Volume 24 No. 02
February 2013
Foreign investors bullish on PHL The Board of Investments (BOI) tallied record-breaking 487 inbound visits in the first 10 months of 2012, a manifestation of the strong foreign investor confidence on the country’s business environment. These missions were composed of 147 individual company visits and 34 multi-company delegation missions. Each mission was composed of at least five corporation executives. The BOI said the influx of business missions is a strong affirmation of the Aquino administration’s economic reforms as perceived by foreign investors globally. Inbound business missions increased by 56.6% in the January to October period last year from the 311 inbound missions recorded in the same period of 2011. There was also an increase in multi-company delegations by 112.5% from a total of 18 in 2011 to 34 in 2012. The increase in inbound business missions was attributed to the restored interest of countries such as the United Kingdom (UK), France, and Canada, and the growing
DTI bats for four industries The Department of Trade and Industry (DTI) will focus this year on four industry groups, namely manufacturing, tourism, mining, and agriculture/agribusiness to supply domestic demand and create more employment opportunities. These industry groups, the DTI said, are the greatest job creators thus needing sustained government support. February 2013
interest coming from non-traditional markets like Russia, Europe, the Middle East, and Africa. Visiting foreign investors were particularly interested in information technology-business process outsourcing (IT-BPO), power, infrastructure or public-private partnership (PPP) projects, tourism, agribusiness and aquaculture, manufacturing of aerospace parts, electronics, garments and textiles, steel, machineries, automotive, shipbuilding, chemicals, and pharmaceuticals. Moreover, the BOI recorded 13 outbound missions and four presidential state visits in 2012.
For instance, the manufacturing sector can employ several less educated people. Garments manufacturing can employ those who had been previously displaced when garment firms started to abandon their operations. Even without exports, a renewed garments manufacturing sector can survive to serve the Filipinos’ needs, the DTI said.
President Benigno S. Aquino III led three of these state visits, which included the UK and the United States (U.S.), where at least USD 2.5-B investments were secured. Last year’s 13 outbound missions were in Taiwan, Singapore, Korea, Malaysia, Japan, Hong Kong, China, Taiwan, Australia, and Cambodia. The areas of interests were maintenance, repair and overhaul services, electricity generation and transmission, hydropower, tourism, energy, e-vehicle, agribusiness, shipbuilding, BPO, duty free shops, and investments in economic zones and in Mindanao.
Construction, another sector under the manufacturing industry, continues to remain robust as more overseas Filipinos (OFs) are either buying new or reconstructing old houses. Housing also generates employment for unskilled workers and stirs demand for other construction inputs such as GI sheets, steel billets, and others. 1
On the same note, tourism sector creates opportunities for services sector and can employ high school graduates. There are also ancillary services that can give rise to tourism like transportation and food. Agriculture and agribusiness has been the biggest job creator in the country. There are also agribased micro, small, and medium enterprises (MSMEs) that need nurturing to ensure their growth.
INDUSTRY TRENDS Export growth revised to 14%-15% The export growth target for this year has been adjusted to 14%-15% from the previous 11% to enable the country attain its goal of USD 120-B exports by 2016. Philippine Exporters Confederation (Philexport) President Sergio Ortiz-Luis Jr. said the higher target for 2013 is attainable given the low base last year. “We can hit the 14%-15% growth as long as the peso will not go down further,” Ortiz-Luis said. Under the Philippine Exports Development Plan (PEDP), growth in exports was placed at 11% annually from 2012 to 2013 and 10% annually from 2014 to 2016. The PEDP has targeted total 2012 exports of USD 80.23B from USD 72.12B in 2011. This year, the country’s exports are expected to hit USD 89.21B. For the 2011-2013 period, the country’s total exports should total to USD 241.57B. Annual exports for 2014 exports are expected to hit USD 98.49B, USD 108.73B in 2015, and USD 120.06B in 2016 for a total of USD 327.28B for the three-year period. 2
“We are still bullish we can hit the USD 120-B goal in 2016. We are not changing that,” OrtizLuis said.
“Most of the highways interconnecting all regions in Mindanao have been completed,” she said.
Earlier, Department of Trade and Industry (DTI) Secretary Gregory L. Domingo expressed optimism that 2013 could be a better year for the country’s exports given more manufacturing plants are opening up this year that would add to the country’s exports volume.
MinDA is currently pursuing the establishment of a transport connectivity especially in the greater context of ASEAN integration and economic community in Brunei DarussalamIndonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).
Business execs urged to invest in Mindanao The Mindanao Development Authority (MinDA) has urged local and foreign investors to explore business and investment opportunities in food, agribusiness, and other sectors in Mindanao.
Investment grade rating possible this year The government is optimistic that the Philippines will finally receive investment grade from credit rating agencies this year given the reforms instituted both in finance and governance.
Mindanao is a major source of globally competitive agri-based products including canned sardines, pineapple, oil palm, seaweed, tuna, and banana. MinDA Chairpeson Luwalhati R. Antonino said the region remains as a leading producer of some of the country’s top agricultural export commodities. “Thirty-three percent of Mindanao’s land area is devoted to agriculture. It is attractive for investment opportunities,” said Antonino, noting the huge and growing halal market in Asia and the Middle East that provides opportunities for producers especially in Mindanao. In a recent Association of Southeast Asian Nations (ASEAN)-India business seminar, she cited several expressions of interest from rich Islamic states for joint ventures in halal industries. Antonino said they also look forward for more partnerships in oil palm development and other industries that have been fully developed such as rubber and pineapple. Coffee, cacao, tourism development, and power generation are also promising industries. She noted the remarkable improvements in Mindanao road network.
“We have progressed so much from where we came from, and 2012 was a banner year for President Benigno S. Aquino III for his administration,” Presidential Spokesman Edwin Lacierda said. British banking and financial services company Barclays said the Philippines would likely receive its first investment grade soon with the enactment of sin tax law and other reforms. Officials have been saying that fiscal reforms including new laws, intensified revenue collection, and debt restructuring are in the forefront of the Aquino administration. Standard & Poor’s, Moody’s Investor Service, and Fitch Ratings have all raised the country’s credit outlook last year. Barclay’s said the country could face consecutive credit rating upgrades once the rationalization of fiscal incentives and mining Philippine Business Report
sector reform bills are passed along with tax reform measures. The administration also maintains that good governance is good economics and that the country is politically stable with strong fundamentals. Philippine software industry eyes global market The Philippine Software Industry Association (PSIA) aims to bolster and sustain the creation and commercial distribution of software products created in the country through the Product Development Special Interest Group (PD/SIG). By 2016, PSIA aims to achieve global recognition for at least 10 Filipino software products and generate approximately USD 1M in annual export revenues. “The Philippine software industry will continue to succeed based on delivering deep technical and professional expertise in specific niches where we can be the best global providers, and creating software intellectual property that will allow Philippine-based companies to achieve ‘top of the food chain’ status within the global software ecosystem,” Gurango Software Corp. President Joey Gurango said. The group was eyeing an increase in active members to at least 50 companies at the end of 2012. The PSIA extends its role to support this group through branding initiatives with the Business Processing Association of the Philippines (BPA/P) and the Department of Trade and Industry (DTI) for product development and intellectual property (IP) portfolio in marketing efforts. Online travel booking robust About half of the online direct bookings will be made on mobile devices by 2017 with even more ancillary purchases made through mobile, a study by the Atmosphere Research Group showed. February 2013
Commissioned by the International Air Transport Association (IATA), the study showed that travel was the largest e-commerce category, led by airline ticket sales. The study noted that passengers were more likely than the general population to own smart phones and tablet devices, with substantial growth expected due to these devices’ growing capabilities. Passengers showed strong interest in using mobile devices to plan and book flights, illustrating their comfort with these devices. The study noted that airlines also wanted commerce platforms that could support extensive fare and product transparency, dynamic pricing, rich basic and ancillary product merchandising and retailing, and the ability to reliably and securely process the massive volume of shopping sessions. Indian businesses exploring new ventures The Indian Chamber of Commerce (ICC) recently brought a major Indian business delegation to the Philippines to explore new avenues of partnership for development through the Association of Southeast Asian Nations-India Business Summit (ASEAN-IBS). The ICC introduced delegates from the Electronics and Computer Software Export Promotion Council (ESC), India’s premier export promotion organization, who were mostly from the electronics and information technology (IT) sector. ESC’s Mandeep Singh Puri said his group has 2,300 member companies engaged in export of electronics hardware, IT and services, IT-enabled services, and telecom hardware and software. Other companies were from the areas of importation/distribution of solar inverter, solar power plant, and electrical and renewable energy (RE) products.
ESC member companies that attended the summit
• Assam Electronics Development Corp. Ltd. • Associated Business Computers • Compucare • Embarc Information Technology (P) Ltd. • FutureSoft India Pvt. Ltd. • M/S. G. P Tronics Pvt. Ltd. • Minarch Overseas Pvt Ltd. • Octaware Technologies Pvt. Ltd. • Securinex Inc. • Telematics4u Services Pvt. Ltd • Tesca Technologies Pvt. Ltd. For its part, the Philippine Chamber of Commerce and Industries (PCCI) supported the stronger economic partnership between India and the Philippines. PCCI President Miguel B. Varela said his group was seeing the expansion of cooperation between India and the Philippines, particularly in garments and textiles industry. Varela cited the possibility of Indian investments in Mindanao, noting the interest of investors in the region after the signing of the peace agreement between the Moro Islamic Liberation Front (MILF) and the Philippine government. “The Bangsamoro Framework Agreement was seen to open the gates to investment inflows and realized the full potential in Mindanao,” Varela said. E-vehicle makers push for foreign partnerships Electric vehicle (EV) manufacturers and dealers are pushing for partnerships between local firms and foreign investors to encourage them to manufacture EVs in the country. The Electric Vehicle Association of the Philippines (EVAP) has completed a roadmap for the industry, including programs vital to promote the industry’s growth. “The roadmap calls for the formation of joint ventures among 3
locals and with foreign firms based on research and development (R&D), manufacturing and assembly, to fast-track the industry’s growth in both the domestic and export markets,” EVAP President Rommel T. Juan said. Under the roadmap, EVs are expected to account for 20% of new vehicles to be produced in 2015. Also, sales of EVs are seen to grow given an influx of alternative energy vehicles for local production. The EVAP said the Department of Energy (DOE) and the Asian Development Bank (ADB) have launched a USD 500-M e-trike (electric tricycle) project. The group said the roadmap will be presented to the Department of Trade and Industry (DTI), which launched the industry roadmap initiative early last year to push for growth of specific industries and the entire manufacturing sector. Vehicle sales to hit 200,000 units The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) is expecting total industry vehicles sales hitting 200,000 units this year on the back of the country’s positive economic performance. Last year, total sales were seen at 180,000 mainly due to supply normalization. The introduction of new models and financing schemes’ availability likewise supported the sales’ growth. Auto sales in the first 11 months of 2012 reached 141,283 units, up 8% from the comparative period in 2011. Also, imported vehicles’ sales reached 26,272 units as of end-November 2012, 14% higher than the sales in the same period in 2011. Furniture makers see USD 200-M export earnings The Chamber of Furniture Industries of the Philippines (CFIP) is looking to post higher export earnings this year from the expected USD 200-M export sales in 2012. Data from the National Statistics Office (NSO) showed that the value 4
of furniture and fixtures exports for the January to October period in 2012 reached USD 151.88M, up 7.62% from the same period in 2011. CFIP President Nicolaas K. De Lange said furniture makers can see higher export earnings this year as they anticipate more buyers to come to the Design Philippines 2013 trade show in March. “Many were talking about the Philippine furniture show on blog sites and so we are expecting that in March, more buyers would come that will translate to more sales for us,” he said. Mining to rebound in 2013 The mining sector is expected to rebound this year, with investments in the minerals sector seen to flourish, the Department of Environment and Natural Resources -Mines and Geosciences Bureau (DENR-MGB) said. MGB Director Leo L. Jasareno said the approval of Executive Order (EO) No. 79, known as Institutionalizing and implementing reforms in the Philippines mining sector, is the key to attaining increased investments in the coming years. “Given the diverse stakeholders working for the sector, the law is seen to create a middle ground where everyone will agree and move on,” Jasareno says. The bureau said the government’s goal is to have a transparent and objective policy that will give investors a clear picture of what is in store for them, given the huge investments needed to get a mining project to operate.
of a bill on minerals sharing. The bill is supposedly independent of any existing law in mining. The government also deems it significant to have the country enrolled in the Extractive Industries Transparency Initiative (EITI) to boost the country’s investment credibility ratings as a prime destination. The EITI is a globally developed standard that promotes revenue transparency at the local level. It is a coalition of governments, companies, civil society, investors, and international organizations.
TRADE AND INVESTMENTS AVIATION AirAsia to buy 100 Airbus A320 AirAsia has confirmed purchasing 100 Airbus A320 to reinforce its Asian expansion thrust.
“The new order from Airbus will pave the way for AirAsia’s expansion plans. We are set to launch two new international routes from Clark International Airport to Singapore and to Taipei this December,” AirAsia Chief Executive Officer (CEO) Marianne B. Hontiveros said. This is part of the group’s strategy to continue placing the airline in competition and remains profitable through new routes and added frequencies.
Next month, the MGB may start evaluating and issuing exploration permits and financial and technical assistance agreement licenses once the so-called “no go zone” maps are completed.
The 100 Airbus A320s is said to accelerate the airline’s growth in Malaysia, Thailand, and Indonesia, and new markets Japan and the Philippines.
However, the granting of licenses on mineral production sharing agreement is still dependent on the drafting and enactment
BANKING EastWest hits 245 branches in 2012 EastWest Banking has concluded Philippine Business Report
2012 with 245 branches as part of its 350 branches target for 2014. In July 2012, the bank received a universal bank license after fulfilling the Bangko Sentral ng Pilipinas (BSP) requirements to hold an initial public offering and list its shares at the Philippine Stock Exchange (PSE). This allows the bank to venture into investments banking and non-allied undertaking. Robinsons Bank to acquire Legazpi Savings Robinsons Bank Corp. has received the signal from Bangko Sentral ng Pilipinas (BSP) to acquire Legazpi Savings Bank (LSB) under the Strengthening Program for Rural Banks Plus (SPRB+). Robinsons Bank plans to use the capacity and branch network of LSB as vehicle in engaging to countryside banking and microfinance lending. “It is good to know that LSB will now be part of a big conglomerate to the benefit of businesses and people in Albay as well as neigboring provinces in Bicol Region,” LSB former owner Al Francis Bichara said. JG Summit Holdings Inc. President and Chief Operating Officer (COO) Lance Y. Gokongwei said Robinsons Bank’s investment in LSB is part of the conglomerate’s plan to reach out to a wider market. SM Investments interested to buy PNB The SM Investments Corp. (SMIC), through Banco de Oro Unibank Inc. (BDO), has expressed interests to acquire a stake in the Philippine National Bank (PNB).
February 2013
SMIC Chief Financial Officer (CFO) Jose Sio said they are in discussion with PNB for a possible investment, noting that they are always open for investments as long as it will help them grow.
BPO Convergys announces 18th contact center Convergys Corporation has announced the opening of its 18th contact center that will occupy over 180,000 square feet on four floors at SM Megamall. Convergys is being recognized for significant contributions to the local and national information and communications technology (ICT) industry. The new center will soon begin recruiting hundreds of position to support clients in multiple industries. Shell Plc plans BPO expansion The Royal Dutch Shell Plc is planning to expand its business process outsourcing (BPO) venture in the Philippines. “We have a BPO here with close to 3,000 employees. It is the biggest BPO of Shell in the world,” Shell Country Chairman Edgar O. Chua said. The company’s BPO unit performs outsourcing work for Shell clients in the United States (U.S.), Denmark, Sweden, Norway, Poland, United Kingdom (UK), and the Netherlands. It offers services including back office accounting and finance work, data maintenance, contracting and procurement, human resource service desk, and customer service.
Pundanera said they plan to put up 10 to 12 service stations yearly. “We continue to be bullish of our operations in the Philippines and we are looking at opening 10 to 12 stations annually in the next three years,” he said. Each service station entails an investment of about P25M. PNOC, Brunei Petroleum ink deal on LNG infra project ventures Philippine National Oil Company (PNOC) signed a deal with Petroleum National Brunei cementing plans to jointly implement investment opportunities in liquefied natural gas (LNG) upstream and other opportunities in the country. The two state-run firms’ agreement signing in December 2012 was the result of Brunei oil firm’s initial visit in October, wherein it explored LNG investment prospects in Mindanao. Petroleum Brunei, together with Brunei LNG Corporation, visited Phividec Industrial Authority (PIA) estate in Misamis Oriental where the proposed LNG gas terminal will be installed. Joint venture approves Duhat-2 drilling program Australia-based Otto Energy Ltd. said the Service Contract (SC) 51 joint venture has approved the work plan and budget to drill the Duhat prospect in mid-2013.
ENERGY
Otto said the decision follows a targeted seismic program in 2012 that confirms the robustness of the large anticline that was poorly defined on previous seismic data. Otto recently doubled its equity in SC 51 to 80%.
Unioil allots P200M for expansion Unioil Philippines Petroleum Inc. is looking at infusing at least P200M to further expand its retail network this year, Unioil President Kenneth C. Pundanera said.
The Duhat prospect has a success case resource of 23M barrels and an upside of 59M barrels of gross field volumes and is one of the three material share price re-rating exploration events planned by Otto for 2013. 5
Dubai oil firm mulls over Bataan industrial park Dubai-based Kampac Oil Middle East FSZO Inc. will conduct a feasibility study on developing about 125 ha in Bataan, owned by Philippine National Oil Company (PNOC) Alternative Fuels Corp., into an industrial and energy hub. Kampac Oil signed an agreement with the Authority of the Freeport Area of Bataan (AFAB) in 2011 to pursue the development of a super oil storage tank farm at the port. PHL group, Malaysians eye palm oil tie-up A group of Filipino investors plan to tie up with a Malaysian company in oil palm propagation and later go into processing in the Philippines. “It is possible that the Malaysian investors will be coming over to discuss the project. There had been preliminary talks. It is now a matter of finalizing the talks to get the project going,” Coconut Industry Investment Fund (CIIF)Oil Mills Group President Jesus L. Arranza said. Initial estimates put the cost of the 80,000-ha oil palm plantation at a maximum of USD 100M.
FOOD McDonald’s eyes expansion McDonald’s is planning to establish 500 stores nationwide in the coming years. “As we grow, we need to be where our customers are. We do that by opening more restaurants in the country especially in new territories and by continuously innovating in providing quality products and services,” McDonald’s Philippines President and Chief Executive Officer (CEO) Kenneth S. Yang said. Yang said McDonald’s recently opened its Kalibo branch, its second store in Aklan next to Boracay. 6
Alliance’s Big Glory Salmon raises investments Alliance Select Foods International Inc. subsidiary Big Glory Salmon and Seafood Inc. is set to increase its capital by USD 500,000.
The Department of Energy (DOE) awarded the two geothermal concessions to Clean Rock after a successful bidding under the so-called 2009 Philippine Energy Contracting Round.
Big Glory Bay imports Salmon from New Zealand, Chile, and Norway and processes it in General Santos. The smoked salmon products are exported to Singapore, Japan, Hong Kong, and South Korea.
MASS HOUSING
GREEN PROJECTS BHI, SCB agree on biomass power plant Greenergy Holdings Inc. said its wholly-owned subsidiary Biomass Holdings Inc. (BHI) and Cleantech Projektgesellschaft mbH entered into an investment agreement with San Carlos BioPower Inc. (SCB). Greenergy said BHI would acquire a 64-% equity interest in SCB for a total consideration of P667.53M, completing the equity fund raising for SCB. Subject to finalization with its banks for the balance of the project funding, Greenergy said SCB is ready to start construction of an 18-megawatt-equivalent (MWe) biomass power generation plant in Negros Occidental. Geothermal firm keen on Bataan, Benguet Local geothermal developer Clean Rock Renewable Energy Resources Corp. said it will pursue the development of the Natib and the Daklan geothermal prospects in Bataan and Benguet provinces, respectively.
Vista Land unit seeks BOI perks for mass housing project Household Development Corp., a Vista Land & Lifescapes Inc. subsidiary, filed an application for registration with the Board of Investments (BOI) to qualify for incentives for a mass housing project. The company is applying for registration with the BOI as a new developer of low-cost mass housing project with a capacity of 135 vertical housing units on a non-pioneer status. The project is located at Mercedes Avenue in Pasig City.
MOTOR VEHICLES Bosch Alaminos auto service opens Robert Bosch Inc. recently partnered with DBS Auto Care in launching a Bosch Car Service (BCS) workshop in Alaminos City, Pangasinan, marking the 29th Bosch workshop established in the country. The collaboration entails a full range of marketing and technical support through trainings and hotline servicing, business development training, a complete quality program, and professional branding and signage.
POWER
Clean Rock President Rene Escalona Puno said the company plans to develop the two geothermal prospects by conducting more exploration and studies to reduce drilling risks.
Alsons secures P9.3-B syndicated loan Alsons Consolidated Resources Inc. subsidiary Sarangani Energy Corp. (SEC) has secured a P9.3-B syndicated loan to fund the first phase of its 210-megawatt (MW) coal-fired power plant in Maasim, Sarangani. Expected to begin operations in August 2015, the power plant’s Philippine Business Report
first phase has a capacity of 105MW, enough to solve the present power shortage in Mindanao. Alsons and SEC Chairman and President Tomas I. Alcantara also expressed optimism with the San Ramon Power Inc. (SRPI) plant in Zamboanga to support the locality and other nearby areas. The plant is expected to fully operate by 2016. Hydrotec breaks ground for Wawa project German-Philippine Chamber of Commerce and Industry (GPCCI) member firm Hyrdotec Renewables Inc. is set to break ground for the P420-M first phase of Wawa Hydro project.
Sy said the study on the LeyteMindanao interconnection will be completed in the next few months as a response to industry players’ earlier calls for more energy supply in Mindanao.
PUBLIC-PRIVATE PARTNERSHIP PROJECTS Gov’t to award P10-B Mactan, Cebu airport project The government is set to award the P10-B contract for the MactanCebu International Airport project in September. The Department of Transportation and Communications (DOTC) and Mactan-Cebu International Airport Authority invited prospective bidders to apply to pre-qualify and bid for the construction of a new passenger terminal, rehabilitation and expansion of the existing terminal, and operation, maintenance and management of the terminals. Project scope
The Hydro project will outsource high-end technology from German producers and is seen to contribute to an effective flood control in the Marikina River, Laguna de Bay, and Pasig River. The project, dubbed as WawaMontalban Hydro Electric Power Plant, is capable of producing 18M kilowatt hours per year. NGCP plans P35-B interconnection projects The National Grid Corp. of the Philippines (NGCP) is planning to undertake two interconnection projects worth P35B. NGCP President and Chief Executive Officer (CEO) Henry T. Sy Jr. said the firm is currently re-evaluating the study done 20 years ago for transmission lines that will connect the Mindanao and Visayas grids, while up for regulatory approval is an alternate Luzon-to-Visayas connection. February 2013
• Construction of a new passenger terminal, along with all related infrastructure and facilities • Construction of an apron for the new passenger terminal • Renovation and expansion of the existing terminal along with all related infrastructure and facilities • Installation of all the required equipment and other facilities • Installation of the required information technology (IT) and other equipment • Operation and maintenance of both passenger terminals PPP school infra gets P8.8B The Department of Budget and Management (DBM) released P8.81B to the Department of Education (DepEd) to implement the public-private partnership for School Infrastructure Project Phase II (PSIP II). The PSIP II involves the design and construction of 10,680
classrooms, including school furniture and comfort rooms, in 14 regions nationwide. “The release will help the DepEd stay right on track toward its goal of closing the classroom gap by end-2013. Engaging the private sector is key in achieving this, as it will allow the government to optimize the resources and capacities of the private sector, all while delivering critical goods and services to the Filipino public,” DBM Secretary Florencio B. Abad said. MPIC invests P6.77B in Cavitex Metro Pacific Investments Corp. (MPIC) announced the P6.77-B investment and cooperation agreement between its tollroad subsidiary Metro Pacific Tollways Corp. (MPTC) and Cavitex Holdings Inc. (CHI), formerly Coastal Road Corp. Cavitex tollroad is built in two segments running from Cavite to Laguna and currently has 90,000 vehicle entries a day. The concession for this road extends to 2033 for the originally built road and to 2046 for a subsequent extension. Calapan Ventures builds P320-M water system Calapan Ventures Inc. (CVI), through subsidiary Calapan Waterworks Corp. (CWC), is infusing P320M into the newly established Metro Agoo Waterworks Inc. (Mawi) in the town of Agoo, La Union. CVI and CWC Chairman Jolly L. Ting and Mawi President Roderick A. Ongcarranceja already signed a memorandum of agreement (MOA) with La Union officials. Under the deal, Mawi will source water from Tubao for distribution to Agoo’s roughly 100,000 residents. CWC’s investment will be used to complete phases 1 and 2 of the integrated water project. Future expansion plans include supplying water to Tubao and neighboring towns in La Union. 7
RESEARCH AND DEVELOPMENT FEU secures P1-B expansion loan The Far Eastern University, Inc. (FEU), a private non-sectarian institution focusing on tertiary learning, is investing P1B to be used partly to finance FEU’s expansion in Metro Manila. FEU also announced plans to put up a new campus in Alabang, Muntinlupa City to be located in a 1.8-ha parcel of land in Filinvest Corporate City. STI targets 9 campuses STI Holdings Inc. is embarking on an aggressive expansion program involving the construction of nine new campuses across the country in the next three years.
Township One industrial estate into a mixed-use site. Intel sees more education engagement American multinational semiconductor corporation Intel expects more presence in the education sector this year, with the government putting special attention on enhancing education services. Intel Philippines Country Manager Ricky Banaag said the Department of Education’s (DepEd) education framework program seeks to empower students and classrooms with technology skills beyond the hardware. This is in line with the pronouncement of Intel South East Asia Managing Director Uday Marty that 2013 will see increased focus on education. “Education transformation will be crucial for South East Asia. Governments and institutions will invest in developing strong educational framework to create a skilled labor force for the future,” Marty said.
The school plans to acquire a 39,880-sqm property in Cainta, Rizal. The lot, valued at P291.1M, will be developed into a new campus for 5,000 students and a new head office for the STI Education Services Group. It also intends to buy a 15,000-sqm property in Caloocan which will be the site of the future Academic Center Caloocan. STI will also build a campus on a 2,000-sqm lot in Ayala Center Cebu as well as new academic centers in Las Piñas, Cubao, Davao, Cagayan de Oro, Calamba, and Lucena. UC exploring expansion site The University of Cebu (UC) is considering the use of a lot owned by MRC Allied, Inc. for the school’s expansion to the City of Naga in Cebu. The development supports MRC’s plans to turn its 160-ha New Cebu 8
REAL ESTATE SM Hotels opens SMX Convention Center in Davao The SM Hotels and Conventions Corp.(SMHCC) has opened the 5,240-sqm SMX Convention Center Davao at the third level of the newly opened SM Lanang Premier Mall. The facility is projected to support the meeting, incentives, conventions, and exhibitions (MICE) industry. “As the largest privately owned and managed convention center in the Southern Philippines, SMX Convention Center Davao aims to meet the increasing demand for leasable space,” SM said. The new facility is the latest in SMHCC’s portfolio including the SMX Convention Center in the Mall of Asia Complex in Pasay City,
SM Megatrade Hall in Mandaluyong City, and the SM Cebu Trade Hall in Cebu. Vista Land bares expansion Vista Land & Lifescapes is planning an aggressive expansion program to take advantage of the strong economy and the prospects for faster growth in 2013. Vista Land said it will continue to launch condominium projects, particularly in urban areas where demand from young professionals is increasing. The company is already the leader in the horizontal segment, with more than 250,000 housing units built in the past 35 years. Also, Vista Land will build commercial developments within or near its residential subdivisions. These planned commercial developments are expected to diversify the company’s revenue streams and enhance the value of its residential projects. Manila Bay resorts to be completed in 2014 The USD 1-B Manila Bay Resorts project in Parañaque City of Robinsons Land Corp. (RLC) and Okada-led Universal Entertainment Corp. is set for completion in 2014. RLC General Manager Henry L. Yap said the project will be developed by Tiger Resort Leisure and Entertainment Inc. and will have three hotels, a commercial retail component to include a shopping mall with cinemas, trade hall, luxury retail stores, restaurants, and gaming facilities. Several residential towers will also be developed as part of the total project. Starwood eyes 1st PHL hotel One of the world’s biggest operators of high-end business and leisure accommodations Starwood Hotel & Resorts Worldwide is looking to open its first hotel in the Philippines. Slated on July 1, 2016, this would mark the Westin brand’s re-entry into the Philippine market. Philippine Business Report
Westin is Starwood’s second largest brand in Asia Pacific region with more than 40 hotels in operation and 20 more in the pipeline.
a 12-m draft berth—the deepest in the Philippines—and will be capable of servicing between five to seven vessels at one time.
Starwood will build the 600-room Westin Manila Bayshore as part of Travellers International Hotel Group’s Resorts World Bayshore.
It also committed to roll out 12 Panamax quay cranes and 36 rubber-tired gantries, the largest container-handling equipment fleet in Mindanao.
SHIPBUILDING DTI invites 9 Japanese shipbuilders The Department of Trade and Industry (DTI) invited nine Japanese shipbuilders to expand operations in the country to sustain its position as one of the world’s top five shipbuilding hubs. Japanese shipbuilders invited by DTI
• • • • • • • • •
Hakodate Dock Co. Ltd. Imabari Shipbuilding Kawasaki Heavy Industries Mitsubishi Heavy Industries Mitsui Engineering & Shipbuilding Co. Namura Shipbuilding Oshima Shipbuilding Co. Sanoyas Shipbuilding Sumitomo Heavy Industries
Of these companies, the Board of Investments (BOI) conducted initial meeting with Mitsui Engineering & Shipbuildiung Co., Namura Shipbuilding, and Sanoyas Shipbuilding. Shipbuilding is one of the government’s preferred industries identified under the Investment Priorities Plan (IPP) entitling this sector income tax holidays (ITH) and duty-free importation of capital equipment, among others.
TELECOM Globe upgrades Makati City network Globe Telecom recently finished upgrading its network in Makati by replacing all cell sites with advanced telecommunications infrastructure. The company’s network in Makati City is capable of widespread 3G and 4G-HSPA+ coverage, which encompasses exclusive villages, upscale condominiums, busy work locales with large-volume human traffic, high-rise buildings, major thoroughfares, indoor coverage in hotels and malls, and key community infrastructures such as hospitals, parks, dining establishments, and the like. This development comes at the heels of the company’s successful network transformation in Cebu, Davao, and other parts of the country early last year. PLDT unit signs telecom deal with UK provider PLDT Global Corp. (PGC), PLDT Group’s international sales and marketing arm, sealed its seventh mobile virtual network operator (MVNO) deal with a United Kingdom (UK)-based firm.
Shipbuilding activities include the construction and repair of ships and shipbreaking. ICTSI to develop Tagum container port Port operator International Container Terminal Services Inc. (ICTSI) said it will develop the Tagum City container port. ICTSI said Hijo International Port will have an area of over 50 ha, February 2013
PGC Vodafone’s has partnered with Teleena, a virtual network enabler in the UK, in offering various telco services to Filipino residents there. The partnership is deemed to set the bar in the UK market specifically catering to the Filipinos.
MVNO is an entity that provides mobile voice and data services to end users through commercial agreements with licensed mobile network operators.
MAJOR PROJECTS P1.5B set aside for irrigation repairs in Mindanao The government is set to begin the restoration of damaged irrigation facilities in Mindanao to prevent major disruption in cropping calendar, particularly on rice crops. National Irrigation Administration (NIA) Administrator Antonio Nangel said the agency has allotted some P1.5B to restore and rehabilitate some 4,700-ha of farmland in Compostella Valley, Davao Oriental, Davao del Norte, Agusan del Norte, Agusan del Sur, and Bukidnon. They are prioritizing the Pautu River Irrigation System, covering some 2,600-ha of rice, corn, and banana farmland. Of the total amount, P1B will be dedicated to level 1 irrigation facilities, or those considered as priority areas; while P500M will be used to restore level 2 canals. Nangel said they aim to complete the restoration early this year, allowing farmers to catch up with the dry cropping season.
COMPANY NOTES SMIC allots P30B for investments SM Investments Corporation’s (SMIC) board of directors has approved the appropriation of P30B for investment and general corporate purposes. 9
The group is in current negotiations for investments in geothermal power, toll ways, and a possible investment in the Ortigas group.
Marubeni to buy 20% of Maynilad Marubeni Corp. said it will acquire a 20-% equity stake in Maynilad Water Services Inc.
transform its facilities across the Philippines into green infrastructure as it pushes nationwide modernization.
It had announced earlier that it is allotting a record P65B for capital expenditures this year, up 16% from the P56B allotted for 2012 while continuing to aim for double-digit earnings growth.
Maynilad provides running water and maintenance services for its aqueduct networks, as well as collecting fee. Some 9.5M, or 10 % of the Philippines’ population, reside in its service area.
SMIC Chief Financial Officer (CFO) Jose T. Sio said a big chunk of this year’s capex will be accounted for by its mall and property development businesses and the integrated resort being built by Belle Corporation.
URC to diversify into power generation Universal Robina Corp. (URC), the food manufacturing unit of JG Summit Holdings, is seeking shareholders’ approval to diversify into the power generation business.
Globe network’s planned new facility layer would have less demand on power and fuel by introducing cost-effective, environment-friendly, and practically designed measures to maximize operational benefits of new technologies, said Globe Chief Technical Advisor Robert Tan.
NTC approves Destiny Cable’s sale The National Telecommunications Commission (NTC) has approved the sale of Destiny Cable’s assets worth P2.4B to Sky Cable Corporation, a subsidiary of the media group ABS-CBN Corporation. The acquisition is expected to benefit Destiny subscribers with clearer signals and more channels. The commission granted the Solid Group, Inc.’s (SGI) Destiny Cable with a license for Cable Television (CATV) 17 years ago. BLIMS expands in Mindanao BLIMS Fine Furniture has picked Davao as jump-off and radiation point for its Mindanao expansion, and had recently opened its first branch in the region at the Ayala Abreeza Mall.
URC said it was set to hold a special meeting to obtain shareholders’ consent to amend its secondary purpose to include the power generation business. The move is intended to complement URC’s sugar business and allow the firm to maximize the productive use of its resources. The company is putting up a 40-megawatt biomass plant at one of its sugar mills’ sites. This will likewise allow the corporation to qualify for incentives available for renewable energy (RE) projects under pertinent laws. Alsons finalizes agreement with Toyota Tshusho Corp. Alsons Consolidated Resources Inc. (ACR) was set to sign the shareholders’ agreement with Toyota Tsusho Corp. (TTC). ARC said the agreement will finalize TTC’s purchase of a 25-% stake in ARC-led Sarangani Energy Corp. (SEC).
The Abreeza branch is BLIMS’15th showroom in the Philippines. BLIMS Business Development Manager Sam Gregory Lim made sure their lineup of offerings will be available for Davaoeños. 10
SEC is the owner and developer of a 210-megawatt (MW) coal-fired power plant to be built in Maasim, Sarangani. It is now building the first 105-MW facility at a cost of USD 310M. Globe Telecom to convert facilities into green infrastructure Globe Telecom Inc. said it will
Globe will review its sites without permanent power grids for solar power potential and assess the type of terrain to minimize cost in hauling equipment. Essential equipment such as base transceiver stations (BTS), which enable wireless communications between the network and subscribers, will be converted into outdoor setups with enough space to lessen power costs. Globe is also deploying solar power solutions for “off-grid” sites, where commercial supply is not available to reduce carbon footprint. With solar and genset hybrid solutions, the run time of generators is dramatically reduced by 80%, resulting in about 70% in savings. Deep cycle battery for “bad grid sites” will drive down fuel consumption by 50% and maintenance costs by 40%.
BILATERAL AGREEMENT ECCP bullish on FTA deal with PHL The European Chamber of Commerce of the Philippines (ECCP) said a free trade agreement (FTA) between the Philippines and European Union (EU) can be sealed within the next three years. It was timely for the two parties to proceed to the negotiating Philippine Business Report
table and start the scoping stage for the agreement, said ECCP Executive Vice President Henry Schumacher. European businesspeople have committed to support the two parties and conclude negotiations on the FTA. Schumacher said the ECCP could assist in the process and that a three-year timetable for signing the FTA was realistic. “The ECCP can blend with the two sides and aid in having both the EU and the Philippines negotiate, agree on parameters, address issues, and eventually come to terms,” he said. Department of Foreign Affairs (DFA) Secretary Albert F. del Rosario earlier said the Philippines was committed to moving the FTA negotiations forward, make the necessary structural changes, and recruit the people that would implement them.
ASEAN WATCH PHL gains popularity as halal food market gateway The Philippines is gaining popularity as a global business platform and gateway for the USD 632-B halal food market.
“Halal’s increasing global popularity stems from strict cultural and religious adherence to its quality standards that make it synonymous to health and hygiene. Thus, halal is a major component of the International Food Exhibition (IFEX) Philippines,” Center for International Trade Expositions and Missions (CITEM) Executive Director Rosvi C. Gaetos said. February 2013
Halal pertains to foods that are allowed under Islamic Law. Haram, on the other hand, refers to foods that Muslims are forbidden to consume. Halal foods are prescribed for the world’s 1.8-B Muslims, consequently yielding a global annual market that constitutes some 20% of the world’s entire food consumption. “In support of the Philippine Export Development Plan’s (PEDP) Halal Development Plan, a special participation rate for IFEX Philippines 2013 will be offered to halal-certified companies, halal certifiers, as well as halalcompliant restaurant, hotels, if they exhibit,” Gaetos said. India, ASEAN conclude FTA talks India and the Association of Southeast Asian Nations (ASEAN) have concluded discussions on a free trade agreement (FTA) on services and investments. The agreement will help India and ASEAN members to increase their trade to United States (U.S.) to USD 100B by 2015. The latest FTA is expected to pave the way for talks on the Regional Comprehensive Economic Partnership, which could bring together a market of more than 50% of the world's population and 30% of its gross domestic product (GDP). PHL sets air talks with several countries To lure more tourists into the country, the Philippines is set to pursue a series of air talks with several countries particularly major and new destination markets, which would start in the first quarter of this year. Talks would be held with several countries including China, Japan, Taiwan, Brazil, Canada, Australia, and even Europe as early as the first quarter of the year, Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said.
President Benigno S. Aquino III has signed Executive Order 29 authorizing the CAB and the Philippine air panels to pursue more aggressively the international civil aviation liberalization policy. Last year, the Philippines successfully held air talks with various countries such as Saudi Arabia, United Arab Emirates (UAE), Australia, Singapore, and South Korea.
ON THE CALENDAR Manila FAME Manila Furnishings Apparel Manufacturer’s Exchange (FAME), The Design and Lifestyle Event, will be held on March 14-17, 2013 at SMX Convention Center, Mall of Asia Complex, in Pasay City.
A trade show approved by Union des Foires Internationales (UFI), the global association of the exhibition industry, Manila FAME is co-located with Manila Now, CEBUNEXT, and Bijoux Cebu presenting top quality export products and unique Philippine craftsmanship in furniture & furnishings, holiday gifts & décor, and fashion. Top buyers usually come from the United States (U.S.), Japan, Australia, Hong Kong, and Germany. Featured products are exhibited by direct and indirect exporters, manufacturers, traders, and trade associations. This special marketing event is organized by the Center for International Expositions and Missions (CITEM), with the help of the Chamber of Furniture Industries of the Philippines (CFIP), Cebu Furniture Industries Foundation Inc. (CFIF), and Cebu FAME Fashion Accessories Manufacturers-Exporters. 11
Economic Indicators
GDP Growth Rate (%)
GNI Growth Rate (%) 8 7 6 5 4 3 2 1 0
8 7 6 5 4 3 2 1 0
3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012)
3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012)
Exports
Consumer Price Index (2000 base year)
132 131.8 131.6 131.4 131.2 131 130.8 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13
(In USD Billion)
6000 5000 4000 3000 2000 1000 0
5,200 5,000 4,800
(1994 base year)
5 4 3 2 1 0
Editorial Team Anne L. Sevilla Editor-in-Chief
Vic S. Soriano Managing Editor
Cresenciano P. Par Associate Editor
Jam A. Hourani Elaine M. Lazaro Emman R. Caleon Writers
Ren C. Neneria Design Layout
Interest Rate (%) 5.8
As of February 7, 2013
5.6 5.5 5.4 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13
Overall Business Outlook on Macroeconomy 60 50 40 30 20 10 0
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
5.7
Visitor Arrivals 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0
4,600
Inflation Rate (%)
As of February 7, 2013
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13
5,600 5,400
May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
Peso per US Dollar Rate 42.5 42 41.5 41 40.5 40 39.5
Imports (In USD Billion)
1Q (2012)
5.3 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13
250 200 150 100 50 0
3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012)
2Q (2012) 3Q (2012) 4Q (2012)
Philippine Business Report
BOI-PEZA Approved Investments (PhP Billion)
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.
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February 2013 issue 12
Philippine Business Report