Philippine Business Report (Dec.2013) by Department of Trade and Industry

Volume 24 No. 12

December 2013

Up 30 notches

PHL most improved in doing business The Philippines soared 30 notches to 108th place this year from last year’s 138th ranking to emerge as the most improved economy in the world in terms of ease of doing business, the 11th edition of Doing Business Report by the World Bank and International Finance Corp. showed. The report tracks changes in regulations applied to domestic small- and medium-sized enterprises (SMEs). “The Philippines jumped in ranking by 30 points, more than any other country out of 189 economies included in the report,” World Bank’s Philippines Country Director Motoo Konishi said.

was “a complete turnaround” from last year, when the country placed lower in seven indicators. “We have made improvements in seven out of the 10 indicators, so this year is a complete turnaround from last year,” Luz said. The changes have been attributed to elimination of certain documentary requirements, guaranteed access to credit information, electronic systems for filing contributions, and impact of laws such as the Data Privacy Act and the Financial Rehabilitation and Insolvency Act.

“This is the first major improvement for the Philippines in the Doing Business ranking since the report started 11 years ago,” Konishi said.

The report highlighted the efforts of the Philippines to allow creditors' committees a say in insolvency proceeding decisions and in providing a legal framework for out-of-court workouts in resolving insolvency.

National Competitiveness Council (NCC) Co-chairman Guillermo M. Luz said the Philippines’ performance in the report’s 10 indicators this year

"A good example is the Philippines, the economy that made the biggest improvement in the efficiency of insolvency proceedings in 2012-2013,” the report said.

December 2013

Most Improved Economies (in terms of ease of doing business) Country

Ranking Improvement 2012 2013

Philippines

138 108

Ukraine

137 112

Rwanda

Brunei Darussalam

Russian Federation 112

159 140

Burundi Guatemala

Brazil

130 116

Iraq

165 151

Kosovo

14 12

Top 10 Economies Ease of Doing Business 2013

• Singapore •Hong Kong •New Zealand •United States •Denmark

•Malaysia •South Korea •Georgia •Norway •United Kingdom

INDUSTRY TRENDS BOI okays P310-B projects The Board of Investments (BOI) registered P309.7-B projects in the first nine months of the year, or 25% higher than the P248.2-B investments approved in the same period last year. Local investors were the main source of investments in the period, whose investment pledges rose by 12% to P258.7B from P230.5B a year ago. Foreign investments, meanwhile, surged 185% to P51B from P17.9B billion. The United States (U.S.) emerged as the top source of foreign capital, with a commitment of P41.7B or 82% of total foreign investments. The growth in investment approvals came largely from big power projects, led by the 600-megawatt (MW) plant of GNPower Ltd. Co. in Mariveles, Bataan. The American-owned coal-fired power plant, the biggest approved project so far this year, will employ 150 personnel.

PEZA granted tax incentives to projects worth P139.6B in the nine-month period, up from P98.6B during the same period last year. Manufacturing sector accounted for 45% of new investments, with electronics representing 80% of new manufacturing projects. “We are going to see a positive impact from these investments in a year’s time,” PEZA DirectorGeneral Lilia B. de Lima said. PEZA approved 523 new projects in the nine-month period, reflecting a 24.2- % increase over the 421 projects registered in the same period last year. Japan remained the top source of investments this year, followed by the United States. PEZA said employment in economic zones increased 12.7% to more than 1M people as of September, from 887,378 last year. “We expect these new investments to help improve our electronics exports because there have been continuing investments in the electronics sector. These will prepare the industry for an upturn by next year,” De Lima said.

Investments were also made for the locally-owned 400-MW coal plant of Pagbilao Energy Corp. with a project cost of P39.9B, followed by the P31.9-B, 405-MW coal plant of another Filipino firm FDC Misamis Power Corp.

PHL among top investment sites for TNCs The Philippines is among the top destinations for investments for transnational corporations (TNCs), a survey conducted by the United Nations Conference on Trade and Development (UNCTAD) showed.

By sector, the electricity, gas, steam and air conditioning supply sector got the largest share of investment commitments at P250.69B. This was followed by real estate activities, specifically the mass housing sub-sector, with P34.1B.

UNCTAD’s World Investment Prospects Survey for 2013 to 2015 showed that the Philippines was among the top 19 prospective host economies chosen by TNCs.

PEZA investments rise 42% to P140B New investments approved by the Philippine Economic Zone Authority (PEZA) rose by 41.6% year-on-year in the January to September period this year. 2

World Top Destinations of TNCs

•China •United States •India •Brazil •Germany •Mexico •Thailand •United Kingdom •Japan •Russian Federation

•Viet Nam •Australia •Poland •South Africa •Canada •France •Malaysia •Hong Kong •Philippines •Turkey

2013 exports to match 2012 record The Department of Trade and Industry (DTI) is confident that the value of merchandise exports this year would match last year’s USD 51.99B. Bureau of Export Trade Promotion (BETP) Director Senen M. Perlada said while the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) has cut its electronic exports projections for the year, the DTI expects the value of merchandise exports by yearend to at least match 2012’s level given the positive performance of non-electronic shipments. “With non-electronics now making up more than half of merchandise exports, we can expect merchandise exports to have at least a flat growth this year, if not a slight positive growth,” Perlada said. Earlier, Philippine Exporters Confederation Inc. (PHILEXPORT) President Sergio Ortiz-Luis Jr. said the group likewise expects merchandise exports to post flat growth this year from a year ago.

The Philippines shared the 19th spot with Hong Kong and Turkey.

Perlada said all the developments will be factored into the assumptions for the new Philippine Export Development Plan (PEDP) for 2014 to 2016.

The survey, conducted between February and May this year, was based on 161 responses of TNCs and 64 responses of investment promotion agencies (IPAs).

“The silver lining is that we are getting less dependent on electronics and somehow diversifying the base of our export products,” he said. Philippine Business Report

Electronics sector eyes USD 112-B exports The country’s semiconductor and electronics sector is eyeing to hit USD 112B in exports by 2030 under the new industry road map. The target was based on the assumption of sustained government support as well as the infusion of at least USD 10B in additional foreign direct investments (FDIs). Speaking at the latest Department of Trade and Industry’s (DTI) Trade and Industry Development (TID) Updates, Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) President Dan Lachica said the industry is also targeting USD 10B worth of investments and employment of 24M workers by 2030. To achieve these targets, the value of exports of electronic products should be at USD 37B in the short-term or by 2016. Semiconductor and electronics sector road map (exports earget in USD billion) Year

2016 2022 2030

Investments

3 5 10

Exports

37 52 112

Jobs

8M 14M 24M

DTI sends team to Belgium The Department of Trade and Industry (DTI) recently sent a team to Belgium to discuss the Philippines’ application to the European Union’s (EU) Generalized Scheme of Preferences Plus (GSP+) as well as prospective free trade agreements (FTAs). The DTI was aiming to file its application to qualify for the EU GSP+, which will allow the country to enjoy more tariff reductions. The GSP+ covers 6,274 products which can enter the EU at zero duty. At present, the Philippines is a beneficiary of the regular GSP, December 2013

which covers 6,209 products, with 3,767 products slapped with lower tariffs and 2,442 products subject to zero duty. Based on DTI’s initial study, the projected increase in Philippine exports under GSP+ will reach € 611.8M. As of 2012, Philippine exports under the regular GSP were valued at € 1.08B. The projected increase in exports to the EU is expected to lead to the creation of more than 200,000 jobs here, particularly in the agricultural and manufacturing sectors. BOI mulls perks for local auto assemblers The Board of Investments (BOI) is planning to introduce a new form of fiscal incentives for automotive firms with assembly operations in the Philippines as stated under the automotive industry road map. Under the road map, the BOI is looking at providing incentives based on the performance of automotive firms. Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said the agency intends to provide incentives to automotive firms which meet the minimum volume of production of 40,000 units per model per year. The minimum volume of production which will be qualified for incentives is intended to push the firms to hike their output to be able to export and become competitive. The automotive industry contributes to the economy through the direct employment of 68,000 individuals and the creation of 240,000 jobs in other automotive support industries. Chemical exports seen to grow 23% Philippine chemical exports are seen to rise by 23% annually in the next two years as more investments pour into the industry,

the Samahan sa Pilipinas ng mga Industriyang Kimika (SPIK) reported. “This year, there are some plants that started up. By January 2014, a naphtha cracker plant will also start commercial operations while a petrochemical plant will be completed in early 2015,” SPIK President Roberto F. Batungbacal said. Historically, the industry has grown 15% every year, but the opening of the naphtha cracker plant is expected to boost production as it brings full integration of the country’s chemical industry closer, Batungbacal said. He said industry players are gearing up to achieve long-term export revenue targets as stated in the sector’s road map. The chemicals industry is one of the largest manufacturing sectors in the country with gross revenues of P330B as of 2009. The industry manufactures basic chemicals, rubber products, plastic products, and other chemicals. Chemical industry road map export target in USD billion Year

Amount

2016 2022 2030

5 10 30

TRADE AND INVESTMENTS AVIATION Cebu Pacific expands cargo business Cebu Air Inc. (Cebu Pacific) is expanding its cargo business in time for the holiday season as part of the expansion of its extensive route network here and abroad. “Aside from Dubai, Seoul, and Singapore, Cebu Pacific Air Cargo ships to the widest network 3

in the Philippines and 19 more international destinations,” Cebu Pacific Vice President for Marketing and Distribution Candice A. Iyog said. PAL adds 2 new Airbus planes Philippine Airlines (PAL) has beefed up its fleet to 48 with the arrival of two new Airbus aircraft as part of a comprehensive fleet renewal program.

PAL now operates 39 Airbus and nine Boeing planes as it continued to replace old aircraft with new ones under its massive refleeting program.

BANKING EastWest to complete 100-branch expansion EastWest Banking Corp. is set to complete its 100-branch expansion program this year. EastWest has constructed 45 new branches since the start of the year while at least 63 new branches are at various construction stages. The bank had 290 main branches and 47 rural banks as of October 2013.

BPO Local Starcom unit banks on huge biz potential in PHL Starcom MediaVest Group Philippines is banking on the huge business potential in the Philippines, which is already one of its major markets. The company aims to enhance its existing relationship with clients as it communicates more brands to Filipino consumers. The Philippines is a “very strong office and a key part of the Southeast Asian region” 4

with a market share higher than in any parts of the world, SMG Australia Chairman and Global Experience Product Director John Sintras said.

ELECTRONICS Semiconductor firm to invest USD 8M for expansion On Semiconductor Philippines Inc. is investing a total of USD 8M next year to purchase equipment and upgrade technology for production of new products at its Cavite plant. On Semiconductor President and General Manager Sunil Banwari said the expansion will come in two phases. The first phase will amount to USD 4.5M and will be made in the first quarter of 2014 while the second phase will involve USD 3.5M and is expected in the third quarter. Banwari added that the investments would involve hiring 20 to 30 employees. At present, the firm has 3,000 employees.

ENERGY Seaoil expects 800 stations in 3 years Seaoil Philippines said it plans to expand its network of gasoline stations in the next three years. “We are looking at having 700 to 800 stations over the next three years and spending about P1.2B every year,” Seaoil President Francis Glenn L. Yu said. By the end of the year, the company is aiming to have 370 stations, most of which are franchised. Petron mulls expansion program Petron Corp. is on track with its “massive expansion program,” Petron Malaysia Chairman and Chief Executive Officer (CEO) Ramon Ang said. “Petron is undergoing massive expansion and modification. We will be finished by end-2014,” Ang said, adding that by the end

of next year, Petron would be able to produce Euro IV products. The Euro IV standard is a globally accepted European emission standard for vehicles. The Euro IV standards require fuel to have significantly low amounts of sulfur and benzene. The upgrade of its refinery would allow Petron to produce 180,000 barrels of oil per day from an average of 100,000 barrels today. Eastern Petroleum goes into LPG tanks Eastern Petroleum made its entry into the 14M-tank liquefied petroleum gas (LPG) market in the country. Eastern Petroleum Chief Executive Officer (CEO) Fernando Martinez said the company will tap 500 dealers for its Eastern Composite (EC) gas cylinder. Martinez expressed confidence the company can deliver this goal starting 2014. They are already processing 193 franchise applicants for immediate activation this month. Otto Energy confirms Galoc oil find Australian firm Otto Energy Ltd. said drilling at the Galoc-5H well in northwest Palawan has successfully yielded oil, confirming the potential of the well. “The Galoc-5H well has successfully flowed oil to surface from the Galoc Clastic Unit (GCU) with the well flowing at a rate of 6,300 barrels per day (bpd),” Otto Energy reported. The plan now is to move to Galoc-6H, install the subsea tree and start clean-up and flow testing, it added. The Galoc joint venture partners approved last year the Galoc Phase II development and began drilling last June. The consortium expects first oil in the fourth quarter of 2014. Philippine Business Report

Total investment cost for the Galoc Phase II project is USD 188M. BHP Billiton cleared to drill in Cinco f ield A consortium led by BHP Billiton said it secured a crucial local government permit from Palawan province to proceed with the drilling of the Cinco oil and natural gas discovery in northwest Palawan. Otto Energy Ltd. of Australia, a member of the consortium that owns service contract (SC) 55, said it received a strategic environmental plan clearance from the Palawan Council for Sustainable Development for the Cinco-1 prospect near the Malampaya gas field. SC 55 is estimated to have a potential resource of 2.2T cubic feet of gas, compared with Malampaya field’s proven reserves of 2.7T cubic feet. Total studies investments in natural gas Total S.A. of France is looking at investment opportunities in the Philippine liquefied natural gas industry. Total planned to team up with a partner for the regasification terminal. “We plan to supply LNG beginning 2016. That is our internal projection and view. That’s dependent on the regasification terminal,” LNG Origination Director for Southeast Asia of Total Gas & Power Anton Safronov said. Safronov said the company was just waiting for the government’s release of the natural gas master plan this year which would serve as a guide for its investment plan in the country. Unioil puts up more stations Unioil Petroleum Philippines, Inc. completed six new stations in Luzon since the year began. These stations were completed between August and October. December 2013

Unioil has 33 retail stations as of end-June. Of these stations, 21 are in Metro Manila and the rest are in Cavite, Laguna, Nueva Ecija, and Pampanga.

Joseph said construction should begin in the next four to seven months, with partial commissioning of the wind farm likely to start late next year.

Earlier, Unioil earmarked about P400M to build 20 retail stations every year until 2015 to reach the company’s target of additional 60 stations.

Depending on the energy demand in the next five to seven years, the partners might put up biomass and solar power projects in the vicinity to increase output to as much as 400 MW.

The remaining 14 stations planned for this year are under stages various of development. “Four of them are under site negotiation and the others are in the permitting stage,” Unioil President Kenneth C. Pundanerahe said, adding that all of them will still be located in Luzon.

GREEN PROJECTS Mudajaya Group inks deal for USD 160-M RE project in Cebu The Mudajaya Group of Malaysia has signed a partnership agreement with local players for a USD 160-M integrated renewable energy (RE) project in the Philippines. “We are proposing to put up at least 200 megawatts (MW) of generating capacity. We hope to start with 50MW,” Mudajaya Group Bhd Group Managing Director and Chief Executive Officer (CEO) Anto Joseph said. Mudajaya Group partnered with Filipino firms Amihan Energy Corp. and Visayan Wind Energy Holdings Corp. for the Amihan wind project. Amihan wind energy project will put up windmills in an 18,000-hectare leased lot within Cebu City, Balamban and Toledo City in Cebu.

Basic Energy keen on Bulusan geothermal project Basic Energy Corp. is keen on pursuing the development of the West Bulusan geothermal power project in the Sorsogon province, Basic Energy President Oscar de Venecia Jr. said. The company’s application was still under review by the Department of Energy (DOE). The generation capacity of West Bulusan geothermal project has yet to be determined, Venecia said. Basic Energy allotted USD 2.5M for capital expenditures this year to finance energy projects. Korean company to build 150-MW solar plant BWST, a unit of Korean manufacturer Yu Jin Optical Electronics Inc., disclosed its plan to construct the largest solar power facility in the Philippines, with a capacity of 150 megawatts (MW) and an investment of at least USD 500M. The company planned to build the solar power project in Porac, Pampanga, BSWT Planning Director Sung Ho Shin said. Yu Jin Optical Electronics is involved in the manufacturing of blades, winding coils, device pick up coils and other electronic parts. Its facility is located at the Cavite Economic Zone in Rosario, Cavite. Shin said the company was recently granted a service contract 5

for the 150-MW solar project, which would be constructed in phases, with an initial capacity of 50 MW. 20-MW solar facility proposed for Zamboanga ecozone Enfinity Philippines Technology Services, Inc. has formally proposed to the city government its plan to build next year a 20-megawatt (MW) solar power facility in the Zamboanga City ecozone. “The decision of Enfinity Philippines Services, Inc. to establish a 30-hectare solar power farm inside Zamboanga ecozone’s second industrial site that would generate 20MW of power is a welcome and encouraging development,” Zamboanga City Special Economic Zone Authority and Freeport Chairman Christopher Lawrence S. Arnuco said. The proposal partly involves installation of solar panels on the roof of the administration building of the Zamboanga ecozone. Hedcor building more hydro projects Renewable energy producer Hedcor Inc. has obtained clearance from the Department of Energy (DOE) to conduct a grid impact study on five more hydroelectric power plants with a total capacity of 112.4 megawatts (MW). Hedcor’s hydro projects

• • • • •

Manolo Fortich 1 (35.2MW) in Bukidnon Manolo Fortich 2 (16.4MW) in Bukidnon Bontoc hydro project (40MW) in Mountain Province Mabinay-Manjuyod 1 (10.5MW) in Negros Occidental Mabinay-Manjuyod 2 (10.3MW) in Negros Occidental

HOSPITAL/MEDICAL SERVICES ALI plans nine healthcare facilities in 4 years Ayala Land Inc. (ALI) is planning to build nine healthcare facilities in the next four years. 6

ALI Chief Financial Officer Jaime E. Ysmael said the company has planned out to build the healthcare facilities within its community developments nationwide. According to him, the company has already identified the sites for the healthcare facilities. “The first one will probably be in Iloilo and hopefully in Nuvali. Then in San Jose Del Monte, Bulacan,” Ysmael said. MPIC completes Tarlac hospital deal Metro Pacific Investments Corp. (MPIC) said it completed the acquisition of a 51-% stake in the Central Luzon Doctors’ Hospital in Tarlac. The hospital will construct a new four-storey building, which would be completed by early 2015. Metro Pacific signed a deal to acquire the hospital deal for P187M in June. This is the second hospital acquired by Metro Pacific this year, and the eighth hospital investment of the conglomerate. The Metro Pacific’s hospital group earlier allotted P3.5B for 2013 capital expenditures, primarily for new acquisition and prospective increase in the existing stake in existing hospitals under its network.

INFRASTRUCTURE/ PUBLIC-PRIVATE PARTNERSHIP MNTC allots P6B for Port Area link Manila North Tollways Corp. (MNTC) earmarked P6B to finance the 8-km extension of the North Luzon Expressway (NLEX) to Port Area in Manila next year. The NLEX-Harbor Link, which starts at the Smart Connect Interchange, involves two segments that

will connect MacArthur Highway and C-3 road to NLEX in Valenzuela City and Mindanao Avenue link. NGCP seeks gov’t approval for P663-M project National Grid Corp. of the Philippines (NGCP) is seeking the Energy Regulatory Commission’s (ERC) approval for its P663-M substation expansion project in Parañaque City. NGCP said the project was intended to augment the Zapote substation capacity, address load growth, and provide single outage contingency. Among the considerations for the expansion is to support the electricity needs of Philippine Amusement and Gaming Corporation’s (PAGCOR) hotel and casino complex in 120-hectare Manila Bay reclaimed area. Maynilad launches P266-M treatment plants Maynilad Water Services, Inc. (Maynilad) has inaugurated a P266-M joint sewage and septage treatment plant to provide services for 18,500 customers in Metro Manila. The new treatment facility situated in Project 7, Quezon City is designed to handle a flow volume of 2,400 and 240 cubic meters of sewage flows and septage from desludging activities. DOTC pursues BRT system The Department of Transportation and Communications (DOTC) is pushing through with the establishment of a bus rapid transit (BRT) system to serve passengers. The proposed BRT system would be established along Quezon Avenue, C-5 Road, and Ortigas Avenue in Metro Manila. Daang Hari completed next year AC Infrastructure Holdings Corporation (ACIHC) expects to complete the 4-km DaanghariSouth Luzon Expressway (SLEX) connector road by the third quarter of 2014. Philippine Business Report

The P2-B road project is the first major infrastructure project awarded by the Aquino administration under the public-private partnership (PPP) program.

and its plans for a third office to be opened in Mindanao in the next few years.

Davao Oriental to invest P175M in agri projects The Davao Oriental provincial government has set aside P175M for its annual investment program next year for agricultural projects, particularly in areas devastated by Typhoon Pablo.

Vista Land, PA Alvarez units seek BOI perks Household Development Corporation (HDC) and P.A. Metro Residence Builders Inc. (PAMRBI) are applying for registration with the Board of Investments (BOI) as an expanding developer of low-cost mass housing projects on a non-pioneer status.

Part of the money will be used to construct irrigation systems and rehabilitate provincial roads, bridges, and other infrastructure in three coastal towns – Baganga, Cateel, and Boston, Governor Corazon N. Malanyaon said. “This (irrigation) project is our big stride towards realizing our dream of making Davao Oriental rice self-sufficient,” said Malanyaon.

LOGISTICS DHL bares USD 25-M expansion in PHL Logistics provider DHL is planning to invest USD 25M for its operations expansion in the Philippines in the next three years.

Supply Chain Philippines, Inc. Managing Director Suzie Mitchell said the expansion seeks to go where their customers are in light of more multinational firms expanding and opening operations in the country. DHL is eyeing Metro Manila and Laguna for the investment. The firm is also considering setting up in Central Luzon, citing strong presence of big companies in the area. Aside from the investment, DHL also announced the opening of its new office in Clark December 2013

MASS HOUSING

HDC project, under Vista Land and Lifescapes Inc., has 1,046 housing units capacity located at Camella Tanza in Cavite. Meanwhile, PAMRBI, a subsidiary of P.A. Alvarez Properties and Development Corp. (PAAPDC), covers 430 units in The North Grove Phases 2 and 3 in Caloocan City.

MANUFACTURING Thai SCG to expand PHL facilities Seeking to strengthen its foothold in the Philippines, Thai-based Siam Cement Group (SCG) plans to put up facilities for their construction and pulp businesses. SCG International Business Director Surasak Kraiwitchaicharoen said they are currently studying to build a construction materials factory that will produce fiber cement boards, smart boards, and ceramic tiles, among others. A market study is ongoing to determine if a new plant is needed to meet the demand for fiber cement boards in the country, which is at 30M sqm. SCG is also looking at a possible cooperation with the government to set up a tree plantation to support the company’s pulp and paper operations.

MEDIA ABS-CBN invests P200M in Korean home TV shopping Multimedia conglomerate ABS-CBN Corporation is spending P200M worth of investments in a partnership with Korea-based home shopping giant CJ O Shopping Corp. to introduce a new TV home shopping lifestyle to Filipino consumers. The joint venture called A CJ O Shopping Corp. is the company’s reentry into the TV home shopping business. ABS-CBN Business Development Head Luis Paolo M. Pineda said the company’s foray into TV home shopping would provide viewers with more opportunities for their lifestyle needs. “Sometimes people don’t have the chance to go out and shop for themselves for things they need at home. We are offering consumers better service and better options as life becomes more mobile and hectic,” Pineda added.

MINING Top Frontier eyes more coal mining projects Top Frontier Investment Holdings Inc., the largest shareholder of diversified conglomerate San Miguel Corp. (SMC), expressed interest in investing in more coal projects in the country. Top Frontier President and Chief Executive Officer (CEO) Ramong S. Ang, who also sits as SMC President and Chief Operating Officer (COO), said as of now Top Frontier doesn’t have any plans to diversify. However, Ang said they may start looking at opportunities in the coal power business as early as now. “Right now, the coal business is low-end and the valuation of the coal business is on the low side. So I think there’s an opportunity for us to invest in this business,” he added. 7

King-King to hire 1,700 miners United States-based mining company St. Augustine Gold and Copper Ltd. expressed its plans to hire 1,700 small-scale miners operating inside the King-King copper-gold project in Pantukan, Compostella Valley. St. Augustine Country Manager and Director for Environmental Permitting Clyde Gillespie said about a thousand small-scale miners were currently operating inside the company’s mining tenement. “We already have an agreement with the Technical Education and Skills Development Authority (TESDA) and we will teach them how to run our processes. For the level of a small-scale miner, they are getting a huge amount but on a large-scale level, it is not significant. They are going after the high-grade gold,” Gillespie said.

POWER Filinvest breaks ground for Mindanao coal plant Filinvest Development Corporation (FDC) power arm FDC Utilities Inc. broke ground for its first power project in Mindanao in November. The 405-megawatt (MW) power plant will be put up at the Phividec Industrial Estate in Villanueva, Misamis Oriental. FDC will initially put up a 270-MW generating capacity. The plant will be connected to the Mindanao grid and is expected to support the growing power demand in the region by early 2016. The company plans to expand the facility by another 135MW in 2018 in anticipation of the island’s economic growth. Companies tapped for the project

The King-King copper-gold project is expected to recover 3.16B lbs of copper and 5.43M oz of gold over its 22-year mine life. OceanaGold signs deal OceanaGold (Phils.) Inc., contractor of the Didipio gold-copper project in Northern Luzon, signed a memorandum of agreement (MOA) with the council leaders of Didipio village in Nueva Vizcaya.

• The First Northeast Electric Power • Engineering Corporation of China Energy • Engineering Group (NEPC China)

Meralco completes Laguna ecozone projects Manila Electric Co. (Meralco) has completed three economic zone projects designed to improve its distribution system in economic zones (ecozones) in Laguna. “We are continuously investing to be able to serve and give the power quality that is needed by our customers. We have about 245 projects from 2013 to 2019 scattered throughout our franchise area,” Meralco First Vice-President and Regulatory Affairs Head Ivanna G. de la Peña said.

Ecozone projects

• • •

*Equipment supply

• NEPC Power Construction Corporation (NEPC Philippines) *Construction

• Engineering Equipment, Inc. (EEI)

*Civil, electrical, and mechanical works

* Contracts awarded

“The agreement demonstrates our commitment to community development and corporate social responsibility projects over and above those that are required by social development management program (SDMP). We are very happy that the leaders of Barangay Didipio continue to be our partners in our effort to pursue our commonly-shared objectives of sustainable development,” Oceana Gold Country Director Bradley Norman said.

Aboitiz unit taps P24-B loan for Davao plant Therma South Inc., a subsidiary of Aboitiz Power Corp., is borrowing P24B to finance the construction of a coal-fired power generation facility in Davao.

The agreement incorporates all previously executed agreements and all additional commitments to community development projects in addition to those projects stated in the company’s SDMP.

Therma South has tapped BDO Capital & Investment Corp. as issue manager and lead arranger. It also appointed BDO Unibank Inc.Trust and Investments Group as trustee and facility agent.

The project is expected to be completed by early 2015.

In a disclosure to the Philippine Stock Exchange (PSE), Therma South said it signed an omnibus agreement with a consortium of lenderbanks to obtain loans and credit accommodations for up to P24B.

115-kilovolt line in Calamba Premiere Industrial Park (CPIP) 83-megavolt-ampere (MVA) substation in Biñan and Sta. Rosa cities 83-MVA power transformer in Carmelray Industrial Park in Calamba

Benefitting companies

• • • • • • • •

Air Liquide Philippines, Inc. Bayer Philippines Coca-Cola Bottlers Philippines Epson Precision Philippines San Miguel Corp. (SMC) Samsung Philippines Electronics Manufacturing Corp. Toshiba Information Equipment Uniden Electronics Philippines

First Gen set to finish Mindanao hydro projects Lopez-owned First Gen Corp. is on track to complete its five hydropower projects in Mindanao. “We’re going through our final feasibility and in all of the projects. We’re looking at starting the construction of an access road because that’s what we need to do further survey,” First Gen President Francis Giles B. Puno said. He said the company is planning to start construction next year and complete the projects as early as 2016. Philippine Business Report

First Gen’s projects

• • • • •

8-megawatt (MW) Tumalaong plant (Bukidnon) 8-MW Bubunawan plant (Bukidnon) 20-MW Tagoloan plant (Bukidnon) 14-MW Cabadbaran plant (Agusan del Norte) 30-MW Puyo plant (Agusan del Norte)

SIPC wins bid for 3 power barges SPC Island Power Corporation (SIPC), a subsidiary of SPC Power Corporation (SPC) of the Salcon Consortium, outbid two others for Package 1 offered by the Power Sector Assets and Liabilities Management Corporation (PSALM). Package 1 is composed of power barges (PB) 101 to 103 which will be rehabilitated by SIPC after passing the post-qualification evaluation. The rehabilitation of the barges, each with 8-megawatt (MW) capacity and Hitachi-Sulzer diesel generator units, is said to cost P50M per barge, and would take three months to complete. PSALM, which manages the privatization of the National Power Corporation’s (Napocor) assets, is also bidding out Package 4 comprised of PB 104. MINERGY to build 110-MW plant Mindanao Energy Systems, Inc.’s (MINERGY) fully owned Minergy Coal Corp. will construct a 110-megawatt (MW) coal-fired power plant approximated to cost P14.55B. The Energy Regulatory Commission (ERC) approved the power supply agreement between MINERGY and sister company Cagayan Electric Power and Light Company, Inc. (CEPALCO) as well as the construction of a 138-kV connecting line. CEPALCO, which owns 77.87% of MINERGY, currently sources 90% of power from the National Power Corporation (Napocor), with their contract ending in March 2015. December 2013

CEPALCO is seen to require an additional 58MW by 2015, and 168MW by 2017.

REAL ESTATE Dubai firm to build ‘Energy City’ in PHL Dubai-headquartered Kampac International PLC plans to build a USD 5-B “Energy City” in the Philippines. The target start for the project is early next year and, upon completion in five years, is seen to employ 8,000 to 10,000. “I can guarantee that investors would locate here because the raw materials are here,” said Kampac Chairman Charles Ampofo. In July 2011, the company signed a memorandum of agreement (MOA) with the Authority of the Freeport Area of Bataan (AFAB) for a project including the development of a super oil storage tank farm facility. Kampac had also previously signed a MOA with the Philippine Chamber of Commerce and Industry (PCCI) and met with President Benigno S. Aquino III. Kampac project inclusions

• • •

Liquefied Natural Gas (LNG) plant and regasification plant Petrochemical facility A water company

Rockwell targets P19.2-B projects Rockwell Land Corporation (RLC) aims to raise P19.2B from 2015 to 2019 to finance its various property projects, with majority of financing to be acquired from sales of units. The Securities and Exchange Commission (SEC) approved Rockwell Land’s P5-B, seven-year, and one-quarter bond issue with proceeds to be used for capital expenditure (CAPEX) requirements

for the rest of 2013 to 2014, mostly for their Proscenium project. Other funding will come from the company’s earnings leasing operations of the Power Plant Mall and Rockwell Business Center (RBC). Residential projects

• • • • • • •

205 Santolan, Quezon City 53 Benitez, Quezon City Alvendia, San Juan Edades, Makati Grove Tower C-F, Pasig City Proscenium, Makati The Cebu Project, Cebu

Commercial leasing projects

• •

Iconique office tower Serviced apartments in Edades and Grove

Sultan 900 to develop Global City Mandaue Project Sultan 900 Consortium will be reclaiming and developing a 131-ha area in Mandaue City, Cebu to a mixed-use, industrial port complex, after winning their unsolicited bid for the Global City Mandaue Project worth P9B. The project, which covers foreshore and submerged lands in areas flanking the Mandaue City bridge going northward to the boundary of Consolacion Cebu, will be developed in 10 years. Meanwhile, subsidiary Globalport 900, Inc. that fully owns Platinum Dredging Inc. and 96.32% of Harbour Centre Port Holdings Inc. (HCPHI), will construct the Cebu Port Terminal in the Mandaue Global City. HCPHI operates Manila North Harbor with San Miguel Corporations’ Petron Corp. through their joint venture Manila North Harbor Port Inc. Taiwanese to build water theme park in Clark BB International Leisure and Resort Development Corp. (BBI) and two 9

Taiwanese owned firms are investing P2.5B to construct a world-class water theme park in a 10-ha area of a 120-ha property in Clark’s Freeport and Special Economic Zone. The theme park, set to be completed in three years, is said to rival Hong Kong Disneyland, Universal Studios Singapore, and Legoland Malaysia. The project, which would employ indigenous people and persons with disabilities (PWDs), is in joint partnership with Eaglesky Technology Amusement and Gaming, Inc. and Central Summit International. ‘Century City’ towers rounded-up Century Properties Group Inc. announced the last towers to occupy the remaining 8,000 sqm to complete their 3.4-ha Century City project in Makati. Forbes Media Tower is the first Forbes-branded commercial office building in Makati with 60,000 sqm of space. Meanwhile, Century Spire is a high-rise residential with interiors by the Armani Group and architecture by Daniel Libeskind whose works include the winning master plan for the World Trade Center site.

commercial, and business establishments in one district. South Park Mall will house four cinemas, a department store, food court and supermarket, as well as South Park Corporate Center at the top floor which will offer 38,000 sqm of office space ideal for business process outsourcing (BPO). Construction and operation of South Park District is seen to generate 5,000 jobs while BPO locators through a three-shift period are expected to employ 18,000 to 20,000. RLC’s Go Hotel plans to expand Robinsons Land Corporation (RLC) is looking to open three more branches of its value hotel brand Go Hotels from the end of 2013 to late 2014. The new branches, which will be located near Robinsons Malls, will raise the hotel chain’s number of rooms from the current 700 to more than 1,200. RLC, which also manages Holiday Inn and Crowne Plaza, has six operational Go Hotels at present. Upcoming Go Hotels

• • •

Existing Go Hotels

Other buildings in Century City

• • • • • •

Gramercy Residences Knightsbridge Residences Milano Residences Trump Tower Centuria Medical Makati Century City Mall

Muntinlupa site for new Ayala project Ayala Land, Inc. (ALI) is developing South Park District, a P12-B, 6.6-ha masterplanned, mixed-use area in Muntinlupa. The project is executed by ALI subsidiary Avida Land Corp. and will integrate residential, 10

Iloilo – 167 rooms Ortigas Center – 198 rooms Butuan – 102 rooms

• • • • • •

Bacolod Dumaguete EDSA-Mandaluyong Otis-Manila Puerto Princesa Tacloban

SM offers P54.5-B reclamation project in Pasay SM Land Inc. submitted an unsolicited proposal for a P54.5-B reclamation and development project to the Pasay City government Public-Private Partnership -Selection Committee (PPP-SC). The project, which will be fully financed by SM Land, will have

300 ha. of foreshore and offshore areas of Manila Bay in the western part of Pasay. Under the unsolicited proposal and invitation for competing proposals, the project will be a joint-venture with the city government which will be allocated with 153ha or 51% of the reclaimed area including roads and open spaces. SM Land proposed that the project would be completed in seven years from the issuance of the notice to proceed by the city government.

RESEARCH AND DEVELOPMENT PWU acquires Makati Medical Center School Philippine Women’s University (PWU) has purchased the Makati Medical Center College, Inc. (MMCCI), STI Education Systems Holdings, Inc. said. STI, which owns 40% of PWU, said it was PWU that acquired 100% of the issued and outstanding capital stock of MMCCI from Medical Doctors, Inc. (MDI).

TELECOM PLDT synergizes with DMPI Philippine Long Distance Telephone Company (PLDT) subsidiary Smart Communications Inc. completed its Mindanao network synergy project with Digitel Mobile Philippines, Inc.(DMPI), commercially known as Sun Cellular. The network synergy, which started in April and covers 25 provinces in Mindanao, will allow the operators a co-usage of their existing infrastructures, boosting resources without the need for new infrastructure. Close to 1,300 sites were synergized, upgrading Sun Cellular’s 2G coverage by 152% and 3G by 64%, as well as Smart’s 2G coverage by 35% and 3G by 57%, both in Mindanao. Philippine Business Report

Puregold to open more branches Hypermarket chain Puregold Price Club Inc. hit their 200th store target ahead of schedule and they plan to open more branches before the year ends. “I’m happy to announce that more stores will open past that mark before the end of the year. I believe we have set a new record —the most number of stores in a supermarket format,” Puregold Chairman Lucio Co said. Puregold acquired 15 branches of Company E Corp. from Eunilaine and Grocer E supermarts. These branches will be converted into Puregold stores. Wendy’s to triple store count by 2016 Wenphil Corp., the local franchise holder of Wendy’s, is aggressively expanding their branches to achieve their triple store count by 2016. “We need to hit 100 stores by 2016. We will go full blast in franchising next year. That is the fastest way to grow,” Wenphil Corp. Chairperson Elizabeth Pardo-Orbeta said. The company is renovating their 34 existing stores for franchising preparations until the first quarter of 2014. According to Orbeta, the renovations will help attract more franchisees.

BILATERAL AGREEMENT PHL, Japan boost trade ties The recently held Association of Southeast Asian Nations (ASEAN)-Japan Commemorative Summit sought to strengthen trade and investment ties with Japan. The summit gave the Philippines a chance to explore trade opportunities December 2013

ASEAN certification project set in EO President Benigno S. Aquino III recently signed an order implementing an agreement on a regional self-certification project.

The summit also discussed and explored strategies to effectively implement the ASEAN-Japan strategic growth road map which aims to double the flow of goods, services and investments between Japan and ASEAN from 2012 until 2022.

Executive Order (EO) No. 142 implements the memorandum of understanding (MOU) among the governments of the Association of Southeast Asian Nations (ASEAN) member states who are partaking in the second pilot project for the regional self-certification system implementation.

SEIPI, KEA sign MOA to strengthen trade The Semicondutor and Electronics Industries in the Philippines, Inc. (SEIPI) signed a memorandum of agreement (MOA) with the Korea Electronics Association (KEA) for stronger business and trade relations between the Philippines and Korea. SEIPI President Dan Lachica signed the MOA with KEA President Dr. In Suk Nam during the Korea Electronics Show held in Seoul, Korea in October. The MOA will encourage Korean companies to invest and expand in the Philippines.

ASEAN WATCH Japan recovery good for PHL Japan’s continuous recovery benefits Philippine economic growth due to the two countries’ trade and investment partnership, the Bangko Sentral ng Pilipinas (BSP) said. The country’s external trade and receipts are supported by Japan, which provide additional stimulus to economic growth, BSP Deputy Governor Diwa C. Guinigundo said. Japanese firms outside Japan are also relocating to the Philippines, which make stronger relations between the two countries.

The project targets to initially implement such a system within the ASEAN Free Trade Area (AFTA) in preparation for the development and operation of an ASEAN-wide Self-Certification System by 2015.

ON THE CALENDAR World Bazaar Festival The longest running charity bazaar in the Philippines is set to cover various selections of goods for another year of Christmas shopping. The bazaar offers unique and trendy novelty items, clothes, shoes, bags, toys, perfumes, lifestyle products, and many more that is perfect for gift-giving. World Trade Center will serve as the venue for the event on December 6 – 22, 2013.

Philippine Postal Permit No. 504

COMPANY NOTES

and meet with potential Japanese investors, Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said.

Economic Indicators

GNI Growth Rate (%)

GDP Growth Rate (%)

2 0

2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013) 3Q (2013)

Exports

Consumer Price Index (2000 base year)

136 135 134 133 132 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13

(In USD Billion)

6000 5000 4000 3000 2000 1000 0

As of December 10, 2013

5,000 4,500

(1994 base year)

3 2

1 0

Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

4,000 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

Inflation Rate (%)

43.5

42.5

6,000 5,500

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

Peso per US Dollar Rate 44.5

Imports (In USD Billion)

Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13

Interest Rate (%) 6 5 4 3 2 1 0

As of December 10, 2013

Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

*GNI - Gross National Income Entered as Third-Class Mail at the Makati Central Post Office under Permit No. 504 valid until 31 December 2013

Editorial Team: Anne L. Sevilla/Editor-in-Chief • Vic S. Soriano/Managing Editor • Cresenciano P. Par/Assistant Editor • Jam 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

Philippine Business Report

December 2013

Philippine Business Report