April 2014
Volume 25 No. 04
Robust growth seen
P-Noy calls for more investments President Benigno S. Aquino III trumpeted the country’s rise to investment-grade status as he outlined the government’s medium and long term plans to lure more investors to do business in the country. The President said the Philippine economy performed well despite the disasters that befell the country in 2013, posting one of the fastest growth rates in Asia at 7.2%. “It goes without saying that this has had a tremendously positive effect on our national psyche. The Filipino has recovered his pride, and has become even more determined to exhibit his full potential to the entire world,” Aquino said. He said the damage brought by typhoon Yolanda only motivated the government to take even more proactive approach and had made progress through the help of the people and the international community.
Fiscal prudence has also allowed the government to increase spending on strategic sectors, such as health, education, and infrastructure.
the high currency and high cost of electricity, among other factors,” First Metro Investment Corp. (FMIC) President Roberto Juanchito T. Dispo said.
“Without doubt, your involvement will help our country further; and I am eager to work with all of you,” he said.
On the same positive note, the Philippine economy is seen to expand by 7.5% to 8% this year, driven largely by the expected increase in the government’s infrastructure spending and continued robust consumption.
He said the government’s move to accelerate infrastructure spending, reportedly 37% higher at P404B this year, would boost the business environment and improve the country’s competitiveness.
He said several international organizations also improved their outlook on the economy and good governance brought about concrete positive results.
“The Philippines will continue to be attractive due to the country’s strong macroeconomic indicators. There are risks we should be vigilant of such as
Also, the expected robust domestic consumption will be driven by rising consumer confidence, increasing tourist arrivals, and high remittances from overseas Filipinos.
He called on local and foreign investors to help restart the economies of areas hit by natural and man-made disasters by putting in investments.
April 2014
1
INDUSTRY Trends PHL call center industry to retain No. 1 status The Philippines’ call center industry is determined to keep its top status in the world for voice calls while putting in place key measures to become also the global leader in the non-voice segment. Call Center Association of the Philippines (CCAP) Executive Director Jojo Uligan pointed out the need to revisit education in the country to incorporate the ever-changing dynamics in the contact centers. On the same note, the Information Technology Business Processing Association of the Philippines (IBPAP) is planning to update its roadmap to set targets until 2020 as it seeks to grow and make the country a preferred destination for both voice and non-voice services. Under the IBPAP’s road map, the information technology-business process management (IT-BPM) industry is aiming to hit USD 25B worth of revenues and provide jobs to 4.5M Filipinos by 2016. Revenues of the IT-BPM sector reached USD 15.5B last year, 17% higher than the USD 13.2B in 2012. In terms of employment, the sector’s workforce went up to 900,000 in 2013 compared to the 777,000 in the previous year. BOI sets consultations on IPP 2014 The Board of Investments (BOI) will hold extensive consultations with specific sectors for the 2014 Investment Priorities Plan (IPP). Board of Investments (BOI) Managing Head Adrian S. Cristobal Jr. said the agency has designed the IPP consultations for this year in a different way by holding sessions with firms from specific sectors. 2
Each year, the BOI conducts three public hearing sessions open for all stakeholders in Metro Manila, Cebu, and Davao for the proposed IPP. “That’s the traditional way and it is open to the public. What we want to do this time is intensify the conduct of consultations, at least with the major sectors so that we can really go deeper into the analysis of issues of specific sectors,” Cristobal said. Among the sectors to be consulted are those identified in the Philippine Development Plan (PDP) to have high-growth potential such as electronics, information technologybusiness process management (IT-BPM), agribusiness, and shipbuilding. Cristobal said the BOI also intends to post the IPP draft on the agency’s website to allow the public to provide comments on the plan. “It will be very extensive consultations because what we intend to come up with is an honest to goodness IPP and not just a listing of areas as in the past,” he said. “As we mentioned several times, the IPP for 2014 and beyond will be based on a large part on the industry road maps that were crafted in the past year and a half where supply gaps and competitiveness issues are identified,” Cristobal said. The IPP released by the BOI every year lists activities that can qualify for incentives. Preferred areas in 2013 IPP
• Agriculture or agribusiness and fishery • Creative industries or knowledge-based services
• Disaster prevention, mitigation,
and recovery projects • Energy • Green projects • Hospital or medical services • Infrastructure • Iron and steel • Mass housing • Motor vehicles • Research and development • Shipbuilding • Strategic projects
U.S. plans 3 PHL trade missions The United States (U.S.) Embassy is organizing three trade missions to the Philippines this year amid interest from American firms to invest in the country. “We will do one on education, one on medical technology, and one on franchising,” Senior Commercial Officer of the Embassy of the U.S. to the Philippines James McCarthy said. McCarthy said the Philippines is also becoming an attractive location for American firms because of the good governance efforts, predominant use of English, young population, and the country’s good relations with the U.S. “This is the most welcoming and gracious country in the world. You couldn’t find a warmer place to do business,” he said. He said opportunities abound in infrastructure, information technology, aviation, franchising, and energy sectors. “I think the Aquino administration is doing what it can,” McCarthy said. Electronics sector eyes USD 37-B exports by 2016 The Department of Trade and Industry (DTI) is set to hold consultations with the country’s major electronics and semiconductor industry players on the proposed Product and Technology Roadmap aimed at enabling the industry to transition to value-added activities. The roadmap positions the industry to raise the annual export value of goods to as much as USD 37B by 2016 from the current level of around USD 23B. By 2022, the value of electronics exports is seen to hit USD 52B and USD 112B by 2030 through value-adding. Philippine Business Report
The Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) expects exports of electronic products to have reached as much as USD 21B in 2013 from USD 23B in 2012. “The electronics sector, a growth pillar of the manufacturing industry and also one of the biggest job generators, has through the years contributed significantly to the country’s aggregate exports, often dominating the majority share of export products,” DTI Undersecretary for Industry Development Group (IDG) Adrian S. Cristobal Jr. said.
from the electronics industry, BOI, and other relevant government agencies and partners. Gov’t readies halal support projects The government has prepared halal support projects to tap the growing USD 2.95-B global market for halal foods.
He said the DTI, through its Industry Roadmap Project (IRP), has been working with the Department of Science and Technology (DOST) to enhance competitiveness of the electronics industry. In particular, the DOST provided funds for the establishment of the Advanced Device and Materials Testing Laboratory (Admatel), the Electronics Product Development Center (EPDC), and the Philippine Institute for Integrated Circuits (PIIC). The BOI has also convened the Electronics Industry Roadmap Technical Working Group (TWG) to ensure the successful implementation of the roadmap. The TWG is composed of representatives April 2014
The investment pledges will be poured mainly into five projects across the RE chain, including the capital outlay of Bronzeoak for the San Carlos solar farm which is targeted on stream this year. The investment financing firm has also been setting its eyes on various investments in the country, including biofuel and biomass facility developments.
The proposed roadmap guides the electronics industry as it moves up the value chain, develops new growth areas, and seizes opportunities in Southeast Asia as free trade in the region is implemented in 2015. “SEIPI is assured of our continued support and their plan for a supplemental roadmap will be facilitated through the mobilization of resources in collaboration with relevant government agencies,” said Cristobal who also sits as Board of Investments (BOI) Managing Head.
EU investors eyeing RE projects European investors are expected to pour USD 500-M foreign direct investments (FDIs) into the Philippine energy sector, primarily in renewable energy (RE) technologies.
Prospective investors were apprised on “investment locations, technologies, and project partners in the field of Asian renewable energy infrastructure.” The Bureau of Animal Industry (BAI), the National Meat Inspection Service (NMIS), the Livestock Development Council (LDC), the Bureau of Agriculture and Fisheries Product Standards (BAFPS), and the Bureau of Fisheries and Aquatic Resources (BFAR) have identified the following support projects: halal slaughterhouses, halal goat production, halal organic fertilizer, and halal aquaculture. Halal calls for the stringiest food production protocols required by international food safety laws and regulations. Government agencies had developed the groundwork for halal food production such as the Philippine National Standard (PNS) for Halal Food, the code of Halal Slaughtering Practices and the protocol for Halal Certification.
Thomas Lloyd Group Chairman Michael Sieg said the development of RE policies in the Asia Pacific region “will not only play a decisive role globally for present generation but also for future generations.” On the same note, Bronzeoak Philippines President Jose Maria P. Zabaleta Jr. said it was a tremendous opportunity to present the world with key RE projects and valuable political insight into the fast-growing Philippine RE sector. With the developed world relatively saturated already on RE technology installations, many foreign firms have been eyeing Asia as potential growth areas for clean energy investments.
Autonomous Region in Muslim Mindanao (ARMM) had also developed its own Halal Food Industry Master Plan and Certification Body along with related measures undertaken by Region 12. 3
Trade and INVESTMENTS AGRICULTURE/ AGRIBUSINESS AND FISHERY A Brown investing P3B in oil palm estate A unit of A Brown Group is investing P3B to establish a 1,400-ha. oil palm plantation in Cagayan de Oro (CDO) City. A Brown Company Inc. Chairman Walter Brown said his company was slowly diversifying into agro-industrial business, especially in the area of palm oil production. “This is just the planning stage, but we are already in partnership with the city government of CDO for the project. They will provide us the land, we will provide them the expertise,” Brown said. CDO recently opened up at least 5,000 has. of raw land for development by interested investors. ANI invests P500M in Davao banana plantation AgriNurture Inc (ANI) has ventured in a banana plantation investing P500M in Tagum, Davao Del Norte for its banana export to China, Russia, and Middle East. Its investment is in partnership with the Tagum Resources Agri Industries Inc. (TRAIN), a joint venture company of Best Choice Harvest Agricultural Corp., ANI’s wholly-owned subsidiary, and Hijo Resources Corp. (HRC). “We have 471 has. now, but we will expand soon. We hope to get 500 has. more within the year or next. We’re barely serving the market,” said ANI Corporate Affairs Head Larry R. Lacson. ANI is also planning to sign a joint venture agreement with a company 4
to establish a pineapple plantation in South Cotabato province.
Nations (ASEAN), Australia, India, and the Middle East.
“We are hoping to enter into a joint venture agreement next year. The one we are talking to has an existing 250-ha. pineapple plantation in South Cotabato, and the owner has additional 200 has. for expansion, so that’s where we will enter,” Lacson said.
House okays ZestAir sale to AirAsia The House of Representatives has approved the sale of Zest Airways (ZestAir) to Air Asia Philippines.
The unidentified company is supplying banana, pineapple, and papaya to Hong Kong, China, and the Middle East. EPI mulls aquaculture JVs Emerging Power Inc. (EPI) is eyeing joint ventures with aquaculture farms in Mindoro to grow 10 tons of export-quality tilapia, sea bass, and shrimp annually. Partnerships are expected to materialize when the Montelago Geothermal Power Plant in Naujan, Oriental Mindoro becomes operational by mid-2016. Steam generated by the plant would be used to maintain growth conducive temperature in fish tanks at 36 to 38 degrees Celsius. The fish produced would be sold to top resorts and hotels in the Philippines while some would be exported to China and Japan.
AVIATION CAB okays CEB-Tigerair deal Civil Aeronautics Board (CAB) gave Cebu Pacific (CEB) the green light to acquire 100% of low-cost carrier Tiger Airways (Tigerair) Philippines. CEB President and Chief Executive Officer (CEO) Lance Y. Gokongwei said the budget airline is spending USD 7M to acquire the 40-% share of Tigerair Singapore Pte. Ltd. and USD 8M for the 60% owned by Filipino businesspeople in Tigerair Philippines. The strategic alliance would allow both CEB and Tigerair to leverage on their extensive networks spanning from North Asia, Association of Southeast Asian
Under Republic Act No. 9183, the law that granted ZestAir a franchise to establish, operate, and maintain domestic and international air transport services, any change in the carrier’s ownership has to be approved by Congress. The go-signal of the House on the sale is contained in Joint Resolution No. 10, which was sent to the Senate for its own approval. Under the deal, former ZestAir President Alfredo Yao reportedly received USD 16M and a 13-% share of Air Asia Philippines.
BANKING BDO buys Deutsche Bank trust business Banco de Oro Unibank (BDO) has inked a definitive agreement to acquire the Philippine trust business of Deutsche Bank AG’s Manila branch. In a disclosure to the Philippine Stock Exchange (PSE), BDO said that the deal, which comprises trust, fiduciary, and investmentmanagement activities, is still subject to closing conditions and applicable regulatory approvals. BDO said the German bank’s business manages around P70B in assets. The deal is thus expected to expand BDO’s assets to around P840B, after the bank ended with P770B last year. Philippine Business Report
DISASTER PREVENTION, MITIGATION AND RECOVERY PROJECTS Napocor puts up P1.9-B flood control project in Mindanao The National Power Corp. (Napocor) is putting up a P1.9-B flood control project for Agus 1 and 2 hydroelectric power plants inside the Agus-Pulangi Power Complex in Mindanao.
“With the construction of the Baloi Plain Flood Control Project, Agus 1 and 2 that operate on limited loads of 120 megawatt (MW) and 50MW can be loaded at their respective rated capacities of 180MW and 80MW. This will combine a total load of 260MW, a 90-MW additional capacity for our Mindanao grid,” Napocor President and Chief Executive Officer (CEO) Ma. Gladys Cruz-Sta. Rita said. The Department of Public Works and Highways (DPWH) will undertake the project this year.
ENERGY USD 756-M Malampaya rig going up in Subic A platform of the Malampaya Deep Water Gas-to-Power Project off Palawan province worth USD 756M, is to be installed next year to maintain fuel supply to power plants providing about half of Luzon’s electricity needs. The platform is part of Phase 3 of the Malampaya project. Phase 2 involved the installation of two additional subsea wells at a cost of USD 250M, Shell Philippines Exploration B.V. (SPEX) officials said. Malampaya is a joint undertaking of the Philippine government and the private sector. The project April 2014
is spearheaded by the Department of Energy (DOE) and developed and operated by SPEX on behalf of joint-venture partners Chevron Malampaya LLC and PNOC Exploration Corp. The European companies engaged in the development of the new gas platform have also poured in P45B in capital, encouraged by the success of the public-private partnership (PPP) project. “The scale of this European investment is significant by any measure. Several European companies are involved in this endeavor that promises to secure an important source of revenue for the Philippine people while creating new jobs for well-trained Filipinos in their own country,” European Union Ambassador Guy Ledoux said. SPEX expects the fabrication of the second platform of the gas project to be completed within the year in time for its scheduled installation in Palawan by 2015. AES to build first battery storage facility in PHL AES Philippines Power Partners Co., the local subsidiary of United States-based energy giant AES Corp., is planning to put up a 40-megawatt (MW) battery storage in Kabankalan, Negros Occidental – the first such project of its kind in the Philippines. According to documents from the Department of Energy (DOE), the U.S. firm subsidiary’s battery storage project is among the list of indicative power projects for the Visayas grid, which is expected to come online by March 2015. “AES has a proposal to National Grid Corp. of the Philippines (NGCP) as ancillary services provider,” said Department of Energy (DOE) Director Mylene Capongcol. RHI, GBPC planning biomass plant Roxas Holdings, Inc. (RHI) and the GT Capital’s Global Business Power Corporation (GBPC)
are undertaking a feasibility study for a 40-megawatt (MW) biomass power plant. “We hope that the feasibility study on the La Carlota, Negros Occidental biomass power plant, which will use bagasse from our plants, will equip stable power supply and enable our units to contribute excess power to the national grid,” RHI Chairman Pedro E. Roxas said. RHI President Renato C. Valencia said the two groups will engage the services of Pöyry Energy Ltd., a leading international consulting and energy company, to undertake a feasibility study of the planned project. The planned project is anchored on cogeneration, also known as combined heat and power (CHP), which involves the use of a power station to simultaneously generate electricity and usable heat.
GREEN PROJECTS Solarus eyes USD 100-M solar plants Renewable energy resource developer Solarus Partners Inc. is seeking to develop solar power projects across the country with an investment of about USD 100M this year for a combined capacity of 50 megawatts (MW). Solarus Managing Director Tetchi C. Capellan said the combined 50MW of solar projects will be concentrated in Panay, Negros, and Mindanao. MVP sets sights on wind energy Metro Pacific Investments Corp. (MPIC) Chairman Manuel V. Pangilinan is interested in wind power generation. MPIC President and Chief Executive Officer (CEO) Jose Ma. K. Lim said the company can buy into projects in the pipeline as the feed-in tariff (FIT) is limited to 200 megawatts (MW). The FIT scheme guarantees investments of renewable 5
energy firms through fixed rates that would be shouldered by consumers over 20 years.
the country, ALI President and Chief Executive Officer (CEO) Antonino T. Aquino said.
Alternergy wind farms get ERC nod The Energy Regulatory Commission (ERC) has approved the application of Alternergy Wind One Corp. (AWOC) to put up two wind power projects in Rizal province.
The hospital development is a joint venture with Mercado General Hospital Inc. (MGHI), a company that has almost six decades of experience in healthcare services.
In its decision, ERC gave AWOC the go-signal to provide power with 67.5-megawatt (MW) capacity in Pililla and 72MW in Sembrano wind farms, with project costs of P294M and P235M, respectively. The two wind farms would interconnect using the facilities of Manila Electric Co. (Meralco). New Ilocos wind farm ready by Q4 Energy Development Corporation (EDC) expects to commission the 87-megawatt (MW) Burgos Wind Project (BWP) in Ilocos Norte, the largest in the Philippines, by end-2014. The USD 300-M project can generate about 233 Gigawatt hours (GWh) of electricity a year once operational, enough to power over a million households and augment the Luzon grid’s dependable capacity. The wind farm, located on a 600-ha. site, will power Vestas V90-3.0-MW wind turbines to be supplied and constructed by Vestas Wind Systems AS of Denmark.
HOSPITAL/MEDICAL SERVICES ALI to invest P5B to build 10 hospitals Ayala Land Inc. (ALI) is spending P5.3B to put up 10 new QualiMed hospitals with a combined capacity of 1,000 beds and 10 clinics over the next five years. The company would build hospitals within its mixed-use developments as well as clinics in its shopping malls across 6
DOTC cleared to buy new trains The Department of Transportation and Communications (DOTC) said it will now proceed with the acquisition of 48 new light rail vehicles from China for the Metro Rail Transit (MRT) Line 3, after the Makati Regional Trial Court (RTC) dismissed the injunction case filed by the MRT Holdings II Inc.
INFRASTRUCTURE/ PUBLIC-PRIVATE PARTNERSHIP Napocor spends P154M for Palawan transmission project The National Power Corporation (Napocor) is spending P154M to complete the remaining stretch of the 111-km. power transmission line that will connect Puerto Princesa to Roxas. The two cities have their electricity supplied via separate grids. The proposed interconnection is expected to improve service provision. The project will be implemented based on a ‘re-routed plan’ approved by the power firm and the affected land owner. Australia extends financial support to PPP The Australian government is extending funding to the Philippines to support the latter’s public-private partnership (PPP), education, and health programs in line with strengthening economic cooperation between two countries. “Through leveraging public funds, we hope the Philippines will be able to build infrastructure for the future,” Australian Minister for Foreign Affairs Julie Bishop said. Given the country’s economic gains and the efforts at improving the business climate, Australian Minister for Trade and Investment Andrew Robb said investing in the country was seen to be attractive for firms.
The Makati RTC cited Republic Act 8975, which states that only the Supreme Court (SC) can enjoin government infrastructure projects from proceeding. “The DOTC successfully fought for public interest and defended its position in court, but the true winners are the riders of MRT-3. The supplier can now start manufacturing the 48 brand new Light Rail Vehicles (LRVs), which will be delivered in tranches starting in the second half of 2015,” DOTC Secretary Joseph Emilio A. Abaya said. DBM gives green light to two PPP projects The Department of Budget and Management (DBM) gave the go-signal to start two public-private partnership (PPP) projects. The DBM issued multi-year obligational authority for the contactless smartcard fare collection system for Light Rail Transit (LRT) and Metro Rail Transit (MRT) lines and the Mactan-Cebu International Airport (MCIA) new passenger terminal project. The automatic fare collection system (AFCS) will be implemented through PPP via the buildrehabilitate-operate-transfer (BROT) and build-own-operate (BOO) contractual arrangements. The total investment cost for the project, which will cover the years 2013 to 2025, will amount Philippine Business Report
to P3.16T, with P671M invested in MCIA for 2013 and another P1.05B set for the AFCS this year.
MASS HOUSING DMCI Homes Parañaque project breaks ground Phase two and additional units in phase one of Parañaque City’s socialized housing project, supported by DMCI Homes, broke ground at the relocation site for informal settlers in Barangay La Huerta. Parañaque Mayor Edwin L. Olivarez thanked DMCI Homes for sponsoring the building of 90 homes in the 132-home PAR Homes 1 and 100 more units in the second phase. DMCI Homes Vice President for Legal Affairs Roel Pacio described the project as the fulfillment of the company’s commitment in the project located in a 5-ha. property within the Don Galo estuary and C-5 Extension road.
RESEARCH AND DEVELOPMENT SCG plans more PHL investments Thai conglomerate SCG announced new investment in the Philippines as part of its overall Association of Southeast Asian Nations’ (ASEAN) expansion program. SCG will be investing more on research and development (R&D) to improve products and services, and on upgrading facilities for more efficient production. In the Philippines alone, SCG subsidiaries’ sales revenues reached USD 157M, an increase of 10% year-on-year. SCG’s overall total assets amounted to USD 13B in 2013, with total assets in the Philippines amounting to USD 221M. STI opens new Caloocan campus The STI Education Services Group, Inc. (STI) opened a P500-M academic center in Caloocan City, expanding its geographical coverage and making room for 9,000 more students in the coming academic year. The new 11-storey school facility was built on a 14,409-sqm. property on Caimito Road.
ALI plans 30,000 housing units Ayala Land Inc. (ALI) plans to roll out 30,000 residential units this year, with an estimated P107B sales value. ALI said it would launch 55 residential projects and about 13,000 housing units would cater to the economic and social housing segments. The company said it also planned to launch eight office buildings, six shopping centers, five hotels and resorts, two commercial estates, and two hospitals to boost recurring income. April 2014
“Our newest campus affirms our commitment to be one of the best institutions offering quality education through the improvement of our facilities. This, in turn, increases the value of education that we offer and improves morale and the quality of life for our students,” STI President and Chief Executive Officer (CEO) Monico V. Jacob said.
MANUFACTURING Century Pacific to expand operations Tuna canner Century Pacific Food Inc. has laid out its expansion program that includes new products, partnerships, and ventures to new categories like coconut water and premium meat products supported by a P3.29-B initial public offering (IPO) this year.
Century Pacific said in its IPO filing with the Securities and Exchange Commission (SEC) that it will actively develop and manage product and brand portfolios to target different price points and respond to emerging market trends. The company is eyeing distribution agreements with large tuna retailers in North America. It will also develop the Swift brand for the canned meat market and premium segment. For the dairy market, it will introduce new Angel formulations while Birch Tree will begin producing adult and children’s milk. UK’s Dyson sets up PHL shop Following the opening of its regional hub in Hong Kong and an industrial plant in Singapore, the British home appliance manufacturer Dyson has set up shop in the Philippines. Dyson Senior Communications Manager Roanna Mottershead said the Filipino consumers’ desire for high-performing and durable products has encouraged them to enter the domestic market. “We’re also looking to open about eight stores this year, with a mix of department store booths, stand-alone stores and concept stores. Hopefully we can get as many people as possible to see and experience our machines,” Mottershead said. She added that the company is also considering putting up a manufacturing facility in the country as it expands its reach in Asia.
MEDIA Japan’s Dentsu Media launches PHL operations Japanese media solutions giant Dentsu Aegis Network has officially launched its media planning unit Dentsu Media in the Philippines. 7
Dentsu Media is the firm’s second Dentsu-branded business in the country after Dentsu Philippines, which has been in the local creative scene for the last 12 years. Dentsu Aegis Network Southeast Asia Chairman and Chief Executive Officer (CEO) Dick Van Motman said that with the country’s robust economy and the local market experiencing an increase in advertising expenditure, Dentsu Media’s establishment was an opportune time. “[The launch of the Philippine office] provides the company the ability to expand and grow with the flexibility to service any industry category. [It] also further strengthens Dentsu Media’s presence in Asia,” Motman added.
MINING SMI still committed to Tampakan project Sagittarius Mines, Inc. (SMI) reiterated that commodities firm Glencore Xstrata is still committed to developing the USD 5.9-B Tampakan copper-gold project in South Cotabato. “Glencore’s approval of SMI’s 2014 work program and budget illustrates that Glencore continues to fully support the Tampakan project,” SMI Spokesman Manolo T. Labor said. In January, the project’s minority stockholder Indophil Resources NL reported that Glencore had expressed interest in divesting its stake in the project. Once SMI received the interagency working group’s (IAWG) advice, they can prepare for the filing of documents for the Declaration of Mining Project Feasibility (DMPF).
POWER EDC reenergizes storm-damaged power plants in Leyte The Energy Development Corporation (EDC) has restored some units of the Unified Leyte 8
geothermal power complex, which was damaged by Super Typhoon Yolanda last November. “We should have all the units back in operation around August and possibly earlier depending on the availability of spare parts, which is dependent on manufacturing lead time,” EDC President and Chief Operating Officer (COO) Richard B. Tantoco said. Leyte Power Plants that resumed (partial) operations
• • • • •
112.5-MW Tongonan 130-MW Upper Mahiao 232-MW Malitbog 51-MW Leyte Optimization 180-MW Mahanagdong
Lanao power plant to start construction in Q3 GNPower will soon start the construction of the proposed coal-fired power plant in Kauswagan, Lanao del Norte in the third quarter of this year. The project, which GNPower expects to complete in two years, scored 92-% social acceptability from different stakeholders in the community during public consultations. Upon its full operation, the plant will help solve the power crisis in Mindanao and allow for expansion of local industries with the stable supply of power now readily available. GNPower Project Engineer Neil Carlo Francisco also disclosed that they have signed a contract with Association of Mindanao Rural Electric Cooperatives (AMRECO) for a total of 300 megawatts (MW). First Gen fast-tracks commissioning of San Gabriel plant First Gen Corp. is eyeing an early commissioning of its 414-megawatt (MW) San Gabriel power facility in Batangas to run by end-2015 from the original March 2016 target. “Right now we are doing site preparation. In Germany, they are starting manufacturing of the turbine. We expect it
to come on time or earlier,” First Gen President and Chief Operating Officer (COO) France Giles B. Puno said. Puno said he hopes to expand the plant or undertake the next two phases of the facility which will total to 800MW on or before 2017. Buyers of San Gabriel produce once completed
• • • •
Manila Electric Co. (Meralco) Industrial users Distribution Utilities Wholesale Electricity Spot Market (WESM)
DOE awards Basic Energy 4 hydropower contracts The Department of Energy (DOE) has approved the four hydropower projects of Basic Energy Corp. in Negros Occidental. Approved hydropower projects
• 2-megawatt (MW) Puntian 1 • 2-MW Puntian 2 • 3-MW Malogo 2 • 2-MW Talabaan Under its contracts with the government, Basic Energy will explore and develop the renewable energy resources over a two-year non-extendable pre-development stage. Upon declaration of commerciality, the contracts shall remain in force for the balance of the 25-year period. Other contracts’ coverage
• Construction • Installation • Operation • Maintenance of hydropower system
to convert hydropower to electrical power • Transmission of electrical power • Other non-electrical uses
Agus to beef up Mindanao grid by 90MW The Agus 1 and 2 hydropower plants’ rehabilitation and integration into the P1.9-B Baloi Plain Flood Control Project could expand Mindanao grid supply by additional 90 megawatts (MW). Philippine Business Report
“The plant management of Agus 1 and 2 intends to increase the confidence levels of the major plant components and auxiliaries such as the Marawi Lake regulation dam, Agus 2 plant spillway gates, and the power intakes of both plants,” National Power Corporation (Napocor) President Gladys Cruz-Sta. Rita said. Sta. Rita explained that the rehabilitation will result in 260MW total load for Agus 1 and 2 from the current combined capacity of 170MW. Once the project is completed, it is expected to prevent Agus River from overflowing flooding and damaging crops in the area.
Rosario, Pasig, will become part of the 8990 Holdings' landbank stocked for future projects. Megaworld targets 30 towers in Makati CBD by 2016 Megaworld Corporation plans to expand their property projects in the Makati Central Business Disctrict (CBD) from its current 27 to at least 30 by 2016, starting with the launch of Salcedo Skysuites seen to sell for P2B.
REAL ESTATE Ayala Land Inc. plans 78 projects for 2014 worth P142B Ayala Land Inc. (ALI) is eyeing to launch 78 projects with a total cost of P142B and earmarking P70B in capital expenditures (CAPEX) for completion of ongoing and new projects for 2014.
This year's CAPEX is higher than the P66.26B in 2013. The company is also looking at launching 30,000 units through all its residential brands, more than the previous year's 28,482 units worth P108B by five of its residential brands. 8990 Holdings gets P2.2-B Pasig lots 8990 Holdings Inc. subsidiary, 8990 Housing Development Corp., struck a deal with Consolidated Tobacco Industries of the Philippines Inc. and Center Industrial and Investment Inc. to acquire and improve a 130,390-sqm. lot in Pasig City for P2.2B. The lot, located along Ortigas Avenue Extension, Barangay April 2014
The 31-storey Salcedo Skysuites, a residential condominium to be located along H.V. dela Costa St. in Salcedo Village, is targeted to be finished by 2018. Of the 27 towers in Megaworld's portfolio, 18 are already completed while nine are still under pre-selling and construction but are almost sold-out. In 2013, the company launched two residential towers that sold-out in less than 12 months despite still being in the planning stage. CPG launches P1-B mall Century Properties Group Inc. (CPG) opened its first retail development, the over P1-B Century City Mall located along Kalayaan Ave., Makati City within the company's Century City project. The mall has 17,000 sqm. of net leasable space rented out to 100 tenants. The mall includes a grocery store and dining establishments aside from retail stores, and also has four cinemas with 100% digital projection. Primary clients of the shopping center will be occupants and residents of the Century City's
Gramercy and Knightsbridge residential towers, as well as denizens of surrounding villages and working professionals from the nearby central business district (CBD).
RETAIL British firms eye PHL British Ambassador to the Philippines Asif Anwar Ahmad and United Kingdom Trade & Investment (UKTI) Manila Director Iain Mansfield said British companies are interested in opening businesses in the Philippines, starting with two to four British fashion brands anticipated to open branches within the year. The brands will partner with local companies to enter the country’s market. Local malls are keen on British clothing brand Primark. Businesses in other industries are likewise eyeing the Philippine market, such as a drugstore which plans to set-up in the country. The country's growing economy is cited as enticing these businesses while the lifestyle brands are attracted by the country's young, fashion conscious population. The British Embassy in the Philippines will assist UK firms to do business and establish their presence in the country. Meanwhile, the UKTI is organizing eight business missions and 10 webinars, as well as setting up a new British Center in The Fort to assist business in the UK that would like to open shop in the country. In 2013, the UK ranked first among European countries and fourth in all the foreign direct investors in the country. Chinese phone brand opens PHL shop Shenzen Gionee Communication Equipment Co. Ltd. set up its first concept store in Davao in February and plans to expand in all major Philippine cities within the year. 9
The opening of the concept store located in Gaisano Mall, Davao, is in partnership with Mindanao's Banana Telecoms Inc., headed by Wiltelcom President and Chief Executive Officer (CEO) Wilson Lu.
TELECOM PLDT boosts DFON for P1.3B The Philippine Long Distance Telephone Company (PLDT) allocated P1.3B to improve their domestic fiber optic network (DFON) in Northern Luzon for the next two years to make it less susceptible to breaks or damages. The project is focused on areas prone to natural disasters and public works that may cause breakage on the network, leading to disruption of PLDT’s services in the areas. Seen to benefit from the improvement work are the estimated 11M Smart Communications and Sun Cellular subscribers, 450,000 users of PLDT HOME and businesses in the area. Underground installation of the San Fernando, La Union-Candon, Ilocos Sur link was scheduled to be completed by March, while the 124-km. TuguegaraoBallesteros link in Cagayan is slated for completion by October. The company is targeting to reach 78,000 km. of fiber optic network and will use 25% of this year’s P29B capital expenditures (CAPEX) to expand their fiber optic network by 10% in 2015.
COMPANY NOTES DMPL completes USD 1.68-B acquisition The Del Monte Pacific Limited (DMPL) has completed its USD 1.68-B purchase of United States (U.S.) consumer food business from Del Monte 10
Corporation, which will be renamed Del Monte Foods, Inc. (DMFI). DMFI’s 26-% market share in the U.S. canned fruit market will open more opportunities in Asia’s expanding markets and provide longer term in South America’s emerging markets. Max’s seals acquisition of Pancake House The Max’s Group has completed the P3.5-B purchase of Pancake House which makes it one of the country’s biggest full-service and family-style dining restaurant chains with a combined network of over 450 stores.
Max’s said it acquired 89.95-% stake in Pancake House, equivalent to 233.16M shares. Despite the entry of a new shareholder group, Pancake House still remains as a listed company, Max’s Group President Robert F. Trota said. 7-11 to expand in Davao, Iloilo The Philippine Seven Corp. (PSC), the exclusive licensee of convenience store chain 7-Eleven, pushes its planned expansion in Iloilo and plans more expansion next year in Davao and nearby provinces. The company targets to increase the presence of 7-Eleven in the Visayas region by opening up 60 to 90 outlets this year, PSC Business Development Division Manager Francis Medina said. The first wave of store openings will be in Panay Island, particularly at the prime locations of General Luna Street, M.H. Del Pilar Street, Rizal Street, and La Paz Plaza.
Maynilad to expand service connections The Maynilad Water Services Inc. (Maynilad) targets to increase its customer base by 53,000 accounts this year as it puts up new pipelines in the south of Metro Manila. The company invested around P500M this year to connect additional accounts in the towns of Cavite, namely Bacoor, Imus, Kawit, Noveleta, and Rosario. There will also be additional connections from Muntinlupa, Las Piñas, Parañaque, and Pasay. Around 70 km. of primary pipes and more than 80 km. of secondary pipes will be laid down in these areas to expand the company’s distribution network. “We are committed to serving all the residents and establishments in our concession area. We are doing everything we can to reach even the farthest point in the West Zone,” Maynilad President and Chief Executive Officer (CEO) Ricky Vargas said.
Country-toCountry PHL, Australia agree to double trade The Philippines and Australia agreed to double bilateral trade and investment in the next five to seven years after they signed another joint economic communique following the recent visit of Australian Foreign Affairs Minister Julie Bishop and Australian Trade Minister Andrew Robb. Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said both countries are steadfast to bring trade relations to a higher level. “Both of us are aiming for the doubling of trade. We agreed on a broad array of business measures that will help boost our economic relations,” Domingo said. Philippine Business Report
With the Philippines’ gross domestic product (GDP) expected to hit 7%-7.5% this year, the export promotion agency of the Malaysian government looks brightly on prospects in the country’s economy. “We affirm our commitment to introduce a diverse selection of quality Malaysian products and services to the Philippines through participation in trade promotions activities and collective development of business partnerships with the support of well-established and respected members of business associations in the country,” MATRADE Manila Commissioner Har Man Ahmad said. UAE trade mission in PHL United Arab Emirates’ (UAE) high-level trade delegation joined the first-ever bilateral business forum in Manila to look for investment opportunities in the Philippines. The delegation was led by Economy Minister Sultan Bin Saeed Al Mansouri. Most of the delegates were presidents and chief executives of big companies in the UAE. The delegation was seeking opportunities by partnership and direct investments in tourism, infrastructure, petrochemical, and pharmaceutical industry, Department of Trade Industry (DTI) Secretary Gregory L. Domingo said.
ASIAN WATCH PHL to benefit from EU-ASEAN “open skies” The proposed “open skies” agreement between the European Union (EU) and the Association of South East Asian Nations (ASEAN) is expected to result in higher April 2014
standards of safety and regulation and more reasonable fares for airline passengers. The ASEAN needs to achieve a single aviation market first as part of the ASEAN economic integration in 2015 before entering into a comprehensive air agreement with the EU, Department of Transporation and Communications (DOTC) Secretary Joseph Emilio Abaya said. “The proposed EU-ASEAN comprehensive air transport agreement is a welcome development and is something to look forward to, especially now that the trend in aviation is connectivity and seamless travel. This is also a chance for our airlines to beef up their operations and compete in a bigger field,” Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said. S&P: PHL banks healthiest in SEA The Philippine banking system is expected to remain healthy this 2014 while other Southeast Asian banks “will face tougher operating conditions,” according to Standard & Poor’s Rating Services (S&P). The healthy domestic economy in the Philippines favors further healthy growth for the country’s banking system, S&P added. The financial sector grew 9.9% in the fourth quarter alone, behind a stable business environment, a manageable inflation rate of 3.7%, and low interest rates. Reconstruction and rebuilding aids from other countries due to Typhoon Yolanda’s devastation prompted an increase in financial activity.
On the calendar The Philippines Trade and Training Center (PTTC) is offering the following training courses, to be held on 21 May 2014:
highly competitive market by implementing Total Quality Management (TQM). TQM is a system designed to focus on customer expectations, the prevention of problems, building commitment to continuous improvement, and the promotion of participative management. Through TQM, companies achieve significant improvements in quality, productivity, cost reduction, and customer satisfaction thereby enhancing their competitive position in a rapidly changing global market. q ISO
9001:2008 QMS Root Cause Analysis and Corrective Action Learn easy-to-apply powerful techniques in root cause analysis. This will help you formulate corrective actions for the completion of your company’s ISO 9001 Quality Management Service (QMS) cycle. q Briefing on Food Packaging Get to know the importance of packaging in your manufacturing processes as well as your product’s saleability. q Consumer
Profiling for Improved Sales performance Improve your target marketing and maximize the return on sales efforts by identifying the most profitable customers and prospects through Customer Profiling.
For details, contact: 468.8963 to 64.
Philippine Postal Permit No. 504
MATRADE Manila sees stronger PHL-Malaysia trade relations Malaysian Embassy in Manila’s trade office (MATRADE Manila) sees Malaysian businesses’ strong growth in the Philippines.
q Total Quality Management Gird your company for today’s
11
Economic Indicators
GNI Growth Rate (%) 10
8
8
7.5
6
7
4
6.5
2
6
0
139 138 137 136 135 134 133
Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14
(In USD Billion)
5200 5000 4800 4600 4400 4200 4000 3800
As of 3 April 2014
Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013) 3Q (2013) 4Q (2013)
Imports 6,000
5,000 4,500 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
(1994 base year)
5 4 3 2 1 0
(In USD Billion)
5,500
4,000
Inflation Rate (%)
Peso per US Dollar Rate 45.5 45 44.5 44 43.5 43 42.5
5.5
Exports
Consumer Price Index (2000 base year)
3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013) 3Q (2013) 4Q (2013)
GDP Growth Rate (%)
Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Interest Rate (%) 6 5 4 3 2 1 0
As of 3 April 2014
Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
*GNI - Gross National Income
Entered as Third-Class Mail at the Makati Central Post Office under Permit No. 504 valid until 31 December 2014
Editorial Team: Anne L. Sevilla/Editor-in-Chief • Vic S. Soriano/Managing Editor • Cresenciano P. Par/Assistant Editor • Jam H. Raposon, Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya/Writers • Ren C. Neneria/Design Layout • Myrna V. de los Reyes/Circulation. Published monthly by the Trade and Industry Information Center (TIIC), Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 • To subscribe, e-Mail: publications@dti.gov.ph • Online: http://www.dti.gov.ph/dti/index.php?p=116
12
Philippine Business Report April 2014
Philippine Business Report