Julian Payne President Canadian Chamber of Commerce
Yashuhiko Arimitsu President Japanese Chamber of Commerce
Senior Adviser Investment Climate Improvement Project Legislative Committee Chairman American Chamber of Commerce
Philippines is located in region of very high economic growth, currently the highest growth in the world. “Largely thanks to China, the region’s output, exports and employment have mostly returned to the levels before the crisis. Leading the global economy, real GDP growth in developing East Asia is poised to rise to 8.7 percent in 2010 after slowing from 8.5 percent in 2008 to 7.0 percent in 2009.” World Bank East Asia and Pacific Economic Update 2010, Volume I, April 2010
2008 Growth Report: Strategies for Sustained Growth and Inclusive Development of the World Bank’s Commission on Growth and Development studied 13 economies with sustained growth of 7% and above in the post-WWII period. Eight are in Asia: China, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand. Vietnam is on the path to joining this group. We believe the Philippines has very high potential to join this group if it follows the policies and strategies the high-growth countries used: fully exploits the world economy; maintains macroeconomic stability; musters high rates of saving and investment; lets markets allocate resources; and has a committed, credible, and capable government.
Philippine Historical Real GNP and GDP Growth Rates 12%
EDSA 1
10%
BOP/Power crisis, coup
Asian crisis
Global Financial EDSA 2 Fiscal crisis crisis
8% 6% 4% 2% 0% -2% -4%
GDP growth GNP growth
-6% -8% -10% -12%
Aquino
Ramos
Estrada
Arroyo
Sources: NSCB; LBT and Associates Inc.
Philippine growth has averaged 4.4% since 2000, in large part because of remittances, which are expected to continue to grow steadily. The challenge is to increase rate of growth to 9-10% for the next decade.
At rate of 11.6%. (with population growth declining from 2.0% to 1.5%), Philippines could reach current World Bank high-income threshold of $12,000 per capita by 2030, with a population of 133 million. Year
GDP
Per Capita
Population
2010
$179 Billion
$1,905
94 Million
2015
$310 Billion
$2,998
103 Million
2020
$537 Billion
$4,747
113 Million
2025
$930 Billion
$7,562
123 Million
2030
$1.6 Trillion
$12,087
133 Million
Implementation of recommendations for Seven Big Winners will move the Philippines far along the path to becoming a high middle-income country. It will create millions of quality jobs providing Filipinos with alternatives to working abroad.
Hosted By:
European Chamber of Commerce Moderator:
Mr. Philip Soliven President and Country Representative Cargill Philippines
December 3, 2009
GVA of Agriculture, Fishery and Forestry, Bn PhP 1,400
8%
1,200
6%
1,000
4% 2%
800
0% 600
-2%
400
-4%
200
-6%
0
-8% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Agriculture, lhs
Fishery, lhs
Forestry, lhs
AFF GVA real yoy growth, rhs
Source: NSCB
Agriculture, Fishery and Forestry GVA Distribution (2009) Forestry 0.4%
RP's Agricultural & Forest Goods Exports, Distribution (2009) Sugar and Coconut products, 37.1%
Fishery 14.9%
related products, 5.2%
Bananas, 16.0%
Agriculture 84.7%
Source: NSCB (as of NIA 4Q-09); GVA means gross value added
Forest products, 1.5% Other agrobased products, Source: NSO (as of Feb 24.5% 2010)
Other fruits and vegetables, 15.6%
ASEAN-6 Agricultural Goods Exports, % of SE Asia Total 35% 30% 25% 20% 15% 10% 5%
0% 1990 Thailand
1995
2000 Indonesia
2001
2002 Malaysia
2003 Viet Nam
2004
2005
2006
Singapore
2007 Philippines
Source: FAO
Agricultural Goods Exports of SE Asia, Bn US$ 80 70
40%
Value, lhs YOY growth, rhs
30%
60 20%
50 40
10%
30
0%
20 -10%
10 0
-20% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: FAO
1.
Multiple new FTAs present great opportunity for RP agricultural exports. Farming sector should be made aware of opportunities as well threats from imports, so sector can adjust. Lowering cost of farm inputs becomes even more important, through improved infrastructure, lower ground and sea transport costs, less government red tape, cheaper fertilizer and insecticides. R&D, agricultural education and training need ramping up.
2.
Agribusiness must update old models and develop new ones. By linking small crop farmers to global and domestic markets, large corporate integrators (foreign and domestic) are proving RP can compete: e. g. SMC (cassava), CP Foods (hogs), Nestle (coffee), Toyota Tsusho (jatropha), Cargill (coconut oil and carrageenan), Del Monte and Dole (fruit). Bananas for export are grown on both large and small farms. La Frutera combined foreign capital, Filipino agribusiness expertise and Muslim land and workers. “Fair trade� can help upland coffee farmers and protect watersheds. The Philippine Agribusiness Center of DA should expand its export development projects.
3.
CARP should end in five years and limits on landholding should be lifted. Farm Land as Collateral law should be passed, and the mandated lending policy in Agri-Agra law should be made optional.
Hosted By:
Philippine Association of Multinational Companies, Inc. Moderator:
Oscar Sanez, President and CEO, BPAP
February 18, 2010
Philippines Offshoring and Outsourcing Industry Employment, in thousands
800 700
708.0
557.0
600 500
442.2 372.0
400
299.0 300
235.6 163.3
200 100.5 100 0 2004
2005
2006
2007
2008
2009E
2010F
2011F
Source: BPA/P
14
Philippines Offshoring and Outsourcing Industry Revenues, Bn US$
12
10
11.6
9.1
8
7.2 6.1
6
4.8
4
3.2 2.4
2
1.5
0 2004 Source: BPA/P
2005
2006
2007
2008
2009E
2010F
2011F
Context: The Philippines in Global BPO space Global #2 BPO destination after India Over $7 billion in export revenues growing at 36% annually Employing ~450,000 workers, end 2009 Drivers for success
• 90 million people; 36 million workforce; over 450,000 College graduates annually
• Large pool of highly educated, English-speaking talent with strong cultural affinity to N America
• Highly reliable infrastructure • Competitive cost structure • Diverse choices of suitable locations in-country • Strong government support
Need to: ensure that the key drivers for success are sustained and country competitiveness strengthened 19
1.
Strengthen the industry with a robust legal framework. The 15th Congress should pass as soon as possible: (1) Department of Information and Communication Technology, (2) Cybercrime, (3) Data Privacy, (4) Holiday Rationalization and (5) much needed Labor Code amendments (all of which affect country competitiveness). Avoid new laws that discourage investments.
2.
Develop a highly positive, supportive environment for the industry. Achieve wide public understanding of industry’s present and potential contribution to the economy and generate public support for the industry. Adopt National Competency Assessment test for hiring. Expand higher-speed broadband using new fiber optic network in more cities. Maintain fiscal incentive regime supportive of the sector and ensure LGUs are supportive of BPO firms following intent of PEZA/BOI guidelines. Promote BPO industry with an aggressive international marketing campaign.
3.
Raise quality and quantity of labor supply available to the industry. Implement educational reform to improve quality of graduates. Correct lack of exposure to spoken English by promoting use of English language in broadcast media and advertising. Use internet cafes for English training. More computers in public schools and use computers for English training . Colleges should adopt curriculum that properly prepares students for BPO careers, introduce integrated service, science, management courses and industry-standard programs in English and technical courses. Expand more certification programs, scholarships and management development programs.
Hosted By:
Canadian Chamber of Commerce Moderator:
Henry Schumacher, Executive Vice-President, ECCP
November 5, 2009
Advertising Animation Architectural and interior design Brand, product and fashion design Cultural exhibition and performance Digital gaming and entertainment Industrial craft Mobile phone applications Motion pictures Music and performing arts Radio broadcasting and TV Toys and playthings Visual arts
Business process outsourcing Engineering design Financial services Hardware and systems design Legal services Medical and healthcare services R&D and consulting services Software development Website development
Rank
Exporter
Value (US$ Mn)
Market share (%)
Growth rate (%)
2005
2005
2000-2005
1 China
61,360
18.29
17.6
2 Hong Kong China
27,677
8.25
0.8
3 India
8,155
2.43
21.1
4 Turkey
5,061
1.51
16.3
5 Thailand
4,323
1.29
5.1
6 Mexico
4,271
1.27
0.5
7 Malaysia
3,233
0.96
7.8
8 Singapore
3,067
0.91
17.5
9 Korea
2,942
0.88
-2.8
2,833
0.84
0.1
10 Indonesia
Source: UNCTAD
1.
Improve Planning with Philippine Creative Industries Master Plan, pass legislation to create Creative Industries Development Council and organize private sector into a Creative Industries Association.
2.
Stimulate overall creative industries environment with human resources development, rebrand Philippine creative image, protect intellectual property, organize awards, exhibits and lectures, study foreign markets, reduce local costs, develop uniquely Filipino products, encourage tie-ups with large foreign firms and encourage Filipino talent to stay home as well as return home.
3.
Encourage foreigners to practice creative industry professions in Philippines, resulting in technology transfer, investment and job creation. Remove restrictions on foreign equity in advertising.
Hosted By:
American Chamber of Commerce Moderator:
Jon D. Lindborg Advisor, Public-Private Partnership Southeast Asia Department Asian Development Bank The views expressed in this presentation are those of the contributors and do not necessarily reflect the views and policies of ADB or its Board of Governors or the governments they represent.
November 26, 2009
Archipelagic geography of Philippines Efficient and modern airports/seaports critical enablers for national competitiveness Directly affect logistics costs for goods and associated services Much room to improve efficiencies Impact on domestic and international tourism Philippines not meeting its tourism potential compared to neighboring countries Need to: (1) Address policy/regulatory impediments; (2) upgrade/rationalize airport/seaport infrastructure and networks.
Total Domestic Air Transport Passenger Traffic 14
30%
Total domestic passengers, in million, lhs YOY growth rate, rhs
12
20%
10
10%
8 0% 6 -10%
4 2
-20%
0
-30% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: CAB
Quality of Air Transport Infrastructure Score (Global Competitiveness Report) 4.7 4.7
Mean score
2009-10 2008-09 6.9 6.9
Singapore Thailand
5.9 5.8
Malaysia
5.8
Indonesia
4.4
Vietnam
3.9 3.7
Philippines 0
1
2
3
6.0
4.7
4.1 4.1
4
5
Source: WEF Global Competitiveness Reports; Note: Mean score refers to the simple average score of all the countries evaluated 2008-09 (134); 2009-10 (133)
6
7
8
R 13 31 R 06 24
Prioritize investments in airport terminal, runway and communication facilities. Transportation Master Plan for Central Luzon until 2050 is needed. DMIA should become primary international gateway and NAIA primarily domestic. NAIA: 1. renovate T-1 for wide-body international; connect T-1 and T-2; use T-3 for narrow-body domestic/international. DMIA will need 2nd parallel runway, new passenger terminal and high-speed rail connection to NAIA/Makati. Settle NAIA IPT-3 investor case. 2.
Each region should have one international airport only (convert existing airports). Prioritize Laguindingan. Expand Mactan. Reform CAAP in order to reverse FAA and EU downgrades. Implement DOTC GOJ-funded Air Traffic Management Project.
3.
Prioritize international tourism and increase international carrier service through reduced costs and pocket open skies (starting with Palawan). Prepare for ASEAN open skies. Before more foreign airlines terminate Philippine service, replace Customs, Immigration and Quarantine overtime, meal and transportation fees with 24/7 government service and end unwarranted taxes on carriers (gross Philippine billings and common carriers tax) which other countries do not charge.
35
Container Traffic per Country, in mil TEUs
Singapore Malaysia Indonesia Thailand Philippines Vietnam
30 25 20 15 10
5 0 2004
2005
2006
2007
2008
Source: International Association of Ports and Harbors
World Port Rankings, 2008 Cargo Volume, '000 Tons Rk
Port
Container Traffic, TEUs
Country
Measure
Tons
Rk
1 Singapore
Singapore
freight
515,415
2
Singapore
20 Port Kelang
Malaysia
freight
152,348
15
43 Tanjung Pelepas
Malaysia
metric
87,939
90 Manila 96 Tanjung Priok
Philippines metric Indonesia
metric
Port
Country
TEUs
Singapore
29,918,200
Port Kelang
Malaysia
7,973,579
19
Tanjung Pelepas
Malaysia
5,466,191
45,230
21
Laem Chabang
Thailand
5,128,057
42,050
24
Tanjung Priok
Indonesia
3,984,278
36 Manila
Source: American Association of Port Authorities; Note: Total number of ports evaluated = 125 per cluster
Philippines 2,997,022
57
Saigon New Port
Vietnam
2,018,104
78 99
Bangkok Johor
Thailand Malaysia
1,375,168 934,767
Quality of Port Infrastructure Score (Global Competitiveness Report) 2009-10 2008-09
4.2 4.1
Mean score
6.8 6.8
Singapore 5.5
Malaysia Thailand
4.4
Indonesia
3.3
2.8 3.0
Philippines 0.0
1.0
2.0
4.7
3.4
3.0
Vietnam
5.7
3.0
3.2
4.0
5.0
6.0
7.0
8.0
Source: WEF Global Competitiveness Reports; Note: Mean score refers to the simple average score of all the countries evaluated - 2008-09 (134); 2009-10 (133)
Cost of Exporting a Container Item
Philippines
Thai
Indo
Viet
96
74
95
60
52**
37
34
79
Port charges/Wharfage
6
22
0.0
1.60
Customs & Security Fee
45
37
23
50
Documentation
42
16
20
13
100
126
100
138
341
312
272
341
Terminal Handling Charge* Cargo Handling
Trucking TOTAL
* Terminal Handling Cost within Inter-Asia trade; $104.00 (20-foot container) for US and Europe trade. ** Figure reflects only the cost of arrester. Stevedoring cost is embedded in the THC.
1.
NCR/Central Luzon Transportation Master Plan up to mid-century is needed and must include strategy to utilize Batangas, Manila and Subic seaports, with modern ground transportation links to industrial and urban centers. Manila should be decongested gradually, shifting international container traffic to Batangas and Subic. Develop cruise business at Manila and other major ports.
2.
All major ports should have complete infrastructure (terminals, cranes, yards, scales, silos, discharging equipment and areas) with hub-andspoke system feeding goods by truck and RORO. Major RORO ports should have modern passenger terminals. Allow chassis RORO (cargo containers on chassis w/o truck). Reduce fees on all shipping. Increase consortium shipping arrangements.
3.
PPA should focus on an independent regulatory role and promote competitive participation in port operations. Activate the National Port Advisory Council. Pass new Maritime Law. MARINA should impose higher standards on shipping and follow international practice.
Hosted By:
American Chamber of Commerce Moderator:
Ray Cunningham, VP – Business Development Aboitiz Power Corp
November 17, 2009
Power Generation by Grid, in '000 Gwh 70
25%
Mindanao Visayas Luzon Total yoy growth, rhs
60
20%
50 15% 40 10% 30 5% 20
0%
10
Source: DOE
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
-5%
1991
0
2008, Installed Generating Capacity, by Type of Power Source, in GW Natural Gas, 18.1%
Diesel/Oil, 21.4%
Nonconventional, 0.2%
Coal, 26.9%
Hydro, 21.0%
Geothermal, 12.5%
Source: DOE
Installed Generating Capacity, in GW 18
Natural Gas Coal Hydro Total YOY growth, rhs
16 14 12
Nonconventional Geothermal Diesel/Oil
10
32% 27% 22% 17% 12%
8
7%
6 4
2%
2
-3%
0
-8% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: DOE
Electricity Supply and Demand Indicators
Total supply, Total consumption, Consump Distribution Installed Total domestic includes use of tion per losses as Capacity domestic Population production + energy sector but capita % of total (KW), production (mil), 2007 net exports net of distribution (kWh), supply 2007 (GWh), 2007 (GWh), 2007 losses (GWh), 2007 2007 (2007)
Indonesia Malaysia* Philippines Singapore Thailand** Vietnam
27,850 22,973 15,963 10,950 34,287 12,510
142,236 101,325 59,611 41,134 143,378 69,487
142,236 99,057 59,611 41,134 146,943 69,487
127,168 91,252 52,002 39,067 137,675 61,970
Sources: International Energy Agency and UN Energy Statistics; World Bank for the population Notes: * net energy exporter; ** net energy importer
225.6 563.6 10.6% 26.5 3,437.0 10.2% 88.7 586.1 12.8% 4.6 8,513.9 5.0% 67.0 2,055.5 3.9% 85.2 727.7 10.8%
Electricity Sales by Sector, in '000 Gwh 60
50% Others Industrial
50
40%
Commercial Residential Total elec sales, yoy growth, rhs
40
30%
30
20%
20
10%
10
0%
0
-10%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: DOE
Source: DOE
Residential Retail Electricity Tariffs (2010) in USc/kwh
20 15 10 5
0 Philippines (Manila)
Japan (Tokyo)
Singapore
Thailand
Malaysia
Indonesia
Vietnam
Source: International Energy Consultants
Industrial Electricity Tariffs (2010) in USc/kwh 15.00 10.00 5.00 0.00 Singapore
Philippines Japan (Tokyo) (Manila)
Thailand
Malaysia
Korea
Vietnam
Indonesia
Source: International Energy Consultants
1.
Challenge: There is no substitute yet for long-term power purchase agreements between creditworthy parties to support financing of new power generation projects. Lenders cannot and will not accept merchant risk or PPAs involving parties that do not have financial wherewithal to fulfill their contractual obligations. Solution: Department of Energy must formulate policies and plans to address this challenge, such as credit enhancements, guarantees, incentives, and more.
2.
Challenge: Investments in new cost-effective power generation projects require initiation of Open Access and Retail Competition. Solution: Fulfill Conditions Precedent to declaration of Open Access and Retail Competition within 2010. All but one Condition Precedent have been fulfilled; namely, transferring management and control of 70% of IPP contracts with NPC to IPP Administrators.
3.
Challenge: Investments in new cost-effective power generation projects require viable Wholesale Electric Spot Market (WESM). The Luzon WESM has functioned well since mid-2006, but initiation of Visayas WESM has been deferred for more than one year. Solution: Initiate Visayas WESM without further delay and integrate it with Luzon WESM. Initiate Mindanao WESM no later than mid-2011.
1.
Challenge: There is no substitute yet for long-term take-or-pay bulk water purchase agreements between creditworthy parties to support financing of new water supply projects. Solution: GRP must enhance credit-worthiness of water supply agencies such as MWSS via performance undertakings. Alternatives: MWSS concessionaires voluntarily enter into take-or-pay contracts for bulk water supply projects supported by their balance sheets or fund such new water supply projects directly.
2.
Challenge: Public policies, rules and regulations for water are administered by numerous departments and agencies thereby undermining its development. Solutions: Rationalize water supply administration and policy via a Water Reform Act; strengthen NWRB. Establish a Department of Water and an independent water regulator. Develop national water master plan that identifies major water resources and treatment requirements; establish supportive policies, rules and regulations.
3.
Challenge: Irrigation and flood control policies desperately need reform and budgetary support. Solutions: Encourage private sector to invest in irrigation via BOT Law or joint ventures with NIA. Reduce flooding by implementing measures to reduce accumulation of silts and sediments and disposal of garbage in waterways. Prohibit development and construction of residences and commercial, industrial or institutional structures within the flood plain.
Hosted by:
American Chamber of Commerce Moderator:
Henry L. Basilio President REID Foundation
November 26, 2009
DPWH - in Php B
DPWH - growth rate
0.4
140
0.35
120
0.3
100
0.25 80 0.2 60 0.15 40
0.1
20
0.05 0
0 2005
2006
Source: DPWH, GAA (2005-2009)
2007
2008
2009
COUNTRY
% OF PAVED ROADS
% OF ROADS IN GOOD CONDITION
PHILIPPINES
20
18
CHINA
81
-
INDONESIA
58
-
JAPAN
78
-
KOREA
87
87
MALAYSIA
81
78
THAILAND
98
98
Source: World Bank
Total Road Length (km) Development 220,000
Barangay Roads Municipal Roads City Roads Provincial Roads National Roads
200,000 180,000
140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
Length (km)
160,000
Source: DPWH 5
Railroads
Roads Japan Taiwan Korea Hong Kong Singapore Philippines Vietnam India Indonesia China Thailand Malaysia
Japan Taiwan Korea Hong Kong Singapore Philippines Vietnam India Indonesia China Thailand Malaysia 0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Source: World Economic Forum, “The Global Competitiveness Report, 2009-2010� Legend: 1=poorly developed and inefficient, 7= among the best in the world
Public Sector (Current Prices) Infra Budget GDP
Period
Required Infra Infra Funding Spending Gap @ 5% of GDP
@ 5% of GDP
% Gap
2003
4,316
124
216
92
2.1%
2004
4,872
106
244
137
2.8%
2005
5,444
117
272
155
2.8%
2006
6,031
141
302
161
2.7%
2007
6,647
163
332
169
2.5%
2008
7,423
206
371
165
2.2%
2009
7,669
239
383
144
1.9%
2010 f*
8,221
211
411
200
2.4%
Source: NSCB; DBM * Nominal GDP growth forecast at 7.2%
Provision of better infrastructure will be a major challenge for the next administration given the deficit PPP presents opportunities to harness available resources and capacities of the private sector for infrastructure development Domestic capital market has available fund for infrastructure investment • • • •
High savings rate Sustained growth in domestic liquidity indicates that ample funds are available Special Deposit Accounts + Reverse Repurchase Agreements = Php 950 billion Low interest rate
Generate a list of viable PPP projects for the next administration based on objective criteria Potential Pilot PPP Projects
ESIMATE (in billion Php)
TOLL ROAD Cavite-Laguna Expressway
(North-South)
13.9
C-6 Expressway (some sections)
38.8
SLEX Toll Road 4 (Calamba to Lucena)
9.1
LIGHT RAIL
LRT 1 South Extension
100
LRT 2 East Extension (Phase 2)
11.4
Create a coalition of bankers association, investment houses and constructors association and agree to promote good projects and good processes (transparent and competitive)
Foster participation between local and foreign contractors Introduce policy changes (BOT-IRR, JV Guidelines, ROWA, TRB) PPP project monitoring to be done at PMS
1.
Accelerate construction of limited access roads, preferably by private sector. Extend N to La Union, NE to Nueva Ecija and S to Batangas, Lucena and Cavite; build C-6 in NCR, Davao to GenSan and Davao to Talisay in Mindanao. Also 3rd Cebu to Mactan bridge. Cost: $2+ billion.
2.
Accelerate rail construction on Luzon, by private and public sectors. Private sector should build LRT-1 South extension and complete MRT-7. Public sector should build LRT-2 west and east extensions, complete Northrail and Southrail projects and their interconnection. A high-speed connection between NAIA and Clark is essential by 2020. Cost $8+ billion.
3.
Legal and procedural reforms are essential to build these and other priority infrastructure projects. Amend BOT Law. Amend or rescind JVA EO. NEDA-ICC should review all major projects. Bid out projects; discourage unsolicited proposals. Remove foreign equity restrictions. Create single light rail agency for Metro Manila. Reform slow project approval process using timetables/deadlines. Release DBM funds in timely manner. Use Congressional DF only for needed infrastructure. Create and follow 10-year infrastructure plan. Implement National Transport Plan (GRP w/AUSAID).
4.
Increase transparency and (hopefully) reduce corruption and controversy over infrastructure projects. Pass Freedom of Access to Information Act. Develop GRP on-line registry of projects and private sector website to monitor top 200300 projects against guidelines. Apply HDM-4 for roads. Mandatory disclosure of JVA projects prior to MOA signing.
5.
Legal and procedural reforms are essential to build these and other priority infrastructure projects. Amend BOT Law. Amend or rescind JVA EO. NEDA-ICC should review all major projects. Bid out projects; discourage unsolicited proposals. Remove foreign equity restrictions. Create single light rail agency for Metro Manila. Reform slow project approval using timetables/deadlines. Release DBM funds in timely manner. Use more Congressional DF for needed infrastructure. Create and follow a 10-year infrastructure plan. Implement National Transport Plan (GRP w/AUSAID).
Hosted By:
Japanese Chamber of Commerce Moderators:
Arthur Tan President and CEO Integrated Microelectronics Michael Raeuber CEO Royal Cargo
November 11, 2009
Development path of Asia’s advanced and middle-income economies – with large shifts of workers from lower value-added agriculture and services into higher-valued manufacturing and exports - has yet to take place in Philippines. For two decades employment in manufacturing in Philippines (as % of total workforce) has remained at 20%, while labor productivity has also failed to increase. Today, domestic manufacturing is severely challenged by high costs, corruption, smuggling, inadequate local suppliers, and competition under new FTAs. However, new FTAs will give Philippine exporters increasing duty-free access to half the world’s population. With key reforms, Philippines can export much higher volumes of electronics as well as furniture and home decor, garments, processed foods and minerals, ships, and automobiles.
Manufacturing GVA Distribution per Segment (2009)
Manufacturing GVA, Bn PhP 1800 1600
Electrical machinery, 8.0%
16%
Value, current prices, lhs Real YOY growth, rhs
12%
1400 1200
Products of petroleum and coal, 8.0%
8%
1000 4% 800 600
Food and Beverage, 58.2%
Chemical and chemical products, 6.6%
0% Textile, footware and wearing apparel, 4.8% Basic metal and other metal industries, 4.4%
400 -4% 200 -8% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
Other industries, 10.1%
Source: NSCB Source: NSCB
RP's manufacturing goods exports 50 45 40 35 30 25 20 15 10 5 0
Value, in Bn US$, lhs
40%
YOY growth, rhs
30% 20% 10% 0% -10% -20% -30% 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: NSO; Note: 2009 data are preliminary (as of Feb 2010)
ASEAN-6 Total Manufactures Exports, Bn US$ 700
Value, lhs
35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15%
YOY growth, rhs
600 500 400 300
200 100 2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Source: WTO
Share in ASEAN-6 Total Manufactures Exports 50% 45% 40% 35% 30% 25% 20%
15% 10% 5% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Singapore
Malaysia
Source: WTO; Note: No data for Vietnam before 1997
Thailand
Indonesia
Philippines
Viet Nam
Investments in Electronics Sector, Bn 2.5 US$
Electronics Exports, Bn US$ 35 30
2.0
25 1.5
20 15
1.0
10 0.5 5
0.0
0
Sources: PEZA and BOI
Source: NSO
Electronics Exports Growth and Share in Total Exports 100% 90% 80%
Electronics exports, % of total exports, lhs Electronics, yoy growth, rhs
60% 50% 40%
70%
30%
60%
20%
50%
10%
40%
0%
30% 20%
-10%
10%
-20%
0%
-30%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: NSO
*Annual Car Sales 1991-2009
LMV and CBU Ratio LMV – Locally Manufactured Vehicle CBU – Completely Built-Up Source: PACCI
1.
Increase priority given to manufacturing. Working with private industry, next administration should: (1) develop an industrial master plan, identifying opportunity sectors for export of goods and services to global markets created by FTAs; (2) support the plan with consistent policies, fiscal incentives, legal, administrative and other reforms; and (3) put a strong economic team in the cabinet that works in tandem with designated private sector leaders of the targeted global industries.
2.
Improve the business climate and level the playing field: (1) reduce costs of doing business - electricity, infrastructure, domestic logistics, corruption, red tape; (2) increase E2m coverage for customs.; (3) “professionalize“ bureaucracy; (4) allow industry to operate free of government interference such as price controls; (5) link minimum wage policies to productivity enhancements; and (6) eliminate smuggling - send smugglers to jail.
3.
Ramp up promotion of Philippine exports and Investment: establish an export development fund to promote exports and investment and aggressively promote Philippines at international trade fairs. Allow duty-free importation of capital equipment.
Philippines is ideally located to manage storage and distribution of consumer goods, spare parts and equipment to surrounding countries (e.g. Timex Philippines uses Cebu as global distribution hub.) Subic–Clark Corridor has potential as a Freeport as regional distribution hub with cost advantage over other Asian Freeports (Singapore and Hong Kong). Allowing foreign companies into domestic transport can improve quality of service, lower costs and result in faster transit and turnaround times.
Ratified Kyoto Protocol, E2M and national single window make Philippine logistics more competitive. Many logistics processes can be outsourced to local BPO companies. Main constraints are nationality requirements, unclear VAT provisions, corruption, poor infrastructure, BOC obstacles to transshipment, and cabotage limits.
1.
Develop Subic as a true Freeport for Logistics by (1) allowing cargoes consigned “to–order” of bearer; (2) move customs out of Subic Freeport to perimeter defined by SBMA, and (3) organize/convene a public-private planning group to promote an Asian Distribution Centre of Goods.
2.
Promote Batangas Port for CALABARZON-destined shipments and Subic for Luzon-destined shipments by (1) inviting feeder vessel operators to call, linking them through Singapore, Kaohsiung and Hong Kong to worldwide shipping, (2) request port operators to offer special promo rates to feeder operators, and (3) promote use of both ports with PEZA and SBMA.
3.
Allow direct consolidations of cargoes to PEZA bonded warehouses instead of using non-PEZA CY/CFS operators, thereby (1) reducing shipping cost of less container load shipments for manufacturers, (2) increasing competition and (3) decreasing red tape and protection of few operators.
4.
Allow transshipment of cargo in various modes, air-air, sea-air, air-sea by requiring BOC to implement relevant transshipment rules (a) to capitalize on capacity of Middle East carriers space delivering cargoes from surrounding countries to Europe and Africa, (b) to invite additional carriers to on Philippines and (c) to develop a trans-shipment industry similar to Dubai and Singapore.
5.
Open door to foreign investment along entire multi-modal transportation chain, including domestic forwarding and distribution to (a) reduce domestic distribution cost and (b) increase service levels.
Hosted by:
Australia – New Zealand Chamber of Commerce Moderator:
Johan Raadsma ANZCham Mining Committee Chairman
November 20, 2009
With an estimated $1.4 trillion in mineral reserves, especially gold, copper, nickel aluminum and chromite, mining potential of Philippines is one of largest in the world.
Minerals development is major government priority with great potential for job creation and revenue generation. After stagnating for almost a quarter century, mining is making a comeback. Investments in Priority Projects has reached US$2.8 Bn, with total investments up to 2013 estimated at around US$13.5 Bn, according to DENR. Most of world’s largest mining companies have expressed serious interest to invest in Philippines, with target investments ranging from hundreds of millions to several billion of dollars. Mining must respect the community and environment and observe Philippine Mining Act, which World Bank considers to be a model framework for social and environmental initiatives for sustainable development.
Mining GVA, Bn PhP
120
80%
GVA in mining, lhs
70%
Real YOY growth, rhs
100
60% 50%
80
40% 60
30%
20% 40
10% 0%
20
-10%
0
-20% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: NSCB; Note: Quarrying activity is netted out.
Mining GVA Distribution per Segment (2009) Other nonmetallic, 26.7%
Mining Goods Exports Distribution (2009) Copper Concentrates, 10.2%
Copper mining, 5.7%
Copper Metal, 46.8%
Iron Ore Agglomerates, 6.2%
Gold mining, 34.7% Gold, 7.9% Chromium Ore, 0.7% Crude oil, 19.8% Source: NSCB; GVA means gross value added.
Other metallic mining, 0.5%
Chromium Nickel mining, mining, 0.1% 12.6% Others, 28.1% Source: NSO (as of Feb 2010)
RP's Mineral Products Exports 3
200%
Value, in Bn US$, lhs YOY growth, rhs
ASEAN-6 Total Mineral Products Exports, Mn US$
40
50%
Value, lhs
3
150%
2
100%
35
40%
30
30%
25 20%
2
50%
20
0%
15
10%
1
0%
10
1
-50%
0
-100%
5
-10%
0
-20%
Source: NSO; Note: 2009 data are preliminary (as of Feb 2010) Source: UNCTAD; Includes ores, metals, precious stones and non-monetary gold
Share in ASEAN-6 Total Mineral Products Exports 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1995 1996 Indonesia
1997
1998 Thailand
1999
2000 2001 Singapore
2002 2003 Malaysia
2004
2005 2006 Philippines
2007 2008 Vietnam
Source: UNCTAD; Includes ores, metals, precious stones and non-monetary gold
1.
Increase growth of mining sector by removing redundant approvals and non-performing claims. Exploration and similar permits should be granted transparently at regional level within 6 weeks and renewed in 1 day at 1-stop shops. Reduce ECC processing time. Allow pre-permitting access to potential project lands. MGB should cancel permits after 2 years of non-performance. MGB should adopt Philippine Mineral Ore Resources Reserve Reporting Code. Develop model best-practice regions.
2.
Carry out public information campaign and increase dialogue with concerned groups. Inform public about responsible mining that minimizes environmental impact. Find common-ground solutions with LGUs, NGOs, religious leaders and local communities to issues raised against specific projects. LGUs should not have mining bans against national policy. Encourage downstream processing/manufacturing. Source supplies from local communities. Endorse Extractive Industries Transparency Initiative.
3.
Work closely with indigenous peoples; develop mining HR skills; monitor legal developments. Since most mines are in ancestral domains, involve IPs as partners from project commencement. Achieve 50% increase in direct mining and milling costs allocated for community development. Implement release to LGUs of their share of mining taxes paid to GRP. Improve salaries and practical skills of MGB staff. Develop mining engineering programs at universities. Implement current Mining Act and avoid arbitrary application of Writ of Kalikasan. Continue the Mineral Development Council.
Hosted by:
Korean Chamber of Commerce Moderator:
Maria Cherry Lyn S. Rodolfo Research Fellow, CRC
September 23, 2009
Tourism as vehicle for poverty reduction Tourism as pull factor to medical travel, long stay and retirement markets
Opportunity to develop and promote tourism (and medical travel), long stay and retirement under the new Tourism Act of 2009
Foreign Tourist Arrivals in RP, by Origin, millions 3.5
25% 20% 15% 10% 5% 0% -5% -10% -15%
3.0 2.5 2.0 1.5 1.0 0.5 0.0 1996
1997
ASEAN
1998
1999
Rest of Asia
2000
2001
North America
2002
2003
2004
Europe
2005 Others
2006
2007
OFWs
2008 Growth, rhs
Sources: DOT and NSCB
Estimated Economic and Employment Contribution of Travel and Tourism Industry 14
Direct economic contribution, Bn US$, lhs
5.0
12
Total economic contribution, Bn US$, lhs
4.5
Direct employment contribution, million, rhs
4.0
Total employment contribution, million, rhs
3.5
10
3.0
8
2.5 6
2.0
4
1.5 1.0
2
0.5
0
0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: WTTC
Singapore, 12.9%
Distribution per Country of International Visitor Arrivals in the ASEAN Region
Philippines, 4.5%
Thailand, 19.0%
Vietnam, 5.2% Brunei, 1.2% Cambodia, 2.9% Laos, 2.5% Myanmar, 0.8% Indonesia, 8.5%
Malaysia, 42.5% Source: WTTC
ASEAN Government's Travel and Tourism Expenditure, Bn US$ 5.0
Indonesia
4.5
Singapore
4.0
Thailand
3.5
Philippines
3.0
Malaysia
2.5
Vietnam
2.0 1.5 1.0 0.5 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: WTTC;
Country
Number of Foreign Patients Admitted
India
500,000
Philippines*
100,000
Revenue Generated in USD
Year
Remarks
480M
2007
www.healthtourism.com
340 M
2008
DOT estimates in press release for October 2010 International Wellness, Medical Travel and Retirement Summit
Singapore
400,000
915 M
2006
Official Statistics (survey) by Singapore Medicine
Thailand
1.3 million
1B
2008
58.6% foreign patients, 41.4% expats (Ministry of Health)
*official statistical system to capture international medical travel market in the Philippines still to be developed
Quality of Air Transport Links: Connectivity Index Philippine’s international air transport network rank* 2007
62
2008
65
2009
76
Sources: IATA *WEF Travel and Tourism Competitiveness Reports (2007: 124, 2008: 130, 2009: 133 countries)
2009 16
2008 9
2007 7
Tickets and airport charges
17
17
14
Extent and effect of taxation
65
57
40
Hotel price index
12
9
-
Quality of roads
94
91
86
Quality of port infrastructure
100
102
87
Quality of domestic transport network Property rights
115
74
92
92
75
70
Business impact of rules on FDI
97
92
78
Price competitiveness
(2007: 124, 2008: 130, 2009: 133 countries) Source: WEF
1
Improve international connectivity – eliminate the common carriers tax and gross Philippine billings tax on foreign airlines (not practiced elsewhere); implement 24/7 operations in international airports and seaports; reform the CAAP.
2
Develop and implement national and destination masterplans and protect property rights of investors and communities in line with Tourism Act of 2009; Promotional resources should be directed to key tourist regions with infrastructure and direct international flights, including Cebu/Bohol, Clark-Subic-, Davao, Laoag and Cagayan de Oro.
3
Reduce costs of doing business and mobility for travel and tourism enterprises and tourists across the value chain (e.g. implement sustainable tourism taxation – national and local, streamline procedures - travel tax, customs and immigration, licensing, amend Sanitation Code).
1
Pursue negotiations of public insurance portability for international medical travel and retirement; promote transparency of medical travel packages; develop and implement national policy on wellness and medical travel.
2
Facilitate seamless travel of medical travelers and health professionals (as part of exchange programs with overseas hospitals) by issuing longer medical tourism visas for patients and their companions and streamlining procedures.
1
Restrictions on foreigners should be liberalized in designated tourism and retirement zones to allow foreign ownership of land and retail facilities and the practice of professions. Until constitutional limit on foreign ownership of land can be reformed, joint ventures with reputable Philippine corporations as well as GRP agencies and LGUs should be encouraged; rules and regulations for JVs with government should be reviewed accordingly.
2
Co-investment by Philippine Retirement Authority in infrastructure development to support long-stay tourism and retirement programs.
John Casey President Australia-New Zealand Chamber of Commerce