Volume 25 No. 01
January 2014
PHL to surpass 7-% growth in 2013 Philippine economic growth was seen to stay above 7% in the last quarter of 2013 as the country outpaced the rest of Asia amid weak economic conditions. The Philippine economy grew by 7.0% in the third quarter of 2013, bringing the nine-month average to 7.4% and making it the fastest-growing economy in Southeast Asia. “Given the backdrop of decelerating inflation and increased government infrastructure spending, we remain optimistic that gross domestic product (GDP) growth in the second half will again exceed the 7-% target of the government,” First Metro Investment Corp. (FMIC) said. The optimism was attributed to the steady increase in remittances from overseas Filipinos (OFs). Domestic consumption accounted for about 70% of GDP. “Continuing low interest environment and better exports prospects provide additional support to this view,” FMIC said. For his part, National Economic and Development Authority (NEDA) Director-General Arsenio M. Balisacan said the Philippines can still surpass the government target despite the recent typhoons. “I think exports have a bigger impact. Imports are picking up, which means that is good for growth in the future,” Balisacan said. January 2014
“But the good thing is our economy is largely domestic now, we’re not vulnerable,” he said, noting that consumption and investments would continue to drive the economy. For 2014, HSBC Asian Economic Research Head Frederic Neumann said there will be a “high upside” for the economy. Neumann said as economic condition continues to improve, more Filipinos will choose to stay in the country instead of seeking jobs abroad.
Echoing Neumann’s optimism, RFO Center for Public Finance and Regional Economic Cooperation Chairperson Roberto de Ocampo said growth for 2014 should prove within the government target. Super Typhoon “Yolanda” presented an opportunity for the remittances to be strong and will help open up opportunities for infrastructure that will have a positive impact on investments, De Ocampo said. 1
INDUSTRY Trends PHL relaxes rules on entry of foreign investors The Philippines is among the 11 countries that have adopted policy measures easing the entry of foreign investors, the United Nations Conference on Trade and Development (UNCTAD) reported. The UNCTAD said the country has amended its Rural Bank Act to allow foreign money into the once-protected rural banking sector. “The Philippines has amended its Rural Bank Act to allow foreign individuals or entities to have equity of up to 60% in rural banks in the country. Prior to amendment, foreign banks were allowed to acquire equity in rural banks, but not foreign individuals or foreign entities,” the report said. The agency said the country was also one of 25 economies that put in place measures to attract foreign direct investments (FDIs) through selective investment liberalization and promotion. These countries pursued efforts to attract FDIs through improved entry conditions, the treatment of established investors, and investment promotion and facilitation. The economies that adopted new policy measures relating to the entry of foreign investors relaxed restrictions on foreign ownership or opened up new business opportunities. “Insofar as new investment restrictions were adopted, they related to various industries, such as mining and maritime auxiliary services,” the report stated. Exports hit USD 5B in September 2013, highest in 3 years Philippine exports rose by 4.9% in September last year to hit 2
a three-year high of USD 5B due to surge in electronic shipments, the National Statistics Office (NSO) reported. “The positive growth was mainly brought by the increase of eight out of the top 10 commodities for the month,” the NSO said. Top export products September 2013
• Articles of apparel and clothing accessories • Cathodes and sections of cathodes • Chemicals • Electronic products • Ignition wiring set and other wiring sets • • •
used in vehicles, aircrafts and ships Metal components Other mineral products Other manufactures
Notably, electronic products, the top export item, rebounded by 12.8% to USD 2.1B in September, accounting for 41.7% of the total exports revenue during the month. Top export markets September 2013 (In Million USD) Japan 1,100.00 U.S. 755.12 China 653.90 Hong Kong 511.70 Singapore 345.80 South Korea 227.00 Germany 220.60 Taiwan 210.70 Thailand 150.00 Netherlands 142.00
Lower inflation seen Private economists surveyed by the Bangko Sentral ng Pilipinas (BSP) in the third quarter of 2013 projected lower inflation rates for last year and this year due to stable global commodity prices. Survey results showed an average inflation forecast for 2013 at 2.9%, down from the 3.1% in the previous quarter. The inflation forecast last year was lower than the 3%-5% government
target while projection for 2014 is within target. On the same note, the 2015 average inflation forecast is steady at 3.6%. PHL assemblers hit record car sales in Oct Local vehicle assemblers achieved record sales in October 2013 buoyed by robust demand for passenger cars (PCs) and commercial vehicles (CVs). Combined sales of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association, Inc. (TMA) reached 16,800 units in October, the first time monthly sales breached the 16,000 mark. October sales were up 11.4% from the 15,081 units sold in the same month last year. Compared to September’s sales of 14,764 units, October sales rose by 14%. “The market is responding very well to the new model introductions, both in the PC and CV segments,” CAMPI President Rommel Gutierrez said. PC sales in October reached 6,128 units, up 36.2% from the 4,498 units in the same month last year.
“Manila has outperformed the rest of the Asia Pacific region in terms of net absorption of office space,” Cushman and Wakefield General Manager for the Philippines Joe Curran said. Net absorption of office space in Manila in the review period was at 482,126 sqm., Curran said. Office space occupancy in Asia Pacific Region Q3 (In square meters) Manila Mumbai Bengaluru Chennai Guangzhou Pune Chengdu Shenzhen Kuala Lumpur Seoul
482,126 314,528 287,630 263,303 250,114 225,117 222,336 185,450 184,925 133,604
He noted that new supply which came in the same period in Manila was at 332,786 sqm. Office space in Taguig City accounted for 59% of the absorption in Manila, followed by Makati City with 29%. As a result of the high net absorption in the office space, vacancy rate across Metro Manila is at 4.3%.
The number of CVs sold in October grew slightly to reach 10,672 units from 10,583 units a year ago.
Curran said the stable growth in the business process outsourcing (BPO) sector has primarily been driving the demand for office space in Metro Manila.
For the January to October period, sales have already reached 148,181 units, posting a 17-% increase over the 126,663 units sold during the same period last year.
The absorption of office space here is seen to increase as demand continues to grow over the next three to five years, he said.
Manila leads office market in AsPac Manila is Asia Pacific’s leading office market as it outpaced the rest of the region in terms of office space occupancy as of the third quarter of 2013, real estate services firm Cushman and Wakefield reported. Philippine Business Report
“The trend we are seeing is increasing absorption. This means that companies are going to be expanding and increasing their headcount,” he added. Construction spending to jump to P600B The construction sector expects project commitments from both January 2014
the public and private sectors to grow by at least 50% to P600B this year. Construction expanded 24% in the first six months of 2013 to P287.5B from P232.4B year-on-year. In a country report in March 2013, the sector reported that investments in construction grew 34% in the first quarter of 2013 from 3.5% decline in the first quarter of 2012. “Guided by these developments, we are positive that we’ll grow faster than our expectations earlier in 2013,” Philippine Contractors Association Inc. (PCA) President Augusto F. Manalo said.
Purchases summed up to USD 5.71B, up by 7.2% from a year earlier and supporting the positive 8.7% and 7% turnouts in July and August 2013, respectively. “September’s result mirrored the buoyant outlook of firms on the volume of business activities in the 3rd and 4th quarters of 2013,” Socioeconomic Planning Secretary Arsenio M. Balisacan said. PHL boosts coconut industry The Philippines is being positioned to rank among the world’s top three largest exporters of coconut coir, along with Sri Lanka and India, by 2016.
Manalo added the sector may register the biggest contribution to the country’s gross domestic product and optimistic it will drive the Philippine economy to expand by as much as 8% this year.
The coconut industry’s coco coir (fiber and peat) sub-sector aims to raise USD 50M in exports, P1.7B in domestic sales, P2B in investments; assist 200,000 farmers and 450 small enterprises; and create10,000 jobs.
Gov’t supports biotech research President Benigno S. Aquino III reiterated the government’s support for the country’s science community and modern agricultural biotechnology in the food security and sufficiency program.
Two government programs support the targets – the Shared Service Facilities (SSF) of the Department of Trade and Industry (DTI) and the Coco Tufting Facility of the Philippine Coconut Authority (PCA).
“The Philippines recognizes the important role of scientific research, particularly genetics, in ensuring the continued nourishment of our people and in realizing our national goal of rice self-sufficiency,” Aquino said.
There are 30 identified SSFs across the country. The PCA develops the sector in the countryside by deploying manually operated twining machine to farmers' groups and setting up a tufting facility.
“As you strive to find ways to improve rice production, you have my government by your side, ready and determined to work with you,” Aquino said to more than 700 scientists and researchers on plant genetics in a rice genetics symposium recently.
The government expects a 10-fold growth of the coco coir sector given the country’s vast areas planted with coconut, especially in Mindanao, and the enormous demand for coco coir in global markets.
Imports up 7.2% in Sept 2013 Merchandise imports grew for the third consecutive month in September 2013 amid higher purchases of electronics and capital goods, the National Statistics Office (NSO) reported.
China is the biggest market for baled fiber, along with Japan, Taiwan, and the United States (U.S.). The country also exports peat and dust to South Korea and Singapore, and twine or cordage to other Asian countries. 3
Demand for coco coir and coconut by-products is reportedly increasing in Europe, particularly in the Netherlands which uses coco peat for cutflowers. Online shopping gains traction Market research firm Euromonitor International said that in 2012, Internet retailing sales rose by 11% to P13.9B, facilitated by higher Internet subscription packages, the proliferation of cheap smartphones, and the popularity of group buying sites such as Groupon and Ensogo that offered steep discounts to consumers. Describing the local Internet retailing landscape, Euromonitor said Amazon accounted for about 40% of sales, and small players, over 40%. Amazon was popular among upscale Filipinos who liked its wide product range and who were confident in its security features. The small players – the likes of Lazada and Zalora were very aggressive and have “invigorating channel growth.” Established brands such as Mercury Drug, Rose Pharmacy, SM Appliance, and Abenson also opened online stores to complement physical stores. Consumer electronics and video game hardware saw brisk sales in 2012. “With still a small market, growth in this category reached 12%. Shopping for mobile phones and gadgets online was stimulated by the increasing demand for smartphones,” Euromonitor said. Credit card use among Filipinos was low, however, putting a constraint on Internet retailing growth. But this boosted the popularity of e-marketplaces such as eBay Philippines, Ayos Dito, Sulit, Multiply, and even Facebook, that facilitated customer-tocustomer transactions. AFAB strengthens efforts to boost investment The Authority of the Freeport Area of Bataan (AFAB) further 4
strengthens its efforts to boost investment in its freeport. Part of this effort is continuous networking with investment promotion agencies and business organizations, preparing projects designed for investment promotion, and participating in local and foreign investment promotion activities. AFAB recently participated in the 10th China-ASEAN Expo (CAEXPO) and the 10th China-ASEAN Business & Investment Summit (CABIS) in Nanning, China led by the Department of Trade and Industry (DTI) and the Board of Investments (BOI). AFAB also witnessed the signing of the Memorandum of Understanding (MOU) between the Philippine Investment Promotion Plan-Steering Committee (PIPP-SC) and the China- ASEAN Business Council (CABC) to further cooperation in investment promotion.
Trade and INVESTMENTS
of 50,000 metric tons (MT) and a pair of flat storage warehouses with a total capacity of 100,000MT of grain each.
from the Board of Investments (BOI) to support its USD 9.5-B fleet modernization program.
San Miguel has allocated space for four more silos within the 12- ha facility that will add another 20,000MT capacity in one or two years.
The flag carrier’s refleeting program, which is considered the biggest aircraft procurement in the history of Philippine aviation, involves 65 aircraft for delivery between 2013 and 2019.
San Miguel is using the Batangas terminal to receive grains that will be distributed to over 30 feed mills nationwide. Anflo Banana puts up two facilities Banana exporter Anflo Banana Corp. is seeking tax breaks under non-pioneer status from the Board of Investments (BOI) for its new facilities in Barangays Tagaluton and Baluntaya in Don Marcelino, Davao del Sur.
The plants can produce about 1.06M Cavendish bananas for export every year.
AGRICULTURE/ AGRIBUSINESS AND FISHERY
If the application is approved, the company would be granted tax breaks for four years as well as duty-free importation of equipment.
San Miguel Pure Foods opens Batangas grains terminal San Miguel Pure Foods Inc. expects lower production costs and improved margins for its flour and feed-milling operations after it opened a world-class grain terminal in Mabini, Batangas.
Pilmico unit seeks BOI perks Pilmico Animal Nutrition Corp., a unit of listed Aboitiz Equity Ventures (AEV), is seeking incentives from the Board of Investments (BOI) for the expansion of its Tarlac project.
San Miguel Mills Inc. President Florentino C. Policarpio said the P2.5-B Golden Bay Grain Terminal, which can handle more than 2M tons a year, can accommodate bigger vessels that will lower freight costs and boost unloading time.
Pilmico is applying for registration with the BOI as expanding producer of hogs at a capacity of 3.153M kilos per year on a non-pioneer status.
The facility houses eight silos with a combined capacity
AVIATION PAL seeks tax perks for USD 9.5-B refleeting Philippine Airlines (PAL) is set to file an application for tax incentives Philippine Business Report
As of press time, sources said the BOI is still evaluating if PAL can double avail of incentives since it is already enjoying all the incentives under the Franchise Law. PAL is already allowed income tax exemption and is also entitled to duty-free and value added-tax free importation of airplanes. AirAsia deploys 6 planes to PH unit Budget carrier AirAsia Berhad of Malaysia deployed at least six aircraft to its Philippine unit last December to serve increased passenger demand during the peak season. “In the Philippines, the economy has expanded by more than 7% [in 2012], due to a turnaround in exports, continued government spending, an expanding tax base and strong purchasing power derived from offshore remittances,” AirAsia Berhad said. Air Asia Inc., the local operator of AirAsia Philippines, acquired a 49-% voting rights and 85-% economic interest in Zest Airways Inc. in May 2013. The local unit was later rebranded as AirAsia Zest to reflect the merger. Cebu Pac flights to Europe expected to start in March Low-cost airline Cebu Air Inc. (Cebu Pacific)’s petition before the European Union (EU) for the lifting of a ban preventing the airline from flying to and from Europe has to wait until March 2014. Civilian Aviation Authority of the Philippines (CAAP) Deputy Director General Captain John C. Andrews said the presentation to the EU Cebu Pacific, scheduled last November, had been postponed January 2014
as efforts during that time were focused on the relief efforts for the victims of Super Typhoon Yolanda. Andrews noted that the airline is likely to make its representation to EU this month, but EU reviews airlines’ compliance with aviation safety standards every March and November.
BANKING Metrobank opens branch in western Cebu town Metropolitan Bank & Trust Company (Metrobank) has opened its first branch in Balamban, western Cebu, site of the province’s shipbuilding industry. Balamban Mayor Ace Stefan Binghay said the opening of Metrobank and the presence of five existing banks in the municipality show the “progressive” economy of Balamban. Metrobank’s operations expansion in the town can be attributed to the sprouting of small-scale businesses and the increase of the residents’ purchasing power due to jobs generated by shipbuilding companies. With the opening of this new branch, Binghay said residents need not go to the one in neighboring Toledo City to do financial transactions. PBB to open new branches Philippine Business Bank (PBB) is set to open 26 new branches to expand in restricted and non-restricted areas nationwide. Area
Number of PBB branches to open
Metro Manila 5 Luzon 10 Visayas 5 Mindanao 6
PBB President and Chief Executive Rolando R. Avante said the expansion strategy will continue given the Bangko Sentral ng
Pilipinas (BSP) approval to grant them the sought licenses. PBB reported a net income of P1B in the first nine months of 2013, up 61% from P624M in 2012. Total net loans hit P28.2B as of September, up 35% from the same period in 2012. Avante said the tremendous growth in its banking business, particularly in assets, was led by expanding small and medium enterprises (SME). Because of the consistent growth in its profit, PBB has started looking for new sites for its 2014 branch expansion as early as November 2013.
BPO Davao emerges as the next IT-BPO host Davao City is fast shaping up as the next destination for Information Technology-Business Process Outsourcing (IT-BPO) services outside Metro Manila. The Information and Communications Technology Office (ICTO), a multi-sectoral body that identifies ICT hubs outside Metro Manila, has named Davao as a top-rated Next Wave City for over three years now. Prerequisites of BPOs
• • • • •
Talented workforce Excellent infrastructure Reasonable cost of doing business Generous incentives given to locators Peace and security conditions
“Availability of talent pool is the number one factor for BPOs to locate in a particular area. The talent pool in Davao is as qualified as those in Manila and Cebu,” ICT Council of Davao Head Bert Barriga said. Sophos SSC opens in PHL Aiming to provide a 24/7 support services to all their customers, the developer and vendor of security software and hardware, Sophos recently put up a new 5
shared service center (SSC) in Manila, Philippines. The Manila SSC is part of Sophos’ Technical Support organization and counterparts in support center of Australia, Canada, France, Germany, Japan, Italy, Spain, United Kingdom (UK), and United States (U.S.). The Manila SSC is currently staffed with over 70 support engineers and customer care specialists, of which 15 are dedicated to the Asia Pacific region.
ENERGY PTT opens 4 new outlets in Luzon PTT Philippines Corp. opened four new retail service stations at the end of 2013, bringing its total outlets in the Philippines to 69.
PTT President and Chief Executive Officer (CEO) Wisarn Chawalitanon said the new service stations are in Biñan, Laguna; Mabalacat, Pampanga; Mauban, Quezon; and Villasis, Pangasinan. “We are accelerating our expansion toward achieving our goal of reaching our target of 150 service stations in the next four years,” Chawalitanon said. Frontier Oil to drill oil wells in 2014 Frontier Oil Corporation targets the end of the first quarter of 2014 to begin drilling in the Calauit oil field offshore northwest Palawan. Last November, the firm was already in talks with rig contractors to drill two wells in the oil field under service contract (SC) 50 seen to take 30 days each and completed by the first half of this year. 6
Previous assessment showed that the wells were expected to generate a maximum of 5,000 barrels per well per day for two and a half years. Meanwhile, some P276.9M from the initial public offering (IPO) will also fund the company’s development of Nassiping gas field under SC 52 onshore Northern Cagayan starting with the testing of Nassiping-2 gas well. The Cinco gas field was assessed to have 3.2 trillion cubic feet (tcf) mean gas resources and 75M barrels condensate. BLNG shows interest in PIE-MO Phividec Industrial Authority (PIA) reported that Brunei LNG Sendirian Berhad (BLNG) requested and reserved areas of the Phividec Industrial Estate in Misamis Oriental (PIE-MO) as possible construction sites of an integrated liquefied natural gas (LNG) facility. BLNG, owned by the Government of Brunei with 50%, Royal Dutch Shell plc. subsidiary Shell Overseas Holdings Ltd. with 25%, and Mitsubishi Corporation with 25%, previously signed an agreement with the Philippine National Oil Co. (PNOC) on LNG investments in the country. PIE-MO, which occupies 3,000 ha in the municipalities of Tagoloan and Villanueva and one of the country’s largest industrial estates, was noted by the World Bank as an ideal area for an LNG floating terminal.
INFRASTRUCTURE/ PUBLIC-PRIVATE PARTNERSHIP DOTC awards LRT2 extension consultancy contract The Department of Transportation and Communications (DOTC) awarded the contract for consultancy and engineering of the Light Rail Transit Line 2 (LRT2) East Extension Project
to the consortium of Foresight Development and Surveying Co., Soosung Engineering Company Ltd., and Korea Rail Network Authority. The contract, worth P247.4M, was over P100M less than the P350M approved budget. Eastward extension of LRT2 from Santolan station will add 4.2 km. to the existing line; two new stations— Emerald Station in Cainta Rizal and Masinag Junction in Antipolo City; and an elevated viaduct. NAIA 1 consultancy and construction management contract awarded TCGI Engineers won the contract for the Ninoy Aquino International Airport Terminal 1 (NAIA 1) rehabilitation project consultation and construction management bidded out by the Department of Transportation and Communications (DOTC). TCGI offered P34M for the consultancy and construction management services budgeted at P38.7M by DOTC. Terminal 1 renovation was budgeted at P1.2B and set in conjunction with the P1.9B modernization of terminal 3. Both projects are anticipated to be completed in time for the 2015 Asia Pacific Economic Cooperation (APEC) Summit that the country will host. NAIA 1 rehabilitation budget breakdown
• P500M — interior designing • P300M — construction of rapid exit taxiway • P20M — enhancement of lavatories
depending on the scheme the regulator would approve. The project would expand the current six-lane Sta. Rita-San Fernando segment to eight lanes, and the Dau-Sta. Ines segment from two lanes to four. The MNTC is also directed by the government to go into a joint venture project with the Philippine National Construction Corp. (PNCC) that will connect Harbour Link to Southern Luzon via an elevated four-lane expressway. P184.2B infra projects approved by NEDA The National Economic and Development Authority (NEDA) approved seven major infrastructure projects worth P184.2B. Among the approved is the Light Rail Transit Line 1 (LRT1) Cavite Extension and Operation & Maintenance Public-Private Partnership (PPP) project of the Department of Transportation and Communications (DOTC). Conglomerates expressing interest
• • • • •
Malaysian firm joins CALAX bidders Malaysia-based MTD Capital Bhd joined the roster of pre-qualified bidders vying for the P35.4-B Cavite-Laguna Expressway (CALAX) project.
and facilities
NLEX expansion planned Metro Pacific Tollways Corp. (MPTC) subsidiary and North Luzon Expressway (NLEX) operator Manila North Tollways Corp. (MNTC) plan to widen Pampanga sections of NLEX. The project is projected to cost from P2.5B to P4B and could take from one to two years to complete Philippine Business Report
Ayala Corp. Megawide Construction Corp. Metro Pacific Investments Corp. San Miguel Corp. SM Prime Holdings Inc.
CALAX pre-qualified bidders
• •
•
MPCLA Holdings Inc. (Metro Pacific Investments Corp. and Leighton Contractors Inc. joint venture) Orion consortium (AC Infrastructure Holdings Corp., Aboitiz Land, Inc., Macquarie Infrastructure Holdings Pte. Limited) Optimal Infrastructure Development Inc. (San Miguel Corp. subsidiary)
January 2014
Approved projects by NEDA Project
Implementing Agency
Terms
Worth
LRT1 Cavite DOTC Construction of 20.7km. P64.9B Extension extension with over 10 stations, passing through Parañaque and Las Piñas to Bacoor, Cavite Metro Rail Transit 7 DOTC Construction of 22.8km. P62.7B (MRT7) rail system from North Avenue station to San Jose del Monte, Bulacan, passing through Commonwealth Avenue, Regalado Avenue, and Quirino Highway Bulacan Bulk Metropolitan Water Supply potable water Water Supply and Sewerage to concession area of MWSS System (MWSS) l Construction of new Mactan Cebu DOTC International Airport passenger terminal (MCIA) Expansion l Renovation of existing passenger terminal l Operation and maintenance of terminals and aprons during concession period l Relocation of Philippine Air Force facilities
P24.4B
P17.5B
l Development of South-South P7.7B Integrated Transport DOTC System (ITS) Luzon Expressway (SLEX) passenger Terminal at Food Terminal Inc. (FTI) in Taguig City l Development of South-Coastal Road passenger Terminal at the Philippine Reclamation Authority (PRA) property along Manila-Cavite Expressway (CAVITEX) ` in Parañaque City
Modernization of the Department Development of a 700-bed Philippine Orthopedic of Health (DOH) capacity specialty tertiary Center (MPOC) l Furnishing of common LRT1 North DOTC Extension-Common station for LRT 1, MRT 3, MRT 7, Station and public utility vehicles (PUVs) l Construction of head-to-head platform for LRT 1 and MRT 3 with 147.4-m. elevated walkalator at MRT7 North Avenue
The project will connect the South Luzon Expressway (SLEX) to the Manila-Cavite Expressway (CAVITEX) via the 47km. four-lane CALAX that will start in Kawit, Cavite and end at the Mamplasan segment of SLEX in Biñan, Laguna.
P5.6B
P1.4B
ICTSI seeks tax perks for container terminal expansion International Container Terminal Services Inc. (ICTSI) applied for tax perks from the Board of Investments (BOI) under the non-pioneer venture classification for the Manila 7
International Container Terminal (MICT) Berth 7 expansion. MICT’s Berth 6 was given income tax holiday (ITH) valid for six years from November 2011 under a pioneer status, increased the terminal’s annual capacity from 1.9M twenty-foot equivalent units (TEU) to 2.5M and helped the port post a gross revenue of USD 28.7M in 2012. MICT contributes 65% of containers transported around Manila. ICTI, which has operations in 17 countries, posted a gross revenue of USD 624.7M for the three quarters of 2013, up by 17% from USD 524.7 in the same period in 2012.
MASS HOUSING Property developers, banana firms seek BOI incentives Three property developers and a banana firm are applying for incentives from the Board of Investments (BOI).
Companies
Empire East Land Holdings, Inc. (Megaworld Corp.) P.A. Alvarez Properties and Development Corporation
Projects the firms are seeking perks for 1,000-unit low-cost mass housing condominium project on Eagle Street, Barangay Barrio Ugong, Pasig City 1,935-unit low-cost mass housing project in Barangay Sto. Cristo, San Jose del Monte City, Bulacan
Communities Batangas Inc. (Vista Land)
Low-cost mass housing project (Camella Lipa Heights) with a total capacity of 646 low-cost mass housing units
Anflo Banana Corporation
New facilities in Barangays Tagaluton and Baluntaya in Don Marcelino town, Davao del Sur
The companies are applying on a non-pioneer status. Once their applications are approved, they would be 8
allowed a four-year income tax holiday (ITH) and duty-free importation of capital equipment to be used in their covered projects. Alveo Land launches residential project Alveo Land, one of the subsidiaries of Ayala Land Inc. (ALI), is set to launch the Tower 2 of its first residential project in ALI’s P20-B mixed-use development Circuit Makati. Earlier, Alveo Land completed tower one of Solstice, Alveo’s address in 21-ha Ciruit Makati. To be launched in May this year, Solstice Towers cost P2.5B.
MANUFACTURING Coca-Cola FEMSA PHL investing P1.2B Coca-Cola FEMSA Philippines is spending an initial P1.2B to increase its manufacturing capability in the country. The capital spending includes the acquisition of a non-alcoholic beverage facility, warehouse, and real estate property located in Darong, Sta.Cruz, Davao del Sur from the San Miguel Group of Companies.
IMI said the production of heating, ventilation, and air conditioning (HVAC) and blower units for Japan Climate Systems Corp. (JCS) has started last October 2013. JCS develops, manufactures, and sells air conditioning, thermal control, and cooling apparatus for automobile and industrial machinery. It is outsourcing to IMI the development of small plastic molds and plastic injection as well as the complete product assembly of HVAC and blower units intended for Mazda cars. “Through this partnership [with JCS], we also expand our company’s business in automotive electronics, especially for the North American market,” IMI President Arthur R. Tan said. Electronics firm expands Clark operations with USD 20M SMK Electronics Philippines Corporation is set to expand its operations inside the Clark Freeport zone and will pour in USD 20-M investments to increase its manufacturing capacity in the next five years.
IMI bags outsourcing deal with Mazda Ayala-led Integrated MicroElectrics Inc. (IMI) has bagged a new outsourcing deal involving the production of air conditioning system for Mazda vehicles.
Toyota invests P40M to expand Sta. Rosa plant Toyota Motor Philippines Corp. (TMP) is spending P40M to increase the production capacity of its plant in Sta. Rosa, Laguna from the current 33,000 units by as much as 18% to 39,000 vehicles a year.
Clark Development Corporation (CDC) President Arthur P. Tugade said when SMK’s expansion project becomes fully operational, it will double the current output of electronic products and components. Tugade said SMK is leasing an additional land area of 3,068 sqm. when the additional investment will be poured in. At present, SMK is one of the leading exporters in the Freeport and has been increasing its export volume by 25%. Philippine Business Report
The budget will finance the fuel requirements and maintenance operations of Napocor’s Small Power Utilities Group (SPUG), Napocor President Gladys Cruz-Sta. Rita said. The SPUG operation serves 221 island grids, including eight isolated networks serving 3,947 energized barangays in 216 municipalities. Filinvest to build P40-B power plant The Filinvest Development Corp. (FDC) plans to spend around P40B for a 405-megawatt (MW) construction circulating fluidized bed coal-fired thermal power plant inside the PHIVIDEC Industrial Estate.
TMP President Michinobu Sugata said this expansion will enable the company to catch up with the expected increase in local demand for vehicles. Aside from increasing its output capacity, the company is also preparing to introduce new models in the first half of 2014 to further cement its foothold in the local automotive industry.
POWER EDC, Trans-Asia win Leyte power The state-owned Power Sector and Liabilities Management Corp. (PSALM) has auctioned the 588-megawatt (MW) Unified Leyte Geothermal Power Plant‘s sales contract.
Along with the Coca-Cola FEMSA’s existing manufacturing facilities in Mindanao, the recently acquired plant will contribute to the company’s rapidly expanding sales and distribution network in the region. “We remain very optimistic about the opportunities that the Mindanao region has to offer. With this acquisition, we confirm our confidence in the economic growth of the Philippines,” Coca-Cola FEMSA Philippines Chief Executive Officer (CEO) Juan Ramón Felix said.
MOTOR VEHICLES
“The PSALM Privatization, Bids Awards Committee (BAC) will conduct post-qualification on the highest ranking bidders to determine the accuracy, authenticity, and completeness of all their documentary submissions, including the standby letters of credit and their full compliance with the bidding procedures,” PSALM President and Chief Executive Officer (CEO) Emmanuel Ledesma said. Napocor allots P14B fund for 2014 National Power Corp. (Napocor) has allotted P14B in 2014 this year for its missionary electrification function’s operations. January 2014
The company already contracted the entire 405-MW capacity of the power facility to some 17 electric cooperatives (ECs) with franchise areas in Misamis Oriental and other parts of Mindanao.
group to build a new high-end residential tower in Makati City. The upscale project, dubbed Century Spire, will be a 60-storey tower within the company’s 3.4-ha flagship development, Century City. The Armani/Casa Interior Design Studio will conceptualize and design Century Spire’s high-end residential units, common areas, and amenities while Studio Daniel Libeskind will lead the structural design. The project is scheduled for completion by end of 2018. Ayala Land starts P65-B QC development Property developer Ayala Land Inc. (ALI) has started the development of its P65-B project in Quezon City.
FDC aims to contribute to efforts to alleviate the power shortage in Mindanao. CEPALCO pursues power deal approval Cagayan Electric Power and Light Company, Inc. (CEPALCO) sought the Energy Regulatory Commission’s (ERC) approval of its energy supply agreement (ESA) with Therma South, Inc. (TSI). The 25-year ESA states that CEPALCO will source 20 megawatts (MW) of electricity monthly from TSI’s 300-MW coal-fired plant currently being built in a site straddling Davao City and the municipality of Sta. Cruz in Davao del Sur. CEPALCO distributes electricity in Cagayan de Oro City and the municipalities of Tagoloan, Villanueva and Jasaan — all in the province of Misamis Oriental.
REAL ESTATE Century ties up with Armani for luxury residential project Century Properties Group Inc. expects to generate P8B in sales as it partnered with the Armani
The 29-ha Vertis North Commercial Block, located just next to the Trinoma Mall, will have 45 towers composed of offices, retail spaces, hotel and residential buildings, and open spaces which will be developed in 10 years. ALI President Antonino T. Aquino considers it the “biggest and most modern development” in the northern part of Metro Manila. “Vertis North is envisioned to be the city center of Quezon City’s Central Business District that will nurture, inspire, and encourage enterprise,” Aquino added. GT Capital eyes Pasay reclamation GT Capital Holdings Inc., has expressed interest for the 300-ha reclamation project in Pasay City. The company was in talks with possible partners for the proposed project and is also 9
The project will be an addition to GT Capital’s existing 300-ha reclaimed property along Roxas Boulevard. BCDA wants to expand Taguig commercial area The Bases Conversion and Development Authority Management and Holdings Inc., (BMHI) plans to expand the Pamayanang Diego Silang (PDS) commercial areas along C-5 road in Taguig in 2014.
lease payment totalling P93M for the first three years with a lease agreement that will run for 25 years and be renewable for another 25.
RETAIL Robinsons acquires Tarlac-based supermarket chain for P290M Robinsons Supermarket Corp., has acquired a Tarlac-based supermarket chain for P290M. Robinsons would acquire the whole Eurogrocer Corp., which operates six supermarkets in Tarlac province, under the trade names EZ Mart and EZ Supermarket. The acquisition will allow the corporation to expand its presence in Tarlac and nearby provinces in Central and Northern Luzon.
The firm plans to build and lease out some 50 additional commercial stalls in addition to the existing 64 stalls in the PDS commercial center.
Fisher Mall’s supermarket opened early December Fisher Mall’s supermarket in Quezon City opened its doors to the public on December 10, 2013.
They also plan to expand the BMHI Corporate Center into a three- to five-storey building to accommodate commercial establishments and corporate offices. Lone bidder may win BCDA lot contract The 5,225-sqm. commercial lot in Bonifacio Global City is being auctioned off by the government. “The lone bidder is the consortium of R-II Builders, Inc. and MGS Construction, Inc. They will undergo a post-qualification to ascertain the authenticity of their submitted documents and qualification,” Bases Conversion and Development Authority (BCDA) Asset Disposition Committee Head Nena D. Radoc said. If the group bags the contract, it will be entitled to a concessional 10
Fisherfoods Corp. is the operator of Fisher Mall’s 3,800-sqm. supermarket. The 3,800-sqm. supermarket features numerous innovations geared toward making shopping fun and convenient. When completed, the mall will feature five shopping levels, dining areas, department store, digital movie houses, and a 2,400-sqm. arcade.
TELECOM PLDT expands network reach Philippine Long Distance Telephone Company (PLDT) said its fiber optic
network has expanded to at least 75,000 km. to support a growing broadband data services business. “We are fortifying our already formidable fiber advantage as we cover more areas in the country and install enhanced redundancies to strengthen the resiliency of our infrastructure,” PLDT President and Chief Executive Officer (CEO) Napoleon L. Nazareno said.
TOURISM DWC to spend more than P1B Discovery World Corporation (DWC) is gearing up for over P1-B resorts expansion and earmarking P120M for entry into new businesses. The leisure firm will allot more than P1-B budget to redevelop Club Paradise Resort in Coron, Palawan and expand Discovery Shores in Boracay. Meanwhile, DWC will earmark P120M for Discovery Fleet Corp. and Palawan Cove Corp. Resorts World embarks on expansion Travellers International Hotel Group Inc. (Travellers), the developer and operator of Resorts World Manila (RWM), has embarked on the integrated casino resort expansion, confident about the Philippine gaming industry prospects. “We believe that there is growth in the market locally and also internationally. We are also quite encouraged with the government efforts to promote tourism,” said Travellers President Kingson U. Sian.
“There are [areas] but we choose carefully the location. The Visayas is one great region. In Palawan, we’re focused more on our area in El Nido. We’ll have an island resort,” Aquino said. Revenue contributions from Ayala’s new hotels and resorts rose 62% to P2.93B in the first nine months of 2013 from P1.81B in the same period of 2012.
UK companies seek opportunities in PHL Over 30 companies from the United Kingdom (UK) are eyeing business and investment opportunities in the Philippines in the next five years.
COMPANY NOTES
Several British businesspeople had expressed interest in investing in oil refinery, manufacturing, and consumer goods in the Philippines, British Ambassador to the Philippines Asif Ahmad said.
Steel Asia bares USD 270-M expansion program Steel Asia Manufacturing Corporation has bared a USD 270-M expansion program that would double its capacity to 3.2M metric tons (MT) by 2016. The company is investing USD 200M for new rebar plants in Bulacan and Cebu with 800,000MT production capacities each and another USD 70M for upgrading of its Davao plant with 500,000MT capacity. Flying V expands Flying V is investing P750M for setting up a solar and diesel plant in the Philvidec Industrial Estate in Misamis Oriental. Flying V-owned Petro de Oro Corp. also plans to put up an oil depot on a 3-ha site with estimated P250M investments, a 25.2-megawatt (MW) diesel plant worth P555M, and a solar power plant that will require a 30-ha site.
Sian said the company is on track to complete its USD 650-M expansion project by 2017.
“The Philippines’ economic fundamentals remain strong. We are therefore confident that our companies will find many opportunities and partners here in the Philippines, benefiting both countries,” UK Trade and Investment (UKTI) Director Iain Mansfield said. More German companies bullish More German companies will invest in the Philippines after an improvement in the country’s rating on the “Doing Business” report by the World Bank (WB), the German-Philippine Chamber of Commerce and Industry, Inc. (GPCCI) said. Governance and regulatory reform measures under the Aquino administration were “now reaping fruits,” said GPCCI General Manager Nadine Fund. Fund said the Philippines remained an attractive investment destination for German companies because of the skilled and highly educated workforce and a huge market of over 90M people. Turkish firm sees PHL as Asia-Pacific hub Elginkan Group, Turkey-based ceramic sanitary wares firm, sees the Philippines as a possible trading distribution center for Southeast Asia.
ALI eyes Visayas Ayala Land Inc. (ALI) plans to develop more tourism projects in the Visayas, ALI President and Chief Executive Officer (CEO) Antonino T. Aquino said. Philippine Business Report
Country-toCountry
January 2014
The group may eventually put up manufacturing facilities in the country depending on the performance and market participation that they will gain domestically, said Elginkan Group General Manager Ihsan Bosum. Bosum said they have considered and first visited the Philippines among other Asian countries, because of “good recommendations” given by different international leaders at trade delegations they attended during the past years.
ASIAN WATCH HK-PHL trade remains robust The trade volumes between Hong Kong and the Philippines remain robust and are increasing, with USD 8.1B recorded in 2012 and USD 7.8B in 2011, the Hong Kong Trade Development Council (HKTDC) said. Hong Kong’s compounded annual exports to the Philippines are “growing annually” by 13.2% while it is 7.9% for imports, from 2009 to 2012. Total trade between the two countries from January to September 2013 went up by 2.7% compared to the same time in 2012, HKTDC said.
Philippine Postal Permit No. 504
open to possible partnership with other interested bidders, including Ayala Land Inc. and SM Land Inc.
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Economic Indicators
GNI Growth Rate (%) 10
8
8
6
6
4
4
2
2
0
138 137 136 135 134 133 132
(In USD Billion)
As of January 14, 2014
Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14
2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013) 3Q (2013)
Imports 6,000
5000
5,500
4800
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
0
5200
4600
5,000
4400
4,500
4200
May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13
4,000
Inflation Rate (%)
Peso per US Dollar Rate 45 44.5 44 43.5 43 42.5 42
2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013) 3Q (2013)
Exports
Consumer Price Index (2000 base year)
GNI Growth Rate (%)
10
(1994 base year)
5 4 3 2 1 0
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
(In USD Billion)
Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13
Interest Rate (%) 6 5 4 3 2 1 0
As of January 14, 2013
Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-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 • Jam H. Raposon/Assistant Editor • Cresenciano P. Par, 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
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Philippine Business Report January 2014
Philippine Business Report