Volume 23 No. 03
March 2012
Philippine Business Registry launched In an effort to speed up the process of starting a business in the country at the least cost, the Department of Trade and Industry (DTI) has launched the Philippine Business Registry (PBR) recently with President Benigno S. Aquino III gracing the inauguration. As a government priority program that focuses on streamlining business registration process and eliminating red tape, the PBR serves as a one-stop shop for entrepreneurs who need to transact with several government agencies to start operating a business. Through the PBR, applicants no longer need to physically visit each agency to register their businesses as these will now be interlinked. These agencies include the DTI, Bureau of Internal Revenue (BIR), Social Security System (SSS), Home Development Mutual Fund (PAG-IBIG), Philippine Health and Insurance Corporation (PhilHealth), and Securities and Exchange Commission (SEC). The project aims to establish a fully secure national business registry database which will integrate information from different government agencies and facilitate seamless business registration across agencies. With fewer steps and faster process, PBR is expected to strengthen the government’s efforts at providing quality service to the people and realize its commitment to curb corruption in the bureaucracy. March 2012
President Benigno S. Aquino III (2nd from right), together with (R-L) Department of Trade and Industry (DTI) Secretary Gregory L. Domingo, Pag-IBIG President Atty. Darlene Marie B. Berberabe, and Social Security System (SSS) President Emilio de Quiros, Jr., listens intently as DTI Undersecretary for Consumer Welfare and Business Regulation Group (CWBRG) Zenaida C. Maglaya (extreme right) talks about the Philippine Business Registry (PBR).
Guide to Business Re gistr ation Sole Proprietorship Walk-in application at DTI Office 1. 2. 3. 4.
Applicant fills out the PBR application form and submits to DTI Teller for processing. DTI Teller secures applicant’s Tax Identification Number (TIN) (If there’s an existing TIN, PBR will validate against records). Business Name (BN) Certificate and Employer’s Registration Numbers (ERNs) are processed. • A Transaction Reference Number (TRN) is presented to cashier for BN fee • Official Receipt of Payment is presented to the DTI releasing officer for the BN Certificate. • Applicant gets SSS, PhilHealth, and Pag-IBIG ERNs from DTI Teller. Certificate of Registration or Employer ID can be secured from agencies upon presentation of PBR-generated ERNs.
Partnerships or corporations* Walk-in application at PBR Kiosk at Securities and Exchange Commission (SEC) Main Office 1. 2. 3. 4.
Applicant fills out the PBR application form and submits to the teller for processing. Applicant submits photocopies of complete SEC registration documents (i.e., SEC registration certificate, Articles of Partnership/ Corporation). Original copies are required for verification. Teller transmits application for ERNs to SSS, PhilHealth, and Pag-IBIG and applicant gets the PBR-generated ERNs. Certificate of Registration or Employer ID can be secured from agencies upon presentation of PBR-generated ERNs.
*
Only partnerships or corporations already registered with SEC can apply.
The launching was only the first phase of the PBR. This year, several local government units (LGUs) and other regulatory offices
are expected to connect to PBR. Kiosks will be installed in selected areas nationwide to facilitate registration in the countryside. 1
INDUSTRY Trends PHL seen rising to 16 largest economy by 2050 The Philippines is forecast to become the 16th largest economy in the world by 2050, a study by the Hong Kong and Shanghai Banking Corp. (HSBC) revealed. th
These countries “share a very low level of development but have made great progress in improving fundamentals . . . . they should enjoy many years of ‘copy and paste’ growth ahead,” the report said. ‘Copy and paste’ refers to the stage of a developing economy when it opens itself and adapts to the world’s existing technologies. It added that the Philippines, just like China and Pakistan, is poised to experience a “multi-decade run” of strong growth. The HSBC report projects that the Philippine per capita income will expand by an average 6.1% in the period 2010 to 2020; 5.6% from 2020-2030; 5.2% in 2030-2040; and 4.8% in 2040-2050.
“We highlight the striking rise of the Philippines, which is set to become the world’s 16th largest economy, up 27 places from today,” said the report titled ‘The World in 2050.’ The study showed that the per capita income in the Philippines is seen to rise to US$10,893 in 2050 from the present US$1,215. HSBC explained that the forecast is based on the economy’s current level of development and the factors determining whether it has the potential to catch up with the more developed nations. “These fundamentals include current income per capita, rule of law, democracy, education levels, and demographic change,” it explained. The Philippines was also included in what the bank termed as the “fast-growth countries.” Others in that category are China, India, Malaysia, Bangladesh, Uzbekistan, Kazakhstan, Turkmenistan, Peru, Ecuador, Egypt, and Jordan. 2
For gross domestic product (GDP), growth is estimated at an average 8.4% in the period 2010-2020; 7.3% from 2020-2030; 6.6% from 2030-2040; and 5.8% from 2040-2050. “Countries like the Philippines, Peru, and Nigeria all demonstrate some combination of favorable demographics and strong fundamentals that should see a significant rise in their economies,” the report added. DTI seeking P1-B fund to boost competitiveness The Department of Trade and Industry (DTI) is proposing a P1-B National Export Development and Competitiveness Fund for the next five years to push the country’s export sector to support the recovery of the electronics sector and sustain the growth momentum in the non-electronics exports. DTI-Bureau of Export Trade Promotion (BETP) Director Senen M. Perlada said DTI Secretary Gregory L. Domingo is recommending this fund allocation to the Cabinet economic cluster. “We are trying to get P1B over the next five years to support our exports sector,” said Perlada, who is also the of the Export Development Council (EDC) Executive Director.
The export programs to be funded would include export promotions, capacity building, policies, and studies. The DTI would also be pushing for the institutionalization of the fund under the DTI budget. The P1-B fund could be divided equally to P200-M annual allocation for the next five years. Last year, the exports sector under the Export Support Fund (ESF) received a total of P80M, of which P60M was spent for intervention measures for the food processing sector and P20M for export promotions. But since the exports sector is expected to recover this year from a slump last year, the government needs to come up with interventions and measures to sustain its recovery. The electronics sector is expected to grow over 30% this year to reach U$31B while the merchandize export is expected to contribute over US$62B. “We are confident that we would still hit the absolute figure,” Perlada said. The country's exports target for 2012 is US$80.2B. Electronics sector seen to rebound The country’s electronics industry considered 2012 as its rebound year where growth is expected at 20% to regain last year’s loss and get back to the 2010 level. “The year 2012 is a snap back year,” Semiconductor and Electronics Industry of the Philippines Inc. (SEIPI) President Ernesto B. Santiago said. He said the electronics and semiconductor market will continue to be weak in the first quarter this year but will start to grow middle of the second quarter. The industry is expected to snap back in the third and fourth quarters of the year. “Growth will be driven by technology as consumers will Philippine Business Report
demand for more new technologies for easier connectivity and more applications,” he said. In the first 10 months of 2011, the industry has generated a total of US$570M in new investments. SEIPI was hoping to end the year with a total of US$1B. The industry generated US$2B worth of investments in 2010. Outsourcing firms still expanding despite ban threat in US The Philippines has continued to attract American outsourcing firms despite threat that US government is banning American companies from outsourcing its non-core services to other countries to preserve jobs in the US market. “We are still seeing a lot of business process outsourcing (BPO) coming in,” said Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (ITPG) Cristino L. Panlilio. “How can you really ban a company from expanding abroad?” he asked. This threat of banning outsourcing, he said, comes out only during election period. As the US unemployment continues to falter, American politicians have to scout for ways to endear them to the voters and one issue closer to home is jobs generation.
The Philippines is EXL’s fastest growing site among seven locations that include Singapore, Malaysia, India, US, and Eastern Europe. The recent expansion has brought to 800 total seats allocated for healthcare support services, which translates to employment of nurses in the country.
Trade and INVESTMENTS AGRICULTURE/ AGRIBUSINESS AND FISHERY BOI open to phased registration of P2-B ARMM banana plantation The P2-B proposed banana plantation of Bahraini-owned Astropex Corp. is going to be registered with the Board of Investments of the Autonomous Region of Muslim Mindanao (BOI-ARMM) on a phased development since land consolidation is taking longer than expected.
“EXL has expanded its existing 1,500-team with an additional 500 seats and another 1,500 seats within the year because the company’s Philippine operation is growing by 70%,” he said. March 2012
ABC, an affiliate of the Anflo Group of Companies, has entered into a contract with Unifrutti Growers Services Inc. as the exclusive buyer of the produce. The bananas will be marketed by Unifrutti under the brand name Chiquita. Located at Pantukan in Compostela Valley, the project is expected to create 306 jobs and was set to start commercial operations last month. Toyota’s food unit relocating here Toyota Tsusho Foods Corp. (TTFC), an affiliate of Toyota Group of Japan, is relocating here its seafood and marine products manufacturing operation from China after encountering problems with its Chinese suppliers. TTFC, the trading company of Toyota Motor Group of Companies, is a wholly-owned subsidiary of Toyota Tsusho Corporation (TTC) of Japan. For its local venture, TTFC has partnered with HJR International Corp. of Cebu to put up a 50-50 joint venture called Mandaue Cebu Marine Products Corp. (MCMPC). HJR has been TTFC’s supplier of frozen shrimp.
AVIATION
“But we are concerned and we are watching with keen attention. So far we continue to attract BPOs,” he said. Panlilio cited the expansion of publicly-listed and New York based BPO firm EXL, which provides back office support to its clients in healthcare, insurance, logistics, and financial analysis (see related story on p.4).
of bananas to Japan and the Middle East.
The BOI-ARMM is going to register the first phase of the banana plantation consisting of 60 has. The investor needs a total of 1,200 has. and is still consolidating other areas nearby. The project proponents are now undertaking land preparations. Anflo to export bananas to Japan, Middle East Local firm Anflo Banana Corp. (ABC) will invest P216M for the export
Cebu Pacific to launch aviation training center in Clark The Cebu Pacific will build a new aviation training center at the Clark Freeport Zone dubbed as the Philippine Academy for Aviation Training Inc. (PAATI) that will train over 2,500 pilots annually. It is expected to operate at the third quarter of 2012. CEB President and Chief Executive Officer (CEO) Lance Y. Gokongwei revealed that CEB is investing US$3.8B for 37 new aircrafts, the largest single aircraft order ever made by a Philippine carrier. Gokongwei expects to double the airline fleet size this year. 3
AirPhil Express adds routes AirPhil Express had additional five routes to fly including Cebu to Cotabato, Cebu to Kalibo Cebu to Legazpi, Cebu to Surigao, and Cebu to Pagadian and from each destination back to Cebu. “The move is seen to boost the number of flyers availing the services of AirPhil Express. With more additions in the number of routes and frequencies in daily flights in the pipeline, we are anticipating about 100-% increase in the number of passengers this year or 8M flyers in 2012,” AirPhil Express Senior Vice President for Sales and Marketing Alfredo M. Herrera said.
BANKING RCBC expands operations The Rizal Commercial Banking Corp. (RCBC) is allotting P5.2B for opening new branches, improving banking operations, and possibly acquiring a new bank.
“We have already complied with the Bangko Sentral ng Pilipinas (BSP) equity investment ceiling. Last year we brought in two investors: International Finance Corp. (IFC) and CVC Capital and we brought in P5.8B of equity,” RCBC President and Chief Executive Officer (CEO) Lorenzo V. Tan said. The Hong Kong-based CVC Capital Partners acquired 15% of RCBC and this raised the bank’s capital by P3.7B. The World Bank’s IFC also invested P2.1B to support the bank’s lending 4
growth particularly in micro, small, and medium enterprises (MSMEs), consumer finance, and microfinance.
BPO EXL to expand BPO operations ExlService Holdings, Inc. (EXL) is expanding its operations in the Philippines, setting up another facility that will cater to the complex needs of the sectors in insurance, healthcare, financial services, travel, and transportation. Already inaugurated at the SM Mall of Asia Complex, the project will create 1,000 jobs. “While the business process outsourcing (BPO) in the Philippines has long been associated with the contact center space, EXL is a next-generation provider delivering complex, industry-focused work to our clients,” EXL President and Chief Executive Officer (CEO) Rohit Kapoor said. Kapoor said the Manila expansion allows tailoring of services to meet the increasingly sophisticated needs of the daily clients. “The Philippines has established itself as a center of excellence for unscripted voice work, clinical management, customer service, legal services, finance, and accounting,” EXL Chief Strategy Officer and Executive Sponsor of Philippine Operation Rembert de Villa said.
CREATIVE/KNOWLEDGEBASED Kris Aquino sets up new company Kris Aquino, along with four other incorporators, has formed a company that will produce films and television shows as well as manage talent, documents from the Securities and Exchange Commission (SEC) showed. Kris Aquino Productions, Inc. was incorporated on 27 January 2012, according to a certificate
of incorporation signed by SEC’s Company Monitoring and Registration Department Director Benito A. Cataran. The company has an initial capitalization of P2M, equivalent to 20,000 shares at P100 apiece. Of the P2-M capitalization, P500,000 has been subscribed while P125,000 has been paid up.
DISASTER PREVENTION GEF allocates US$8B for pilot Manila bay cleanup project The Global Environment Facility (GEF) is allocating US$8M for a cleanup of Manila Bay specifically aiming to reduce polluting nutrient level and fish kill-causing oxygen depletion. A part of a global aim to revive “dead zones,” the project involves two pilot areas over a three-year program until 2014, United Nations Environment Programme’s (UNEP) said. The other pilot area is the Chilika Lake in India. The Philippines has been chosen as one of the pilot areas because of its earlier initiatives in the cleanup of Manila Bay, according to UNEP Deputy Executive Director Amina Mohamed. This particularly includes the Manila Bay Declaration in 2001 and a 2008 Supreme Court decision mandating more than 10 agencies to rehabilitate Manila Bay. UNEP will replicate the program in other dead zones after completion of the pilot project.
ENERGY Nine firms plan P54-B bioethanol distilleries At least nine companies have expressed interest to put up bioethanol distilleries in the Philippines with an estimated combined investments of P54B, Philippine Agricultural Philippine Business Report
Development and Commercial Corp. (PADCC) said. “Together with the Department of Energy (DOE), we came up with a list of about nine potential investors. We need 13 distilleries to comply with the 10-% blending requirement of bioethanol,” said PADCC President Marriz B. Agbon. He said most of the interested companies have foreign partners, including Koreans, Singaporeans, and Thais, citing the big capital requirement of bioethanol plants. The facility is expected to start commercial production by May this year. Agbon said the nine potential investors were in different stages of negotiations with the Philippine government. P15-B new investments in ethanol eyed to meet domestic demand To plug the current domestic supply gap in ethanol, at least P15B in investments is being eyed by government for the setting up of additional nine more production facilities with 30M liters of capacity each. During the First Philippine Bioenergy Conference at the Manila Hotel, Department of Energy (DOE) Secretary Rene D. Almendras emphasized that the calculated investment will just be for the prevailing 10-% blend (E10) and will go up accordingly as the mix by volume goes higher. The investors, he added, are already coming forward with their project plans, noting that the major factor triggering has been the issuance of a Department Circular which defined the pricing and local allocation of supply vis-à-vis imports. The additional volume needed would still be significant at roughly 320M liters, as current production is just at 79M liters, Almendras said. March 2012
NGCP allots P14.3B for 2012 capex The National Grid Corporation of the Philippines (NGCP) has allocated capital expenditures of P14.3B, slightly lower than the 2011 investment of P15.3B, to improve and maintain the country’s power transmission highway. “Looking forward, I see 2012 as another challenging year for us, with our many projects lined up to further improve the operation and management of the Philippine transmission backbone. NGCP’s continuous evolution, reformation and improvement will require our sustained commitment, dedication and hard work,” NGCP President and Chief Executive Officer (CEO) Henry Sy, Jr. said. Sy said 2012 would be another challenging one for NGCP, with bigger expansion and efforts to build a strong and smart power grid. Projects lined up for 2012 • • • • •
San Esteban-Laoag 230-kilovolt line Magapit Capacitor Project Binga-San Manuel 230-kv line upgrading Dasmariñas EHV substation expansion Tayabas 500-kV substation expansion
Meralco completes 7 capital projects Power retailer Manila Electric Co. (Meralco) said it has completed seven capital projects from November to December last year.
subtransmission line, and two new distribution lines. These projects are situated in Metro Manila and the provinces of Quezon, Laguna, and Rizal.
The new Calamba substation, commissioned on 29 December 2011, augmented Meralco's distribution capacity in the southern part of its franchise area to meet the increasing power requirements of customers in Calamba and Canlubang areas, including industrial customers in Light Industry and Science Park (LISP) II and First Philippine Industrial Park (FPIP). Meralco added that the distribution lines from this new substation will provide a more, reliable and stable electric service in Calamba area and Sto. Tomas in Batangas. A power transformer at Botocan substation was recommissioned in November 2011 to boost the adjacent Tayabas and San Pablo II substations.
Meralco Executive Vice President and Networks Head Ricardo V. Buencamino said the projects have reinforced the company’s electric distribution system and have improved electric service.
A 13.8-kV distribution line in Imus, Cavite was also upgraded to the standard 34.5-kV distribution system to enable customers in barangays Malagasang II-A and Anabu II-E to have switching flexibility during maintenance or emergency situations.
The recently completed projects are the construction of a new substation, capacity addition to two existing substations, replacement of a defective power transformer, the construction of an additional 115-kilovolt (kV)
Its distribution facilities in Metro Manila were also augmented with the increased capacities at Tegen and Diliman substations through the installation of additional 83 megavolt-ampere power transformers. 5
A second 115-kV source for Fort Bonifacio Global City-4 substation and a new distribution line from Dolores substation were completed. Meralco said these additional facilities will support the load growth in the cities of Manila, Quezon, Taguig and municipalities of Taytay, Angono, and Binangonan in Rizal. Given these various capacities build-up, customers will greatly benefit from the enhanced distribution infrastructure in the said areas, Buencamino said. Nido petroleum to drill 5 oil exploration wells Australian firm Nido Petroleum Ltd. is set to drill five more exploration wells off Palawan within the next two years to help unlock the potential of its top 15 prospects, which are estimated to yield a combined resource of 2.9B barrels. Nido Petroleum Chief Executive Officer (CEO) Phil Byrne bared plans of drilling a well at the Lawaan prospect, as covered by Service Contract (SC) 54A; Pawikan prospect within SC 54B; Balyena prospect in SC 58; and Aboabo and Apribodo prospects in SC 63. The proposed drilling of these areas between November this year and January 2014 is at a total cost of US$90M and expected to yield some 1.2B barrels of oil.
INFRASTRUCTURE Water project receives non-pioneer tax incentives The Board of Investments (BOI) has granted non-pioneer status for an availment of four-year income tax holiday (ITH) to the application of South Balibago Resources Inc. for its water supply project in Iloilo City. South Balibago Resources Inc. has proposed to register its P34-M project as new operator of the Passi City Water Supply System in Passi City in Iloilo. 6
The project is covered by the 2011 Investment Priorities Plan (IPP) under the heading Preferred Activities (2) Infrastructure that includes water supply and/or distribution.
MANUFACTURING 2 printer firms invest in CALABARZON Two of the world’s biggest printer manufacturers are investing over P20B in the country for the establishment of high-technology printer manufacturing facilities for the exports market, generating over 6,000 jobs for Filipinos once they start commercial operations in the Cavite-Laguna-Batangas-RizalQuezon (CALABARZON) area.
Philippine Economic Zone Authority (PEZA) Director-General Lilia B. De Lima said the bigger investor is a Japanese digital imaging solutions firm, which is investing P20B for a new printer factory in Batangas. The other investor is Brother, a primarily printer manufacturer. These two companies were the largest investors approved by the PEZA Board in December last year. De Lima said the Japanese investor will establish a new project that will produce one new high-tech printer. It has already selected a 20-ha. property in Batangas. On its first year of operations, the firm is expected to provide 4,000 direct jobs and a total of 6,000 on the third year. Brother is also finalizing a five to 10-ha. factory location somewhere in the region, she said.
URC readies P5.2B for expansion Universal Robina Corporation (URC) is allotting P5.2B for capital expenditures (capex) this year. URC said it is spending P4.3B for the continued expansion of its branded consumer foods segment operations, primarily snackfoods production facilities in the Philippines and biscuit production facilities in Thailand and Viet Nam. It also earmarked P380M for its commodity group to fund mostly maintenance capex as well as P475M for its agro-industrial group for farm expansion and bulk handling facility for the feeds division. Bag venture inaugurated in Tarlac D’LUXE Bags Philippines Inc., which manufactures the Coach luxury bag collection, expects to produce 4M to 5M bags for export worth US$130M by 2014. Coach International Limited Senior Vice President Martyn James said the joint venture between Coach and Luen Thai Group-Tan Holding Corporation’s D’Luxe Bags Philippines in 2006 had grown 10-folds. The D’Luxe Bags Philippines. Inc. factory was recently inaugurated in Concepcion, Tarlac. “If you look at the opportunities in the Philippines, it could become our second biggest supplier in the world,” James said. Luen Thai Enterprises and the Tan Holding Corporation Chief Executive Officer (CEO) Willie Tan said as of December 2011, D’Luxe already employed 1,200 workers who produce 90,000 to 100,000 pieces of Coach bags a month, or some 1.2M a year. He said apart from the Coach production in Tarlac, D’Luxe Bags Philippines is hoping to expand operations this year in Cebu, where it manufactures Adidas products, and in Clark, where it produces Polo Ralph Lauren items. Philippine Business Report
He said plans are underway to put up a new apparel and textile mill for a new Japanese brand in Bataan. Luen Thai Group-Tan Holding Corporation is also looking at opening a shoe factory in the country by next year and possibly even venture into real estate in the future. Tan’s business has employed a total of 35,000 workers in Tarlac, Clark, and Cebu.
MINING San Miguel eyes Nonoc nickel project San Miguel Corp. is in talks with Philnico Mining and Industrial Corp. for a possible investment in the Nonoc nickel mine located in the southern region of Mindanao.
Located on Nonoc Island off Surigao City, the Nonoc mine is believed to hold one of the biggest nickel and cobalt resources in Southeast Asia. Canadian miner completes fund raising for gold project Mindoro Resources Ltd. has raised a total of C$2.7M from a private placement with the funds to be used for drilling works at its gold projects in Batangas. The firm said it raised C$1.3M from the third tranche of the private placement through the sale of 10.9M common shares or Clearing House Electronic Subregister System (CHESS) depository interests (CDI) to unidentified investors. Apex to expand Compostela Valley facility Publicly-listed Apex Mining Co. Inc. is expanding its ore processing facility in Mindanao by three-folds in line with a recently drawn up business plan. Apex said its board approved the plan to significantly expand the production capacity of its porphyry copper-gold deposit located at Maco, Compostela Valley.
In a disclosure to the Philippine Stock Exchange (PSE), San Miguel Corporate Information Officer Ferdinand K. Constantino said negotiations are currently ongoing between the diversifying conglomerate and the controlling shareholders of Philnico to revive the operations of the Nonoc mine.
It intends to reopen historic mining areas and expand the current producing areas. The company’s project team has already completed preliminary design and cost engineering, leading to the start of early construction within the coming months.
“We are evaluating the viability of investing in the Nonoc nickel mining project. An appropriate disclosure shall be made to the exchange in the event such investment is concluded,” Constantino said.
The company aims to progressively increase and upgrade its resource, develop new vein systems, and achieve a gold production rate of 100,000 oz. per year by 2015.
Philnico is 55% owned by Compline Resources Co. of Hong Kong, 30% by Australia’s Pacific Energy Ltd., and the balance by local investors.
Gov’t explores ways to improve efficiency The government is exploring on jeepney improvements with right
March 2012
MOTOR VEHICLES
specifications to assure safety, reliability, and affordability. Department of Transportation and Communications (DOTC) Secretary Manuel A. Roxas II said the agency will conduct pilot test on the use of brand-new diesel engines to determine the most cost-efficient in three modes. Meanwhile, the DOTC Land Transportation Franchising and Regulatory Board (LTFRB) and Department of Energy (DOE) are working with the University of the Philippines (UP) School of Mechanical Engineering to ensure the use of LPG-jeepneys and e-jeepneys as replacement to high diesel fuel. “I’ve also met with a number of transport group leaders such as 1-Utak, Pasang Masda, FEJODAP, Public Transport Workers’ Foundation, Alliance of Transport Operators and Drivers Association of the Philippines (ALTODAP), Alliance of Concerned Transport Organizations (ACTO) and explained that the government will help them switch to viable fuel alternative,” Roxas said. Yokohama tires to expand operation The Yokohama Rubber Co. subsidiary firm Yokohama Tires Philippines is set for a major expansion with an additional US$650-M allocation for its current facility in Clark. The development is said to create more than 5,000 direct jobs when new facilities become fully operational.
PUBLIC-PRIVATE PARTnERSHIP PROJECTS GSIS, SSS to venture in PPP The Government Service Insurance System (GSIS) is planning to invest in government infrastructure projects under the public-private partnership (PPP) program with the Asian Development Bank (ADB) and the International Finance Corp. (IFC). GSIS is set to invest up to US$750M. 7
GSIS President and General Manager Roberto G. Vergara said the move is part of GSIS effort to build equity weightings and investing in government that would eventually translate to higher yields for the pension fund. “We will be investing. We won’t be a lender. We’re targeting returns in double digits, something we don’t get in government funds. This is over a long period of time, which is 10-15 years,” Vergara added. The overall goal is to generate return of at least 9% a year to make investments worthwhile for the members. Meanwhile, SSS is ready to invest P50B. “If there are good opportunities in PPP, we have allocated as much as P50B,” SSS President and Chief Executive Officer (CEO) Emilio S. de Quiros said. De Quiros added that SSS has roughly P300B investable funds and PPP projects would be a viable long-term investment. Gov’t to push PPP projects The government would continue to push public-private partnership (PPP) programs this year, Department of Finance (DOF) Secretary Cesar V. Purisima said as he urged the public to help the current administration with the reforms it has been putting in place. “You can change 30-40 cabinet secretaries but the same culture is there. The same processes are there. The same Commission on Audit (COA) rules are there to block you every step of the way. It’s not easy but the important thing is that President Aquino has taken on big challenges,” Purisima said. He urged the Management Association of the Philippines’ (MAP) members to help the government by paying proper taxes, not giving into corrupt measures, and even by joining civil service. 8
REAL ESTATE Alveo to develop Alveo Land High Street South The Alveo Land Inc., the upper middle market unit of Ayala Land Inc., is set to invest P60B in developing Alveo Land High Street South situated at the 7.6 ha. lot in Bonifacio Global City.
Alveo Project Development Head Jennylle S. Tupaz said the project will be a 50-50 partnership with Evergreen Holdings Inc. and designed for 12-18 residential towers and commercial areas on the ground floor. Alveo is putting up a 31-storey residential tower at a cost of P3.5B dubbed as Maridien as its first project in High Street South. “This development is set to emerge as a premiere cultural district that complements BGC’s inherent dynamics and character,” Alveo President Robert S. Lao said. Megaworld to invest P45B in township district Megaworld Corporation is investing P45B to develop a 15-ha. integrated township district dubbed as Uptown Bonifacio situated at the northern district of Fort Bonifacio extending to the Kalayaan Avenue. “Designed to be the country’s newest business district, Uptown Bonifacio will take Megaworld’s livework-play lifestyle to new heights,” Megaworld Senior Vice President for Marketing Noli Hernandez said. “We will continue our best efforts to ramp up the construction of our next generation ‘green’ office developments in Uptown Bonifacio that will help generate at least 80,000 new jobs in the area,” Megaworld First Vice President for Business Development and Leasing Division Jericho Go said.
Vista Land launches P32-B projects Vista Land & Lifescapes is launching 32 residential subdivision projects nationwide this year, which would total to P32B. Vista Land will open 20 expansion projects from existing areas around the country. They will also launch horizontal developments in 12 new areas. “Demand for our house and lot packages is very strong since studies have shown the Vista Land brands, including Camella, remain the most preferred by home buyers. We are strengthening our presence in existing areas while expanding our reach further by entering new markets,” said Vista Land President Manuel Paolo A. Villar. Villar said Vista Land is entering the provinces because many overseas Filipino workers (OFWs) come from these areas and intend to buy homes for their families. He said OFWs from Europe, Middle East, and Asia account for about 55% of the firm’s reservation sales while five to 10% of sales uptake is by US-based Filipinos.
MAJOR PROJECTS NEDA-ICC okays P14-B infra projects Geared towards promoting agricultural growth, disaster risk reduction, and climate change adaptation, the National Economic and Development Authority-Investment Coordination Committee (NEDA-ICC) has approved P14.8B worth of projects in irrigation, flood control, and education. The Umayam River Irrigation Project (URIP) and the Casecnan Multi-Purpose Irrigation and Power Project-Irrigation Component (CMIPP-IC), Phase II are Philippine Business Report
the two irrigation projects approved by the ICC’s Cabinet Committee (CabCom). “The URIP enhances the standard of living of the people in the project area by increasing rice production through irrigation development and agricultural support services,” said Socio-economic Planning Secretary Cayetano W. Paderanga, Jr. The URIP involves the construction of an overflow diversion dam across the Umayam River, an irrigation canal network, protection dike, and improvement of waterway that aims to provide water supply to agricultural lands of Adgaoan, La Paz and Umayam, Loreto in the province of Agusan del Sur. Paderanga said that given the long-term productivity-enhancing nature of the project, it can address sectoral, regional, and local development plans such as the Food Staples Self-Sufficiency. Plaridel bypass to ease exit from NLEX The Department of Public Works and Highways (DPWH), with assistance from the Japan International Cooperation Agency (JICA), designed and constructed the P1.6-B Package 1 to decongest traffic and provide an alternative route for North Luzon Expressway (NLEX) motorists in the area. DPWH designed the Package1 of Plaridel bypass road and Interchange, a 6.87-km. road link up with the North Luzon Expressway (NLEX) that will allow motorists and riders to avoid the recurrent heavy traffic in Sta. Rita town. This project is part of the projected upgrading of the Inter-Urban Highway System along the Philippine-Japan Friendship Highway. DPWH Secretary Rogelio L. Singson said the bypass road “eloquently March 2012
manifests the government’s program to improve travel for our people which, in turn, will facilitate trade and commerce, aside from socio-cultural exchange.” Moreover, Manila North Tollways Corp. (MNTC), NLEX builder-concessionaire, will provide P109M worth of toll collection system installation. This project is for the motorists and other travelers, particularly commuters bound for the eastern Bulacan municipalities of Plaridel, Bustos, San Rafael and farther up North to have a faster and more convenient trip.
COMPANY NOTES Splash sets 300-M capex for expansion To continue its expansion and growth in the food business this year, popular beauty and personal care products maker Splash Corp. has set a capital expenditure program of nearly P300M. Splash said its board approved a capital budget of P294.8M, of which P142.6M will go to Splash Foods Corp., a newly-formed unit that now owns the Barrio Fiesta brand of canned food and condiments. In September 2011, Splash acquired 80% of the food manufacturing arm of Barrio Fiesta. Splash plans to launch various food products (including condiments) here and abroad over the next 12 to 24 months. Splash Chief Executive Officer (CEO) Rolando B. Hortaleza said the group is aiming to become a major player in the food industry through the expansion of food lines and capitalizing on its marketing and distribution capabilities in specific countries.
PLDT Alpha Enterprise beefs up services Philippine Long Distance Telephone Company (PLDT) Alpha Enterprise has made its services portfolio stronger after joining with VITRO Data Center, the country’s first purposely-built, industrial-strength data center.
With its partnership with PLDT, VITRO Data Center now provides high-capacity connectivity nationwide and abroad. “Combining the reach of the PLDT network and the strength of VITRO’s data infrastructure, PLDT Alpha Enterprise is better able to deliver top-class, end-to-end ICT solutions to its discerning clientele,” PLDT Executive Vice President and Head of Enterprise and International and Carrier Business Ernesto R. Alberto said. VITRO is certified for the ISO 27001:2005 Information Security Management System standard and accredited by the Philippine Economic Zone Authority (PEZA). It is also the first Internet data center in the country to be certified for the ISO 9001:2008 Quality Management System and ISO 14001:2004 Environmental Management System standards. Bulacan-based ecozone firm ships first garments order First locator at the Pilipinas Development Corp. (PDC) Information Technology Park and Korean-owned All About Inner Wear (AAIN) was set to ship at least 60,000 boxes of inner garments to South Korea. AAIN is an exclusive manufacturer for Cotton Club, Sua Fam, and other companies selling male and female inner garments like brassieres, 9
bikinis, sandos, boxer shorts, among others in South Korea. The company came to PDC IT Park last August where they established their manufacturing facilities and trained an initial 198 workers from Bulacan. AAIN Plant Manager JB Kim said they would hire 500 new workers within the year as more machineries and other equipment arrive. “Bulacan has many good workers and they speak English well,” Kim said, adding that AAIN also has plants in Indonesia and Viet Nam.
bilateral Agreement PHL, US push trade facilitation in bilateral treaty Philippine and United States (US) trade negotiators recently agreed to expand a bilateral trade and investment framework agreement the two countries signed on 09 November 1989 to now include adopting the best customs practices to meet global standards.
It is now being revived to strengthen bilateral trade relations between the two countries. The entry point has apparently been focused on facilitating the flow of goods between the US and the Philippines. The new agreement covers the advanced exchange of customs laws, procedures and rules through publication including that in the Internet, speeding up release of imported goods, automation to be able to meet international 10
standards in modern customs administration, and helping each other modernize their customs procedures. PHL, Qatar investment accord readied The Philippine and Qatar governments agreed to sign two economic agreements that would pave the way for the entry of US$1-B Qatari investments into the country in various sectors, particularly food, mining, real estate, petrochemical, and steel. Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (TIPG) Cristino L. Panlilio said the signing of the US$1-B Investment Fund Agreement under the Mutual Protection of Investments Agreement and Avoidance of Double Taxation Agreement highlighted the visit of His Royal Highness Emir of Qatar Khalifa Al-Thani. Panlilio said the Board of Investments (BOI) and the Qatari Investment Authority (QIA) have concluded their negotiations for the agreements and only minor details are being ironed out. Qatar has US$300B in foreign direct investments (FDIs) and other investments portfolio making them very capable of investing in the country’s public-private partnership (PPP) program and other private sector projects. Qatar also wants an intensive business matching session with the private sector. PHL-Turkey trade robust The Philippines and Turkey have been benefiting from each other as seen in the US$100M worth of exports from Turkey to the Philippines in November of 2011 and about US$116-M exports to Turkey, Philippine Chamber of Commerce and Industry (PCCI) President Miguel B. Varela reported. Chairman of the Philippine-Turkish Business Council of PCCI Ernesto
C. Chua, and Turkish businessman Irfan Karabulut stressed that there are a lot of business possibilities the two countries will be potentially inclined to undertake. Turkish businessmen have expressed interest for possible investments in construction, food, medicine and healthcare, television and education. Varela said the visit was not only significant in terms of gaining better knowledge and understanding of the country and potentially meeting new business partners but also in terms of turning these into concrete business undertakings. PHL assures Canada of better business environment The Philippines has assured Canada of the improvements in structural and regulatory reforms in the country for a more conducive and transparent business environment for both domestic and foreign trade and investment. Philippine Ambassador to Canada Leslie B. Gatan noted that the implementation of transparency and accountability measures in the Philippines are drawing positive responses most notably from the stock market which started the year with, and continues on, a record-setting run. Canada’s Minister for International Trade Edward B. Fast said Canada is prepared to share its resources and technology with the Philippines, anchored on one of the closest people-to-people relations Canada has with any other country in the world. Fast said he is looking forward to visiting the Philippines soon, and expressed confidence that many areas could be worked on to enhance trade and commercial relations further. PHL seeks more Australian investments The Philippine Team-Australia rallied several Australian companies and institutions to look at the Philippine Business Report
The Philippine Consulate General in Sydney reported to the Department of Foreign Affairs (DFA) that the Philippine Team-Australia led by Ambassador Belen F. Anota promoted the Philippines as a trade destination during a business networking reception hosted by Consul General Anne Jalando-on Louis in Sydney. Some 27 representatives from the Australian business, finance, business process outsourcing (BPO), infrastructure, information technology (IT), tourism and training, and education sectors attended the reception. Anota highlighted the government’s resolve to set the moral, political, and economic foundations for long-term growth and development and the Philippine government’s efforts to fight corruption and to create a more conducive climate for trade and commerce.
ASEAN WATCH CAMPI eyes large chunk of consolidated ASEAN mart The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) hoped to capture a large share of the consolidated Association of Southeast Asian Nations (ASEAN) market which is expected to be implemented in 2015. Newly elected CAMPI President Rommel T. Gutierrez of Toyota Motor Philippines Corp. said the association intends to work closely with the government, particularly the Board of Investments (BOI), and other industry associations. CAMPI is aiming to make the Philippines an alternative production hub of motor vehicles and auto parts in ASEAN. March 2012
CAMPI members Regular • Asian Carmakers Corp. (BMW) • Columbian Autocar Corp. (KIA) • Columbian Manufacturing Corp. (Daewoo Buses) • Honda Cars Philippines Inc. • Isuzu Philippines Corp. • Mitsubishi Motors Philippines Corp. • Nissan Motor Philippines Inc. • Toyota Motor Philippines Corp. • Universal Motor Corp. (Nissan light commercial vehicles) Associate • CATS Motors (Mercedes Benz and Chrysler) • PGA Cars Inc. (Audi, Porsche, and Lamborghini) • Suzuki Motor Philippines
ASEAN+3 may increase emergency fund Southeast Asian countries and Asia's three largest economies will likely agree this May to expand an emergency fund designed to buffer countries in the region against global economic shock. Around US$240M is the minimum amount needed to provide a safety net for Asia's developing economies in light of current global uncertainty, ASEAN+3 Macroeconomic Research Office (AMRO) Director Wei Benhua said. A 20-person office known as AMRO was launched in Singapore last year. The office is broadly comparable to a small-scale, Asia-only version of the International Monetary Fund. It will monitor economic conditions in the region, detect risk, and decide when and how to deploy the emergency fund. ASEAN tourism ministers push for common visa The 15th meeting of the tourism ministers of the Association of Southeast Asian Nations (ASEAN) held in Manado, Indonesia ended with high hopes as major accomplishments were reported and key measures committed to hasten integration, enhance connectivity, and improve the quality of tourism services in the region.
A significant measure that the tourism ministers agreed to fast track is the development of a common visa for non-ASEAN nationals. This is also related to the goal of the regional bloc of attracting 107M tourists by 2015. The combined visits to the 10-member nations totaled 79M in 2011. Department of Tourism (DOT) Secretary Ramon R. Jimenez, Jr. is optimistic that of this figure, 7.7% will be generated by the Philippines or around 8.2M visitors. “We have just successfully rolled out our new branding campaign in the presence of international travel executives, national tourism organizations, and media practitioners during the ASEAN Tourism Forum. We have caused excitement and we are expecting a surge of interest in our country and our people, the latter being the aspect that highlights our difference,” Jimenez said. Talks were likewise advanced with dialogue partners China, India, Japan, and Korea on various cooperation activities that deepen cross-cultural relations, improve exchange of information and technology, and travel between and among these countries.
Philippine Postal Permit No. 504
Philippines as a trade, investment, and tourism destination.
11
Economic Indicators
GNI Growth Rate (%)
GDP Growth Rate (%)
7 6 5 4 3 2 1 0
7 6 5 4 3 2 1 0 3Q(2010) 4Q (2010) 1Q (2011) 2Q (2011) 3Q (2011) 4Q (2011)
Exports (In US$Billion)
Consumer Price Index (2000 base year)
128.5 128 127.5 127 126.5 126
5
4000
5
3000
5 5
1000
4
0
Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12
Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
(1994 base year)
6
4.6 4.55
0
42 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12
Interest Rate (%) 4.75 4.65
2
42.5
Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
4.7
4
43
4
Inflation Rate (%)
Peso per US Dollar Rate 44
Imports (In US$Billion)
5000
2000
43.5
3Q (2010) 4Q (2010) 1Q (2011) 2Q (2011) 3Q (2011) 4Q (2011)
Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12
4.5 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
*GNI - Gross National Income Entered as Third-Class Mail at the Makati Central Post Office under Permit No. 504 valid until 31 December 2012
Editorial Team: Anne L. Sevilla, Editor-in-Chief • Vic S. Soriano, Assistant Editor • Cresenciano P. Par, Jam A. Hourani, Ariel B. Salcedo, Elaine M. Lazaro, and Emman R. Caleon, Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation. Philippine Business Report is 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
Philippine Business Report
12
March 2012
Philippine Business Report