PHILIPPINE
Vol. 22, No. 8 August 2010
FACTSHEET The Month’s Highlights
Political
So-called ‘midnight’ appointments by former President Arroyo – claimed as having violated a constitutional provision – have been revoked by President Aquino, excluding the appointment of Chief Justice Corona. This decision is challenged in the Supreme Court. The Supreme Court temporarily blocked the government from levying the 12% VAT on all road tolls and from implementing a plan to raise by more than 250% the toll at the South Luzon Expressway. Eight hostages from Hong Kong were killed while seven survived the bloody end of an 11-hour hostage drama at the Rizal Park in Manila. This comes as a major blow to the Philippine tourism industry, compounded by the incompetence of the Philippine National Police in resolving the standoff.
Economic
The economy grew at a surprising rate of 7.9% in the second quarter following an equally strong first quarter growth of 7.8%. Industry expanded by 15.8%, services grew by 6.4% and agriculture contracted by 3% in the second quarter. Imports grew for the eighth month in a row but at a much weaker pace of 1.4% year-on-year to US$ 4.17 billion in June. Exports in June rose 33.4% to US$ 4.56 billion, creating the first trade surplus in seven months. Imports for the Jan – June period grew by 28.5% to US$ 26.185 billion while exports expanded by 37.7% to US$ 23.721 billion. The trade deficit in the first semester stood at US$ 2.47 billion, which was better than the US$ 3.16 billion shortfall registered in the same period of 2009.
Malacanang submitted to the House the P1.645 trillion 2011 ‘reform’ budget, which is giving more emphasis on education, social services and protection, public health, housing and land distribution for the poor. The Philippines will soon sign with the US Millennium Challenge Corp. an agreement for a grant of US$ 433 million which would be used to finance crucial revenue and infrastructure projects, Finance Sec. Purisima said. Energy Sec. Almendras has urged the National Grid Corp. to go public as part of its concession agreement with the government. South Cotabato’s provincial government will review a ban on open pit mining that could hamper the US$ 5.2 billion Tampakan coppergold project in Mindanao and other existing quarrying operations. OFWs sent a record US$ 1.6 billion in June, bringing the first half remittances to US$ 9.1 billion, 6.9% higher than the amount remitted in the first half of last year. The Dept. of Finance wants to stop the creation of new Freeport zones as part of government’s bid to plug loopholes in the grant of income tax holidays. The Balance of Payments surplus stood at US$ 3.326 billion as of end-July, up 22% from the previous year. The government incurred a budget deficit of P32.7 billion in July. In the first seven months, the deficit widened by 22% to P229.4 billion, from P188 billion in the same period last year.
Double-digit manufacturing growth was sustained in June, up 23.4%
The Dept. of Public Works and Highways has returned to government coffers about P17 billion worth of excess funds it has unearthed from its budget for the year.
The Dept. of Energy will review all service contracts located near the disputed areas in the South China Sea.
DOTC Sec. de Jesus disclosed that the Commission on Information and Communications Technology (CICT) and the
National Telecommunications Commission (NTC) are not under his department but under the Office of the President. The government timeline to raise the tax effort to 15% of total economic output has been extended by a year to 2012. PEZA reported that investments registered in January to July surged by 57.5% to P68.61 billion as a number of semiconductors and tourism companies continue to increase their presence in the country. The country’s inflation rate remained steady at 3.9% in July. This brought the average inflation for the 7-month period to 4.2%. Gross international reserves declined by US$ 1 billion to US$ 49 billion in July due to revaluation losses in the central bank’s gold holdings. The DOF expects P18.4 billion in royalties from Malampaya in 2010 and 2011. Government decided not to sell its 10% stake in the Malampaya project. The auto industry registered an all time high in vehicle sales in July, reaching 98,119 units for the 7-month period, up 37.2% from a year ago. Foreign direct investments reversed to a net outflow of US$ 35 million in May; for the period Jan to May, FDI grew by US$ 446 million, down 68% from the US$ 1.4 billion recorded a year earlier. The average bank lending rate dropped in June to 7.07%, a slight decline from the 7.2% registered in December last year.
Business
Ayala Land Inc. posted a 34% increase in net profits to P2.51 billion in the first semester. Ayala Corp.’s profits grew by 9% to P4.4 billion in the first half. Manila Water’s profit rose 34% to P1.96 billion in the first 6 months, based on
a 5% growth in water sales, the connection of more customers and a reduction in water losses. ABS-CBN announced that its net income hit a record P2.265 billion in the first half this year, exceeding the full-year earnings of 2009. The property business hiked the profit of Alliance Global Group Inc. by 36% to P4.83 billion in the first semester. Profits of Lopez-led First Gen Corp. jumped by 158% to US$ 50 million in the first half due to higher electricity sales and stronger performance of affiliates. Leading cement-maker Holcim Philippines Inc. grew its first-semester net profit by 42.6% yearon-year to P2.81 billion as booming construction boosted domestic sales. RCBC posted a 24.8% increase in net earning to P2.1 billion in the first semester. The net profit of BDO grew by 94% to P4.1 billion in the first semester. Despite a slight drop in consolidated service revenues, PLDT still managed to post a 10% increase in its net income to P21.7 billion in the first half of the year. SM Prime Holdings, Inc. reported a 10% increase in net profits to P3.8 billion in the first semester, mainly driven by higher rental revenues. Globe Telecom suffered a 30% drop in net income in the first half to P5.1 billion. Aboitiz Power Corp. reported an eight-fold increase in its bottom line in the first half to P12.7 billion, due to a surge in power sales. Semirara Mining Corp. posted a net income of P2.55 billion in the first half, more than triple the P720.7 million recorded a year ago, on strong contributions from its power generation business. Philippine Airlines said it earned US$ 31.6 million in the period April to June, an 11% decline from the income in the same period of last year due to higher operating expenses. JG Summit Inc. more than doubled its net income in the second quarter to P7.75 billion on the back of stronger performance of snack and beverage unit Universal Robina Corp. Metrobank reported a consolidated net income of P4.2 billion in the first half, up 36% from last year. First-half profits of Petron Corp. rose by 64% to P2.96 billion following higher volumes and prices as well as lower expenses. A one-time gain from the sale of a stake in Meralco propelled profits of Lopez Holdings Corp. to P11.376 billion in the first half. Lopez-led Bayantel, however, widened its losses to P666 million in the first half compared to a loss of P610 million in the same period of last year, due to foreign exchange losses. DMCI Holdings Inc. nearly doubled its net income in the first half to P4.18 billion, mainly driven by first time contributions of its power generation business, coupled with the steady growth of its construction, real-estate and coal-mining units.ATI Inc. posted a healthy profit in the first
half, driven by the increased volume of cargo passing through the company’s ports, jumping 75.4% to P921.1 million.
court dismissed the complaint. The President issued a statement that he wants the NAIA Terminal 3 fully operational by yearend.
San Miguel Corp. is beefing up its telecommunication portfolio, acquiring control of BellTel for an undisclosed amount through wholly owned subsidiary Vega Telecom Inc.
Redondo Peninsula Energy Inc., a joint venture between Aboitiz Power Corp. and Taiwan Cogen International Corp., said it would pursue the construction of a 300-MW coal-fired power plant in Subic.
The Financial Rehabilitation and Insolvency Act, which was published this week, is expected to facilitate the rehabilitation or liquidation of cash-strapped firms and individuals, a SEC official said. Negotiations for the sale of San Miguel Pure Foods Co. Inc. bogged down after SMC failed to reach an agreement with the Campos family and tuna canner Century Pacific Group. SMC disclosed that it was keen on selling only 49% of Pure Foods. Korea Electric Power Corp. is in talks with diversifying San Miguel Corp. on a possible partnership over its planned coal-fired power projects in Mindanao. The owners of Belle Corp. and Leisure & Resorts World Corp. are in an advanced stage of negotiations with US-based Harrah’s Entertainment Inc. to build the country’s largest casino complex, estimated to cost around US$ 350 million. JG Summit has joined the BPO bandwagon, investing in a 777-seat support center. The Consunji family is in talks with three local and foreign groups that have expressed interest to acquire AG&P, the country’s oldest construction company. Pagcor posted another record-breaking unaudited income of P15.5 billion in the first half, up from P14.6 billion in the same period of last year.
Investments
Lopez-led First Philec Solar Corp. will be expanding its manufacturing facility in Batangas to be able to reach an annual wafer output equivalent to 720-MW of electricity.
Infrastructure
PIATCO lost its arbitration case against the Philippine government also in the Singaporebased International Chamber of Commerce – International Court of Arbitration. Like the Washington arbitration court, the Singapore
National Grid Corp. has completed the upgrade of the crucial San Jose transformer in Bulacan. This is part of the grid company’s US$ 60.91 million San Jose substation project. The DOE will study the possibility of tapping the existing pipelines of First Philippine Industrial Corp. to further promote the utilization of natural gas in the country. With the anticipated visit of air safety inspectors from the European Union in October, there is hope that the EU ban on Philippine-registered airlines can be lifted for PAL and Cebu-Pacific in November this year. The SEC has approved the incorporation of Maibarana Geothermal Inc., which will build an integrated steamfield and power plant estimated to cost around P2.8 billion in Calamba, Laguna, and Sto. Thomas, Batangas. The company, owned 65% by PetroGreen Energy Resources Corp., 25% by Phinma’s Trans-Asia Oil & Energy Development Corp., and 10% by PNOC Renewables Corp., expects to commission the first 20-MW power plant by the second half of 2013. Energy Sec. Almendras said the sale of the 982-MW Agus-Pulangi hydropower complex in Mindanao will likely be scrapped. He argued that keeping these facilities in government’s hands would be beneficial, helping to stabilize supply and electricity prices on that island. The Aquino administration is set to launch the multi-billion peso public-private partnership in October, covering much needed infrastructure projects.
Agriculture
First-half agriculture output shrank by 2.59% due to an El Nino-caused dry spell, the government reported, extending the slump that began when severe storms hit in the final months of 2009. DENR Secretary Paje will try to jumpstart the stalled US$ 1 billion food security program of San Miguel Corp. and the Kuok Group.
Economic Indicators MERCHANDISE EXPORTS In Million USD
BANKING INDICATORS
JAN-JUN 2010 14,173
JAN-JUN 2009 9,759
(%) Change 45.23
Clothing Accessories
807
765
5.58
Coconut Oil
572
201
184.46
Electronics and Components
Woodcraft & Furniture
504
462
9.27
Elect. wiring harness
509
266
91.11
66
165
-60.04
Metal Components
Gold
378
195
93.58
Bananas
139
199
-30.30
Tuna
167
175
-4.21
Petroleum Products
128
156
-17.71
Footwear
4
14
-68.22
Pineapple
100
123
-18.86
20
21
-6.86
Shrimp and Prawns Basketwork
21
19
13.00
Dessicated Coconut
67
78
-14.47
4,874
3,582
36.07
23,711
17,225
37.65
OTHERS TOTAL EXPORTS
MERCHANDISE IMPORTS In Million USD JAN-JUN 2010 8,765
JAN-JUN 2009 7,100
(%) Change 23.5
447
296
51.2
1,142
776
47.2
Mineral fuels, lubricants
4,710
3,296
42.9
Transport Equipment
1,513
1,025
47.6
274
300
-8.8
1,635
1,459
12.0
Iron and Steel
574
422
35.9
Chemicals
339
272
24.7
Plastics
532
355
50.0
Metal Products
269
213
26.2
Power Generating Machinery
220
171
28.7
Misc. Manufactured Articles
248
245
1.3
Paper and Paper Products
272
222
22.3
Dairy Products
347
215
0.0
4,900
4,014
22.1
26,185
20,379
28.5
Electronics and Components Telecommunication Eqpt. and Electrical Machinery Industrial Machinery
Textile Yarns, Fabric Cereals
OTHERS TOTAL IMPORTS
T-Bills primary issues (%p.a.) WAIR Auction Auction Date -(Aug. 9, 2010 ) 91 days 182 days 364 days (NI - no issuance) Reserve Money (Aug. 2-6, 2010) (million PHP)----Dollar Deposit Rates (% per annum) (Aug. 9-13, 2010) Savings Deposits Time Deposits 60 days and below 61-90 days 91 - 180 days 181 days and above LIBOR/SIBOR (% per annum) (24 Aug. 2010) Libor 90 days Sibor 90 days Libor 180 days Sibor 180 days Banking Lending Rates (% per annum) (Aug. 9-13, 2010) All maturities (one year and below) (more than 1 yr. - 5 yrs.) (more than 5 yrs.)
3.965 4.263 4.516
983
0.416 0.952 1.025 1.146 1.319
0.3075 0.3320 0.5183 0.5460
7.109 7.109 7.109 7.109
GROSS INTERNATIONAL RESERVES In Million U.S. Dollars January February March April May June July August September October November December
2010 45,592 45,764 45,579 46,944 47,689 48,704 49,042
Source: National Statistics Office
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2009 39,248 38,925 39,041 39,316 39,589 39,490 40,169 41,493 42,529 43,173 44,168 44,243
BOI approved investment project
Peso Exchange Rate (end month)
January - March 2010 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
SYCAMORE GLOBAL SHIPPING CORP Shipping - operator of domestic and inter-island shipping - project cost P 521,000,000 LORENZO SHIPPING CORPORATION Shipping - operator of domestic and interr-island shipping - project cost P 282,500,000 BIOTECH FARMS INCORPORATED Producer of fresh chicken eggs and other by-products of poultry layer
2010 USD 46.74 46.16 44.42 44.69 46.49 46.44 45.56 45.18
2010 EURO 65.30 62.95 59.39 59.08 57.49 57.50 59.41 57.22
45.71
59.79
2009 USD 47.34 48.24 48.17 48.40 47.54 48.28 48.07 48.79 47.59 47.73 46.75 46.35 47.77
2009 EURO 60.60 61.40 64.04 64.20 66.35 67.93 68.55 69.97 69.40 70.80 70.17 66.66 66.67
Source: BSP
- project cost P 200,000,000
Annualized Inflation 2009-2010
WESTERN FEEDMILL CORPORATION
Philippines Metro Manila 2010 2009 2010 2009 Jan 4.3 7.1 3.6 4.3 Feb 4.2 7.3 4.1 4.7 Mar 4.4 6.4 5.0 3.2 Apr 4.4 4.8 5.3 2.2 May 4.3 3.3 4.6 0.8 Jun 3.9 1.5 4.1 -0.1 Jul 3.9 0.2 4.1 -1.0 Aug 0.1 -1.1 Sept 0.7 -0.3 Oct 1.6 1.1 Nov 2.8 2.0 Dec 4.4 4.0 Ave. 4.2 3.4 4.4 1.7
Producer of animal feeds - project cost P 50,000,000 CELEBES COCONUT CORPORATION Export producer of coconut based products - project cost P 47,063,000 MALALAG BAY AQUACULTURE AND PROCESSING CORP Production of fresh and processed milkfish and other marine products - project cost P 30,397,960
Outside MM 2010 2009 4.6 8.3 4.3 8.4 4.1 7.8 4.1 5.8 4.2 4.2 3.9 2.2 3.8 0.7 0.6 1.1 1.9 3.1 4.5 4.1 4.1
Source: National Statistics Office (NSO)/BSP
Balance of Trade by Major Trading Partners: Jan – July 2010 (F.O.B. Value in Million U.S. Dollars) Country Total 1. Japan
Total Trade
Imports
Exports
Bal. of Trade
49,896.02
26,185.34
23,710.68
-2,474.66
1,195.31
534.71
660.60
125.89
2. Singapore
1,181.26
432.42
748.84
316.42
3. United States
1,161.75
418.27
743.48
325.21
756.77
351.19
405.58
54.39
4. China, 5. Hong Kong
521.03
114.72
406.31
291.59
6. Korea, Republic of
491.81
280.94
210.87
-70.07
7. Taiwan
420.75
283.56
137.19
-146.37
8. Others
44,167.34
23,769.53
20,397.81
-3,371.72
The Philippine Monthly Factsheet is prepared by: European Chamber of Commerce of the Philippines (ECCP) For more detailed information, please contact: ECCP 19/F Philippine AXA Life Centre Sen. Gil Puyat Ave. cor. Tindalo St. Makati City, Philippines Tel.: (632) 845.1324 Fax: (632) 845.1395 e-mail: schumacher@eccp.com website: www.eccp.com
CEBU
FACTSHEET
MONTHLY
Vol. 18, No. 8, August 2010
THE MONTH’S HIGHLIGHTS Wages In Central Visayas Up By Pesos 18. The wage board agreed to adjust the minimum daily wage in Central Visayas by Pesos 18. Some labour groups criticized the amount as too small but which a business leader said is adequate considering the finances many companies are in. The increase adjusts the daily minimum wage from Pesos 267 to Pesos 285. The export sector is not covered by the increase until 12 February 2011 to allow it to recover from a global economic crisis and the depreciation of the dollar. Another Power Crisis To Hit Cebu By 2015. Even if Cebu will have enough power by next year, it is bound to face another power crisis by 2015 if there will be no other power plants to start this year or if the existing power plants will not expand. This is the projection made by the Department of Energy Sec. Jose Rene Almendras. Almendras said the total 400 megawatt base load capacity that will be supplied by the Cebu Energy Development Corporation (CEDC) and Kepco next year will provide Cebu with excess power supply. However, such excess cannot sustain the surging demand within the next three or four years. Environmentalists ‘To Close’ DENR. Environment advocates issued a symbolic “notice of closure” this week on the regional environment agency, Department of Environment & Natural Resources (DENR) -7, saying it violated its mandate of protecting natural resources and the people’s right to a healthy ecology. The group accused DENR of allowing the unprecedented destruction of marine resources through offshore oil and gas mining and of facilitating sickness, deaths and other calamities by violating the Environmental Impact Assessment Law. The environment advocates also said recla-
mation projects have displaced communities and re-shaped landscapes. Patent Libraries Set. A project making use of available patent information is seen to help businesses thrive by using knowledge that is shared in patent documents. The Innovation and Technology Support Offices (ITSO) project, which is spearheaded by the Intellectual Property Office of the Philippines (IP Phils.) and the World Intellectual Property Organization (WIPO), has chosen Metro Cebu as one of the pilot areas in the country for this project. While patents protect the inventor by giving him exclusive rights to commercialize a product, the information that comes with the patent document is available to all. The patent information can be used as a tool for business. To put up these “patent libraries”, they are tapping schools and universities, research and development institutions, business chambers, industry associations, technology hubs and non-government stations to manage these libraries. Cebu Exporters On Track To Hit 10% Growth Target. Cebu exporters are confident that the 10% growth target set by the Export Development Council starting in 2011 will be achievable despite a bad year in 2009. Electronics and semi-conductors will still lead the export growth, but players in these sectors are the multi-national location sin the eco-zones. Outside the zones, coconut oil exports will continue its table growth while Cebu food sector will grow steadily. The furniture sector, together with the exporters utside the Mactan Export Processing Zone, will still struggle next year. DTI: No Need To Re-Register Business Name For Branches. Prospective local and foreign investors need not register their business names (BN) again with the Department
of Trade & Industry (DTI) every time they open a business branch even in a region outside their address. They will just have to declare the intended scope of their business operation – barangay level, regional or nationwide – when they register their business names for the first time with DTI. Cebu City Barangays To Start Waste Management. Twenty barangays in Cebu City will be given Pesos 20,000 each for them to start implementing Solid Waste Management programs, specially in promoting waste segregation, reduction, recycling and composting. The council also passed a resolution releasing Pesos 4 million from the calamity fund to install materials recovery facilities in 53 barangays to complement the Solid Waste Management Project. DA Vows Full Support For Seaweed Industry. The Department of Agriculture (DA) made true its promise to support the struggling seaweed industry in the Philippines as industry players expressed disappointment on the lack of support from the previous administrations. In a dialogue with the members of the Seaweed Industry Association of the Philippines (SIAP), DA Sec. Proceso Alcala assured SIAP members of full support from the department and one of his promises include the immediate implementation of seaweed nursery projects. Coastal Tunnel Open 24/7. The Cebu South Coastal Road (CSCR) tunnel will be passable to vehicles 24 hours a day, except to certain types of vehicles that could compromise the safety of motorists. The full opening of the tunnel will ease the traffic congestion on N. Bacalso Avenue and down-town, since motorists coming from southern Cebu can now take the tunnel going to the north and vice-versa, at any time of the day.