July 2013
Volume 24 No. 07
PEZA investments rise 89.7% Investments registered with the Philippine Economic Zone Authority (PEZA) grew 89.7% in the first five months of the year to P74B over last year’s P39B on the back of the country’s improved business climate. PEZA Director-General Lilia B. De Lima said the newly generated investments indicate that investors have finally gone back to the Philippines. “The growth was primarily driven by the electronics sector mostly from Japanese locators,” PEZA Promotions and Public Relations Group Manager Elmer H. San Pascual said. Historically, majority of PEZA locators are engaged in electronics manufacturing. San Pascual said projects mainly consist of expansions. He said PEZA remains on track to achieve its total target investment commitments of P1.1T within a six-year period
July 2013
from 2011 to 2016. This is based on a 10-% annual growth target. In April this year, PEZA reported accumulated investments of P2.36T over the past 18 years, 33% of which came in the first two and a half years of the Aquino administration. PEZA has a total of 2,950 investors, which are all export-oriented.
“This means that while we can give tax incentives, PEZA itself get no tax incentives at all,” De Lima said. De Lima said her agency has remitted a total of P13.91B representing taxes, 50% dividends to the national government, and payments of previous PEZA loans.
PEZA exports reached USD 482.4B for the period 1995 to February this year. PEZA exports account for 76% of the country’s total exports.
PEZA has also streamlined its bureaucracy from the original 1,006 personnel to only 494 strong, lean but efficient highly-motivated service-oriented workforce servicing 2,950 companies in 281 ecozones located all over the country.
PEZA enterprises also employ a total of 912,047 Filipinos. De Lima, however, said a total of 4.5M jobs have been generated by PEZA investors if the indirect employment would be included.
From registering only exportoriented manufacturing companies, PEZA has gone into the information and communication technology (ICT) sector, tourism and medical tourism, and agro-industrial ecozones.
PEZA also religiously pays taxes to the national government, including the 32% regular corporate income tax.
PEZA locators are entitled to income tax holidays (ITH) or a choice of 5% tax on gross income. They are also allowed to import duty-free capital equipment.
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INDUSTRY Trends Mindanao positioned as PHL’s palm oil capital Palm oil industry stakeholders in Mindanao are aiming to develop the region as palm oil hub of the country.
A total 5.99M tons of commodities were traded within the country, up by 26.7% from 4.73M tons in the same period last year. Goods continued to be transported mostly via water, with 99.9% of goods shipped, only slightly higher than last year’s 99.8%. Top 4 domestic commodity trade in Q1 Commodity Food and live animals Machinery and transport equipment Manufactured goods Animal and vegetable oils, fats, and waxes
Mindanao Development Authority (MinDA) said 20% or 177,000 ha out of 900,000 ha of land identified apt for palm oil plantation is already under negotiation for the sector’s development. MinDA Secretary Luwalhati R. Antonino named Univanich Carmen Palm Oil Corporation as among the private sectors that ventured on palm oil business. The firm had a groundbreaking ceremony for its P600-M palm oil crushing mill in Carmen, Cotabato. Some P30B worth of business opportunities was identified during a business matching session held in Kuala Lumpur last year mostly on the development of palm oil industry in Mindanao. MinDA assumes actual investment projects in palm oil industry in partnership with the Board of Investments (BOI) and the Department of Trade and Industry (DTI). Domestic trade volume up 27% in Q1 Domestic trade volume in the first quarter increased from a year ago, the National Statistics Office (NSO) reported. 2
Value (in P billion) 38.80 20.30 19.50 2.27
In terms of region, most of the goods came from Metro Manila with trade value at P35.31B, followed by Central Visayas with P23.79B. PHL to ship banana to U.S. The Philippines may finally push through with the exportation of Cavendish bananas to the United States (U.S.), the Bureau of Plant Industry (BPI) announced.
Philippine banana exports rose 111% in 2012 despite export restrictions set by China because of increased demand from the country’s premium markets. The local banana industry managed to increase shipments of Cavendish bananas to 3.8M MT in 2012 from 1.8M MT in 2011 because of increased demand from traditional markets like Japan and Korea, and the opening of new export markets such as Indonesia, Pakistan, Jordan, and Middle East countries. Bamboo sector action plan nears approval The Department of Trade and Industry (DTI) said the proposed Philippine Bamboo Industry Development Program’s (PBIDP) 2013 Agenda for Action would be presented to the Philippine Bamboo Industry Development Council (PBIDC) for final approval.
BPI Director Clarito M. Barron said a work plan for the banana exportation to the U.S. has already been approved by both parties. “The U.S. government give the go signal for the commencement of shipments of highland Cavendish bananas,” Barron said. Eyed for shipment to U.S. defense commissaries are 3,000 metric tons (MT) of Cavendish bananas produced by DOLE Philippines. Manila tapped the U.S. market after China imposed stricter sanitary and phytosanitary restrictions on Philippine banana exports. Aside from the U.S., the Philippine government is also talking to Japan, Korea, and other Middle East countries for banana exports.
Early this year, DTI conducted a series of planning workshops to address the need to come up with a wide-ranging action plan for the Philippine bamboo industry. The action plan for the bamboo industry, which seeks to improve the environmental health and competitiveness of the bamboo industry, was crafted following workshops and Philippine Business Report
consultations conducted by the government with private industry associations as well as non-government organizations (NGOs). The action plan contains measures for environmental management to be led by the Department of Environment and Natural Resources (DENR), as well as for business development which would be under the DTI. For the business development component, DTI encourages the private sector to pursue the production of high-end products in the construction and creative industries. Aside from the environment and business components, the action plan would also have measures for social development to be handled by NGOs and private industry associations. The PBIDC is chaired by DTI Secretary Gregory L. Domingo and composed of representatives from the Departments of Environment and Natural Resources (DENR), Education (DepEd), Agriculture (DA), Science and Technology (DOST), Labor and Employment (DOLE), the League of Municipalities of the Philippines (LMP), NGOs, and private industry associations. OFW tourist arrivals rise 4.2% in 2012 The number of overseas Filipino workers (OFWs) registered as tourists rose by 4.2% to 215,943 in 2012 from 207,152 in 2011, the Department of Tourism (DOT) reported. OFW tourists commonly traveled by air and 52.25% went for a vacation. Among the places frequently visited by OFW tourists include Baguio, Batangas, Boracay, Cebu, Davao, Laguna, and Tagaytay. Some 15% of the OFW tourists are professionals holding managerial and administrative positions while 12.54% are industrial workers. July 2013
Based on the DOT data, the average annual gross income of the OFW tourists stands at USD 81,500.
personnel dislocated by the reorganization of the BOT Center to the PPP Center.
New EO amends PPP President Benigno S. Aquino III recently signed Executive Order (EO) 136 s. 2013 refining EO 8 s. 2010 and specifying particulars that were not assigned before such as the governing board of the Public-Private Partnership (PPP) Center.
A revision to Section 2 reconfigures the Project Development Facility (PDF), a revolving fund, to the Project Development and Monitoring Facility (PDMF).
EO 8 renamed the Build-Operateand-Transfer (BOT) Center to the PPP Center of the Philippines and transferred it to the National Economic and Development Authority (NEDA) from the Department of Trade and Industry (DTI). EO 136 added new sections and subsections to EO 8. Section 3A creates the PPP Governing Board with SocioEconomic Planning Secretary as the Chairperson and the Finance Secretary as Vice-Chairperson. Its members are the secretaries of the Departments of Budget and Management (DBM); Justice (DOJ); Trade and Industry (DTI); Executive Secretary; and the Private Sector Co-Chairman of the National Competitiveness Council (NCC). It also assigns the PPP Center to be the Secretariat of the board. Section 4A directs the inclusion of the PPP Center Executive Director to the NEDA Infrastructure Committee–Technical Board (INFRACOM-TB) and the NEDA Investment Coordination Committee–Technical Board (ICC-TB). An additional Section 5A sets the guidelines for the retirement or separation benefits of BOT Center
The new Section 6 clearly sets the purposes of the PDMF and creates the PDMF Committee composed of representatives from NEDA, the Department of Finance (DOF), and Budget and Management (DBM), and the PPP Center to oversee the PDMF. A new section is also added that would require all government agencies to submit reports of projects undertaken through PPPs to the PPP Center. DOT allots P1B for tourism promotion The Department of Tourism (DOT) has set aside P1B for promotions and marketing programs under the Tourism and Promotions Board (TPB), which is twice as much as its 2012 budget.
Tourism branding, which intends to enhance the country’s image and promote the Philippines to the international tourism market, would receive much of the 2013 budget. While the DOT is redoubling its efforts in promoting the country as an ideal tourist spot, it also enjoins other government agencies to take cognate action to enhance tourist destinations such as the development of several airports to accommodate direct 3
international flights, hotels and resorts. DOT also urges local enterprise to produce unique, fine, premium products that foreign customers would buy and bring home. Tourism receipts expected to double by 2016 The government is targeting tourism receipts to reach USD 8B by 2016, almost twice the target for this year, with foreign arrivals projected to reach 10M by 2016.
Tourism receipts, which are tourists’ spending within the country, are seen to land at USD 495B this year, and USD 6.07B by 2014, while tourist arrivals for 2013 are targeted at 5.5M. For 2011, the tourism receipts posted at USD 2.99B and USD 3.82B in 2012. Meanwhile, tourist arrivals were at 3.9M in 2011 and 4.2M in 2012. In the first quarter of 2013, tourist arrivals reached 1.27M, and by May, was already at around 4.3M. This assures that the 5.5M target is not far from possible. Requirements for FIT eligibility set The Department of Energy (DOE) released the guidelines in the selection and awarding of certificates for eligibility for feed-in-tariff (FIT) to renewable energy (RE) projects, applying a “first come, first served” policy in distributing the aimed 760-megawatt (MW) RE installation. 4
The FIT rate would allow for secure cash inflow for 20 years for the developers to be able to put up their RE facility before the installation target runs out. Developers would begin their bid for the installation after its declaration of commerciality (DOC). In a circular signed by DOE Secretary Carlos Jericho L. Petilla, the DOE is required to complete the process for the DOC in 30 working days after receiving documents needed from proponents. An endorsement to the National Grid Corp. of the Philippines (NGCP) is then needed from the DOE once the DOC is confirmed.
CBRE Philippines estimated Metro Manila office space occupancy to reach 450,000 sqm this year just as the previous year. The business process outsourcing (BPO) sector is seen as the largest market in terms of office space due to the country having the lowest office cost in Asia. Office rent takes up about 11%-15% of BPO expenses. Corporations also have a healthy demand in office space. High demand for residential properties in Metro Manila is also seen by the firm due to the rising numbers of overseas Filipino workers (OFWs) and BPO employees.
Developers can then file for electromechanical completion from the DOE after they finish 80% of their infrastructure as may be determined from the proponent’s engineering, procurement, and construction (EPC) contract. DOE shall issue the approval or rejection of the electromechanical completion within 15 working days after the final day of site validation. Upon approval of the electromechanical completion, DOE will issue a certificate of endorsement (COE) for eligibility following the FIT system to the Energy Regulatory Commission (ERC) who will process the application for certification of compliance (COC). The COC, which is valid for five years and should be renewed six months before expiration, is needed by power generation plants to start commercial operations. COEs would be issued while installations are still available. Q1 office occupancy hit record high Office occupancy in central business districts (CBD) in Metro Manila, which has always been above 90% since 2011, reached 97% during the first quarter of the year, real estate services firm CB Richard Ellis (CBRE) Philippines reported.
Trade and INVESTMENTS AGRICULTURE/ AGRIBUSINESS AND FISHERY First Pacific to develop palm plantation First Pacific Co. Ltd. is considering to develop 30,000-ha area in Davao Oriental for palm oil production by the Hong Kong-based company’s agri-business arm, PT Indofood. PT Indofood is already evaluating the feasibility of available areas in Philippine Business Report
Davao Oriental for palm oil cultivation. First Pacific earlier said they were interested in agricultural areas for palm oil, sugar, rubber, coffee, and cacao production; however, Indofood opted to focus on palm instead of other viable products in the country such as bananas because of the plant’s resiliency against typhoons. ANI prepares to increase export sales Aiming to increase sales in the international market, listed fruits and vegetables producer AgriNurture Inc. (ANI) had obtained a 1,000-ha banana plantation in Mindanao and earmarked P1B to upgrade their cold storage facility. The additional area would add 40,000 metric tons (MT) of Cavendish bananas to their annual yield, expanding their banana plantation for expected growth in overseas demand for fruit.
ENERGY Petron embarks on expansion program Petron Corp. targets to build 5,000 new service stations in three to four years and complete relocation out from Pandacan oil depot to Navotas; Rosario, Cavite; and Limay, Bataan by 2016.
Philex Petroleum wins bid for 2 areas in Palawan Philex Petroleum recently won the bidding for 616,000 ha Area 4 and 424,000 ha Area 5 located Northwest of Palawan and is planning to conduct seismic survey and exploration within the year as they await the completion of the service contract signing. The Department of Energy (DOE) will give the company seven years for exploration. Philex Petroleum said that seismic surveys to spot drilling areas will take two years. PTT to expand network in South Luzon PTT Philippines Corp. (PTTPC) is planning to expand operations in South Luzon this year.
With this, they are exceeding their original plan of constructing 15 stations yearly with an annual investment of P350M. To date, the company has a total of 50 stations nationwide. Most of these stations are in North Luzon and are catered by its Subic terminal.
Otto Energy starts drilling 2 new Galoc wells Otto Energy Ltd. has started drilling two new development wells at the Galoc oil field in Northwest Palawan.
July 2013
EXPORT Sysco eyes coco water, calamansi juice for import American marketer and distributor of food products Sysco is interested in importing coconut water and calamansi juice from the Philippines.
PTT Philippines President and Chief Executive Officer (CEO) Wisarn Chawalitanon said the company is hoping to end 2013 with 70 stations nationwide, 20 of which are currently under construction and are set to open this year in South Luzon.
Chawalitanon noted that they would also be looking at building a new terminal in Batangas when their expansion plans in the South proved to be profitable.
Under their network expansion program, the company has recently built their 1000th station located in Guiuan, Samar, bringing their total number of stations in the country to 2,100.
The additional wells are part of the Phase II development of the drilling program that the field consortium approved last year. The consortium expects first oil to flow in the last quarter of this year, increasing field production to 12,000 barrels of oil per day (bopd) from the current rate of 5,600 bopd.
The Australian firm said that the Ocean Patriot rig has begun drilling on June 04, 2013 and has already drilled 400m for both Galoc-5H and Galoc-6H wells in Service Contract14C block.
Sysco participated recently in the 9th International Food Exhibition (IFEX) Philippines and got interested in some local products especially the coconut and tropical fruit juices. “Sysco will closely work with us to build the industry. They do not just want to go and buy food products. They want to build a sustainable relationship,” Philippine Trade and Investment Center in Los Angeles (PTIC-LA) Trade Representative Archimedes C. Gomez said. PHL exports 15 metric tons of rice to HK The Department of Agriculture (DA) exported 15 metric tons (MT) of black, brown, and red rice from the Don Bosco Multi-Purpose Cooperative (DBMPC) in Cotabato to Hong Kong recently. This was the country’s second rice shipment. 5
The first shipment, with 35MT of organic black rice and aromatic Jasponica rice, was sent to Dubai. Indonesia also ordered 20MT long grain aromatic rice. The DA also said that an added 20MT of heirloom rice is projected to be shipped in the US by the last quarter of 2013. Yet, the volume of rice exports can still increase as the country is expected to produce more rice in the coming months. It was the first time in 40 years that the country was to export rice at this high volume, the DA reported.
GREEN PROJECTS Wind power projects get green light from DOE Three local power developers are set to officially start their wind power projects after the Department of Energy (DOE) issued their individual ventures a Certificate of Declaration of Commerciality. Energy Development Corporation (EDC) is on track to begin commercial operations of its USD 300-M, 87-megawatt (MW) Burgos Wind Project in Ilocos Norte. Aside from the wind farm, EDC’s three-work package includes putting up a transmission line connecting the farm to the Laoag substation of the National Grid Corp. of the Philippines (NGCP) and the creation of a substation adjacent to the farm and interconnected to the Laoag substation. In Pililla, Rizal, Alternergy Wind One Corp. will begin the construction stage for their 67.5-MW wind power project by early 2015. The project involves the construction and installation of 27 wind turbines along the ridge of the mountainous province. Trans-Asia Oil and EDC’s P6.3-B, 54-MW wind farm project in Guimaras has also received go signal. 6
DOE awards 16 RE service contracts As of April 2013, the Department of Energy (DOE) has awarded nine companies with 16 renewable energy (RE) service contracts that will allow them the exclusive right to explore, develop, and use RE sources in their respective contract areas. Developers
Projects
Hawaiian Philippines Co. n 8-megawatt (MW) bagasse cogeneration power plant in Silay City, Negros Occidental n Mariveles geothermal power project in Bataan Basic Energy Corp. n Iriga geothermal power project in Camarines Sur n East Mankayan geothermal power project in Ifugao, Benguet, and Mt. Province n Negron-Cuadrado geothermal power project AP Renewables, Inc. in Zambales, and Pampanga n Makban geothermal steam field Philippine Geothermal Production Company, Inc. in Laguna and Batangas n Tiwi geothermal steam field in Albay n 5.7-MW hydropower project in Mabungao, Southeast Asia Renewable Power Corp. Mt. Province n 1.5-MW hydropower project in Malecon, Mt. Province 800-kilowatt (kW) hydropower project in Malig, Mt. Province n 1.2-MW hydropower project in Natonin, Mt. Province n 1.10-MW project in Mariveles, Bataan. n 10-MW hydropower project in La Union Local Government of Tubao n 3.3-MW hydropower project in Lucban, Quezon Renesons Energy Corp. n 10-MW hydropower project in Misamis Oriental Minergy Energy Systems n 33-MW Bangui wind power project in Ilocos Norte NorthWind Power Development Corp.
The three companies are now racing to get the feed-in-tariff (FIT) incentives for wind power under the “first come, first served” policy. NorthWind eyeing projects in the North NorthWind Power Development Corp. is keen on developing projects in Aparri, and Pamplona in Cagayan. NorthWind Chairman Niels Jacobsen said the company is waiting for the start of the construction of the transmission line that will link the wind farms to the power grid. Northpoint Wind Power Corp., one of the company's subsidiaries, will construct the USD 95-M 40-megawatt (MW) wind project in Aparri. NorthEast Wind Systems
Corp. will likewise build the 40-MW wind farm in Pamplona which is seen to be operational on or before 2015. Six hydro plants clear for building The Department of Energy (DOE) has greenlighted the construction of six hydropower projects with a combined capacity of 47.6 megawatts (MW) following declarations of commercial feasibility, data from the department’s Renewable Energy Management Bureau (REMB) showed. These projects are: • Hydrocore, Inc.’s 4.5-MW Ibulao hydroelectric plant in Lagawe, Ifugao • Constellation Energy Corp.’s 3-MW Dupinga plant in Gabaldon, Nueva Ecija Philippine Business Report
• Oriental Energy and Power Generation Corp.’s 18-MW Timbaban plant in Madalag, Aklan, and the 10-MW Culaman plant in Manolo, Bukidnon • Hedcor Tudaya, Inc.’s 7-MW Tudaya plant in Sta. Cruz, Davao del Sur • Century Peak Energy Corp.’s 5.1-MW Igbulo plant in Igbaras, Iloilo Data showed there are still 36 hydropower projects under DOE’s evaluation.
PUBLIC-PRIVATE PARTNERSHIP PROJECTS DOTC pre-qualifies 4 groups for Bicol airport contract The Department of Transportation and Communications (DOTC) has shortlisted four groups for consulting and engineering services for the proposed P963.2-M Bicol International Airport project. Pre-qualified services groups for the Bicol International Airport project n
Ove Arup & Partners Hong Kong Ltd. Filipinas Dravo Corp. (FDC) and Key Engineers Co. and Proconsult Inc. n Schema Konsult Inc. and Pertconsult, International, DCCD Engineering Corp. and Philipp’s Technical Consultants Corp. n TCGI Engineers, Urban Integrated Consultants Inc., and Engineering & Development Corp. of the Philippines n
The initial procurement for the Bicol airport includes airside development, covering the continuation of runway strip construction, concrete paving of runways, 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 land components. Mall of Asia in the South to rise by 2015 SM Prime Holdings Inc. announced that they will complete the July 2013
construction of their mall in Cebu, dubbed as the Mall of Asia (MOA) in the South, by 2015. The shopping center will be part of the firm’s mixed-use development called SM Seaside City at the reclaimed South Road Properties (SRP). The whole project would cost P20B-25B to cover the construction of a shopping mall, a convention center, residential condominiums, and a hotel. The company will allot P5B for the mall. SM Seaside City Cebu will have four levels and is expected to house over 800 food and retail shops, including international brands. DOT allots P1.5B for Davao’s tourism projects Department of Tourism (DOT) has allotted P1.5-B budget for Davao’s infrastructure projects. One of the big projects planned for Davao is to develop the road that connects Mt. Apo in Davao del Sur to Davao City. DOT Secretary Ramon Jimenez Jr. said the infrastructure improvements can maximize Davao’s tourism potential. It can also boost the employment and business opportunities of the place.
MINING Intex will start Mindoro project The mining and exploration company Intex Resources AXA is positive that they can explore Mindoro for nickel through the Mindoro Nickel Project (MNP). The Norwegian-based company has established projects from tree and agro-forestry plantations to potable water system. TVI Pacific Inc. starts operations in Zamboanga TVI Pacific Inc. got the approval of Zamboanga Del Sur’s provincial government to start operations for their gold-silver project in Sitio Balabag after the latter checked another copper-zinc operation of the company in Canatuan, Zamboanga Del Norte.
The operations in Canatuan will shut down yearend while the new project in Sitio Basilag is set to operate in 2014. The new project is expected to produce 50,000 ounces of gold starting next year.
POWER SMC allots USD 1.5B for new coal plants The San Miguel Corp., through SMC Global Power Holdings Corp., allots USD 1.5B for new coal-fired power plants in the Philippines. The Bataan plant will start operations in the middle of 2015 and the Davao plant, by the second quarter of 2015. Early this year, SMC Global Power signed the engineering, procurement, and construction (EPC) contract with Formosa Heavy Industries Corp. and True North Manufacturing Service Corp. Aboitiz invests P125B for power plants Aboitiz Power will invest some P125B to build new power plants over the next five years, bringing their attributable capacity to roughly 3,500 megawatt (MW). They plan to start a 300-MW coal power plant in Mindanao and in Toledo, Cebu, which is expected to be operational by first quarter of 2015 and 2016, respectively. They also plan to construct two more power facilities in Subic with 600-MW and another expansion of 400-MW in Pagbilao, Quezon’s 735-MW. 7
Korean businessmen plan to invest in Zamboanga Korean businessmen Lee Ik Hwan and Alex Huang lead their group for a meeting with Zamboanga City Mayor Celso L. Lobregat to discuss potential investments in Zamboanga’s power supply. The businessmen suggested building a solar power plant to solve the city’s power shortage. They told Lobregat that solar energy will be cheaper but it will involve a large amount of money to build it. ACR pursues USD 1.3B power generation projects Alsons Consolidated Resources Inc. (ACR) wants to pursue USD 1.3B worth of power generation projects for Mindanao. “By 2019, ACR will have an attributable capacity of 665 megawatts (MW),” ACR Chief Finance Officer (CFO) Luis R. Ymson Jr. said. ACR will venture into renewable energy through the 16.7-MW Sigil river hydropower project; build two coal-fired power plants through the Sarangani Energy Corp. and one through San Ramon Power Inc. in Zamboanga City; and complete the rehabilitation of the Iligan diesel power plant that costs USD 450M. The company will also spend USD 900M for a 419-MW open cycle gas turbine and coal-fired power station to supply the needs of the USD 5.9-B Tampakan copper and gold mining operation in Mindanao.
REAL ESTATE
that would add 2,000 residential units with a sales value of P12B. Megaworld expects to have 26 residential towers in the Makati CBD from the current 18 buildings. The projects are Two Central, Three Central, Paseo Heights, and Greenbelt Hamilton. AboitizLand to launch more projects AboitizLand, Inc. is launching three projects this year as it seeks to expand outside Cebu. AboitizLand will launch The Outlets at Pueblo Verde in the 4th quarter and aim to seal an agreement with Ayala Land Inc. for a mixed use project in Cebu that will include condominiums, retail outlets, and possibly office buildings for business process outsourcing (BPO) companies.
Also, the airline will operate a total of 32 weekly flights between Cebu and Davao with the addition of four more weekly flights. Davao Oriental, Kalinga declared tourism areas President Benigno S. Aquino III signed two new laws and a directive declaring Kalinga and Davao Oriental as Tourism Development Areas (TDAs).
Aboitiz said the project is on top of five projects the company intends to launch until next year. FPIP to set up industrial parks in Subic, Clark, Southern Luzon area The First Philippine Industrial Park Inc. (FPIP) is mulling to develop industrial parks in Subic, Clark, and in the Southern Luzon area. First Philippine Holdings Corporation (FPH) President and Chief Operating Officer (COO) Elpidio L. Ibañez said demand has increased, particularly from Japanese-based companies, which would like to put up their respective facilities in the country.
TOURISM
Megaworld continues expansion in Makati Megaworld Corporation is expanding in the Makati Central Business District (CBD) on expectations that demand for upscale residential projects will remain robust.
Cebu Pacific adding flights to Mindanao Cebu Pacific recently increased Mindanao’s connectivity by offering more flights to Zamboanga, Tawi-Tawi, and Davao by adding two weekly flights between Cebu and Zamboanga via Airbus A320, making it a six times weekly service.
Megaworld was set to complete four more residential towers
Cebu Pacific also added thrice weekly flights from Manila
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to Zamboanga and from Zamboanga to Tawi-Tawi, making it a 24 times weekly service and a daily service, respectively.
Republic Act (RA) No. 10560 identified several areas in Davao Oriental and in the Kalinga province as TDAs. A Memorandum Circular No. 47 was also signed enjoining all national and local government units to "actively support" the crafting of comprehensive plans and programs for the country’s two leading tourist destinations namely, Baguio and Boracay. Megaworld earmarks USD 1B for Bayshore project Megaworld Corporation’s integrated tourism estate project at the so-called Entertainment City would entail an investment of more than USD 1B, Megaworld Business Development Consultant Danilo L. Madlansacay said. Madlansacay said the bulk of the amount would cover the construction of Megaworld’s residential and commercial projects in the 30-ha area. Philippine Business Report
COMPANY NOTES Hotels, convention centers planned The SM Hotels and Conventions Corporation (SMHCC) is targeting to put up more hotels and convention centers nationwide starting this year. SMHCC Vice President (VP) for Sales and Marketing Lourdes P. Macalindong said the company’s target is to build one hotel yearly. The five-year plan started this year with the construction of Conrad Manila, an eight-storey luxury hotel located at the SM Mall of Asia (MOA) Complex which is scheduled to open in 2015. Macalindong said the company also plans to start construction of Park Inn by Radisson in Clark Freeport Zone in Pampanga this year and is expected to open next year.
SMC in talks with investors for PAL San Miguel Corp. said it is in talks with prospective foreign companies for strategic partnership with Philippine Airlines (PAL). The food conglomerate said its prospective partners include Tokyo-based All Nippon (ANA) and Dubai-based Emirates Airline. The partnership is expected to happen within the year. In April 2012, SMC and PAL President and Chief Operating Officer (COO) Ramon Ang, and Lucio Tan signed investment agreements that would result in the issuance of new shares to SMC for a stake in PAL and low-cost partner Air Philippines Corp. The transaction will help boost SMC’s revenues in the next years. Figaro aims for 150th store Local coffee chain Figaro Coffee Co. expects to set up its 150th store in three years after which it plans to list its shares.
SMX Convention Specialist, Inc., VP and General Manager Dexter D. Deyto said the SM Group is also looking at building more convention centers in North Luzon and Visayas. SMC to spend USD 750M for 3 cement plants San Miguel Corporation (SMC) plans to spend USD 750M to build three new cement plants capable of producing 2M tons a year.
July 2013
In a bid to increase its presence overseas, Figaro will also open an outlet in Seattle. Wendy’s PHL expects renovated stores to increase sales WenPhil Corp., the Philippine franchisee of Wendy’s International, projects sales to increase this year on the back of expectations that renovated stores will do well. “With the renovation of the existing stores, plus the opening of new ones, we expect to do well this year,” WenPhil Corp. Chairman Elizabeth Pardo-Orbeta said. The company is currently renovating and refurbishing its stores, spending between P3M-P5M for each site. Orbeta said the company has targeted to bring the number of Wendy’s stores to 50 this year. So far, she said, WenPhil is all set to open up to seven stores in the coming weeks. Currently, there are 33 Wendy’s stores which are all in Luzon. Of this number, 32 are company-owned.
Figaro Coffee Co. Chief Executive Officer (CEO) Crismel Verano said the company currently operates 79 outlets, mostly in Metro Manila, two in China, two in Malaysia, two in Papua New Guinea, and one in Saudi Arabia. This year, Figaro will open eight more stores nationwide.
The first of the three new plants will be built in Pangasinan, right next to SMC’s Northern Cement plant. The other two will be put up in Southern Luzon and Cebu.
Total investment includes the franchise fee, site assessment, store design, store construction, store equipment, initial stocks, training of the initial store team, opening assistance from operations team, store operations manual and project management fee.
The stores in the Philippines come in different formats such as carts, which entail a franchising investment of P2.5M; kiosks, P4.2M-P5.4M and full stores, P6.5M.
PLDT sees 3M new subscribers Philippine Long Distance Telephone Co. (PLDT) still expects over 3M in net add-on mobile subscribers in the first half of this year. PLDT President and Chief Executive Officer (CEO) Napoleon Nazareno said the net add-on from its three mobile brands Smart, Talk N’ Text, and Sun in the second quarter would be over 1M. In the first quarter of this year, PLDT remained upbeat on the growth of its prepaid business 9
segment, reporting 170,000 new subscribers per week or 2M users in the first three month for its three wireless brands.
bilateral Agreement PHL, Brazil ink air services agreement The Philippines and Brazil have inked the first air service agreement (ASA) to further boost travel between Manila and Sao Paolo.
ASEAN WATCH Russia-ASEAN trade urged Improving economic relations between the Association of Southeast Asian Nations (ASEAN) member countries and Russia could be a driver of global growth, Department of Finance (DOF) Secretary Cesar V. Purisima said.
The Philippines accounts for 7% of Singapore's total fruit import and only 1% of the total vegetable import last year. Lim cited that Singapore imports more than 90% of its food from different countries. With these, she said that they want to enable the consumers to enjoy key food items at adequate supply and stable prices with assurance of food safety. 10
Department of Agriculture (DA) Undersecretary for Field Operations Joel S. Rudinas said the cluster meeting looked into the landmark achievements or disappointments of the BIMP-EAGA Agribusiness and at the changes that may have something to do with its continued progress. “We want to see where we are now; what are the milestones we have achieved? Because these are keys to the success of the cooperation,” Rudinas told the Philippines News Agency (PNA).
Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said the agreement would allow seven flights for the Philippine designated carriers and seven flights for airlines designated by Brazil.
PHL seen to expand fruits, vegetables market in Singapore The Philippines has a lot of opportunities for fruits and vegetables in the Singapore market due to its rising demand, Agri-Food and Veterinary Authority of Singapore (AVA) Executive Manager Joyce Lim said.
Indonesia-Malaysia-Philippines-East ASEAN Growth Area (BIMP-EAGA) Agribusiness Cluster Meeting recently held in Puerto Princesa City, Palawan, wanted to look into the milestones of the sub-regional group since 1994.
"I believe that there is substantial potential between ASEAN and Russia that has not yet been tapped. Our trade between each other, from the ASEAN standpoint, represents less than 1%, and from the Russian standpoint, represents just a little over 1.5%. Our respective traditional markets, US and Europe, are slowing down. We need to start looking to each other -- Russia and ASEAN -- as new global growth drivers," Purisima said during the RussiaASEAN Business Forum, during the St. Petersburg International Economic Forum held on June 22, 2013.
He said if the cooperation among Brunei Darussalam, Indonesia, Malaysia, and the Philippines has built successful mutual aids, then there is a possibility that the cooperation can be expanded outside of its usual scope. If countries are helping each other on the challenges of climate change and food insecurity globally, then the four countries can also build strongly on them based on expertise and resources.
He likewise highlighted the demographics of the region’s economies, saying that the ASEAN presents a huge potential for Russia.
“We have expertise and resources, like we have a private sector that is engaged in seed production and seed technology, then our partnercountries can avail of them because they’d also like to increase their food security,” he said.
With its young population, expanding middle class, rising consumer spending, and increased investments in infrastructure, ASEAN will be growing in the next couple of years. He urged Russian business to take advantage of this amazing growth story.
Being in the Pacific, the other countries in the East Asian Growth Area are also burdened because of the challenges of climate change and food insecurity, and making expertise and resources available can help stabilize situations, Rudinas said.
BIMP-EAGA meet reviews achievements The Philippine delegation to the three-day first Brunei-
The meeting aims to present and discuss updates and developments and identify necessary next steps in the implementation of flagship Philippine Business Report
The Agribusiness Cluster is currently anchored on the food basket strategy of BIMP-EAGA which focuses on three major themes, namely, food security, export development, and sustainable development. The Cluster is headed by the Philippines with DA Secretary Proceso J. Alcala as chairman. Around 100 participants from the four member-countries attended. BIMP-EAGA projects open 20,000 job opportunities Filipino workers are expected to benefit from employment opportunities provided by four major projects worth more than USD 23B geared towards enhancing and complementing the developmental goals of the Brunei Indonesia Malaysia Philippines-East ASEAN Growth Area (BIMP-EAGA) Business Council (BDBEBC).
signed between KBBB Chairperson Suharani binti Haji Abd Ladi and BDBEBC Executive Chairman Pengiran Haji Mohd Yusof held on June 28, 2013 in Brunei Darussalam. These projects are aimed at further developing growth in the BIMP-EAGA region. PHL prepares to join ASEAN corporate governance plan The Philippines is expected to join the Association of Southeast Asian Nations (ASEAN) Corporate Governance Scorecard (ACGS) in preparation for the integration of the ASEAN by 2015, a government official said.
These projects were selected and proposed by Brunei-government supported cooperative Koperasi Bumiputera Bersatu Berhad (KBBB). KBBB was set up in 2006 as a cooperative of voluntary associations with the main objective of raising the Bumiputera community’s economic well-being through regional and international partnerships. “The four new projects in Brunei pose exciting job opportunities for our fellow Filipino workers. The need for around 20,000 workers in Brunei will assist the government in its job creation efforts,” KBBB Consultant Jose Silvestre Natividad said. He added that project proponents have expressed a big preference in getting the services of Filipino skilled workers, contractors, design firms, engineers, and consultants. The projects form part of the memorandum of understanding July 2013
Securities and Exchange Commission (SEC) Chairperson Teresita J. Herbosa said they are currently laying down the framework for the participation of the Philippines’ publicly-listed companies (PLCs) in the ASEAN-led corporate governance program. Herbosa explained that at present, the SEC is implementing the compulsory Annual Corporate Governance Report (ACGR) by PLCs.
On the calendar World Food Expo World Food Expo will be held on July 31-August 03, 2013 at the World Trade Center Metro Manila (WTCMM).
Products to exhibit baked products baking equipment bar coders bar equipment cabinets canned goods cheeses chocolates coffee makers coffee products cookies and biscuits confectioneries cutlery dairy products flavors/spices
fruits and vegetables furniture glassware juices kitchenware liquor packaging equipment snack foods spices showcase/display tableware tea products vending machines water purifiers/distillers wines and spirits
Commworld Commworld, featuring products and services that put focus on the industry’s growth areas that facilitate and stimulate technological progress for the PHL’s telecommunication industry, will be held on August 15-17, 2013 at the SMX Convention Center in Pasay City. Technologies on 3G/GPRS /HSDPA, antennas, towers and accessories, application software, base station, battery supplies, broadband technology, broadcasting technology, CAD/CAM/ CAE/CIM, call center technology, camera equipment and accessories, cellular switching systems, communications software, and services will be on display.
Philippine Postal Permit No. 504
programs and projects reflected in the Rolling Pipeline 2013-2014, as well as the other priorities of the Cluster.
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Economic Indicators
GNI Growth Rate (%) 8 7 6 5 4 3 2 1 0
8 6 4 2 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013)
133.5 133 132.5 132 131.5 131 130.5
(In USD Billion)
5000
5,000
2000
4,800
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13
(1994 base year)
4
1
40
0
39 Feb-13 Mar-12 Apr-12 May-13 Jun-13 Jul-13
4,400
Inflation Rate (%)
2
41
(In USD Billion)
4,600
0
3
42
5,400 5,200
Peso per US Dollar Rate 43
Imports
3000
Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
44
4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013)
4000
1000
As of July 19, 2013
0
Exports
Consumer Price Index (2000 base year)
GDP Growth Rate (%)
10
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13
Interest Rate (%) 6 5 4 3 2 1 0
As of June 4, 2013
Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13
*GNI - Gross National Income Entered as Third-Class Mail at the Makati Central Post Office under Permit No. 504 valid until 31 December 2013
Editorial Team: Anne L. Sevilla, Editor-in-Chief • Vic S. Soriano, Managing Editor • Cresenciano P. Par, Assistant Editor • Jam A. Hourani, Associate Editor • Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation. Published monthly by the Trade and Industry Information Center (TIIC), Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 • To subscribe, e-Mail: publications@dti.gov.ph • Online: http://www.dti.gov.ph/dti/index.php?p=116
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Philippine Business Report July 2013
Philippine Business Report