Volume 24 No. 01
January 2013
PHL sets higher growth targets Pleased with the strong economic performance in 2012, the government has set more bullish growth goals for 2013 and 2014 supported by strong macroeconomic fundamentals. The government is aiming for a gross domestic product (GDP) growth between 6% and 7% this year and between 6.5% and 7.5% next year, Economic Planning Secretary Arsenio M. Balisacan said. Economic officials see a surge in foreign investments starting this year on the back of expectation that the Philippines will finally get an investment grade rating. On the back of favorable ratings revisions over the past two years, the Philippines is now rated just one notch below investment grade by all three major international credit watchdogs, namely Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s.
III’s administration coupled with political stability in the country.
utilities will be driven by the growing demand for power, water, and gas.
The adjustments in the WB’s forecasts came after the government reported a 7.1-% growth rate in the third quarter of 2012, one of the fastest rates in the whole of Asia, next only to that of China.
Services like the information technology-business process outsourcing (IT-BPO), tourism, financial intermediation, and trade are seen fueling growth, he added.
An investment grade would mean better confidence on the Philippines to attract more foreign direct investments (FDIs) and thus help in job generation.
“We hope to see a more vibrant industry sector. We see an improved manufacturing sector buoyed by the semiconductor and electronics industry, as the world economy is expected to recover between 2013 and 2014,” Balisacan said.
On the demand side, household consumption will remain robust and the expected expansion of exports and construction will further boost growth. Even capital formation, especially in the private sector, is expected to contribute a greater share of overall growth.
The World Bank (WB) has also raised its growth forecast for the country for this year, citing prudent economic policies of President Benigno S. Aquino
He said construction is expected to grow robustly this year because of the major public infrastructure projects and additional boost coming from private construction, while
Also, the job situation could perk up with the expected improved electronics industry, which accounts for more than half of the country's exports.
DTI pushes more trade with Europe The Department of Trade and Industry (DTI) recently held the second round of stakeholder consultations for a PhilippineEuropean Union (EU) trade agreement where studies
on the possible impact of a free trade agreement (FTA) with the EU were presented.
consultations support the government’s objectives to make our trade policies more transparent and responsive,” said DTI Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr.
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“The studies presented by independent research organizations during the stakeholder
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The DTI commissioned the Philippine Institute for Development Studies (PIDS), Ateneo de Manila University (ADMU), University of Asia and the Pacific (UA&P), and De La Salle University (DLSU) to conduct and present the impact studies in a series of national consultations. Members of the academe, government agencies, civil society, and business organizations attended the stakeholder consultations.
INDUSTRY TRENDS Mindanao sees more investments The Departments of Trade and Industry (DTI) and Finance (DOF) said the groundbreaking peace deal signed in October last year between the government and the Moro Islamic Liberation Front (MILF) would inspire investors' confidence that could boost the country's economy in the long run. DTI Secretary Gregory L. Domingo said the government is expecting “hundreds of millions of dollars” of new investments to come in, most of which will be in the power, mining, manufacturing, and agriculture sectors. He assured that Mindanao is prepared for the influx of investors. “The absorption capacity is there because there are lots of opportunities,” he said. Meanwhile, DOF Secretary Cesar V. Purisima said the peace deal is an additional pillar for the economy. The government is optimistic that the new accord, which seeks to establish a new autonomous Bangsamoro region by 2016, would foster lasting peace in the South. Once the deal is fully implemented, the country's second largest island will gain powers such as the right 2
to impose taxes to cut central government subsidies, a bigger share in revenues from natural resources, and a more active role in internal security. Moody's also cited the landmark peace agreement to have wider beneficial effects on investment and economic growth in Mindanao. “The government's renewed focus on the mining sector could also provide further diversity to the economy and an additional stream of revenue for the government - although such intentions have faltered in the past,” Moody's said. Manufacturing roadmap ready by Q1 The government and the business sector are expecting the finalization of the country’s manufacturing roadmap in the first quarter this year.
The IDC will set targets for industries, primarily on increasing the share of the manufacturing sector to gross domestic product (GDP). Citing the bank’s research data, Deutsche Bank’s Rafael Garchitorena noted that they have seen evidence that there has been a resurgence in the manufacturing activities since 2010. Garchitorena said the manufacturing sector will again be a growth driver. He said the country’s stable labor cost, now lower compared to that of Asian neighbors, is one of the positive factors that will push investors back to the Philippines. One of the initiatives initially looked at is developing basic industries such as iron and steel, copper, and petrochemicals. “There have been attempts to do this in the past but did not take off. I think the economic condition now is very different and we are in a stage of economic growth that makes the environment more conducive to industry development,” Cristobal said.
Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said the DTI and other government agencies and industry organizations will fully implement the manufacturing roadmap under the mandatory medium-term development plan. “We now have concrete plans to achieve the manufacturing sector’s full potential with this strong commitment that would steer the country’s re-industrialization,” Cristobal said. He cited the revival of the Industry Development Council (IDC) that has remained dormant in the 1990s. The council, similar to the setup of the Export Development Council (EDC), will function as a working group starting in the first quarter this year.
Exports to reach record USD 52B in 2012 Merchandise exports for 2012 could have reached USD 52B, exceeding the all-time high record of USD 51.4B, with the traditionally strong fourth quarter of last year that is expected to boost overall growth, Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (TIPG) Cristino L. Panlilio said. “Because of the rebound in exports, we already reached USD 40B as of September so we want to hit USD 50B to USD 52B,” said Panlilio. With the USD 14-B contribution from the services exports, total exports may hit USD 66B in 2012. This would pave the way for the doubling of the country’s exports to USD 120B by 2016 based on the exports growth target under the Philippine Export Development Philippine Business Report
Plan (PEDP). Of this figure, USD 92B would come from merchandize exports and USD 28B from services.
innovation strategies to come up with new raw materials the whole year around.
Panlilio said exporters, especially in the electronics sector, are also confident of hitting new record high this year.
Product development is among the sector's focus areas to reach sustainable growth in the next few years. Others include marketing, capacity building, and advocacy.
“We are very confident the electronics sector would have grown faster in the fourth quarter last year,” he said. Electronics exports account for over 50% of the country’s total merchandize exports.
De Lange said the successful implementation of these strategies is targeted to double the sector's export revenues in the next three years from the current target of USD 200M.
By 2013, exports could hit USD 72B but with the strong growth, the outlook could be revised up to USD 74B or USD 75B with merchandize exports hitting USD 57B and services contributing between USD 15B and USD 16B.
“Green” firms recognized The Department of Environment and Natural Resources (DENR) identified last year's 18 environmentally responsible companies in the country, awarding them with an Official Seal of Approval.
Furniture sector creates supply hubs The furniture industry adopted a strategy to cut costs and address the growing demand in the domestic market by establishing supply hubs nationwide. Chamber of Furniture Industries of the Philippines (CFIP) National President Nicolaas K. De Lange said these hubs are located in Nueva Ecija, Zambales, Ilocos, Cagayan de Oro, Davao, and the Visayas region. “If we can set up enough of these areas, then we could help with the sustainability of the supply chain and create more capacity to the industry,” De Lange added. The hubs, which processed raw materials from local and foreign sources, should be near the manufacturing centers, he added. “If we can use our factories as an assembly point and finishing point, it can increase our capacities, lower our costs, and help the industry in the whole supply chain. It is really a win-win cycle,” he stressed. The CFIP intends to establish sustainable and environmentfriendly raw materials and enhance Janaury 2013
“Green” companies • Coca-Cola plants in Isabela, Ilocos Norte, La Union, and Pangasinan • Energy Development Corporation’s geothermal power fields in Kidapawan City, in Cotabato and Leyte • Green Core Geothermal, Inc.-Tongonan Geothermal Power Plant • Hedcor Sibulan, Inc. hydropower plant in Davao del Sur (a subsidiary of Aboitiz Power Corporation) • Holcim, Inc.’s plants in Lugait, Misamis Oriental, and Norzagaray, Bulacan • Nestle Philippines’ Cagayan Distribution Center and factory in Pulilan, Bulacan • Philippine Associated Smelting and Refining Corporation in Isabela, Leyte • Pilipinas Shell Petroleum Corporation’s Tacloban Terminal • Shell Philippines Malampaya BV’s Batangas Onshore Gas Refinery • STEAG State Power, Inc. in Misamis Oriental • Team Energy Corporation’s power stations in Pagbilao, Quezon and Sual, Pangasinan
“The awardees were chosen because of their exemplary environmental performance and for going beyond mere compliance with existing environmental laws and regulations,” DENR Secretary Ramon P. Paje said. The said companies, which include giant multinational and energy corporations, were recognized under DENR's Philippine Environmental Partnership Program (PEPP) that
seeks to promote self-regulated compliance with environmental standards especially given the global issue of climate change. Besides not having received a complaint against the chosen companies, DENR also credited their trailblazing role in the green campaign. “Their policies on self-monitoring and self-regulation deserve to be recognized and emulated by other companies,” Paje added. Automotive parts makers go green The country’s major automotive parts manufacturers have decided to go green after nine months of intensive planning and execution of in-plant programs to evolve into sustainable enterprises with greener, safer, and more productive workplaces. Eleven companies were involved in the pilot project of the “Greener Business Asia” in the region jointly undertaken by the International Labor Organization (ILO) and the government of Japan with the Employers Confederation of the Philippines (ECOP) as local partner. The project constituted in-house training in the factories for both workers and managers that covered a wide range of subjects from environmental management to energy conservation and safety in the workplace. The ILO hopes to replicate the program in other industries in the Philippines in succeeding years. Participants to the program • • • • • • • • • • •
AGC Automotive Philippines Inc. Daiwa Seiko Philippines Famous Secret Precision Machining Inc. Suburba Automotive Ventures Torres Technology Center Totech Parts Manufacturing Tri-R Allied Group TRP Inc. Valerie Products Manufacturing Yazaki-Torres Manufacturing Inc. YTM Components Inc.
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PHL eyed as ship repair hub Taking advantage of its strategic location to the region’s shipping routes, the Philippines is positioning to become the ship repair hub in the Asia-Pacific region for oceangoing merchant and fishing vessels. This was contained in a study on the shipbuilding and ship repair industry of the Philippines conducted by the Japan International Cooperation Agency (JICA) and the Nomura Research Institute as part of the ongoing formulation of industry roadmaps by the Department of Trade and Industry (DTI). Based on the study, the Philippines has the potential to become a ship repair hub owing to its strengths, which include an inland sea, bay and deep seashore, abundant labor force, and legalized fiscal incentives. The study has also identified foreign direct investments (FDIs) from Japan and Korea as most promising because shipbuilders from these countries are finally looking outward for expansion opportunities. The shipbuilding industries in China, Japan, and Korea are also reaching their maturity levels thus the need to develop new hubs outside of these countries. To date, there are 121 registered shipbuilding and repair facilities in the country, which employ a total of 8,047 workers. In the past, shipbuilding industry output was limited only to small ships, tankers, barges, and fishing vessels. But with the entry of new players like Tsuneishi Heavy Industries of Japan and Hanjin Shipyard of Korea, the Philippines is now ranked as the world’s fourth largest player in shipbuilding. Healthcare BPO seen most promising Considered the most promising sector in the information technology-business process outsourcing (IT-BPO) industry, the healthcare information management (HIM) sector posted a 172-% growth in 2011. 4
International research firm MarketsandMarkets reported that HIM will become a USD 330-B industry by 2016, substantially larger than the entire IT-BPO industry, which is projected by Everest Group to grow to USD 256B that year. By the end of 2012, it was expected to have generated revenue of USD 433M and employed 43,000 Filipinos. The Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP), in partnership with the Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO), is pursuing all measures to sustain this growth. “This one sector of the IT-BPO industry stands to be bigger than what is projected in the entire market. These have tremendous implications for the Philippines,” said DOST-ICTO Deputy Executive Director for ICT Industry Development Alejandro Melchor. “The country can build on the present market share which is 8% of the global market. All our clients are geared towards capturing a minimum of 13% to 15%,” Melchor said. The Philippine HIM sector has evolved to provide services in all HIM aspects, including clinical data management, disease management, revenue cycle management, pharmacy benefits management, electronic medical records, medical claims recovery, patient education, insurance processing, and quality assurance. Food exporters enter Middle East The Center for International Trade Expositions and Missions (CITEM) and the Department of Agriculture (DA) are helping Filipino food exporters establish their foothold in the huge Middle East food market. Already, CITEM and DA took 11 Philippine food companies to the Middle East as exhibitors in the Salon International Alimentation
(SIAL) held at the Abu Dhabi National Exhibition Centre, United Arab Emirates (UAE) in November last year. The CITEM-DA partnership for the Philippine participation in SIAL can augment the country’s market positioning as a reliable source of tropical products and a competitive destination for raw materials and semi-processed food. Forming part of the Philippine Pavilion in SIAL were the exhibits of the 11 food firms comprising texture and flavors such as natural colors, extenders or gelling agents, ingredients for snacks and confectionery, juices and beverages, bakery products, ethnic sauces and mixes, and canned meat and seafood. Their participation in SIAL also enabled them to be updated on market trends and gain direct access to trade buyers, retailers and store owners and managers, particularly those of the importdependent member-states of the Gulf Cooperation Council (GCC). According to CITEM, the GCC can be used as a gateway to the Middle Eastern region’s food market, which currently imports 90% of its food requirements, projected to rise to USD 53.1B by 2020. Participating food companies to SIAL • • • • • • • • • • •
CDO Foodsphere Inc. DLA Naturals Inc. Finelineasia Group Company Inc. Marigold Manufacturing Corporation M. Lhuillier Food Products Inc. Philippine Grocers Food Exports Inc. Prime Fruits International Inc. Raspina Tropical Fruits Inc. Raw Brown Sugar Milling Co. Inc. Sagrex Foods Inc. Southern Philippine Fresh Fruit Corporation
The Philippine participation in SIAL Middle East also served as a preview to what the country will offer during its own food show, the 9th International Food Exhibition (IFEX) Philippines, scheduled on May 16-19 this year at the SMX Convention Center in Pasay City. Philippine Business Report
The country’s biggest and most important export-oriented food event, IFEX Philippines will feature a wide array of fresh, processed, halal, and natural Asian food products on its relaunch as “Asia’s Ethnic Food and Ingredients Show.” IFEX Philippines is organized by the country’s export marketing arm CITEM, a Department of Trade and Industry (DTI) attached agency.
TRADE AND INVESTMENTS AGRICULTURE/ AGRIBUSINESS AND FISHERY BOI okays P2.4-B poultry projects The Board of Investments (BOI) has approved the registration of two poultry production projects worth P2.4B.
BOI approved the P2.32-B integrated production project of Thai-owned Charoen Pokphand (CP) and the P127.1-M project of Filipino company United BLC. The CP project will include parent stock farms in Tarlac and Pangasinan and six broiler farms in Bulacan and Nueva Ecija. The farms are expected to produce up to 21,847 metric tons (MT) of poultry products annually and will begin operations in next month. Meanwhile, the United BLC project involves the procurement of 15 modern hatchery equipment. Janaury 2013
United BLC will set up a 10,000-sqm hatchery project in Indang, Cavite. This will be leased exclusively by Tyson Agro-Ventures Inc., one of the country’s leading broiler chicken producers. With commercial production to begin this month, the plant will have an annual capacity of 26.95M chickens. Calata inks P1.6-B deal with Argentine firm Calata Corp. recently signed an exclusive 20-year contract with Siembra Directa Corp. worth P1.6B for the supply of agricultural inputs for the latter’s farm operations in the Philippines. Calata said its partnership with Siembra will help promote and advance the use of environmentallyresponsible and state-of-the-art farming technologies in the country. Century Canning invests P523M for coco juice, shells export project The Board of Investments (BOI) has approved the P523-M food processing project of Century Agriculture Corp., a unit of tuna products manufacturer Century Canning Corp.
receiving a green light from Civil Aviation Authority of the Philippines (CAAP). SEAIR I is a spun-off unit of SEAIR and is taking over the airline’s missionary routes that fly to main destinations like Manila, Cebu, and Davao. The airline is currently eyeing inter-Palawan routes such as Puerto Princesa-El Nido, Busuanga, and Manila to Batanes flights. SEAIR I fleet include three Domier 328s and one LET 410UVP-Es. The firm plans to acquire two more LET aircraft.
CONSTRUCTION Fluor Corp. to expand local presence Fluor Corp. is eyeing to participate in areas of power, oil and gas, and mining in the Philippines as it expands local presence. Fluor has completed projects in the country including the Enron Power Corp.’s coal-fired power plant in Batangas and Procter and Gamble’s (P&G) Cabuyao facility in Laguna.
The 100% Filipino-owned company is a new exporter of coconut beverage and coconut shells. The project, which is expected to generate 294 jobs, will begin its coco export operations in September 2013.
The firms is also currently working on the third phase of the Malampaya gas-to-power project wherein it is responsible for engineering and procurement for the new depletion compression platform and modifications required on the shallow water platform.
Century will now go into manufacturing, preserving, producing, distributing, exporting, and importing all kinds of food and beverage products derived from fruits, vegetables, and other agricultural products.
Fluor Philippines Vice President and Country Manager Dan Spinks said the firm is also interested to participate in the government’s public-private partnership (PPP) program, noting that they would want to take part with a local partner.
The company will sell its products not only to the local market but also to the United States (U.S.) and Europe.
ELECTRONICS
AVIATION SEAIR unit to launch commercial operations this year A unit of South East Asian Airlines (SEAIR) is set to start commercial operations early this year after
Sharp applies for tax perks Sharp Corp. is applying for tax perks with the Board of Investments (BOI) for the production of liquid crystal display (LCD) and light emitting diode (LED) televisions in Muntinlupa City. Once the application is approved, Sharp would qualify for incentives 5
like exemption from the payment of income taxes and from duties on imported spare parts. It would also enable the firm to enjoy other non-fiscal incentives such as employment of foreign nationals and simplified customs procedures for the importation of equipment and for exports of processed products. The company will produce TV sets with sizes of 32 inches and below which will be available in the local market.
ENERGY Malampaya consortium starts USD 1-B expansion The consortium operating the Malampaya deepwater-to-gas power project in offshore Palawan began the third phase of its USD 1-B additional investment in the Philippine gas field. The additional investment will be used for the project’s Phases 2 and 3. For Phase 2, the consortium is investing USD 250M for the drilling and development of two additional wells. This is expected to be completed by February 2014. For Phase 3, some USD 750M will be invested for the installation of the yard where additional equipment and facilities will be housed by December 2015. Australian oil firm to explore 3 Cebu prospects Australian upstream oil firm Gas2Grid Ltd. is conducting exploration works on three prospects in Cebu. The company will conduct a work-over for Malolos-1, which will involve the removal and transfer of tubes to Malolos-1 from Nuevo Malolos-1, and oil and gas flow testing. The Sydney-based firm holds the 750-sq km petroleum Service Contract 44 located in onshore Cebu island. 6
Gas2Grid will also conduct exploratory drilling at the Gumamela-1 prospect, which has an estimated 15M barrels of recoverable oil potential. Nido sets Linapacan Oil redevelopment Having raised USD 43M to fully fund its exploration activities for 2013, Australian firm Nido Petroleum Ltd. has firmed up plans for its re-entry into West Linapacan oil field. A portion of the funds will be used toward studies which could lead to a final investment decision. The West Linapacan oil field re-entry plan will be carried out in tandem with the Galoc field’s phase 2 development. Pitkin allots USD 10M for drilling Philex Petroleum Corp.-led Pitkin Petroleum Plc. is set to spend USD 5M to USD 10M to drill an exploratory well under Service Contract 53. Service Contract 53 is located in onshore Mindoro. Service Contract 53 covers 7,240 sq km, mostly onshore and adjacent to the Palawan Basin, which hosts all the producing oil and gas wells in the Philippines.
capacity would be 10M to 20M tons which is expected to be established in two to three years. Swensen’s to open 3 outlets Swensen’s, a global chain of ice cream restaurants, is seeking to open three more outlets in the Philippines this year. “We are very picky with the locations we want to open in, so we are just waiting for the right opportunities,” Swensen’s Philippines Owner and General Manager Lizzie Guerrero said. Swensen’s outlets are currently located at the SM Mall of Asia (MOA) in Pasay City and Eastwood Mall in Quezon City. Established in 1948, Swensen’s first ice cream parlor was opened in San Francisco, California.
GREEN PROJECTS BOI approves P3.43-B Mindoro wind project Local renewable energy developer Philcarbon Inc. will enjoy tax perks for its P3.43-B wind power project in Southern Luzon.
FOOD AB Pascual to put up P800-M yogurt plant AB Pascual Foods Co., the 50-50 joint venture of Asia Brewery Inc. (ABI) and Grupo Leche Pascual, has announced plans to establish an P800-M yogurt manufacturing plant in the country, transforming the Philippines as its production hub for Southeast Asia. ABI Chief Executive Officer (CEO) Michael G. Tan said the company’s first yogurt offering, dubbed as Creamy Delight, would be sold for P15 per piece for the original flavor and P20 for the thick and creamy variant. Grupo Leche President Tomas Pascual said the plant’s production
The Board of Investments (BOI) has approved the company’s application for registration of its 33.4-megawatt (MW) Bulalacao wind project in Oriental Mindoro.
HOSPITAL AND MEDICAL SERVICES PROJECTS Metro Pacific group taking over Delos Santos Medical Center Infrastructure holding firm Metro Pacific Investments Inc. (MPIC) is taking over a majority stake in the company that owns and operates De Los Santos Medical Center (DLSMC). Philippine Business Report
MPIC announced the signing of a deal with the shareholders of DLSMC to participate in a P250-M capital-raising which will give it 51-% equity ownership in the expanded De Los Santos General Hospital Inc.
INFORMATION AND COMMUNICATIONS TECHNOLOGY Sopra banking to establish PHL services hub The Sopra Banking Software is bent on establishing Philippine services hub by the first quarter of 2013 for its regional software and information technology (IT) services for banks and financial institutions. Sopra Banking Software’s Van Der Linden said the Philippine banking technology has enormous room for improvement and they are currently in talks with several top banks to provide core banking software and services. “With the hub, the cost of implementation for delivering our services to local banks will be lowered. We do this because I don’t see any markets in Asia that has the same potential as the Philippines,” Linden said.
INFRASTRUCTURE/PUBLICPRIVATE PARTNERSHIP PROJECTS Gov’t approves P113-B infra projects The government has recently approved 11 infrastructure projects worth over P100B, including a key project connecting the North Luzon Expressway (NLEX) with the Southern Luzon Expressway (SLEX) and the Cavite-Laguna Expressway (CLEX).
Janaury 2013
Approved by the National Economic and Development Authority (NEDA) Board were the P25.56-B NLEX-SLEX Connector slated from 2013 to 2016 and the P43-B CLEX from 2012 to 2017. SMC ready to start MRT 7 construction San Miguel Holdings Corp. (SMHC) is eager to start construction of the USD 1.2-B Metro Rail Transit Line 7 (MRT 7) project as soon as it secures the green light from the government. The Japanese government, through Japan Bank for International Cooperation (JBIC), has indicated interest to help fund the MRT 7 project that would run from San Jose del Monte station in Bulacan to SM City station in North Avenue to link with the Light Rail Transit Line 1 (LRT 1) and MRT 3. Project cost of the 23-km MRT 7 is estimated at USD 1.24B. DOTC to roll out 8 PPP projects The Department of Transportation and Communications (DOTC) is rolling out eight of the country’s USD 4.8-B public-private partnership (PPP) projects: • Upgrading the Mactan-Cebu International Airport • Contracting out the operations and maintenance (O&M) for the Bohol Airport which will replace the existing Tagbilaran Airport • Contracting out the O&M for Laguindingan Airport in Misamis Oriental • Upgrading the Puerto Princesa Airport in Palawan • Installing automatic fare collection system in MRT and LRT lines • LRT Line 1 Cavite Extension • Contracting out the O&M for LRT Line 2 • Installing the Integrated Transport System (ITS) Project, which aims to put up three world-class mass transportation intermodal terminals at the boundaries of Metro Manila: one each in the north and two in the south of the metropolis.
Water firms join forces for Cebu province project Manila Water Company Inc. and Metro Pacific Water Investments Corp. have forged a partnership for a water supply venture in Cebu. Under the new partnership, Metro Pacific Water agreed to acquire 39% of the consortium, while Manila Water will continue to retain its majority ownership at 51%. The Gaisano Group holds 10% of the consortium. The Cebu Bulk Water Supply Project is expected to provide 35M liters a day of bulk water in the province.
MANUFACTURING P&G allocates USD 50M for expansion Procter & Gamble (P&G) has allocated USD 50M to double the capacity of its Cabuyao manufacturing and distribution plant to serve the robust domestic market and become more cost efficient in logistics. The plant expansion is the second phase of the P5.2-B additional investments of P&G which started in May 2012. P&G Vice President for Asia Product Supply and Asia Sustainability Edward Hunter said the additional investment is a way of expressing confidence in the Philippine economy, noting that the country continues to be a very attractive investment and growth market for multinational firms.
MASS HOUSING 8890 Group infuses P8B to IP Convergence The 8890 Group of Companies is infusing up to P8B worth of assets into IP Convergence Data Center Inc. to transform the technology firm into a holding company. The 8890 Group triumvirate owners, Jesus B. Atencio, Luis Yu Jr., and Mariano Martinez have acquired 80% of IP Convergence with a total 7
of 176.4M shares for P0.9524 each or a total of P168M. Atencio said the move was to boost cash flow to ride in the booming local economy eyeing P6-B sales this year from the projected P5B sales in 2012. “We are exploring all options to raise equity and boost production, given the overwhelming demands in mass housing,” Atencio said.
MINING Coal Asia sees 42-% net income boosts Coal Asia Holdings has seen a 42-% growth in its net income due to the incentives given by the Board of Investments (BOI).
ore processing capacity to about 5M metric tons per annum (MTPA) beyond 2014 operations from the initial throughput capacity of 2.5MTPA during mine’s commissioning.
POWER Meralco taps Mindanao power generation The Manila Electric Co. (Meralco) has plans to break into Mindanao power generation industry, aiming to build a southern Philippine portfolio with capacity of between 135 megawatts (MW) and 300MW. Meralco has shown growing interest in doing business in the South, especially after the Bangsamoro peace agreement. Meralco President Oscar S. Reyes said the group’s concentration would be in Luzon but will venture for greenfield or built-from-scratch projects in Mindanao.
REAL ESTATE “The impact of these BOI incentives on the company’s bottomline is very significant and can be catalyst for further growth,” DA Market Securities Fund Manager Aldo Claparols said. Coal Asia Chairman Harald Tomintz said the government support would contribute to industrial growth and economic upliftment, particularly in the countryside. OceanaGold Corp. commissions Didipio copper-gold project OceanaGold Corp. has reported the successful commissioning of its Didipio copper-gold project in Nueva Vizcaya. “We are very pleased to announce that we have started milling at Didipio. We have met the objective,” OceanaGold Managing Director and Chief Executive Officer (CEO) Mick Wilkes said. OceanaGold said the expansion would help increase the plant’s 8
Alliance Global Group plans spending USD1.5B The Alliance Global Group Inc. has plans to spend USD 1.5B to triple its hotel rooms and become the Philippines’ largest hotel owner in the next five to seven years. Alliance President Kingson U. Sian said they are targeting to have more than 5,000 hotel rooms as early as 2017 and develop tourism-related projects. “We are not slowing down nor putting on hold any of our tourism ventures,” Sian said. Ayala Land to launch high-end residential project in 2013 Ayala Land Premier (ALP) is launching four to five new high-end residential projects nationwide this year. ALP is investing P12B in Ayala Center with P3-B first instalment for a new two-tower development called Garden Towers and another P9-B allocation for the three-tower Park Terraces.
Philreality’s joint venture on BGC approved Philippine Realty and Holdings Corp. is set to enter into a deal with principal shareholder Greenhills Properties Inc. (GPI) for the development of a 6,400-sqm prime property in Bonifacio Global City (BGC) into a mixed-use complex. Philrealty said its board had approved the signing of a memorandum of agreement (MOA) with GPI after it had finished evaluation of proposals solicited from local and foreign architectural firms on a masterplan for the property. The property consists of four 1,600-sqm lots forming a block bounded by 5th Avenue, 25th St., 6th Ave. and 24th St. in BGC. Robinsons Land to acquire 2-ha Libis property Robinsons Land Corp. (RLC) is acquiring a two-hectare property in Libis, Quezon City for conversion into a mixed-use complex. The property will be developed into a residential and office complex with a retail component, RLC President Frederick D. Go said. RLC is on the hunt for more properties to expand its portfolio of office buildings and ensure a pipeline of projects. It expects to complete Cyberscape Alpha and Cyberspace Beta in the middle of this year which will increase the company’s total net leasable area to 274,000 sqm from 194,000 sqm. Pro-Friends enters condo development Property Company of Friends, Inc. (Pro-Friends), one of the fastest growing horizontal property developers in the country, has ventured for the first time into the residential condominium development. The company’s first condominium project is a one-hectare development in Santolan near Boni Serrano. It will be called Ilustra Philippine Business Report
Residences, a six-cluster 12 to 15-storey building complex, Pro-Friends President Jocelyn L. de Guzman said. Development is expected to start in the first quarter this year. Filinvest builds new hotel, venue Filinvest Alabang Inc. has accelerated developments of its 244-ha Filinvest City with the opening of a new five-star hotel and the establishment of the country’s largest events tent venue worth over P1B. Its new five-star Crimson Hotel has an investment of over P1B and the Filinvest Tent with over P100M, Filinvest’s Commercial Centers Group Managing Director Danilo Antonio said. Antonio said Filinvest Tent is an anchor project for the 2.8-ha Spectrum Center, which is one of the clustered developments of the Gotianun-owned Filinvest property in Alabang, Muntinlupa City. Filinvest Tent occupies a total of 2,000 sqm space. The accelerated pace of development in the Filinvest City was largely driven by the opening of the Skyway that ends right in Alabang, making the commercial center more accessible to the public.
RESEARCH & DEVELOPMENT PHL puts P1.7B in PCARI The government is investing P1.7B in the Philippines California Advanced Research Institute (PCARI), which will have deliverables through revolutionary e-learning system and a health product. PCARI is a multi-stakeholder partnership between the Philippines and the University of California (UC) in Berkeley and UC San Francisco, which aims to spur economic growth through innovation. National Academy of Science and Technology Philippines Janaury 2013
(NASTP) Deputy Director General for Operations Dr. William G. Padolina said initial deliverables are expected before 2016 which include products on education and health. FEU allocates P100M for Alabang campus Far Eastern University (FEU) is allocating an initial capital of P100M for FEU Alabang to rise on a 2.2-ha lot within the Woods District of Filinvest Corporate City.
TELECOM Kickstart invests in startup online Kickstart Ventures Inc., a whollyowned subsidiary of Globe Telecom, has invested P4M more in Kalibrr, a startup online learning platform designed to help users qualify for and land business processing outsourcing (BPO) jobs. Co-founded in January 2012 by UC Berkeley graduates Paul Rivera and Dexter Ligot-Gordon, Kalibrr is composed of talents from the Philippines and around the world. The company aims to create economic opportunities through learning and employment.
FEU’s newly opened branch in Makati brought in 1,1771 students compared to last year’s 931 and is expected to increase in the succeeding years.
SHIPBUILDING BOI okays P259-M ship repair facility The Board of Investments (BOI) has approved the P259-M ship repair facility of Nautilus Shipyard Repair, Inc. to be located at the Navotas Fishery Port Complex. The facility is expected to operate by June this year with an annual capacity of 96 vessels and a minimum berthing capacity of 7,500 deadweight ton (DWT). It will also be used as a standard marine travel lift equipment designed for vessels up to 45 feet wide and with capacity of 600T. The Maritime Industry Authority (MARINA) said the Philippine shipbuilding industry employs about 39,000 workers, 70% of whom belong to the skilled and semiskilled category. Meanwhile, the Technical Skills Development Authority (TESDA), which has trained 95,000 welders, has laid out manpower development plan for the shipbuilding sector.
MAJOR PROJECTS DOE lights up USD 45-M energy efficiency project The Department of Energy (DOE) has partnered with the private sector, local government units (LGUs), and power distributors for the USD 45M Philippine Energy Efficiency Project (PEEP) in off-grid communities. “The program aims to demonstrate efficient lighting system and technologies to reduce peak electricity demand, thus reducing energy consumption and greenhouse gas emissions,” DOE said. With the lighting project, communities in off-grid or far-flung areas are expected to become more energy efficient in their lighting and power generation systems. Under the PEEP’s National Residential Lighting subcomponent, solar-powered light emitting diodes were installed in off-grid areas nationwide. “We will be able to save 10,704 liters a year of kerosene and an emission reduction of 15,502 kilograms of carbon dioxide,” 9
said PEEP Project Director and DOE Undersecretary Loreta G. Ayson.
a world-class certification for food safety management.
To date, 223 households in off-grid areas in Aklan, Antique, Palawan, and Davao del Norte have already benefited from the project.
The firm’s hotdog processing plant located in Porac, Pampanga is the first in the country certified to Food Safety System Certification (FSSC) 22000.
COMPANY NOTES Chevron, Jollibee form partnership Jollibee Foods Corporation (JFC) and Chevron Philippines Inc. (CPI), marketer of international energy brand Caltex, have partnered to open Jollibee outlets in Caltex sites around the Philippines.
The certification, recognized by benchmarking organization Global Food Safety Initiative (GFSI), allows MFC to use FSSC 22000 standard to meet the requirements of several global retailers or major branded food companies under one, internationally-recognized food safety management system. MFC presented its newest tagline, “Masarap na, World-Class pa!” which sets its vision in exporting Mekeni products around the world. ResToeRun goes on expansion Multi-brand family footwear boutique ResToeRun is embarking on an aggressive nationwide expansion program to mark its fifth year in business.
“A one-stop shop where customers can load up on fuel and at the same time enjoy their favorite JFC products will definitely satisfy their needs,” Corporate Real Estate Vice President William Tan Untion said. Lots’A Pizza stores nearing 200 With 195 stores nationwide, Lots’A Pizza, Inc. announced that it is set to tap new market segments with new product lines this year. The new pizza varieties of Lots’A Pizza are intended for pizza eaters seeking more premium ingredients. The company has rolled out new flavors to extend its appeal beyond its current market of midincome families, said Lots’A Pizza President Teresita Ngan Tian. Mekeni steps up exports Mekeni Food Corporation (MFC) is eyeing the expansion of its export market after receiving 10
The company was set to have reached its 30-store mark by end-2012. The expansion pace is set to continue at a rapid rate with the slated opening of three more outlets in Cavite, Cagayan de Oro, and Bacolod.
BILATERAL AGREEMENT Malaysians interested in ARMM A total of 20 businesspeople from Malaysia have shown keen interest in investing in the Autonomous Region in Muslim Mindanao (ARMM) during the first ARMM International Business Forum held recently. With the theme “PhilippinesMalaysia Investments: Fostering Sustainable Development in Muslim Mindanao,” the forum was attended by local entrepreneurs, members of various local government units (LGUs), and ARMM leaders.
Italian trade mission keen on PHL Encouraged by the economic growth prospects in the Philippines, a trade mission from Italy’s Confederation of Italian Industries (Confindustria) said they were looking for new projects and business opportunities here. “Italy is one of the most eminent countries that have sent an inbound mission to the Philippines. I salute you for making the Philippines a priority,” Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (TIPG) Cristino L. Panlilio said in his keynote speech delivered before the Italian delegation. Confindustria, Italy’s biggest association of manufacturing and services companies, sent a 21-member delegation to meet with the trade associations such as the Philippine Chamber of Commerce and Industry (PCCI) and the Federation of Filipino Chinese Chamber of Commerce and Industry (FFCCCI), the Italian Chamber of Commerce of the Philippines (ICCP), and the European Chamber of Commerce of the Philippines (ECCP). The delegation also had parallel sectoral programs on trading, infrastructure, and energy. Business-to-business meetings were also arranged between Italian and Philippine companies. “We are experiencing a recordbreaking number of inbound missions wanting to see up close and personal what the country is all about now. I believe we are in the radar of every significant country in the world today,” Panlilio said. He attributed this favorable business sentiment on the transparent, just, fair, and dynamic administration of President Benigno S. Aquino III. Turkish eyeing Filipino business partners Turkish businesspeople are looking for joint venture partners Philippine Business Report
in energy, construction, natural gas, home and office furniture, and art decorations. Kayseri Chamber of Commerce Chairman Ali Ezinc expressed confidence that the Philippines and Turkey could further increase their trade and investments during the recent Turkish business mission in the country. Ezinc said Turkish businesspeople have been impressed by the Philippine culture and have been encouraged to do business in the country. “There is much potential for trade and investment between Turkey and the Philippines,” said Philippine Chamber of Commerce and Industry (PCCI) President Miguel B. Varela.
ASEAN WATCH
Asian Nations (ASEAN) as a major factor that can help improve the standard of living, lift people out of poverty, and increase the contribution of the region to global growth. “The trade integration in ASEAN is certainly welcome. It’s obviously operating in parallel with TPP [Trans-Pacific Partnership], with the WTO [World Trade Organization] efforts,” IMF Managing Director Christine Lagarde said. IMF urged ASEAN countries to increase trade between themselves as China’s current account surplus drops to 3% of gross domestic product (GDP) from 10%, driven by the shift from investment to consumption. FTA with European Union seen to benefit cacao and abaca The country’s cacao and abaca fiber are expected to benefit from the Philippine-European Union (EU) free trade agreement (FTA), a study revealed.
PHL pushes “Smart Society” in ASEAN The Philippines is pushing for a Smart Society in its 2012-2013 term as Chairman of the Association of Southeast Asian Nations (ASEAN) Telecommunications and Information Technology Ministers (TELMIN). This was revealed by Department of Science Technology (DOST) Secretary Mario G. Montejo during the 12th ASEAN TELMIN Meeting recently held in Mactan, Cebu. The Philippines, through Montejo, takes over from Myanmar as TELMIN chair while DOST-Information and Communications Technology Office (ICTO) Undersecretary Louis Casambre chairs the assembly of ASEAN Senior Officials supporting the ASEAN TELMIN. IMF sees ASEAN trade integration key to global growth The International Monetary Fund (IMF) sees the trade integration of the Association of Southeast Janaury 2013
source most of their raw materials from Africa. “Bringing us in parity with these cocoa exporters would be a big help to the industry and even accelerate their rapid growth in the future,” Briones said.
ON THE CALENDAR Internal Quality Audit This two-day seminar will introduce control measures that will determine if your established quality system is suitable to meet your company objectives and is helpful in improving your daily operations. This will guide the company in effectively implementing its documented system and identify areas for improvement. It will be held at the Philippine Trade Training Center Philippine Trade Training Center (PTTC) on February 14-15, 2013. Please contact Jezel Sunga at 486.8989. Time Management This briefing will provide the participants basic and practical techniques to achieve more with the proper use of time. It will be held at the PTTC on February 15, 2013. Please contact Len Ragamat at 486.8989.
Philippines Institute for Development Studies (PIDS) Senior Research Fellow Dr. Roehlando Briones presented this result in his study entitled “Prospects for a PH-EU FTA: Agricultural Sector Component” during a consultation for the proposed RP-EU FTA conducted by the Department of Trade and Industry (DTI). According to the study, niche products or sectors, including cacao and abaca, are possible sources of economic growth opportunities. Briones said the big chocolate producers in Europe and some chocolate producers in the U.S.
Facebook Business Page Management Learn how to use the social networking site Facebook to your business advantage. The Philippine Trade Training Center (PTTC) will hold the Facebook Business Page Management seminar on February 19-20, 2013 at the PTTC in Pasay City. Please contact Gerald David at 486.8989. 3 Rs Convert wastes into productivity. A half-day seminar dubbed as 3 Rs (Reduce, Reuse and Recycle) will be conducted by the PTTC in Pasay City on February 28, 2013. Please contact Len Ragamat at 486.8989. 11
Economic Indicators
GNI Growth Rate (%)
GDP Growth Rate (%) 8 7 6 5 4 3 2 1 0
7 6 5 4 3 2 1 0
2Q (2011) 3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012)
2Q (2011) 3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012)
Exports
Consumer Price Index (2000 base year)
132 131.5 131 130.5 130 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
(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
5.4
Overall Business Outlook on Macroeconomy 60 50 40 30 20 10 0
Editor-in-Chief
Vic S. Soriano Managing Editor
Cresenciano P. Par Associate Editor
Jam A. Hourani Elaine M. Lazaro Emman R. Caleon
As of January 15, 2013
5.5
Visitor Arrivals
Anne L. Sevilla
Interest Rate (%) 5.8 5.6
Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
Editorial Team
May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
5.7
Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
4,600
Inflation Rate (%)
As of January 15, 2012
5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0
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)
2Q (2012) 3Q (2012) 4Q (2012)
Philippine Business Report
Writers
5.3 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13
250 200 150 100 50 0
BOI-PEZA Approved Investments (PhP Billion)
3Q (2011)
4Q (2011)
1Q (2012)
2Q (2012)
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January 2013 issue 12
Philippine Business Report