City, the vacancy level in the area had also dropped, as space take-up improved. The University of the Philippines - Ayala Land Inc. Techno-Hub along Commonwealth Avenue, in particular, had experienced substantial growth over the past year.
"The general lack of large contiguous office spaces in the market has forced some BPO companies to take up space even in buildings that have interior locations, as long as their technical and spatial requirements are satisfied," Santos said.
He said the glut in office spaced experienced in past years was quickly becoming a thing of the past.
FDI NET INFLOW AT $66-M IN SEPTEMBER
Date Posted: 10 December 2010
MANILA, Philippines - Foreign direct investments (FDI) recorded a net inflow of $66 million in September, reversing the $54 million in the same month last year.
For the first 9 months of the year, the FDI net inflow amounted to $1.1 billion versus $1.6 billion in 2009.
"The mandate inflows this year reflected cautious investor sentiment on the back of renewed concerns over the exposure of European banks to sovereign debt and the health of the American economy, notwithstanding the strong fundamentals in the domestic economy, "the Bangko Sentral ng Pilipinas said.
Equity capital registered a net outflow of $22 million in September, better than the year ago's net outflow of $45 million.
Net FDI, portfolio inflows, and remittances from Filipinos working overseas help keep the country's balance of payments (BOP) in surplus.
The central bank has forecast a net FDI inflow of $2 billion this year, up 5.3% from $1.9 billion in 2009.
It said it expects the BOP surplus to hit $8.2 billion, more than double an earlier estimate of $3.7 billion, on strong exports, remittances and fund inflows.
The BOP surplus in the first 9 months of the year stood at $6.54 billion.
The Philippines' BOP was in surplus of nearly $5.3 billion in 2009, the biggest in 2 years.
PH OVERTAKES INDIA IN BPO INDUSTRY - IBM REPORT
Philippine Daily Inquirer
Date Posted: 03 December 2010
MANILA, Philippines - The Philippines is now the world's leader in business support functions such as shares services and business process outsourcing after effectively overtaking India in these categories last year, according to IBM's Latest Global Locations Trend Annual Report released recently in New York.
The 20-page report, launched in October but was only made available online last month, said it was the first time that India was not in the leading position for these activities. India now ranks No. 2.
"The Philippines has taken over the lead in the global ranking from India, after having challenged the top position for several years," the report said.
It said the Philippine offered a similarly attractive business environment for international business support functions as India, but has not had the same labor cost increases as have occurred in various Indian "hot sports" in recent years.
The International Labor Organization, in its report titled "Offshoring and Working Conditions in Remote Work" released in Geneva in July this year, said the BPO industry may be broadly divided into "voice" services such as call/contact centers, and "back office", like finance and accounting, data processing and management, and human resource development. Call centers make up 70 percent of the BPO Industry in the Philippines.
Trailing India were the United States, Poland, China, United Kingdom, Colombia, Costa Rica, Fiji, Ireland, South Africa, Sri Lanka, Hungary, Australia, Egypt, Chile, France, Canada, Singapore and Netherlands.
The report noted China's ascent as a services destination, and confirmed it should be considered more "merely" the world's factory.
Sri Lanka is another Asian country that has succeeded in positioning itself as an alternative to India, the report also said, while South Africa and Egypt confirmed their increased attractiveness for services investment. Also, various other countries have emerged as new preferred destinations, notably in Latin America where Costa Rica and Columbia are now both among the world's Top 10 recipient countries.
Finally, Fiji is remarkably higher ranked due to one single large services center.
Each October, IBM Global Business Services presents an annual report analyzing the latest global trends in location selection. The report is prepared by PLI-Global Location Strategies, a division of IBM Global Business Services that advises clients where to establish and operate their business functions around the world, and also helps economic development organization with their strategies to attract and retain businesses and improve their business environment.
This year's Global Location Trends report outlined the economic changes and their implications for the global economic landscape and the investment attraction and retention efforts of cities, regions, and countries.
These changes in corporate location strategies manifested themselves in more nuanced ways for different types of business functions, the report said.
Hence, investment in services activities (regional headquarters, shared services centers, business support functions) recovered in 2009, with more than 115,000 jobs created globally in these functions compared with just over 100,000 in 2008.
Acordingly, a central feature of the corporate restructuring currently taking place is the move toward greater use of the "Shared Services Center model" (where a particular function is concentrated in one place for use throughout the organization) for a wider range of activities, including higher value-added activities such as Human Resources and decision support functions.
BELGIAN FIRM EYES 15 ENERGY PROJECTS IN PH
Philippine Daily Inquirer
Date Posted: 05 December 2010
MANILA, Philippines - Belgium-based energy developer Enfinity has sought government approval of 15 applications for renewable energy service contracts for its proposed solar-power projects, according to the Department of Energy.
DOE documents showed that Enfinity, through its local subsidiary Enfinity Philippines Renewable Resources Inc., planned to put up separately two 5-megawatt solar power facilities within the Clark Freeport Zone and Cavite Export Zone.
Enfinity Philippines also has five other proposed projects, which have a combined capacity of 10 MW, to be located at Libjo, Surigao del Norte; Poro, Cebu; Casiguran, Aurora; Burdeos, Quezon; and San Fernando, Romblon.
Based on the applications they submitted to the DOE, Enfinity Philippines is also looking at several prospective solar areas for their power projects, including Tawi-tawi; Palawan; Calamansig, Sultan Kudarat; Sacol Island; Barangay (village) Matti, Digos, Davao del Sur; Victoria, Tarlac; Concepcion, Tarlac; and the Mactan Economic Zone. The company has yet to announce more specific details for these particular projects.
Enfinity earlier announced during a signing ceremony held at the Board of Investments that it targeted to invest some $1 billion to complete a 500-MW power portfolio in the country. These investments are expected to be poured in within the next three to five years.
The company has signed agreements with electric cooperativesd such as Davao del Sur Electric Cooperatives Inc. (Dasureco), Zamboanga Electric Cooperative Inc. (Zamcelco) and Tarlac Electric Cooperative Inc. II (Tarelco II), as well as with the various economic zones in the country for its planned investments.
It has also forged an agreement with state-run National Power Corporation for the establishment of solar-power projects in off-grid areas in Romblon, Palawan and Quezon.
Based on earlier discussions, Napocor president Froilan A. Tampinco had said that Enfinity was considering putting up a total of 10 MW of solar-power capacity in Napocor's Small Power Utilities Group areas. This capacity, however, could go as high as 20 MW to take advantage of economies of scale, he added.
GOV'T MAY OFFER $1.2-B GAS PIPELINE UNDER PPP
Date Posted: 05 December 2010
MANILA, Philippines - The Department of Energy plans to offer the $1.2-billion Batangas-Manila (BatMan 1) natural gas pipeline as a "solicited public-private partnership" as it targets to accelerate the development of the natural gas industry.
Energy Secretary Jose Rene D. Almendras said this was an option that the government was considering as the World Bank had said that no private company or consortium was expectred to take on such a project on its own not only because of the huge investments needed but also due to the "long gestation process".
In most countries, he said that liquefied natural gas (LNG) projects usually have government participation.
Almendras said he had directed that state-owned Philippine National Oil Company to study the energy industry and the possibility of using the BatMan 1 pipeline to transfer natural gas to Metro Manila from Batangas - both for generation and transportation use.
The BatMan project alone is seen to be lucrative, although capital-intensive, as it entails putting up the 100-kilometer BatMan 1 pipeline, a liquified gas terminal, and a 600-megawatt plant. These facilities will be drawing their natural-gas requirements from the Malampaya deep-water gas-to-power project. Diversifying conglomerate San Miguel Corporation had earlier expressed interest in this project.
The government has been trying to boost the local natural gas industry as it wants to tap LNG to serve as an alternative source for a back-up generation capacity and to provide cleaner fuel for public-utility vehicles.
"I'm asking PNOC to really study [the project]. We really need to look at LNG as a back-up plan. One of the things I learned here is that you've got a few hundred facilities operating a few thousand equipment that can go wrong anytime. That's why we need back-up. We really need to develop alternatives," Almendras explained.
Recently, however, Almendras announced that two foreign investors and one local proponent had submitted separate proposals to put up liquefied natural gas terminals and power plants.
PH LIKELY TO EXCEED GROWTH TARGET FOR Q4
Philippine Daily Inquirer
Date Posted: 02 December 2010
MANILA, Philippines - With the economy expected to enjoy robust expansion while the inflation environment remains favorable, the Philippines may exceed official growth projections for the fourth quarter.
According to First Metro Investments Corporation (FMIC) and University of Asia and the Pacific (UA&P), the economy stands a fair chance of registering a growth rate faster than the 6.5 percent seen in the third quarter.
In a joint publication, the two institutions also announced that inflation could even slow down further in December from the 2.8 percent reported in October.
'GDP [gross domestic product] in the fourth quarter should be faster than that in the third quarter, or could range between 6.5 and 7 percent," both institutions said.
The report appeared in "The Market Call", a monthly publication jointly put out by FMIC, the investment banking arm of Metrobank and UA&P.
"Inflation and UA&P said the economy's accelerated growth in the fourth would be supported by sustained rise in remittances from overseas workers.
Remittances help fuel household consumption, which is one of the key drivers of the Philippine economy.
The two institutions also said that a sharp rise in export income would support robust growth of the economy in the last quarter of the year.
In the first nine months of 2010, exports amounted to $38 billion - up by 39 percent year-on-year.
The Philippines managed to sustain growth over the past decade, even during the global economic turmoil last year.
However, its economic performance has been described by many economists to be mediocre, with GDP having grown by a modest 4.9 percent from 2000 to 2009.
But in 2010, the economy has accelerated at a rate not seen in years. The GDP expanded by an average of 7.5 percent in the first three quarters of the year.
This is partly due to base effects, given the substantial slowdown last year. Also, improved business and consumer sentiment resulted in an increase in investments and consumption, government economic managers said.
Accelerated growth of the economy normally leads to rising income levels that boost demand for goods and services. In turn, this leads to a faster rate of increase in consumer prices.
However, monetary officials reported that inflation remained benign througout the year because the effects of higher demand on prices had been offset by the impact of rising supply.
They said the rise in investments had beefed up supply of goods and services, which kept prices relatively stable.
The Bangko Sentral ng Pilipinas said high growth rate and low inflation rate would be sustained if efforts to shore up investments were continued.
LOCAL STOCKS SOAR OVER 3% ON STRONG US ECO DATA
(With reports from Maiki Oreta, ABS-CBN News; and AFP)
Date Posted: 02 December 2010
MANILA, Philippines - Local stocks soared on Thursday, tracking the upbeat sentiment in Asian markets, as strong jobs and manufacturing data in the US overshadowed worries over the eurozone.
Reports said private sector employment in the US rose by 93,000 in November, the fastest in 3 years, giving hopes that the jobs sector was already recovering. The US manufacturing sector also expanded for the 16th consecutive month in November, according to a key survey.
The figures sent the Dow surging by 2.7%, the S&P 500 by 2.16%, and the tech rich Nasdaq by 2.05%.
Asian markets, which have been clouded in the past week by concerns over the eurozone, welcomed the positive data out of the world's biggest economy.
At home, the benckmark Philippine Stock Exchange index soared by 146.02 points or 3.6% to 4,148.90, while broader all-share index jumped 83.42 points or 3% to 2,850.31.
Gains were recorded across the board, with all subindices ending in the green.
Advancers thumped decliners, 103 to 31, while 39 issues were unchanged.
Value turnover came in at a hefty PhP7.9 billion, with 1.45 billion shares traded.
However, local traders said the market has not fully recovered yet from its recent 6% slump, and there was still room to return to previous levels.
Aboitiz Power Corporation was the most active traded stock by value, jumping 7.5% to an all-time high close of PhP35.80. The company is set to receive funds for expansion from its parent firm, Aboitiz Equity Ventures Inc. (AEV), following the sale of the latter's transport unit.
AEV also finished at a fresh record high of PhP40.50, a 6.4% rise from yesterday's close.
Meanwhile, second most active was Alliance Global, which gained 5.8% to PhP12.44, and third was Manila Electric Company, which added 2.8% to PhP181.
PHILIPPINE TO OVERTAKE INDIA AS WORLD'S CALL CENTER
Date Posted: 01 December 2010
MANILA, Philippines - The Philippines would soon overtake India as the call center capital of the world,a recent study by Everest Research Institute showed.
Moreover, the country is seen surpassing India in the broader business process outsourcing (BPO) industry.
The Philippines' call center revenues are expected to reach $5.7 billion this year or $200 million higher compared to India's $5.5 billion. BPO revenues, on the other hand, are forecast to hit $9.5 billion, playing catch-up to India's $12.4 billion.
The Business Processing Association of the Philippines (BPAP) said beating India was not "fat-fetched" as more companies based there start moving their operations in the Philippines.
"[More] clients are going here," said BPAP executive director for external affairs, Martin Crisostomo.
The shift to the Philippines is attributed to several factors: the country's workforce has better English-speaking skills, the Philippines' telecommunication network is superior to that of India, incentives are higher for companies setting up business here, and Filipinos display unrivaled affinity with the American culture.
Crisostomo noted that the growing local BPO industry should not only translate to higher economic growth, but also more jobs.
In the call center sector alone, some 60,000 jobs will be up for grabs next year.
"We are hiring a lot," noted Bong Uichanco, Asia-Pacific sales director of BPO firm Stream Global Services.
The BPO Industry gas just released its latest roadmap, wherein revenues and workforce are targeted to reacg $25 billion and 1.3 million, respectively, from $9 billion and 500,000 today.
To Achieve these, the sunshine industry said it must accelerate talent development and obtain stronger government support.
NET 'HOT MONEY' INFLOW BREACHES $3B MARK
Philippine Daily Inquirer
Date Posted: 29 November 2010
MANILA, Philippines - The flow of "hot money" into the Philippines surged further this month, breaching the $3-billion mark, as investors continued to bet on favorable economic prospects over the short term.
Data from the Bangko Sentral ng Pilipinas showed that the net inflow of foreign portfolio investments from the start of the year to November 12 reached $3.44 billion.
Gross inflow amounted to $10.19 billion, while gross outflows settled at $6.75 billion. Most of the inflows are invested in stocks, while others are placed in bonds and bank deposits.
From January to November last year, the net inflow of foreign portfolio investments reached only $372 million.
"There is significant amount of liquidity globally, and part of this liquidity is going to emerging economies like the Philippines," BSP Governor Amando Tetangco, Jr. said.
Foreign investors have been placing funds in the Philippines and other developing economies in Asia because of projections that the region would continue to drive growth of the world economy.
While the increase in "hot money" inflows highlighted investors' confidence in the country, some economists said the portfolio investments would not amount to much unless these could be turned into long-term, job-generating investments.
They said investment in stocks, bonds and bank instruments are short term in nature and only serve to strengthen the peso - a development that will adversely affect exporters.
Tetangco said there should be a sustained push for investments and that there should be viable, attractive investment opportunities to make the growing liquidity more productive.
"Credit is already growing. However, we have this huge liquidity available in the system for deployment into productive activities, and so there is room for further increase in bank loans," Tetangco said.
He said there should be enough investment opportunities to encourage banks to lend more of the funds they are getting as deposits.
Tetangco is hopeful that the Aquino administration's Public-Private Partnership (PPP) program will help spur demand for and actual extension of bank loans.
SEPTEMBER IMPORT GROWTH STRONGEST IN 4 MONTHS
Date Posted: 26 November 2010
MANILA, Philippines - Merchandise imports in September climbed to 24.6% to $4.57 billion from a year earlier, marking the strongest growth in 4 months, the National Statistics Office said on Friday.
The September import growth was a reversal of the 25% contraction in the same month last year, and faster than the 23.1% growth in August.
Also, compared to August's import bill of $4.45 billion, September was higher by 2.7%.
Imports of electronic parts, which accounted for 35.7% of the total import bill in September, were up an annual 23.8% to $1.63 percent over last year's figure of $1.32 billion. These are inputs used by the semiconductor and electronics industry, the country's biggest export sector and a major contributor to the economy.
The government expects imports to climb 20% this year and exports to increase 15%, with estimated growth for both revised upwards earlier this year.
Merchandise exports climbed 46.1% in September, from a year ago after a 37% jump in August.
Apart from electronic parts and fuel, the Philippines' other top imports were electrical and industrial machinery, transport equipment, iron, steel and metal scraps.
PHILIPPINES WINS WTO CIGARETTE TAX CASE VS THAILAND
abs-cbn.NEWS.com
Date Posted: 16 November 2010
MANILA, Philippines - The World Trade Organization (WTO) favored the Philippines over Thailand on a trade dispute that involves cigarette import taxes.
"We certainly won," Solicitor General Joel Cadiz, who is currently in WTO's Geneva office in Switzerland, told abs-cbnnews.com in a phone interview.
"I was told about it last night," he added, referring to the WTO decision on Monday.
The case stems from a 2008 complaint from the Philippines, where Philip Morris, the largest cigarette maker in the world, operates two manufacturing plants. The cigarettes are slapped higher taxes when the multinational firm's sister company in Thailand imports from the Philippines.
Thailand has only one cigarette manufacturer, the Thailand Tobacco Monopoly (TTM), which is under the Ministry of Finance in Bangkok.
The Philippines, which is represented by the Office of the Solicitor General, had claimed that Thailand violated WTO rules when it set a series of higher customs values for Philippine-made cigarettes since 2006. Customs values are the basis for calculating customs duties and other taxes.
The Philippines also questioned the higher maximum retail prices slapped on imported Philippine-made cigarettes. These are the basis for assessing value-added taxes.
Philip Morris Philippines Manufacturing Inc., (PMPMI) exported 6.8 billion sticks to Thailand in 2009, lower than the 8 billion sticks it used to export from its manufacturing plant in Batangas.
PMPMI has been exporting Marlboro and L&M brands to Thailand since 2003. Thailand is a southeast Asian neighbor.
Since PMPMI sources some of its tobacco leaves from farms based in northern Luzon, the Philippine panel had noted that the livelihood of Virginia tobacco farmers were also at stake.
Thailand has 60 days to appeal the decision before the WTO.
Meanwhile, Philip Morris' local office "welcomed" the WTO decision.
"Philip Morris Philippines Manufacturing Inc. welcomes the decision of the World Trade Organization over the tax dispute between the Philippines and Thailand," PMPMI Managing Director Chris Nelson said in a statement.
"We hope that with the WTO decision, all issues relating to Philip Morris exports to Thailand will be settled favorably by the Thai authorities," he added.
PMPMI has retained the export business when it formed a joint venture with Lucio Tan-led Fortune Tobacco Corporation in February 2010. The joint venture, Philip Morris Fortune Tobacco Corporation focuses on the local market.
FOREIGN FIRMS OFFER NUCLEAR EQUIPMENT, KNOW-HOW TO PH
Philippine Daily Inquirer
Date Posted: 10 November 2010
MANILA, Philippines - Foreign Suppliers for nuclear equipment have expressed interest in investing in the country's nuclear power industry, as the Philippine government looks into this resource option as among the long-term measures to ensure energy security.
National Power Corporation spokesman Dennis Gana told reporters that nuclear supplies for nuclear power plants elsewhere, are likewise interested in putting up a nuclear power plant in the Philippines.
A number of these suppliers, along those from the United Kingdom, Canada and China, are sending teams to the Philippines next month to meet with key decision-makers and local partners through a nuclear power forum.
According to the forum host, Center for Energy Sustainability and Economics (CESE), countries in Southeast Asia, including the Philippines, are fast becoming important emerging markets for the global nuclear industry.
"Services that increase efficiency, manage or reprocess waste fuel, and ensure on-time within-budget project management, as well as key needs such as fuel, cables, and other equipment, are all in demand as the Philippines joins its ASEAN neighbors in the Asian nuclear power renaissance with over $50 billion already earmarked across the Southeast Asian grouping for nuclear power development, " CESE explained.
Although highly interested, most of these suppliers, however, are still monitoring the development of a concrete Philippine nuclear policy, according to an industry source.
The Aquino administration, through the Department of Energy, targets to jump-start critical discussions over the formulation of a nuclear policy within the year.
Energy Secretary Jose Rene D. Almendras earlier sought for a PhP100-million budget to explore the possibility of developing nuclear power plants in the country. This study was meant to start discussions on nuclear power, in the hope of getting an "honest to goodness" evaluation.
But reaching a policy decision alone, based on what has happened in other countries, might take three to six years, while the actual construction of the nuclear facility would take as long as 94 months, the energy chief said.
Due to the lack of a clear nuclear policy, the Philippine government had to turn down for now offers of two foreign nuclear companies, which he met in a trip to the United States.
"There was one company that was proposing to come in for nuclear, but we told him we're not ready because (the Philippines is) still determining our stand on nuclear, and we still have to do our study on safety standards," Almendras had said.
Another firm named Excel Services Corporation, a nuclear power plant engineering company, wanted to give the government a proposal on how to rehabilitate the mothballed 620-megawatt Bataan Nuclear Power Plant (BNPP).
Both Toshiba Corporation, one of Japan's biggest suppliers of nuclear reactors, and Korea Electric Power Corporation, earlier expressed interest to help the Philipines re-power the mothballed BNPP.
Meanwhile, Tokyo Electric Power Corporation, and Kansai Electric Power Corporation had offered to provide technical assistance to the Philippine government to develop a nuclear power program.
EXPORTS CLIMB 46.1% IN SEPTEMBER
Date Posted: 10 November 2010
MANILA, Philippines - Exports continued to post strong double-digit growth in September, bouyed by a surge in demand for the country's electronic products.
Data from the National Statistics Office showed the total export bill climbed 46.1% to $5.314 billion in September from last year's level of $3.638 billion, beating August's 37% growth.
Month on month, exports rose 11.7% from the $4.758 billion posted in August.
Meanwhile, aggregate merchandise exports for the period January to September 2010 increased by 38.5% to $38.298 billion from $27.649 billion registered during the same period in 2009.
Electronic products, the country's main export item with a share of 65.5% of the total bill, surged by 54.6% to $3.478 billion from last year's $2.250 billion.
Singapore was the Philippines' top market, accounting for 24.2% of the total exports at $1.283 billion.
Japan came in second, with $765.85 million, followed by China ($669.74 million), US ($558.68 million), and Hong Kong ($383.99 million).
The government expects exports to climb 15% this year, and imports are forecast to increase 20%.
The electronics industry group, meanwhile, expects its exports to climb by 25% to 30% this year.
As demand from the country's trading partners continues to improve alongside with the global economy, the government is confident it can beat its growth targets this year.
BPO INDUSTRY MOVING UP THE VALUE CHAIN
Philippine Daily Inquirer
Date Posted: 27 October 2010
MANILA, Philippines - The local information technology and business process outsourcing industry has begun to move up the value chain, proven by the faster growth of revenue vis-a-vis employment.
According to Raju Bhatnagar, vice president for BPO and government relations of Indian IT-BPO industry association Nasscom, the non-linear growth of revenue and employment numbers indicated that higher value was being derived from the same employee pool.
"This needs to be sustained. Otherwise, you'll be adding more of the same work," he said in a briefing at the International Outsourcing Summit.
Moving forward, he said the industry's growth would be more supply-constrained, referring to the availability of qualified talents, than demand-constrained, as companies the world over continued to increasingly embrace offshoring and outsourcing.
To sustain the industry's growth momentum, efforts must be directed toward developing the future talent pool, not only those at the rank-and-file level, but those in the middle management, he said.
"You have to take care of the middle-management people. Some progress has been made and you've started to reduce the stress level and the crunch on middle managers. The problem is those on the entry level in middle management," he said.
He said preparing IT-BPO professionals to eventually become middle managers should start at the grassroots, by tweaking the college curriculum to enable students to meet the demands of the industry.
Also, the government should be ready to pass legislation that would make the Philippines even more attractive to companies wanting to offshore and outsource some of their functions, he continued.
"You have to prepare the environment and the ecosystem so companies will be more comfortable to outsource here. Issues on data privacy and cybercrime should be addressed by proper legislation," he said.
The Business Process Outsourcing Association of the Philippines, with the help of the American Chamber of Commerce of the Philippines and other foreign chambers, continue to push for the necessary legislation to further boost the industry and sustain its momentum.
Earlier, BPAP chief executive Oscar Sanez said the most critical law that legislators could pass was the Data Privacy Law, as this would help make the country a more attractive investment destination for companies looking to offshore some of their functions.
According to the BPAP IT-BPO Road Map May 2011-2016, the industry is poised to generate as much as $25 billion in revenue and 1.3 million in new jobs by 2016, with steady government support and strong public-private partnerships.
$4.8-B INVESTMENTS IN BPO TO BOOST JOBS CREATION
Business Mirror
Date Posted: 27 October 2010
MANILA, Philippines - The Philippine business-process outsourcing (BPO) industry estimates an annual investment of $800 million from the private sector to push its goal of generating an average 216,666.67 jobs a year up to 2016.
"We're not a capital-intensive industry. We don't build plants or are not into mining. That amount is what we estimate that are investments in people," Business Processing Association of the Philippines (BPAP) chief executive Oscar R. Sanez said on Tuesday at a press conference for the International Outsourcing Summit.
Sanez said the investment in talent is necessary, "if the government wants this to remain a sunshine industry."
According to Gaurav Gupta of the Dalles, Texas-headquarted Everest Group, the Philippine BPO industry has posted a compounded annual growth rate of 30% since 2006 to an estimated $9 billion in revenue for 2010.
Citing the Roadmap 2016, the Everest Group managing partner and country head for India said the information technology and BPO sector has contributed between 4% and 5% of the Philippines's annual gross domestic product.
"There is, hence, a need to communicate to the government that after overseas Filipino workers (OFWs) and tourism, the BPO is the third-largest contributor to the economy in terms of net import earnings," BPAP chairman Alfredo Ayala said in the same press briefing.
Ayala added that he expects the industry to be equal to remittances of OFWs' share of 10% to GDP.
"If we resolve that talent issue, we can do that in relatively short period of time."
Sanez cited estimates of direct employment in the BPO sector hitting 530,000 this year, or about 19% higher than the 440,000 jobs the industry generated last year.
But while the demand for talent has never been a problem, according to Ayala and Gupta, the industry has been saddled with a supply contraint. Sanez admitted that the industry has "not been able to tap real good candidates out there."
We hope that we could have as well that level achieved by the nursing sector that has drawn people to take up that course, he added.
Ayala said that doing so means communicating "to parents and young people that being in contact centers is not a dead-end job."
Hence, Ayala said this would take zero investment on the part of the government "to attain the lower end of the target" $25-billion revenue by 2016.
However, Ayala noted an amount higher than Sanez's of $2.083 billion annually for the next six years - or a total of $12.5 billion - as he estimated that for every dollar of revenue, five cents of investment is required.
The issue of talent-supply contraint comes at a time when "more people opted to stay out of the labor force and hence, there were lesser persons competing in the labor market," according to the Bureau of Labor and Employment Statistics' July 2010 labor force survey.
The BLES estimates the total number of unemployed persons stood at 2.708 million - a decline of 214,000 from year-ago level.
Still, employment growth in the service sector where BPOs belong "fell sharply to 1.5% (+283,000) from 5.4% (+934,000) in July last year," the survey noted.
IT-BPO REVENUE SEEN HITTING $20B-$25B BY 2016
Philippine Daily Inquirer
Date Posted: 27 October 2010
MANILA, Philippines - Revenue from information technology and business process outsourcing in the country is expected to hit $20 billion by 2016, and may even reach as high as $25 billion with stronger public-private partnership.
According to the "IT-BPO Road Map 2011-2016: Driving Global Leadership," which was presented at the International Outsourcing Summit Tuesday, a $20-billion industry could be achieved by 2016 with continued concerted industry effort and strong government support. An industry that big would give employment to as many as 900,000 individuals, the road map showed.
With strong public-private partnerships, the road map showed that the Philippine IT-BPO Industry has the potential to generate revenue of as much as $25 billion and employment for as many as 1.3 million people.
While these figures were highly attainable, given the Philippines' track record in the industry, the study found that talent development issues would have to be addressed.
In a briefing Tuesday, Gaurav Gupta, managing partner of road map co-developer Everest Group, said there should be strong collaboration between the industry and the government from now until 2016 to determine common issues that had to be addressed.
"This includes initiatives in the areas of educational and training incentives and reforms, enhanced visibility of the Philippibe country brand internationally, and better appreciation among Filipinos of the opportunities available in the IT-BPO industry and the kinds of jobs that are being created," he said.
Business Processing Association of the Philippines chief executive Oscar Sanez agreed, adding that the industry needed to refocus some of its initiatives.
In terms of capabilities, he said the local IT-BPO industry had to market niche verticals that had the greatest growth potential, including healthcare and more advanced finance, accounting, marketing, and human resource processes.
Talent development activities should likewise be taken one notch higher, he said, with focus to be given on certification.
AFTER WB, IMF RAISES GROWTH FORECAST FOR RP ECONOMY
Philippine Daily Inquirer
Date Posted: 21 October 2010
MANILA, Philippines - The International Monetary Fund has upgraded its 2010-2011 growth projections for the Philippines, citing robust consumption by Filipino households and a rare increase in investments by businesses.
In its latest outlook on Asian Economies, the IMF said the Philippines has so far outperformed earlier expectations, thanks in part to improved global economic conditions and to stimulus policies of the government.
The IMF now expects the Philippine economy to grow 7 percent this year, faster than the forecast of 3.6 percent it made in April and the 3.2 percent announced at the start of the year.
Earlier, the World Bank raised its growth forecast for the Philippine economy for this year from its previous estimate of 4.4 percent to 6.2 percent, citing growth in demand from the external and domestic fronts that was higher than initially anticipated.
For 2011, the IMF sees the domestic economy expanding by 4.5 percent, up from the previous estimate of 4 percent.
"In the Philippines, above-trend growth in 2010 reflects a recovery in exports, strong consumption supported by robust remittance inflows, and a pickup in investment. In 2011, as the recovery matures, growth is expected to return to trend," the IMF said.
Remittances have continued to rise this year, raising the purchasing capacity of at least 10 percent of Filipino households. The increase was attributed largely to better economic conditions offshore that helped boost demand for Filipino labor.
The modest recovery of the United States and other industrialized countries from the recession last year also lifted exports of the Philippines, the IMF noted.
The increase in the IMF's growth projection for the Philippines was consistent with its higher growth estimates for the region.
The IMF said Asia was expected to post an average growth of 8 percent this year and 7 percent in 2011. These figures were about a percentage point higher than the fund's earlier forecasts.
In the report, the IMF said that Asian economies must focus on promoting the interest of small and medium enterprises, mainly by improving their access to credit, and pursue infrstructure development.
The IMF said a lesson for Asia, which was deemed heavily reliant on the West for their export earnings, was to strengthen local demand to insulate it from economic downturns in the industrialized countries.
"It is time also to look ahead of the medium term, when Asia will have to rely increasingly on domestic demand for its growth. A strong package of measures taken across the region to foster this medium-term reorientation will help Asia to sustain its robust growth," the IMF said.
The Philippines escaped a recession last year, managing to grow 1.1 percent. This was a marked slowdown from 3.8 percent in 2008 and 7.2 percent in 2007.
TIME RIPE FOR RP-EUROPE TRADE DEAL
Philippine Daily Inquirer
Date Posted: 20 October 2010
MANILA, Philippines - With member-states of the Association of Southeast Asian Nations becoming more agressive in forging free-trade agreements outside of existing trade pacts, the time may now be right for the Philippines to tread the same path.
European Union Ambassador Alistair MacDonald noted the advanced discussions that the EU was now having with Singapore, as well as its recently launched FTA talks with Malaysia.
Vietnam had likewise expressed interest in starting FTA negotiations with the EU, following the signing of the EU-Korea FTA earlier this month.
If the Philippines does not want to be left behind, he said the country would do well to step up its efforts in launching FTA talks with the EU.
"I believe that the time is ripe for the Philippines and the EU to look seriously at a possible bilateral FTA, not as an alternative to an EU-Asean FTA, but as an important building block towards that goal, and as a means of ensuring that the Philippines is able to take advantage of the opportunities, which some of your neighbors are already very keen to capture," he said in a recent speech.
The Philippines had an advantage over some of its neighbors, he said, as an EU-Philippines partnership and cooperation agreement (PCA), a precursor to a full blown FTA, was already in place.
The PCA lays down the framework of cooperation between EU and the Philippines in the areas of politics, trade and investments, justice and security, migration and other economic and development issues, sans the trade concessions afforded by an FTA.
On the part of the EU, he said the trading bloc was "willing to engage bilateral with those Asean countries who are willing and able to negotiate an ambitious FTA...which covers not only the liberalization of trade in goods and services, but also addresses such issues as (intellectual rights) protection, trade facilitation, government procurement, investment and competition policy."
INVESTOR CONFIDENCE AT RECORD HIGH
Philippine Daily Inquirer
Date Posted: 19 October 2010
MANILA, Philippines - Optimism over the Philippines' growth prospects remained at record levels and well above regional standards amid stable inflation and the country's sound economic fundamentals.
Investors also gave their vote of confidence in the new administration, with two out of three saying that President Aquino's performance would bode well for the local economy.
The latest ING Quarterly Investor Dashboard Survey showed the Philippine maintaining its record-high score of 157 points in the third quarter.
"The Philippines maintains its position in the optimistic zone for the fifth consecutive quarter, suggesting that investors are confident in the market despite continued signs of a slowdown in the US economy," it said. "The index for the Philippines once again ranks considerably higher than the overall pan-Asia (ex-Japan) rating, which increases 7 percent to 146 points for the third quarter of 2010 from 136 points in the previous quarter."
Investor confidence in the Philippines increased substantially by 76 percent since falling to the financial crisis low of 89 in the first quarter of last year.
"Local and foreign investors alike have reflected this optimism by pumping more money into Philippine stocks," said ING Investment Management Philippines head and chief investment officer PJ Garcia.
Average daily turnover in the local stock market in September almost doubled to PhP6.05 billion, in contrast to the PhP3.91 billion in average daily turnover from January to August, ING noted.
The survery also showed that more investors believe that the Philippines was starting to "decouple" from the US economy.
"The Philippines, along with many emerging market economies, is increasingly becoming more resilient to external developments. Record-high OFW remittances and the strengthening of the peso against the US dollar have made a strong case for consumption-driven growth," Garcia said.
Meanwhile, the ING survey showed that a sizable 69 percent of investors responded positively when asked about the impact of the current performance of the new administration on the economy, whereas only 23 percent were unsure.
"Investors indicate support for President Aquino's campaign platform as 71 percent believe that he should focus on minimizing graft and corruption," it said.
WB RAISES GROWTH FORECAST FOR RP TO 6.2%
Philippine Daily Inquirer
Date Posted: 19 October 2010
MANILA, Philippines - The World Bank has raised its growth outlook for the Philippines for the year, citing growth in demand from the external and domestic fronts that was higher than initially anticipated.
The multilateral institution now expects the Philippine economy to grow 6.2 percent this year, up from its previous estimate of 4.4. percent.
Eric Le Borgne, World Bank country economist for the Philippines, said in a briefing Tuesday that the robust growth of the country in the first half, at 7.9 percent, came as a surprise given that some countries were recovering only modestly from last year's global recession.
"The Philippines is one of the few countries in the region that posted a growth of above 7 percent in the first half. This was brought by a mix of global and local factors as well as those that are transitory and permanent," he said.
Le Borgne said the stimulus spending by the government, which is likely to be withdrawn once the recovery becomes firm, and sustained growth in personal consumprion were partly credited for the rapid expansion in the first semester.
He also cited rising foreign foreign direct investments, particularly in the country's business process outsourcing sector.
The 7.9-percent growth in the first half was the fastest pace seen in more than 30 years. In 2009, the growth stood at measly 1.1 percent, weighed down by recession in major export markets such as the United States.
For the second half, however, Le Borgne said the growth might slow down a bit as the economy returns to normal levels of production following a sharp recovery from last year's downturn.
For 2011, Le Borgne said, the World Bank expected growth of the Philippine economy to settle at 5 percent. This is lower than the government's official target of at least 7 percent annually starting 2011.
Le Borgne, however, said that while the World Bank expected growth of the Philippines to decelerate in the second half and in 2011 from the 7.9-percent in the first half of this year, growth could pick up in 2012 with the implementation of the government's infrastructure development plan.
He was referring to the Public-Private Partnership Program being pursued by the Aquino Administration. Under the PPP, the government invites private firms to invest in public infrastructure projects.
Vikram Nehru, chief economist of the World Bank for Far East Asia and the Pacific, said in a video conference also held Tuesday that growth in most countries in the region would decelerate in the second half as economies return to normalcy.
Nehru presented the contents of the latest publication of the World Bank on its updated outlook on East Asia and the Pacific. He said the bank, expected the region to grow an everage 8.9 percent this year, faster than the 7.3 percent expansion last year.
He said the bullish outlook on economies in the region was the reason why foreign capital investments in the region were surging.
Nehru said central banks in the region have to be cautious and keenly monitor the inflows of resources to prevent the adverse effects of asset price bubbles and the risk of economic instability, which could happen after a sharp rise in currencies in the region.
"But should inflows remain; especially against a background of weak gloabl growth, the authorities will be faced with the challenge of balancing the need for robust capital flows (especially foreign direct investments) while ensuring competitiveness, financial sector stability and low inflation," the report said.
MAPPING THE FUTURE: PPP AND THE SCIENCE AND TECHNOLOGY AGENDA
Philippine Daily Inquirer
Date Posted: 18 October 2010
THE PHILIPPINE Council for Agriculture, Forestry and Natural Resources Research and Development (PCARRD), a component agency of the Department of Science and Technology (DOST), recently concluded a month-long series of science and technology agenda consultations with 65 different research centers around the country, including state colleges and universities, with 210 research directors and researchers attending.
Each consultation round took two days and were held in four venues - the PCARRD head offices in Los Banos for the South Luzon and Bicol areas; the Philippine Carabao Center in San Jose Nueva Ecija for Central and Northen Luzon areas; Cebu City for the Visayas; and Davao City for Mindanao.
While "stretching the envelope of knowledge in science and technology" and "invigorating research and development in the country" remained DOST's and PCARRDS's primary goals, the thrust for the next six years is to "help alleviate poverty by increasing farmer incomes and stimulating growth in agriculture, fisheries and natural resources management to also help provide more employment while assuring food security and ecological sustainability and resilience."
The thrust of PCARRD is still to ensure the contributions of science and technology to five "thematic areas":
Food security;
Competitiveness;
Frontier & cutting edge science;
Sustainable development; and
Support to allied agricultural, fisheries and forestry development.
With regard to the last item, for example, PCARRD generates a new knowledge and possible technologies that the Department of Agriculture's Bureau of Agricultural Research can commercialize.
Of special concern to the leadership of PCARRD - Dr.Patricio S. Faylon, executive director, and Danilo C. Cardenas and Richard M. Juanillo, both deputy executive directors - for the next six years are the following:
1. Bringing about a needed shift in mind-set that would change the focus to innovation and value adding.
Setting research priorities
In all of the exchanges during the formal main group and break-out group deliberations, the scientists expressed their dilemma - they are torn between their need to pursue their personal curiosities (so badly needed in scientific search) and the imperative to general knowledge useful for addressing the nation's major problems.
2. A systematic participatory prioritization of research projects to address key national concerns of poverty alleviation, food security and ecological sustainability.
While the participants saw the intellectual value of engaging different stakeholders, the strategies, systems and structures and skills in place in many institutions largely preclude the ability and productivity to sally forth into the larger world and engage others. Everyone recognized the need to consult in identifying fruitful areas for intervention and in settling research priorities based on national needs. However, there is need to develop a mechanism for such a process all over the country.
3. Reshaping the research institutions of the future in ways that would mold scientific and academic excellence, and social relevance.
Many research institutions will need technical and managerial help in restructuring themselves to better enable them to generate activities relevant to major national problems at hand, especially in light of limited resources. Such reorganizations should include the ability to use tools and mechanism of PPP (public-private partnerships.)
Research institutions and schools, in general, should learn to think as business organizations. This will not be easy, and may generate controversy.
4. Fostering inter-agency and inter-consortia collaboration and the sharing of knowledge.
Another observation that arose was the greater need to cross regional boundaries in conducting research and sharing research information. Here, there were a number of systems-imposed problems. The open sharing of research information, which researchers hope to convert into published intellectual capital that may add brownie points to their performance evaluations, does not come easily. There is fear of intellectual property rights infringements that may lead to someone making a breakthrough faster than the person who originally made the base discovery. Again, mechanisms for attribution and credits of original findings need to be developed.
Easier said than done
5. Focusing on shorter term projects focused on mandates, resource availability.
This is easier said than done and will require multisector, multidisciplinary approaches and resources. Mechanisms that will link academic institutions with communities, private sector organizations and NGOs to address poverty, food security, competitiveness and ecological sustainability will be required. At the moment, there are no organizations that address this concern.
6. Establishing common performance indicators, together with a rating system, to measure the value of each researcher's contribution to the total effort.
Critical performance indicators are linked to solutions to problems we want to address and not to the conventional indicators used by activity-focused bureaucracies or to those associated with pure science and technology ventures. They are linked to social consequences we wish to produce: substantially greater incomes for our farmers resulting in greater productivity and less value web losses for all concerned; our people's ready access (surer supply, more convenient locations and more affordable prices) for food, more profitability for our business; increasing ecological amelioration, resiliency and a return of better air and water quality, are among some of these.
7. Improving the absorptive capacity of centers for the funds they request.
This will be one of the thorniest aspects of the whole effort. A more honest gaps analysis has to be made as to why our researchers are not as productive as those of other countries. The analysis needs to look at the strategies, structures, systems, skill sets, staff complements and styles of leadership that pervade in our research and academic institutions.
Lip service
Many of our institutions of higher learning pay lip service to research while saddling their researches with teaching and administrative assignments. It is here where the private sector can help our schools more in providing them targeted resources to pursue research.
Research centers typically make proposals based on the needs identified by interested parties, including government agencies and business entities collated by PCARRD.
The goals of pursuing new knowledge using scientific method and prompting innovative technologies as applications of the new knowledge are lofty. The goals of alleviating poverty through increasing farmer incomes, raising profits and spurring economic growth and development while ensuring food security and ecological sustainability are compelling. In light of limited resources and absoptive capacities of partner institutions, tensions among institutions are likely to arise.
The information that came out of the series were high informative, revealing problems, prospects and challenges for science and technology research and development for the country. The following managerial questions emerged:
Conflicting goals
1. How can a manager help settle the complicated issues of conflicting goals, like personal interests versus the need of agriculture and industry?
2. How would an effective manager go about helping define challenges faced, frame the vision, mission and goals at different levels of the effort - national to individual research project - given limited resources?
3. How do you shorten the value web from a product and/or process idea to solid research and eventual commercialization?
4. Who else and what other organizations must be included in the value web to make it work optimally?
5. How must the diffrent people and/or organization be engaged to maximize collaboration to address proverty, food security and ecological sustainability?
6. How should scientists and government officials engage with business, NGOs and communities to quickly address livelihood and business issues that relate to improving production and productivity to serve local needs and export opportunities while ensuring the ecology's integrity?
These were some of the challenging questions PCARRD and its cooperating scientists has to tackle. Some of the commodities they were looking to do more research on included bamboo for ecology amelioration and protection, construction, agricultural and fisheries application; native banana varieties; root crops like sweet potato and cassava; bio-fuels; food and feed corn; high value vegetables and fruits; and processes that would improve transportability and shelf life.
What was apparent in the consultations is the insufficient cooperation, let alone collaboration, between most research institutions on one hand, and the private community sectors on the other.
S&T Interventions
Closer links with these sectors of society will help identify pressing problems that relate to increasing profitability and the attractiveness of certain interventions, the lowering of the business-side risks of farming operations, greater efficiencies in packaging and transport, and a whole host of science and technology interventions that may be developed and promoted.
Business professional organizations like MAP, PCCI and the chambers of commerce and industry and the like should take the initiative and be more engaged with the PCARRD family in identifying problems that science and technology agencies can focus their talents on so that people can enjoy the benefits as a rise in income, improved supply ans accedd to food at lower costs, increased competitiveness, and improvement of the environment.
PEZA INVESTMENTS SURGE BY 32%
Philippine Daily Inquirer
Date Posted: 13 October 2010
MANILA, Philippines - Investments registered with the Philippine Economic Zone Authority in the first three quarters jumped 32.1 percent to PhP80.6 billion, from PhP61.1 billion in the same period last year.
In a report to Trade Secretary Gregory Domingo, Peza Director General Lilia de Lima said these investment commitments came from the 364 projects that Peza board approved in the first nine months.
These projects were composed of 323 manufacturing and information technology projects and 41 developer projects, both new and expansion activities.
From these investment pledges, De Lima said Peza experienced exports to exceed $5.6 million yearly and additional employmenty to hit 63,519.
One of the projects approved was that of Green Future Innovations Inc., which is putting up a $120-million ethanol refinery and biomass power facility in San Mariano, Isabela.
The facility, which is targeted to go on stream by 2012, will produce 54 million liters of ethanol and use bagasse and sugarcane residues to produce 19 megawatts (MW) of electricity, 13 MW of which will be sold to the grid.
Green Future is owned by Japanese firms Itochu Corp. and JGC Corp., GCO of Taiwan, and the Philippine Bioethanol and Energy Investments Corp.
Itochu and JGC are constantly on the lookout for possible locations for large-scale bioethanol and power-generation projects in Asia. The Philippines is one of the more attractive locations for the Japanese firms due to the country's Biofuels Law and the Renewable Energy Law.
"Among our other Asian prospects, the Philippines is the most advanced in its implementation of a biofuels law. We are glad to be attuned to the market demand, especially as the mandated 5-percent blend of ethanol in gasoline will climb to 10 percent by next year," Green Future marketing consultant Erwin Co, an Itochu representative, said in a statement Wednesday.
Once operational, the Green Future project is seen providing employment to about 15,000 people in the farm site alone. Another 500 people will be needed at the plant.
The plant, which will have a capacity of 54 million liters, will become the largest domestic producer of ethanol, followed by San Carlos Bioenergy Inc. with 37 million liters and Roxol Bionergy Inc. with 30 million liters.
EXPORTS GROW 36.6% TO $4.745B IN AUGUST
Philippine Daily Inquirer
Date Posted: 12 October 2010
MANILA, Philippines - The country's exports continued to grow in August, maintaining a double-digit stride for the ninth consecutive month.
Outbound shipments surged 36.6 percent in August to $4.747 billion from the same period last year, the National Statistics Office said on Monday.
The rate of increase in August was faster than that in July, when exports grew 35.9 percent, reaching $4.504 billion.
With the latest export figure, receipts in the eight months to August hit $32.97 billion, growing by 37.3 percent from the $24.01 billion seen the previous year.
In August, the value of electronics products shipped out grew by 45.3 percent over the year to $2.989 billion. Electronics accounted for 63 percent of total outbound cargos.
Growth in electronics exports was driven by a 68.4-percent rise in shipments of semiconductor components and devices.
NSO data further showed that the value of apparel and clothing accessories-the country's second top export products-increased by 31.5 percent over the year to $180.92 million.
Coconut oil remained at third, growing by 181.6 percent to $132.27 million.
Fourth on the list were automotive wiring sets, which increased by 46.3 percent to $107.23 million.
Fifth were woodcrafts and furniture, which rose by 3.2 percent to $97.21 million.
Manufactured goods represented 87.6 percent of receipts, going up in aggregate value by 36.3 percent to $4.161 billion in August.
In August, all three of the biggest markets for Philippine goods showed a marked increase in orders.
Singapore, the Philippines' largest trading partner in Southeast Asia, remained at the top spot, accounting for 20.3 percent of total outbound traffic. Value of shipments increased by 278.4 percent to $962.28 million.
Exports to the United States followed with 13.5 percent of total-up by 2.2 percent to $641.74 million.
Shipments to Japan made up 12.7 percent of total, rising 9.1 percent to $603.68 million.
"With a 36.6 percent year-on-year increase, the Philippines joined Vietnam as top performers among neighboring Asian economies in terms of export growth in August," said Rolando Tungpalan of the National Economic and Development Authority. "At this rate, we are optimistic that the country could exceed the 2010 exports growth target of 15 percent".
IMF FURTHER RAISES GROWTH FORECASTS FOR RP
Philippine Daily Inquirer
Date Posted: 06 October 2010
MANILA, Philippines - The International Monetary Fund has again raised its growth forecast for the Philippines for 2010 and 2011, citing improving domestic demand and business sentiment in the country and the rest of Asia.
For this year, the IMF raised its growth projections to 7 percent from the 6 percent forecast made in July and the 3.6 percent announced in April.
For 2011, the country is not expected to grow by 4.5 percent, better than the original projection of 4 percent.
In its latest outlook on economies across the globe, the IMF said the revised projection for the Philippines mirrored the improved outlook for other economies in Asia. So far this year, IMF said, Asian countries showed faster-than-expected rebound from last year's global turmoil.
"Asia entered the global crisis on a strong footing and is continuing to lead the global recovery," the IMF said.
In the case of the Philippines, the domestic economy grew by 7.9 percent in the first half, beating most expectations. This prompted the government to believe that even its official growth target for the year -- set at 5 to 6 percent -- was already conservative.
The IMF said a robust increase in domestic demand had to do with the sharp expansion of the Philippine and other Asian economies in the first half.
"In most parts of the region, resilience in domestic demand - thanks in part to proactive policy stimulus - has offset the drag from net exports," the IMF said.
Exports by the Philippines and other Asian countries have so far rebounded this year after last year's contraction. However, economists said, the growth was still short of making export revenues revert to the pre-crisis levels.
This is because recovery of the United States and Europe, major export markets, from the recession in 2009 was only moderate. Demand from these countries, although improving, thus remains volatile.
Still, IMF said Asian countries have become less dependent on Western economies, given that their domestic demands have been growing. Moreover, rising investments in Asian countries are helping sharpen their rebound.
Increase in investments from the private sector has allowed governments to take the backseat in driving Asian economies, the recovery of which was initially boosted by stimulus spending by the governments.
"The hand-off from public sector-driven to private sector-driven growth is well under way in most Asian countries," the IMF said.
Economic managers in the Philippibnes said the same has been the case domestically, as investments have so far grown this year, although there would be much room for more.
The IMF said, however, that the Philippines should focus on improving its fiscal sector to avoid dampening an already improving conpetitiveness.
"Consolidation should be a priority where fiscal risks are building," the IMF said, citing the Philippines among a few other countries where budget deficits of governments have risen sharply following the global crisis.
The budget deficit of the Philippine government hit PhP299 billion last year from PhP68 billion in 2008, and is expected to further increase to PhP325 billion this year.
RP FIRMS SCORE HIGH ON CORPORATE GOVERNANCE
Philippine Daily Inquirer
Date Posted: 04 October 2010
MANILA, Philippines - Twelve Philippine companies scored high in corporate governance based on a regional benchmark by CLSA Asia-Pacific Markets.
Six of those companies landed in the top quartile, namely Manila Water Co., Ayala Corp., Aboitiz Power, Energy Development Corp., Globe Telecom and Bank of the Philippine Islands, according to a research report by the CLSA Philippines dated 29 September.
Three of these stocks had garnered high corporate governance and oversight of the company in accordance with the principles of responsibility and transparency.
Other Philippine companies also made it to the second quartile. These are Ayala Land Inc., International Container Terminal Services Inc., Manila Electric Co., Philex Mining Co., SM Prime Holdings Inc. and SM Investments Corp.
Out of these 12 stocks, CLSA has a "buy" or "outperform" recommendations for nine of them: Manila Water, Ayala Corp., Aboitiz Power, EDC, BPI, Ayala land, ICTSI, SM Prime and SM Investments.
CLSA's report on corporate governance analyzed corporate-specific measures on discipline, transparency, independence, accountability, responsibility and fairness.
Overall, CLSA sees improvements in the Philippines' overall ranking in corporate governance.
An earlier report dated 6 September, a collaboration between CLSA and the Asian Corporate Governance Association, showed the Philippines scoring at the bottom of 11 Asian countries.
"While the Philippines admittedly did not perform well in this year's [corporate governance] watch, this has to be taken in the context that this survey was conducted during the Arroyo administration," the report said.
It said it was hoping that the government could speedily enact the kind of changes needed to improve in time for its next survey.
"With the Aquino government taking good governance as one of its major thrusts during the campaign and even in President Aquino's inaugural speech, we see a strong possibility of the Philippines' corporate governance scores improving in the next CG Watch," the report said.
RP BUSINESSES MOST BULLISH IN ASIA-PACIFIC
Date Posted: 24 September 2010
Most small and medium enterprises (SMEs) in the Philippines are upbeat on domestic business prospects, resulting in potential expansion in capital spending and hiring of more employees, according to a survey by Hong Kong Shanghai Banking Corporation. (HSBC).
The semi-annual small business confidence monitor of British banking giant HSBC showed a "healthy" level of optimism among Philippine SMEs, even though local traders were reported to be more "guarded" compared to other Asian emerging markets, HSBC Senior Vice President Junie Veloso said.
The Philippines debuted with a respectable score of 115 on HSBC's newly created SME confidence index, coming in only slightly behind economic powerhouse India (121).
Vietnam led the pack in the HSBC SME survey with an index of 164, followed by Singapore (136) and China (123). Taiwan's index climbed from 97 to 103, placing it back to positive territory for the first time since the financial crisis.
An index score of over 100 suggests a positive view while anything below 100 reflects the opposite.
The survey, conducted between April and June 2010, revealed that 40% of Philippine SMEs plan to increase their capital expenditure in the next six months. On job creation, 27% of SMEs plan to expand their workforce, while 66% may maintain their existing staff count. This leaves only 7% of companies likely to lay off employees.
Some 6,300 respondents from 21 markets worldwide, including 300 local SMEs were polled.
RP RANK IN WORLD COMPETITIVENESS REPORT IMPROVES
Philippine Daily Inquirer
Date Posted: 13 September 2010
MANILA, Philippines - The country rank improved by two notches in the latest World Competitiveness Report, placing 85th among 139 countries covered. The Philippines ranked 87th last year.
Economic managers said the improved competitiveness ranking of the Philippines, which got a score of 3.96 in the latest report, came after registering a respectable recovery from the global economic turmoil last year. The economy posted a 7.9-percent year-on-year growth in the first semester.
The World Competitiveness Report, published yearly by the World Economic Forum, measures the competitiveness of countries covered based on three major areas: Basic requirement, efficiency enhancers, and innovation and sophistication.
Under the first category, the Philippines ranked 99th. This area covers a country's level of infrastructure, macro-economic stability, quality of health services and education and efficiency of institutions.
The country ranked poorly in this area, officials said, due to scarce resources for infrastructure and social services projects.
Under the second category of "efficiency enhancers", the Philippines ranked 78th. This covers higher education and training, goods-market efficiency, labor-market efficiency, financial-market development, technological readiness and market size.
Under innovation and sophistication of business category, the Philippines ranked 75th.
WEF said the three categories were deemed appropriate measures of competitiveness, noting that the economic performance of a country alone would not give the entire picture of how well a country was performing.
"The concept of competitiveness, involves static and dynamic components: Although the productivity of a country clearly determines its ability to sustain a high level of income, it is also one of the central determinants of the returns of investment, which is a key factor explaining an economy's growth potential," the report said.
The Aquino administration's economic team claimed the government aims for improved competitiveness of the country, as they target a much faster growth for the economy and enhancement of public service delivery through curbing corruption over the medium term.
RP ON STEADY COURSE, KEY INDICATORS SUGGEST
Philippine Daily Inquirer
Date Posted: 06 September 2010
MANILA, Philippines - The composite leading economic indicators (LEI) - a broad barometer used to gauge the economy's health - continued to improve in the third quarter but at a slower pace, the National Statistics Coordination Board said.
The decline in the composite LEI - composed of 11 indexes including inflation - eased in the third quarter to -0.037 point, from a revised -0.09 in the second quarter, NSCB data showed.
However, such improvement is "not as remarkable as in the first two quarters of the year," said Romulo A. Virola, NSCB secretary general.
The composite LEI has 11 components: Total merchandise imports, consumer price index, wholesale price index, tourist arrivals, stock price index, electric energy consumption, hotel occupancy rate, money supply, number of new businesses, terms of trade index, and foreign exchange rate.
Virola said that of the 11 indexes, nine contributed positively to the composite LEI in the third quarter.
Virola said the share of these nine positive contributors quarter account of 68.3 percent of the composite LEI.
That share dropped from 100 percent in the second quarter.
The top positive contributor is the consumer price index, benefiting from low inflation observed during the quarter ending in September.
The second biggest positive contributor is money supply - the total amount of money available in an economy in a given period. It was driven by growth of 11.4 percent year-on-year.
On the other hand, the top negative contributor is the number of new businesses, pushed down by an 8.2 percent decline.
As of end-June, new enterprises numbered 2,725 compared to 2,967 a year earlier.
The second-biggest negative contributor is the wholesale price index, which suffered a reversal after contributing positively in three precious quarters.
Virola said that the slower growth of WPI in the second quarter signaled that the cycle of this index for the third quarter 2010 is on its way down.
ECONOMY GREW 5.9 - 6.9% IN 2ND QUARTER
Philippine Daily Inquirer
Date Posted: 23 August 2010
THE PHILIPPINE economy likely grew by 5.9 to 6.9 pecent in the second quarter largely due to the overall global recovery as well as improvement in investor and consumer confidence in the Philippines, Economic Planning Secretary Cayetano W. Paderanga Jr. said Monday.
Paderange told reporters that based on avilable economic indicators, growth - as measured by the gross domestic product (GDP) - rode on the strong expansion of international trade, GDP refers to the value of goods and services produced within the country at a given time.
"The improvement in investor and consumer confidence, the relatively peaceful conduct of the national and local elections and the added contribution of election-related spending may have also influenced the country's economic growth", Paderanga said.
On the other hand, he said a higher growth would have been constrained by the negative impact of the El Nino on agriculture and fisheries.
Paderanga, who is also director general of the National Economic Development Authority, said the industry sector was anticipated to be the main driver in the second quarter.
He said this was the expectation as the manufacturing sector continued to restock products in response to improving domestic and external demand.
He said the services sector might have also been a significant growth driver as trade expanded primarily with neighboring countries.
"Finance is also expected to grow along with manufacturing and trade", Paderanga said. "As in the first quarter, private services may have been strong due to election-related expenses."
Last week, Paderanga said lower agricultural output was not likely to have a large impact on GDP growth for the April-June quarter.
He said that while decreased farm production might dampen economic growth, election spending would offset this.
Paderanga said that while the agriculture sector represented 20 percent of GDP, strong typhoons that hit last year affected only certain aread of the country.
He said he hoped that growth in the second quarter "will not be too far" from the 7.3 percent posted in the first quarter."
JUNE EXPORTS CLIMB 33.4%
With a report from Reuters
Date Posted: 10 August 2010
Manila, Philippines (Update) - Merchandise exports continue to post double-digit growth in June, although slower than the precious month's rise.
Date from the National Statistics Office showed that the country's total export bill grew 33.4% to $4.55 billion in June from the year-ago of $3.41 billion. Month on month, exports went up 7.2% from $4.24 billion in May.
Overall exports in the first half of the year climbed 37.65% to $23.711 billion from $17.225 billion during the same 6-month period in 2009.
Electronics shipments, which dominate exports and are largely assembled for imported parts, jumped 49.1% year-on-year to $2.9 billion in June after a 41% rise in May, the NSO said. Electronics made up 63.9% of June export revenues.
Other top earners were apparel and clothing accessories, coconut oil, woodcrafts and furniture.
Singapore emerged as the country's top export destination for the month, accounting for 16.5% of the total bill, with receipts worth $748.83 million, higher by a hefty 201.1% year on year.
The United States came in second with export earnings of $743.49 million, followed by Japan ($659.23 million), Hong Kong ($406.28 million), and China ($403.86 million).
The government expexts export to climb 15% this year, higher than its earlier estimate of 12% growth. Imports, on the other hand, are forecasted to increase 20% from a previous estimate of 18%.
The electronics group expects its export to climb 25% to 30% this year, notwithstanding signs demand may soften due to faltering global growth.
The local economy though is expected to grow faster than the official target of 5% to 6%, and accelerate to 7% to 8% in 2011. The economy grew at its quickest pace in 22 years in January to March on a seasonally adjusted basis, thanks to election spending, government pump-priming and a turnaround in exports.
IT, BPO FIRM EXPANDS FOOTING IN PHILIPPINES
Philippine Daily Inquirer
Date Posted: 04 August 2010
Manila, Philippines - A world-leading information technology, consulting, and business process outsourcing services company on Wednesday formally announced the expansion of its recently opened global delivery center in Manila.
Cognizant, which employs some 200 professional in Manila, said that the expansion would allow the company to accommodate as much as 600 more professionals.
"Within months of opening our Manila center in October 2009, we have steadily grown our presence and investment in the Philippine capital, and have moved into a larger facility," said R Chandrasekaran, president and managing director of Global Delivery, Cognizant.
"Our Manila center will continue to strengthen our integrated global delivery capabilities, as our investments in new global, regional, and local delivery center help our clients harness specialized talent globally in order to meet their requirements and risk preferences, as well as provide business continuity," Chandrasekaran said in an emailed statement.
"We are committed to working closely with the academic community in the Philippines to develop talent across our full range of services," he added.
Oscar Sanez, president and chief executive officer of the Business Processing Association of the Philippines, welcomed Cognizant's expansion in the Philippines.
"We are pleased to see Cognizant expand its operations in the Philippines," said Sanez.
"As one of the world's fastest growing consulting, technology and BPO/KPO companies, Cognizant's deep insight into global practices earned through its exposure to Global 2000 companies and a footprint spanning five continents will help the IT and BPO/KPO industry in the Philippines increase its competitiveness and define newer benchmarks," Sanez said.
"We thank Cognizant for investing in the Philippines and providing an opportunity for experienced professionals as well as fresh graduates in the country to serve global customers," he added.
President Benigno Aquino III also commended Cognizant for providing job opportunities for Filipino professionals. He said that the company's expansion affirms the surging demand for global BPO services currently dominating the business arena.
"It is gratifying to note that you have again placed your confidence upon us by allotting about six hundred (600) job posts specifically for Filipinos. I know that our people are prepared to take on global challenges that come with the demand of the industry. Together, we shall work hand in hand towards world class excellence," Aquino said in a separate text message.
The Cognizant Manila office, which provides high-end operational and contact center business process services to clients worldwide, also runs on Cognizant 2.0, a Web 2.0-based platform that allows the company's associates worldwide to collaborate and deliver important time-to-market, cost and transformational value to its clients.
EXPORTS ROSE 38.7% IN FIRST 5 MONTHS; ELECTRONICS LEAD SURGE
Philippine Daily Inquirer
Date Posted: 13 July 2010
EXPORTS SURGED 37.3 percent to $4.24 billion ibn May, a sharp turnaround from the 26.9 percent decline in the same month last year, the National Statistics Office Said Tuesday.
"This was the fifth consecutive month that exports registered positive year-on-year growth as global trade continued to recover," said Augusto B. Santos, deputy general of the National Economic and Development Authority.
Compared to exports in April when earnings reached $3.6 billion, May shipments rose 17.9 percent.
This put January-May export receipts to $19.16 billion, a growth of 38.7 percent from $13.82 billion in the same period last year.
In May, the value of electronics products sent out - which accounted for 60.3 percent of total outbound cargoes - grew 41 percent from a year ago to $2.55 billion.
The country's top dollar earner showed an increase of 16.5 percent from $2.19 billion in April.
Growth in electronics shipment was driven by a 42.5 percent improvement in semiconductor components and devices.
NSO documents further showed that receipts from the country's second top exports - apparel and clothing accessories - increased by 36.9 percent to $150.97 million.
Coconut oil placed third, growing by 188.8 percent to $110.13 million. Fourth on the list were woodcraft and furniture, which rose 19.3 percent to $93.99 million. Fifth were automotive wiring sets, which jumped 56.6 percent to $89.41 million.
Other top earners were metals components, up 97.5 percent to $68.36 million; other products made from imported inputs, up 4.8 percent to $55.53 million; cathodes made of refined copper, down 43.4 percent to $48.58 million; tuna, down 4.8 percent to $29.21 million, and petroleum, down 37.5 percent to $21.1 million.
In May, all three of the biggest markets for Philippine goods showed increasing orders for shipments.
The United States regained the top spot with 16.2 percent of total outbound traffic, the value increasing 38.9 percent to $687.55 million.
Exports to Japan followed with 14.6 percent of total, going up by 21.8 percent to $506.46 million. Shipments to Singapore made up 10.4 percent of total, rising 105.7 percent to $215.01 million.
BELGIAN FIRM PLANS TO PUT UP ONE OF THE LARGEST SOLAR POWER PLANTS IN RP
Philippine Star
Date Posted: 06 July 2010
MANILA, Philippines - Belgium-based renewable energy firm Enfinity has expressed interest in building what could be one of the biggest solar power facilities in the Philippines.
Industry sources said Enfinity is eyeing to put up 50 megawatt to 100 megawatt (MW) solar power inside the Clark Freeport Zone in Pampanga.
It was learned that the Belgian power developer is now in "serious" discussions for a possible lease agreement with officials of the Clark Development Corp. (CDC) on the proposed porject. CDC is the government entity running the operation of the freeport.
Sources said Enfinity's proposal would be an ideal project since it will redound to savings for the zone locators.
Clark has about 90 locators. The area covers around 30,000 hectares located 100 kilometers north of Manila.
If the project pushes through, buyers of power will save on transmission costs as it will be directly located inside the economic zone.
According to sources, there is no definite project cost yet but as a rule of thumb, a solar project normally commands around $2.5 million to $3 million in investment per MW.
It was also learned that Enfinity expects to secure the approval this week of the CDC for the project.
Enfinity is eyeing the Philippines as one of its investment havens. The company, in fact, said it is willing to pour in as much as $1 billion for renewable energy projects in the Philippines.
"The Philippines is one of the most important promoters of renewable energy in the Asian region. The government passed the Renewable Energy Act which is paving the way for quick development of alternative energy sources. Enfinity sees much opportunities in solar energy which could either be rooftop or land-based installation," Gino van Neer, Enfinity co-founder and Enfinity Asia Pacific CEO, earlier said.
In the near term, Enfinity said it expects to generate about 500 MW from solar and wind projects with the help of prospective local partners.
Enfinity is one of Europe's leading power producers and one of the world's top 10 players with $1.5 billion owned and operated power projects. Enfinity's turnover grew 200 percent from 83.6 million euros in 2008 to 252 million euros in 2009 and has over 200 employees.
Aside from Asia and Europe, Enfinity is also expanding its presence in North America.
In 2008, Enfinity Asia Pacific Ltd. was formed in Hong Kong to specifically focus on projects in Asia.
So far, it has a portfolio of ongoing solar and wind projects in 14 countries with China and India on the forefront. It is currently developing, financing and constructing a 1,000 - MW photovoltaic solar installation on 3,000 acres in India.
Biomass, solar and wind will be among the major sources of energy in the next decade, accounting for more than a third of the country's total energy demand.
The contribution of solar, wind and ocean will reach 0.6 NMBFOE (million barrels of fuels equivalent) in 2003 rising to 1.7 NMBFOE in 2007 and 3,0 NMBFOE in 2012.
Contribution of wind, solar and biomass sources for non-power applications will comprise a large portion of total demand for renewable energy in the next 10 years. Demand for solar and wind energy sources is foreseen to grow with the implementation of the program to invigorate the market for solar water heaters and locally fabricated solar dryers and wind pumps.
Based on the 2001 inventory for solar technologies, a total of 5,120 solar systems have been installed, as follows: 4,619 solar photovoltaic (PV) systems; 433 solar water heaters; and 68 solar dryer systems.
EXPORT EARNINGS UP BY 38.9% IN 1ST 4 MONTHS
Philippine Daily Inquirer
Date Posted: 10 June 2010
Export Earnings continued their double-digit rise in April at 27.4 percent year-on-year, reaching $3.573 billion, the National Statistics Office said Thursday.
But the rate of the increase in April was slower than the 43.8 percent yearly growth observed in March, when earnings reached $4.181 billion.
Also, the April export performance was a turnaround from the 35.2 percent decline observed in the same month of 2009.
"This was the fourth consecutive month that exports registered positive year-on-year growth as global trade continued to recover," said Augusto B. Santos, Acting Socioeconomic Planning Secretary.
From January to April, receipts hit $14.903 billion, growing by 38.9 percent from $10.73 billion the same period last year.
In April, the value of electronics products shipped out grew by 29.7 percent to $2.183 billion from the same month previous year.
Although electronic products accounted for 61.1 percent of total outbound cargoes that month, the country's top dollar earner posted a decrease of 9.7 percent from $2.416 billion the previous month.
Still, growth in electronics shipments was driven by a 29.5 percent improvement in the semiconductor components and devices.
NSO data further showed that receipts from the country's second top export, coconut oil, went up by 372 percent year-on-year to $107.25 million.
Articles of apparel and clothing accessories, grew by 6.2 percent to $106.63 million.
Fourth on the list were woodcraft and furniture, which increased by 37.4 percent to $70.44 million.
Fifth were automotive wiring sets, which rose by 49.2 percent to $61.67 million.
Also, metals components went up by 64.1 percent to $51.88 million; products made from imported inputs, down by 4.4 percent to $47.62 million; cathodes made from refined copper, down by 31.2 percent to $42.95 million; petroleum products, down by 43.4 percent to $29.83 million; and tuna, down by 5.3 percent to $28.04 million.
Manufactured goods represented 86.7 percent of receipts and went up in aggregate value by 29.7 percent to $3.097 billion in April.
Agriculture products posted a total income of $208.12 million - an increase of 34.3 percent.
Receipts from mineral products reached $134.09 million, rising by 16.1 percent.
In April, all three of the biggest markets for Philippine goods had increased orders for shipments.
Japan regained the top spot with 17.3 percent of total outbound traffic. The value of shipments increased by 42.2 percent to $616.97 million.
Exports to the United States followed with 16.1 percent of total - up by 28.3 percent to $573.62 million.
Shipments to China made up 9.9 percent of total, rising 15 percent to $352.83 million.
FOREIGN DIRECT INVESTMENTS GROW BY 19% IN 1ST QUARTER
Philippine Daily Inquirer
Date Posted: 10 June 2010
Manila, Philippines - Foreign direct investments into the Philippines registered a net inflow of $396 million in the first quarter, up by nearly 19 percent from a year ago, as the anticipated recovery of the global economy boosted risk appetite of investors.
For March alone, FDIs recorded a net inflow of $14 million, a turnaround from a net outflow of $258 million in the same month in 2009, when recession in many industrialized countries prompted investors to liquefy their assets, including those placed in emerging markets like the Philippines.
The Bangko Sentral ng Pilipinas reported on Thursday that the net inflow of FDIs in the first three months was a result of the $482 million in gross inflows and the $86 million in gross outflows.
Of the gross inflows, $32 million was accounted for by reinvested earnings. Some multinational firms used portions of their incomes to beef up capitalization, a move officials said reflected confidence resulting from expectations of economic recovery.
The country's economic managers said renewed optimism since the start of the year partly helped the domestic economy grew at a pace much faster than anticipated.
The country's gross domestic product grew by 7.3 percent in the first quarter, prompting officials to review, for potential upgrade, of the government's official growth target for the year set at only 2.6 to 3.6 percent.
Rise in FDIs in the first quarter was consistent with earlier projection by the BSP of rising foreign capital entering the country and other emerging Asian markets in 2010.
Analysts said investors were looking for income-generating opportunities this year after they were pushed to the sidelines in 2009, by the global turmoil. Developing countries like the Philippines have become the focus of many investors, they said, since they proved better performers in 2009 than most of their counterparts in the industrialized world.
The Philippines still grew by 1.1 percent in 2009, thereby escaping a recession where many developed countries fell into.
The rising foreign capital inflows into the Philippines is partly credited for the strengthening of the peso, which now hovers in the 45:$1 territory after averaging PhP47 level in 2009.
The appreciation of the local currency is credited for helping keep a relatively moderate inflation, as this has made imported goods cheaper.
However, exporters said the strong peso has been threatening the viability of smaller players in the industry. The appreciation of the peso makes Philippine-made goods more expensive in dollar terms, thereby dampening their competitiveness.
Exporters have pressed on the BSP to intervene more in the foreign exchange market, particularly by buying more dollars to deliberately weaken the peso.
However, the BSP stood firm on its policy of keeping a flexible exchange rate. The BSP said it would only intervene in the foreign exchange market to avoid sharp and sudden rise or fall of the peso, but would not target any exchange rate.
SHARES SOAR TO RECORD LEVEL
Philippine Daily Inquirer
Date Posted: 04 June 2010
Local stocks yesterday soared to their highest level in over two years as investors looked forward to the proclamation of a new president with a popular mandate - something they claimed would be good for the corporate sector and the domestic economy.
Likewise inspired by a sharp rebound in global markets, the main-share Philippine Stock Exchange index gained 65.67 points, or nearly 2 percent, to close at 3,355.23.
The previous peak of 3,342 recorded earlier this year was breached as favorable domestic and offshore developments ecouraged bargain-hunting, dealers said. The day's finish marked the highest level attained by the PSEi since it hit 3,447.29 on January 15, 2008.
"Risks overseas have tapered off and, locally, the election process is crossing the finish line. As suggested by large foreign buying, confidence is slowly getting back, and this is also in anticipation of the (entry of the) new captain of the ship," said Astro del Castillo of local fund manager First Grade Holdings.
Value turnover was higher than the previous day's average at PhP4.53 billion.
Given the improved trading volume, Del Castillo said the index could still trek higher in the next trading sessions, but would remain vulnerable to wild swings in overseas markets. He said the next target on the upside would likely be 3,400. Any pullback, he said, would likely be limited to 3,300-3,250.
"There are worries that this rally we have experienced is unsustainable. But with a few positive news here and there, we can push higher and finish smoothly this week," said AB Capital Securities analyst Maria Arlysa Narciso.
"Business confidence is expected to improve under a new wing of governance. Also, the country's economic path are turning to be good. Hopefully, all these things will help the PSEi maintain its position above its recent resistance."
The across-the-board rally was led by the property, mining/oil, holding firms and industrial sectors.
There were 74 gainers against 32 decliners, while 71 stocks were unchanged.
The day's favorit were blue chips Philippine Long Distance Telephone Co.m Ayala Corp., Ayala Land Inc., and SM Investments Corp.
Apart from the country's rosy prospects under a new administration and the stunning 7.3 percent growth of the economy in the first quarter, risk appetite was bouyed by a rebound on Wall Street. US stocks surged on higher-than-expected home sales and recovery from what could have been an exaggerated selldown of energy stocks after the Gulf of Mexico oil spill.
The US Dow Jones index gained 225.52 points or 2.25 percent to 10,249.54, while the Nasdaq and S&P 500 indices were also up by 2.64 percent and 2.58 percent, respectively.
RP ECONOMY GROWS 7.3%
Philippine Daily Inquirer
Date Posted: 29 May 2010
Manila, Philippines - This time, it is a welcome "midnight" performance.
The Philippine economy bounced back from an anemic performance in 2009, posting 7.3 percent growth in the first quarter of this year from 0.5 percent a year ago to beat most expectations.
"This is a glorious ending for the Arroyo administration and a good beginning for the incoming Aquino administration", Romulo Virola, secretary general of the National Statistics Coordination Board (NSCB), told reporters Thursday.
Dennis Arroyo, director for policy and planning at the National Economic and Developmentn Authority (NEDA), said that given the robust growth of the Philippine economy in the first quarter, the government would revise its growth target for the year, which was set at a conservative range of only between 2.6 to 3.6 percent.
President Gloria Macapagal-Arroyo is required by consitutional term limits to step down on June 30 after more than nine years in office. She is expected to be replaced by presumptive president-elect Benigno Aquino III.
Officials credited election spending, a sustained rise in remittances and improved business and consumer confidence - which resulted in increased spending for goods and services rendered within the economy in a given period.
The NSCB said the growth in the first three months was the fastest since the GDP registered an 8.3 percent expansion in the second quarter of 2007, also an election year.
Similarly, the country's gross national product (GNP) - the value of goods produced and services rendered by Filipinos here and abroad - posted a higher-than-expected growth rate. It rose 9.5 persent in the first quarter, up from 3.3 percent in the same period last year.
"The improvement in the global economy, brighter economic outlook, increased business and consumer confidence, and election-related spending all contributed to the resurgence in economic activities," said Augusto Santos, director general of NEDA.
At a press conference, Santos said that these more than offset the adverse impact of the dry spell caused by El Nino on the agricultural sector, particularly the crops and the fishery sub-sectors.
The Philippines' rebound from last year's economic slowdown was consistent with projections that the global economy would recover after suffering from a recession last year due mainly to economic woes in the United States and Europe - two of the biggest export markets and home to many overseas Filipino workers.
Better economic conditions offshore - attributed to stimulus spending by governments across the globe - helped sustain the rise in remittances, which normally fuel consumption by Filipino households. These likewise led to a rebound of the Philippines' export sector.
Virola said at the press conference that economic growth in the first quarter was supported by the industry and services sectors, the growth rates of which outweighed the poor performance of the agriculture, forestry and fisheries sector.
Industry Growth
Industry, which includes manufacturing, utilities, and mining and quarrying, grew 15.7 percent in the first quarter, recersing the 2,6-percent contraction in the same period last year.
This sector's growth was led by manufacturing, which expanded 20.7 percent, a turnaround from the 7.6 percent decline last year.
Services, which include the continually booming business process outsourcing sub-sector, grew by 6.1 percent in the first quarter, accelerating from 1.9 percent a year ago.
Battered by the dry spell, the agriculture, forestry and fisheries sector contracted by 2.5 percent in the first quarter, reversing the 2.1 percent growth in the same period last year.
Santos said the growth in the first quarter helped create additional 1.73 million jobs.
9M OFWs
The World Bank said recently that economic growth over the past decade had not made a serious dent in tackling the dire poverty plaguing the country.
Remittance in the first three months amounted to $4.3 billion, up 7 percent year-on-year. Santos said remittances helped increase domestic demand, which in turn boosted incomes of businesses.
The cash transfers from the roughly 9 million Filipinos working abroad are equivalent to nearly 10 percent of the Philippines' economic output.
Contrary to economists' forecasts, the remittances of Filipino overseas workers even increased at the height of the global financial crisis.
Like the Philippines, other developing Asian countries export to the West and so they benefited from higher export income with the recovery of economies of the United States and Europe.
During the first quarter, Singapore's economy grew 15.5 percent; Thailand, 12 percent; Malaysia, 10.1 percent; Vietnam, 5.8 percent; Taiwan, 13.3 percent; China, 11.9 percent; Hong Kong, 8.2 percent; and, South Korea, 7.8 percent.
However, Arroyo said the government's economic team would continue to monitor factors that could drag down growth of the economy.
Eurozone Debts
Santos said these adverse factors included debt problems of Greece and other countries in the Eurozone that are somehow dampening investor confidence not only in Europe but also in emerging Asian economies.
Santos said the possibility of a La Nina in the second half would further drag down the performance of the agriculture, forestry and fisheries sector.
To ensure that the economy's first quarter performance is sustained, the government has to increase spending on infrastructure, social services and education, he said.
To do so, the government should enhance tax collection, said Santos. [With a report from Agence France-Presse]
Stocks Surge on Peaceful Polls
ABS-CBN News Online
Date Posted: 11 May 2010
Manila, Philippines - Stocks surge on Tuesday as investors cheered the relatively peaceful local elections, and rally in overseas markets.
But shares of Sen. Manuel "Manny" Villar's real estate firm, Vista Land and Lifescapes Inc., fell minutes after the presidential contender conceded to Sen. Benigno "Noynoy" Aquino, who was leading in the partial tally of votes.
The benchmark Philippine Stock Exchange index rose 3.85% or 120.87 points to 3,262.93, its best percentage gain since August 24, 2009.
The broader all-share index went up to 3.54% or 69.65 points to 2,036.42.
All subindices were also significantly higher, with 5 or 6 sectors outperforming the main index.
Advancers swamped decliners, 117 to 12, while 32 issues were unchanged.
A total of 1.74 billion shares valued at PhP5.91 billion were traded.
The top 3 most active stocks were Philippine Long Distance Telephone Co. (PLDT), Aboitiz Power Corp., and Energy Development Corp. (EDC).
After rising by as much as 2.6%, PLDT ended higher by 1.22% or PhP30 to PhP2,495. The telephone giant tracked the 4% rise in its American Depository Receipts overnight.
Aboitiz Power jumped 10|% to PhP16.50, its highest close since listing in 2007, while EDC gianed 3.8% to PhP5.04.
Bucking the general rally was Vista Land, which fell 1.1% to PhP1.74 apiece, after its owner accepted defeat in the presidential race.
Villar has conceded to Aquino, who was leading by a wide margin in the ongoing tally of votes being conducted by the Commission on Elections (COMELEC).
At 9:39 a.m., the Comelec's partial count showed Aquino had 12,587,406 votes, followed by Estrada with 8,015,110 votes. Villar came in third with only 4,477,209 votes.
Before Villar's announcement, Vista Land was up as much as 3.5%, along with the market.
'Hot Money' Inflow Up 602% in 1st Quarter
Philippine Daily Inquirer
Date Posted: 15 April 2010
Net Inflow of foreign portfolio investments into the Philippines grew by 602 percent in the first quarter, reaching $384.75 million from $54.78 million in the same period last year, the Bang Sentral ng Pilipinas reported Thursday.
Data from the BSP showed that the latest foreign portfolio investment inflows were a result of $1.66 billion in gross inflows and $1.27 billion in gross outflows.
In March alone, net inflows of 'hot money' amounted to $76.04 million, up 138 percent from $32 million in the same month last year. The net inflows were a result of the $580 million in gross inflows and $504 million in gross outflows.
Monetary officials said the steep increase in hot money to the Philippines was an indication of foreign investors' growing optimism toward the country and other emerging economies.
Capital market players said some of the hot money flowed into the country's stock market.
The increase in hot money inflows, however, has resulted in the appreciation of the peso.
Monetary officials said the even if the peso were to strengthen, this would not necessarily affect Philippine-made goods.
The impact of the rise of the peso on the cost of the Philippine exports is being tempered by low inflation, officials said.
7 Growth Areas in RP, According to Foreign Investors
Inquirer.Net
First Posted 15 April 2010
Manila, Philippines - Agribusiness, business process outsourcing, creative industries, infrastructure (airports and seaports, road and rail, power and water), manufacturing and logistics, mining, and tourism, medical travel, and retirement will frontline the country's drive for robust investment, foreign investors said in a form.
At the briefing on "Seven Big Winners: High Growth Sectors for Investment and Job's of the Joint Foreign Chambers of the Philippines, John Casey, president of the Australia-New Zealand Chamber of Commerce, and the joint chambers is committed to creating a "higher standard for life" for Filipinos which would result from higher foreign investments.
The joint chambers' goal for the next decade is to help the country create 10 million new jobs and to produce $75 billion in foreign direct investments, Casey said.
For his part, Dr. Federico Macarans of the Asian Institute of Management forecast that 2011 will bear more intense competition for foreign direct investments within Asia, which would continue to experience the largest growth even in the face of limited global investment.
John Forbes, senior adviser for the Investment Climate Improvement Program, said the Philippines should be able to take advantage of this situation. "The Philippines is located in a region currently with the highest economic growth in the world," and the country may be able to benefit from this by employing strategies used by Asia's most dynamic economies, he said.
Forbes said these strategies include fully exploiting the world economy, maintaining macroeconomic stability, mustering high rates of saving and investment, as well as having a committed, credible, and capable government.
To help promote foreign investments into the country, AIM's Macaranas said investors must have an understanding that the Philippine investment environment is chaotic so that they can respond accordingly with approriate strategies.
Macaranas also called for the implementation of the Philippine Investments Promotion Plan (PIPP). which seeks to double investments from overseas by 2014, as well as more public-private partnerships.
Given that the joint chambers' recommendations will only create an impact if the next administration considers them, the foreign businessmen's organization said the next president must be a "true visionary, have the capability to implement, and recognize the importance of foreign investments."
The JFCP is composed of the American, Australian-New Zealand, Canadian, European, Japanese and Korean Chambers of Commerce, as well as the Philippine Association of Multinational Companies Regional Headquarters.
Exports Rise for 4th Straight Month in February
13 April 2010
Manila, Philippines - Philippine exports grew for the fourth straight month in February as the recovery of the global economy boosted demand for the country's key goods.
Data from the National Statistics Office (NSO) showed that the country's export earnings for the second month of 2010 rose to $3.57 billion from the year-ago level of $2.51 billion. However, on a monthly basis, exports slightly declined by 0.4% from $3.58 billion in January.
Shipments of electronics, which dominate exports and are largely assembled from imported parts, climed 53.4% to $2.07 billion in February after a 51.2% jump in January.
Semiconductor exports, which comprised 42.3% of total exports and the biggest share among the major groups of electronic products, amounted to $1.508 billion or an annual increase of 59.6%.
The country's exports started to slowdown in September 2008 and had since contracted as demand from most of the country's trading partners softened due to the gloabl crisis.
Contributing about two-fifths of the country's total output based on expenditure terms, exports recovered only in November 2009, withy a revised growth of 5.7%.
The Philippines expects exports to grow 7% to 9% and imports to rise 13% to 15% in 2010. The main electronics industry group expects shipments to grow 20% or more this year on strong demand from China and India.
For the month of February, the NSO said japan, including Okinawa, was the country's top export destination, with total receipts of $627.04 million or 17.6% of total earnings. This was 55.4% higher than last year's $403.44 million.
The United States came in second with export receipts of $603.83, followed by Singapore ($321.62 million), China ($2296.28 million), Germany ($291.20 million), and Hong Kong ($259.62 million).
The Philippines provides about 10% of the world's semiconductor manufacturing services, including for mobile phone chips and micro processors.
World Bank Raises RP Growth Forecast for 2010
Philippine Daily Inquirer
Date Posted: m 07 April 2010
The World Bank has turned more bullish on the Philippines, revising its growth forecast for the economy from 3.1 to 3.5 percent for 2010, saying remittances and export income may be more robust than earlier anticipated as prospects for gloabl economic recovery are nore more solid.
The revision of the growth forecast for the Philippines came with the upward adjustment in projections for other countries in East Asia and the Pacific, which the World Bank said would be a key growth driver for the world economy for the year.
The World Bank now sees the region growing an average 8.7 percent, nearly a percentage point higher than its earlier forecast of 7.8 percent.
Ivailo Izvorski, the World Bank's lead economist for East Asia, said in a video conference yesterday that the world economy was still facing the risk of a "double dip," a phenomenon where countries contract immediately after having recovered from a recession, after coming from the latest crisis that peaked in the first half of last year.
He cited the debt woes in the Eurozone as one of the potential factors that might choke the world's nascent recovery.
However, Izvorski noted that the threat of a double dip was now less than how it was five months ago, taking into account the performance of economies in the first quarter.
In the case of the Philippines, Izvorski said, the global recovery could mean faster growth in remittances sent by Filipinos overseas. The World Bank expects remittances to the Philippines to grow anywhere between 6 to 8 percent this year, or to more than $18 billion from last year's $17.3 billion.
Nonetheless, the World Bank said the Philippine government needed to implement structural reforms to make economic growth in the country translate to an increase in the country's per capita income.
Vikram Nehru, the World Bank's regional chief economist in East Asia, said sustained growth in remittances to the Philippines in 2009 was noteworthy since it defied the recession in the industrialized nations where layoffs and wage cuts were implemented.
The $17.3 billion in remittances to the Philippines last year was 5.6 percent higher than the $16.4 billion registered the previous year.
If remittances to the Philippines grew 5.6 percent last year even at the height of the turmoil, Nehru said, then money from Filipino migrants could grow at a faster rate this year given the improved global economic prospects.
World Bank country economist Karl Kendrick Chua said economic growth should be much faster to outpace the growth in population and thus lead to higher per capital income, One way to do so was for the government to shore up revenue collection to afford more pump-priming activities.
The Worls Bank's lastest economic growth forecast for the Philippines is within the government's own prjection of between 2.6 and 3.6 percent.
LOCAL STOCKS SURGE TO 2-YEAR HIGH
Philippine Daily Inquirer Website
First Posted on 24 March 2010
MANILA, Philippines - Local stocks Wednesday rallied to a two-year high as an upbeat global investor sentiment and a string of favorable domestic news fueled a broad based buying of equities.
The main-share Philippine Stock Exchange index gained 37.36 points or 1.2 percent to close at 3.166.60 - exceeding the year's previous peacj of 3,130 seen in early January to reach its highest level since late February 2008.
Value turnover was heavy at PhP3.8 billion on the back of heavy foreign buying. The market has so far captured close to PhP10 billion in net foreign equity flows since the start of the year, based on dealers' estimates.
"We're really following the regional and global markets. Equities are really compelling this year as valuations are still historically cheap, although not as dirt-cheap as last year", said Paul Joseph Garcia, chief executive officer at ING Investment Management, which handles the biggest equity funds in the country.
"This is a confirmation that we are out of the woods and now racing to greater heights. Investors, local and foreign, are more optimistic despite noisy political environment," said Astro del Castillo, managing director at local fund management firm First Grade Holdings, Inc.
Based on PSE documents, Wednesday's close was the highest for PSEi since February 21 when the index finished at 3,176.06.
ING's Garcia said the index may still have some more momentum to go up, with the next upside target at 3,250. On the downside, the next support was seen at 3,050.
He noted that the market managed to establish a new high for the index this year after three unsuccessful attempts since January, when it pulled back over worries over the fiscal position of Greece and other European states.
Yesterday's rally was fueled by robust trading on the interest rate - sensitive property counter, which was up 4 percent. The Bangko Sentral ng Pilipinas has said that it would keep key interest rates at record-lows through the first semester, which was an encouraging signal for mortgage borrowers.
Lopez-owned utility stocks also sizzled on the expected closing of a deal to sell additional shares in Meralco to First Pacific Co., Ltd. of Hong Kong.
There were 70 gainers as against 29 decliners and 72 unchaged stocks.
PLDT succumbed to profit-taking but this was offset by heavy buying on Ayala Land, Metrobank, First Holdings, Metro Pacific Investments, Robinsons Land and Banco de Oro.
The local market was also aided by the upbeat trading in Wall Street overnight. The S & P 500 Index hit an 18-month high as signs of growing demand for steel and semiconductors boosted confidence the economic recovery was further gaining ground.
GLOBAL CONGLOMERATES INVEST IN RP
Four of the world's largest business conglomerates poured in a total of PhP119.1B worth of investments into the country, an affirmation of investor confidence in the country's sound macroeconomic fundamentals and stable fiscal position.
"Investor confidence in the Philippines continues to be strong with recent entry of critical investments poured from several global conglomerates such as the Sumitomo Metal Mining Co., (SMMC), Charoen Pokphand Foods (CP Foods) and Al Kharafi Group," Department of Trade and Industry (DTI) Secretary Peter B. Favila said.
"The decision of these companies to invest is a clear indication that the Philippines remains to be one of Asia's invesment destinations of choice," Favila added.
First in the list of these major investors is the Taganito HPAL Nickel Corporation (THNC), a joint venture firm of Nickel Asia Corp. (NAC) and SMMC, an affiliate of one of Japan's largest conglomerates, the Sumitomo Group.
To be located in a 670-ha. Special Economic Zone (ecozone) in Surigao del Norte, the PhP62.7-B joint venture project is considered the biggest investment in the Philippine mineral sector and is envisioned to increase the country's market share to more than 5% of the total world nickel production output in three years.
Another big investment is CP Foods' PhP2.4-B aqua feed mill project in Capas, Tarlac. CP Foods, a wholly owned subsidiary of Thailand's largest agribusiness group, the Charoen Pokphand Foods Public Company Limited (CPF), said the project will bridge the current gap demand for aqua feeds in the country.
The entry of CP Foods is expected to boost the potentials of Philippine aquatic production with the introduction of new technology.
In addition, Al Kharafi Group, one of the biggest conglomerates in Kuwait, will invest PhP54-B for the design, financing, construction, and operation of the Diosdado Macapagal International Airport (DMIA) Terminal 2.
The DMIA Terminal 2 is an integral part of the Subic-Clark mega logistics hub and is being developed to be the Philippines' premier gateway airport by 2011.
The Kuwait investors intend to construct the new DMIA Terminal 2 in two phases. Phase 1, with total investment cost of US$100M, involved the construction of airport terminal, main gateway and boulevard to the airport, a covered parking area, offices, conference rooms, and other airport amenities.
Phase 2, valued at PhP49.5B, involves the construction work for the bulk of other major airport facilities.
The completion of this airport in 2011 is expected to further boost the country's competitiveness as a logistics hub in Asia and the Pacific.
In another development, Philip Morris Philippines Manufacturing, Inc. (PMPMPI) broke ground its PhP1-B regional lease warehouse in Subic that will store tobacco leaf for shipment and processing in various Philip Morris factories in the Asia-Pacific region.
PMPMI has signed a 50-year lease agreement with the Subic Bay Metropolitan Authority (SBMA), increasing the total land area of its project to 49,279 sq. m. from the current 9,600-sqm warehouse.
With the presence of these companies in the country, we are optimistic that others will follow," DTI Undersecretary Elmer C. Hernandez said.
"These investments can generate more jobs for our people, more export earnings and a bullish perception among potential and existing investors that the Philippines remains to be a productive and profitable place to do business. There is indeed a silver lining in the Philippine investment horizon," he added.
RP AT THE EPICENTER OF GLOBAL GROWTH
The Philippine business sector is optimistic this year as the country is considered being at the epicenter of the ongoing global economic growth, the top executive of one of the country's largest and most active investment banks said.
"Asia is the emerging growth engine of the world," First Metro Investment Corporation (FMIC) President Francisco Sebastian said.
Sebastian said the country is part of the "VIP" group in Asia that is now taking off, referring to Vietnam, Indonesia, and the Philippines, which, he said, are benefitting from huge population and strong domestic demand.
FMIC, the investment-baking arm of the Metropolitan Bank & Trust Co., sees the domestic economy expanding by 3.8% this year, slightly exceeding the government's growth target of between 2.6% - 3.6%.
Growth will accelerate from a projected expansion of between 1.3%-1.5% in the gross domestic product (GDP) last year, Sebastian said.
Expected to underpin this year's economic recovery are consumer spending, which will be kept robust by remittances of overseas Filipino Workers (OFWs), and increased government spending.
The government will spend more for the conduct of the May national elections and for the rebuilding of infrastructure damaged by the recent natural calamities. Politicians running for elective office are also expected to pour huge amounts of money into their campaign.
Sebastian said remittances are expected to increase by 5% - 6% this year, a forecast that is in line with the Bangko Sentral ng Pilipinas' (BSP) projection of a 6% increase over last year's level. The BSP has projected an increase of at least 4% in remittances last year to around US$17.1B.
Dt. Victor Abola of the University of Asia and the Pacific (UA&P) expects inflation this year to be at around 4.2% - 4.3% within the BSP's target range of 3.5% - 5.5%.
FMIC's top executives consider 2010 as "a year of steady growth and recovery of the Philippine markets."
FMIC Vice President for Investment Advosory Eduardo Banaag, Jr. painted a rosy outlook for the local stock market, predicting that the key index will challenge its highest peak of 3,873 by the second half of this year.
For the whole year, he said, the index is expected to rise by 10% over last year, extending its rebound after advancing by 63% in 2009.
"The stronger-than-expected recovery and low interest rates will stretch the rallies in stock markets to 2010," Banaag said.
Sebastian said this year's implementation of key market-friendly legislations, such as the Real Estate Investment Trust (REIT) Act and the Personal Equity and Retirement Account law, should also boost the stock market. (BMI 01/10)
ECONOMIC OUTLOOK FOR 2010 BETTER THAN 2009
Despite the challenging global economic environment and the recent calamities that hit the country, economic managers see better Philippine Economy in 2010.
Department of Finance (DoF) Secretary Margarito Teves said they expect 2010 to be much better than 2009, with this year's gross domestic product (GDP) exoected to grow between 2.6% - 3.6%.
Teves expected the country's major economic indicators to remain stable this year as the world economy starts to stabilize and signs of recovery are in sight.
In addition to tough economic reforms put in place in recent years, he said the implementation of the government's Economic Resiliency Plan (ERP) has also helped cushion the impact of global economic crisis.
The PhP330-B ERP is broken down as follows:
> PhP160B for the increase in the 2009 budget to fund accelerated spending for small, community-level infrastructure projects and social protection measures;
>PhP40B for tax cuts for low and middle earners (PhP20B) and the scheduled cut in corporate income taxes (PhP20B) as provided in the Revised Value Added Tax Law;
>PhP100B to be provided by government financial institutions and social security instutions to finance large infrastructure projects; and
>PhP30B for additional benefits provided by social security institutions.
In line with the ERP, the 2009 budget prioritized infrastructures, social protection, agriculture, education, and health care projects. These public services are expected to strengthen the economy and lay the foundation for future growth.
PTIC Brussels Note:
The Philippine Trade & Investment Center (PTIC)- Brussels initiated talks with the European Investment Bank's Asia Operations Desk and presented investment opportunities in the Philippine Energy Sector. This eventually led to preliminary visits of EIB Oficials in Manila to explore possibilities with concerned government agencies and officials (Department of Energy, Department of Agriculture, etc), with the assistance of the Philippine Board of Investment's Europe Desk. This series of preliminary meetings eventually led to the EIBs decision to extend a 50 Million Euro investment loan facility to the Philippine Energy Sector. read article below. For further details, more information may be found at the EIB website: http://www.eib.org/projects/pipeline/2008/20080218.htm
European Investment Bank gives LandBank €50M for relending
Written by Erik de la Cruz / Business MIrror Tuesday, 25 November 2008 19:40
THE European Investment Bank (EIB), the European Union’s (EU) long-term lending arm, is extending a 20-year, €50-million loan to state-owned Land Bank of the Philippines.
LandBank will relend the money to entities that need funds for projects in renewable energy.
EIB officials led by its vice president, Carlos da Silva Costa, said the multilateral financing institution would sign the loan deal with LandBank once documents have been finalized.
“We’re expecting to sign it as soon as possible,” the visiting EIB official said in an interview on Tuesday.
The credit line will increase EIB’s exposure to the Philippines to €464 million. More loans may be made available to the country in the coming years, da Silva Costa said.
The EIB previously lent to state-owned lender Development Bank of the Philippines and Manila Water Co. Inc.
“The Philippines has been one of the main beneficiaries of EIB financing in Asia,” said Philippe Szymczak, head of EIB’s Asia lending operations. The bank’s Philippine loan portfolio is the second-biggest in the region next to China’s.
The deal with LandBank, he said, involves the transfer of European know-how and technology. EIB had also held initial talks with local energy companies for possible financing deals.
Szymczak said EIB aims to expand its portfolio in Asia in the coming years and is now focused on supporting projects that promote environmental sustainability.
EIB, which began lending in Asia in 1993, is authorized to lend up to €3.8 billion in the region between 2007 and 2013. An indicative “sub-ceiling” of €1 billion has been set for projects in 18 Asian partner-countries.
To enhance its ability to support the EU’s efforts to mitigate climate change, EIB has also put in place the €3-billion Energy Sustainability Facility.
There are no amounts allocated per country per sector.
“There are no quotas. We lend on a first-come, first-serve basis, and the Philippines is a front-runner” in terms of allocation, said da Silva Costa. He said the bank can finance not just big projects, but also those which small and medium enterprises would undertake.
“For small projects, we deal with local banks who can act as intermediators. That’s cost-efficient. But for big projects, we deal directly with the borrower,” he said.
“Our risk appetite has not been affected by the crisis,” he said. “In this period of global financial crisis, the multilateral agencies, including the EIB, are present and are actually willing to support projects that correspond to our priorities.”
Established in 1958 to finance capital investment promoting EU policy objectives, EIB has emerged as the largest international financial institution with lending volume reaching €48 billion in 2007.
South East Asian ministers
to sign key trade deal
By Danny Kemp
Agence France-Presse - inquirer.net
First Posted 13:15:00 02/27/2009
Filed Under: International (Foreign)Trade, International Economic Institutions
HUA HIN -- Southeast Asian ministers opened a key summit focused on the global economic meltdown Friday at which they were expected to sign a major free trade deal with Australia and New Zealand.
Ministers will also discuss forming a long-awaited human rights body, but the annual meeting in the Thai beach resort of Hua Hin is set to be dominated by efforts to shield their export-driven economies from turmoil elsewhere.
With the 10-member Association of Southeast Asian Nations (ASEAN) suffering plummeting demand from its developed trading partners, Thai Prime Minister Abhisit Vejjajiva called for cooperation to ride out the crisis.
"We must not resort to protectionist tendencies at trying times," Abhisit said in a speech to business leaders. "We must continue to believe in free and fair trade that shall remain the cornerstone of our ASEAN economic community."
The deal to set up a free trade area with Australia and New Zealand is the most comprehensive ever agreed by the bloc, which comprises nearly 600 million people.
ASEAN is starting to feel the effects of the global economic crisis, with its financial hub Singapore facing its worst recession since independence and others including Thailand sliding in the same direction.
Officials said the pact with the two Pacific countries was expected to be signed later Friday, nearly four years after talks on the deal first began.
It covers trade in goods and services, investment, financial services, telecoms, electronic commerce, intellectual property, competition policy and economic cooperation.
Australia is ASEAN's sixth-biggest trading partner and New Zealand the ninth, while ASEAN collectively is Australia's biggest overseas market.
The agreement is part of a raft of measures mooted by the organisation to ride out the crisis.
Leaders will sign a declaration on a roadmap for forming a European Union-style community by 2015 and discuss a $120-billion emergency fund agreed on by Asian finance ministers on Sunday.
Foreign ministers discussed the fund on Thursday night and called for it to be implemented as a "matter of urgency" to fight the global downturn, ASEAN Secretary General Surin Pitsuwan told reporters.
He said they agreed it should be completed "most desirably" before the 10 ASEAN leaders meet with their Chinese, Japanese and South Korean counterparts from April 10-12.
That meeting was originally due to take place in December alongside the summit, but both were postponed because of political turmoil in Thailand.
The ASEAN grouping, whose diverse members include a military dictatorship, an absolute monarchy, several young democracies and some communist countries, faces its perennially tricky problem of human rights.
Foreign ministers are due to meet Friday on a human rights body due to be set up under ASEAN's new charter, signed in December, but critics say it will be toothless because of the bloc's policy of non-interference.
The top problem in this department remains military-ruled Myanmar. Rights watchdogs urged the group again on Thursday to press the country's generals to end rights abuses and introduce political reform.
These abuses include the treatment of the Muslim Rohingya boat people, who hit the headlines earlier this year when Thai security forces allegedly abandoned hundreds of the migrants at sea.
The ASEAN summit itself also faces accusations of lacking relevance because of the absence of major regional partners and key economic powers China, Japan and South Korea.
They said they were unable to attend after the summit was delayed.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.