PHILIPPINE
Vol. 22, No. 10 October 2010
FACTSHEET The Month’s Highlights
Political
The President ordered the filing of charges against top officials, including Manila Mayor Lim and Manila’s former police chief, in connection with the Aug. 23 hostage-taking incident, but cleared close friend DILG USec. Rico Puno. Backed by a supportive Congress, the President granted amnesty to detained Sen. Antonio Trillanes and more than 300 rebel officers and soldiers who took part in three military uprisings against his predecessor. The Supreme Court issued a status quo ante order on E.O. 2 which revoked so-called midnight appointments of former president Arroyo. President Aquino is headed for another legal battle at the Supreme Court as the tribunal was asked to declare as unconstitutional the EO suspending all allowances, bonuses and incentives of officials of government-owned and –controlled corporations and financial institutions. Delayed delivery of poll materials forced the Commission of Elections to postpone elections in 1,732 barangays nationwide. According to the Armed Forces, the Barangay Elections were generally peaceful.
Economic
The Philippines has managed to move five notches in an international corruption perception survey (134th of 178) despite an unchanged score, a Transparency International report shows. Imports grew by 22% to US$ 4.4 billion in August. With exports valued at US$ 4.8 billion, a trade surplus of US$ 347 million was recorded for that month. For the first eight months, total imports rose by 26.1% to US$ 35.324 billion; exports reached US$ 32.970 billion during the same period, resulting in a trade deficit of US$ 2.354 billion. Monetary authorities approved a fourth phase of reforms in its foreign exchange regulatory framework, liberalizing existing restrictions on capital outflows to address the strong inflows of capital into emerging markets, including the Philippines, and temper the strong appreciation of the peso against the dollar.
In an attempt to curtail oil smuggling, the Bureau of Customs requires accreditation of oil importers and hired 6 global survey firms to monitor fuel shipments in RP ports. The BSP reported a 41% drop in the net inflow of foreign direct investments in July to US$ 222 million from US$ 377 million in July 2009. The total net FDI inflow in the 7-month period registered a 42% decline to US$ 954 million from US$ 1.18 billion last year. Investments registered with the PEZA rose by 32% to P80.6 billion in the first nine months of the year from P61.0 billion a year ago. The BOI reported that approved investment projects hit P192 billion in the Jan to Sept period, compared to P45.2 billion in the same period of last year. The net inflow of foreign portfolio investments or ‘hot money’ surged 520% to US$ 1.42 billion in the nine months ending September. The DTI is pushing for the amendment of the Labor Code, which contains provisions that are making the country increasingly uncompetitive in the global arena. Bent on getting as many businesses involved in PPP projects, the government is thinking of ways to mitigate ‘unforeseeable’ risks related to such projects, according to DTI’s Domingo. Remittances from overseas Filipino workers reached US$ 1.5 billion in August, up 9.8% from the US$ 1.33 billion remitted last year. Remittances in the Jan to August period went up 7.4% to US$ 12.2 billion. Annual inflation eased to a ten-month low of 3.5% in September, strengthening expectations that monetary authorities will keep policy rates unchanged. The average inflation rate for the 9-month period stands at 4.1%. Gross international reserves hit US$ 53.75 billion in September, breaching the central bank’s full-year forecast. The BOI has approved tax and other incentives for Dana Fresh Agri-Development, Inc.’s P314.25 million cavendish banana project in Malandag, Sarangani.
The growth of profits of listed companies eased to 20% in the first half from 46% in the same period of last year. The country’s balance of payments hit a record surplus of US$ 6.54 billion as of the end of September, compared to US$ 3.7 billion recorded in the same period of last year. Government is set to bid out mining claims, abandoning the old practice of ‘first come, first served’, as a way of generating additional funds for the public coffers. Finance officials reported a September budget shortfall of P31.7 billion, a result that raised the nine-month tally to P259.8 billion, 80% of the full year ceiling of P325 billion, but well below the P373.7 billion ceiling for the period. The Supreme Court has finally lifted the TRO on the government plan to hike toll fees at the South Luzon Expressway, however, the implementation of toll fee increases is still delayed. The BSP has put on hold banks’ applications to issue debt instruments such as Hybrid Tier 1 or 2 capital, as it is coming up with new rules on capital adequacy in view of Basel 3. Cabinet officials have recommended adoption of an open skies policy and President Aquino is open to considering the proposal.
Business
DOE has accredited Philcarbon Inc. as a Class A energy services company (ESCO) in the Philippines. AgriNurture Inc., a leading supplier of fresh and processed agricultural food products, has signed an agreement to acquire 51% each of Sunshine Supplies International Co. Ltd. and Xiamen Wantaixing Trading Corp. for a combined US$ 2.5 million. The President has disapproved a project to dredge Laguna de Bay, saying he found it pointless to spend P18.5 billion just to move dredged matter from one area of the lake to another nearby site. A Belgian dredging firm is involved in the project.
The BOC filed before the DOJ a P24 billion technical smuggling case against Pilipinas Shell Petroleum Corp. for alleged ‘intentional’ misclassification and misdeclaration of oil importations for four years. Shell denies report on misdeclaration of imports. Petron Corp. together with Two San Isidro SIAI Assets Inc. formed a P3.4 billion new company that will engage in the power generation business; the new company is called Limay Energen Corp. The ADB and the Japanese government will fund a wind farm feasibility study for renewable energy company Alternergy Philippine Holdings Corp. ADB will provide P630,000 under the Clean Energy Financing Partnership Facility to partially fund the study. Aegis PeopleSupport (Philippines), Inc. intends to hire an additional 1,200 employees as the company continues to expand operations in the country. Meanwhile, Accenture plans to hire another 2,000 individuals next year to support its expansion plans. BPO firm Sitel has opened 4,000 new jobs in its Manila and Baguio sites to support additional business from existing clients. Ayala group’s Integrated Microelectronics, Inc. has completed its US$ 30 million, 56% acquisition of PSi Technologies, Inc. Six foreign companies have expressed interest in British Gas Group’s 40% stake in the 1,000MW Sta. Rita and 500-MW San Lorenzo natural gas power plants in Batangas, according to First Gen Corp. chair Federico Lopez. Diversifying San Miguel Corp. has entered into a major mining deal with Indophil Resources NL that could eventually give the Filipino conglomerate a significant stake in one of the country’s largest mining projects, in the US$ 5.2 billion Tampakan project. The SEC has approved high-end leisure developer and gaming firm Belle Corp.’s acquisition of Premium Leisure and Amusement Inc. through a share-swap deal valued at P5.265 billion. Globe Telecom is aiming to corner the bulk of the potential annual P2 billion market for mobile advertising after teaming up with a world leader in this new advertising platform: Vienna-based Out There Media. KLM, the sole carrier that operates long haul flights between Manila and Europe, said it may halt its Philippine operations due to local tax policies. San Carlos Bioenergy Inc., which supplies
ethanol to Petron Corp., has stopped its production pending resolution of the tariff issue on imported ethanol. Jollibee Foods Corp. is adding chicken barbeque chain Mang Inasal to its roster of bands, having offered the firm’s owners some P3 billion for 70% in a deal expected to be completed within a month. The Philippine paper unit of Siam Cement Group, Thailand’s largest industrial conglomerate, is expanding operations in power generation, intending to build a 30-MW power plant in Calumpit, Bulacan, in two to three years. Meralco said it has trimmed its system loss to a record 7.78%, the lowest over the past 30 years. Meanwhile, buoyed by a surge in sales, Meralco reported a consolidated net income of P8 billion for the first nine months of the year, up 61% from the same period of last year. Meralco is set to enter power generation after finalizing plans to form a new subsidiary that will install 1,500-MW of capacity by 2016. The company allotted US$ 2 billion for power generation.
The local cassava industry will benefit from Nestle Philippines plans to invest P4.35 billion for a non-dairy coffee creamer project in Batangas, the BOI said.
Infrastructure
The DOE is considering the conversion of the 630-MW Malaya diesel power plant in Rizal into a natural gas-fired facility. Also being considered for conversion into a gas-fired plant is the decommissioned 850-MW Sucat thermal facility. San Miguel eyes US$ 900 million power plant to support the operations of the Tampakan mining project. The government will renegotiate the multimillion-dollar Northrail contract with the Chinese government reliable sources said. Manila has notified Beijing about the renegotiation of the contract for what has been criticized as the most expensive railway project in the world. Launched in 2004, the railway was supposed to be operational by February this year. Work on the project was suspended in 2008.
Philex Mining Corp. said its core net income grew 46% in the first nine months to P2.31 billion on the back of higher metal prices and increased revenue from petroleum.
AES Corp. has taken initial steps to expand its 600-MW Masinloc coal-fired facility in Zambales. The expansion will require an investment of US$ 800 million.
FCF Minerals Corp., the local subsidiary of British firm Metals Exploration Plc, is seeking tax perks and other incentives for its P7.099 billion investment for the production of gold bullion in Nueva Viscaya.
The Aboitiz Power Corp. is set to put up a P15 billion 200-MW circulating fluidized-bed coal power plant in Davao City in an effort to address the fast-deteriorating power supply situation in the south.
Investments
The program of the Aquino administration to improve the country’s infrastructure received a boost from the Japanese government which approved a US$ 10 million grant for PPP studies.
A Filipino-Japanese-Taiwanese consortium has firmed up a US$ 120 million investment for a bioethanol production venture in Isabela which promises to be the biggest biofuel enterprise in the country. The consortium Green Future Innovations, Inc.’s 54-million liter ethanol plant in San Mariano, Isabela, is planned to be fully operational by 2012. B/E Aerospace, Inc. chose the Philippines over 31 other investment sites to accommodate a ‘multi-billion-dollar contract to manufacture galleys / aircraft interiors for the airbus A350”, the British embassy said in a statement. Century Properties Inc. has partnered with General Electric to build a US$ 100 million outpatient medical information technology building in the Makati financial district. Australian miner Ratel Gold Ltd. Plans to buy a 60% stake in the Kingking copper-gold project in Compostela Valley by acquiring shares from North America-based Russell Mining and Minerals, Inc.
San Miguel Corp. has signed a deal to acquire up to 51% of Universal LRT Corp., the company that will build the MRT Line 7 linking North Avenue in Quezon City to San Jose Del Monte in Bulacan. The rail and road network is expected to cost US$ 1.3 billion, while the commercial and residential developments expected to rise along the route would cost another US$ 2 billion.
CongressWatch
The House passed on second reading the Aquino administration’s P1.645 trillion national budget for 2011, with the P21 billion conditional cash transfer intact. A private think-tank has called on Congress to review the existing EPIRA law to strike out a provision allowing cross ownership between generation and distribution companies.
Economic Indicators MERCHANDISE EXPORTS In Million USD
BANKING INDICATORS
JAN-AUG 2010 20,024
JAN-AUG 2009 13,732
(%) Change 45.83
1,134
1,028
10.34
Coconut Oil
843
328
156.77
Woodcraft & Furniture
702
623
12.66
Elect. wiring harness
719
402
78.79
99
200
-50.63
510
282
80.48
Electronics and Components Clothing Accessories
Gold Metal Components Bananas
198
262
-24.48
Tuna
223
236
-5.49
Petroleum Products
184
185
-0.26
Footwear
6
15
-61.64
Pineapple
146
176
-17.09
Shrimp and Prawns
27
31
-11.42
Basketwork
30
26
13.26
94
101
-7.24
OTHERS
Dessicated Coconut
66,406
4,973
1235.41
TOTAL EXPORTS
32,970
24,011
37.31
MERCHANDISE IMPORTS In Million USD JAN-AUG 2010 12,047
JAN-AUG 2009 9,988
(%) Change 20.6
610
428
42.4
1,544
1,063
45.3
Mineral fuels, lubricants
6,078
4,536
34.0
Transport Equipment
1,990
1,445
37.8
367
385
-4.5
1,942
1,601
21.3
Iron and Steel
810
578
40.2
Chemicals
453
373
21.4
Electronics and Components Telecommunication Eqpt. and Electrical Machinery Industrial Machinery
Textile Yarns, Fabric Cereals
Plastics
748
489
52.9
Metal Products
354
281
26.1
Power Generating Machinery
294
228
29.0
Misc. Manufactured Articles
354
346
2.3
Paper and Paper Products
379
313
20.9
Dairy Products OTHERS TOTAL IMPORTS
472
293
61.3
2,732
2,381
14.7
35,324
28,023
26.1
T-Bills primary issues (%p.a.) WAIR Auction Auction Date -(October 18,2010 ) 91 days
3.575
182 days
3.935
364 days
4.134
(NI - no issuance) Reserve Money (Oct. 4-8, 2010) 1,008,590 (million PHP)----Dollar Deposit Rates (% per annum) (Oct. 11-15, 2010) Savings Deposits 0.342 Time Deposits 60 days and below
0.933
61-90 days
0.979
91 - 180 days
1.128
181 days and above LIBOR/SIBOR (% per annum) (28 Oct. 2010) Libor 90 days
1.312
0.2869
Sibor 90 days
0.3020
Libor 180 days
0.4498
Sibor 180 days Banking Lending Rates (% per annum) (Oct. 11-15, 2010) All maturities
0.4665 7.083
(one year and below)
7.083
(more than 1 yr. - 5 yrs.)
7.083
(more than 5 yrs.)
7.083
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 49,906 53,754
Source: National Statistics Office / BSP
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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 January - September 2010
Peso Exchange Rate (end month)
CHAROEN POKPHAND FOODS PHILIPPINE CORP Agribusiness - fishfeeds, shrimp feeds, feedmilling - project cost - P 2,360,925,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
THERMA LUZON, INC. Power generation project - IPP (coal fired) - project cost - P 1,959,000,000 SEACOAST MARITIME CORP. Shipping - domestic/inter-island shipping - project cost - P 421,763,000 MCX MOTOR PHILS, INC. New assembler of motor vehicles (motorcycles) - project cost - P 214,117,000 BIG GLORY BAY SALMON AND SEAFOOD, INC, New export producer of smoked salmon - project cost - P 107,872,000
2010 USD 46.74 46.16 44.42 44.69 46.49 46.44 45.56 45.18 43.92 43.06
2010 EURO 65.30 62.95 59.39 59.08 57.49 57.50 59.41 57.22 59.92 59.82
45.27
59.81
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
Annualized Inflation 2009-2010
RAW BROWN SUGAR MILLING CO. New producer of raw sugar - project cost - P 27,400,424 NAKAYAMA TECHNOLOGY CORPORATION New export producer of pet house - project cost - P 14,075,000 GLOBAL COLLABORATIVE SOLUTIONS ICT - BPO - project cost - P 8,892,526 WINTEX TEXTILES INDUSTRIES, INC, New export producer of knitted fabrics - project cost - P 5,363,000 MIZUKEN GLOBAL SOLUTIONS New IT export service firm in the field of engineering design - project cost - P 2,646,895
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 4.0 0.1 4.5 -1.1 Sept 3.5 0.7 3.5 -0.3 Oct 1.6 1.1 Nov 2.8 2.0 Dec 4.4 4.0 Ave. 4.1 3.4 4.3 1.7
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 3.8 0.6 3.5 1.1 1.9 3.1 4.5 4.0 4.1
Source: National Statistics Office (NSO)/BSP
Balance of Trade by Major Trading Partners: January - August 2010 (F.O.B. Value in Million U.S. Dollars) Country Total 1. Japan
Total Trade
Imports
Exports
Bal. of Trade
68,294.39
35,324.42
32,969.97
-2,354.45
9,364.65
4,405.99
4,958.66
552.67
2. United States
9,018.01
3,770.10
5,247.91
1,477.81
3. Singapore
7,779.97
3,505.57
4,274.40
768.83
4. China
6,044.03
2,826.45
3,217.58
391.13
5. Korea, Republic of
3,966.83
2,416.13
1,550.70
-865.43
6. Hong Kong
5,693.91
2,904.13
2,789.78
-114.35
7. Taiwan
3,380.88
2,353.19
1,027.69
-1,325.50
8. Others
23,046.11
13,142.86
9,903.25
-3,239.61
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
MONTHLY
FACTSHEET
Vol. 18, No. 10, October 2010
THE MONTH’S HIGHLIGHTS Power and Water Shortage In Cebu. Cebuanos suffered not only a lack of power supply but also the lack of water. The reason for such was the rotating brownouts that lasted for two hours within the franchise area of the Visayan Electric Company (VECO). VECO has to once again implement the rotating brownouts due to the lack of supply. The lack of power also affected the ability of the Metropolitan Cebu Water District to supply water. City Sets Pesos 80 M For Environment. Cebu City Government is finalizing Pesos 900 million additional budget, which includes Pesos 80 million allocation for environmental projects. Aside from the Pesos 100 million for the city-wide asphalt road repair, the proposed supplemental budget will include funds intended for eco-management. For the environment, proposals to purchase equipment for plastic recycling and the purchase of motorcycles with side-cars to be used by the barangays to pick up biodegradable waste have been included. Also incorporated are funds to support the continuing establishment of material recovery facilities as well as composting sites in the different barangays of the city. Pesos 17.2 Million Grant For Transport Network. The World Bank (WB) approved two grants to the Cebu City Government worth Pesos 17.2 million for technical studies, including one that will gather transportation data to support planning for a Bus Rapid Transit (BRT). Foreseeing opposition from operators, World Bank also plans to provide incentives and access to funds to allow the operators to buy new vehicles that are more environment friendly. Employment In Central Visayas ‘Improves’. Unemployment rate in Central Visayas was 1.1 % lower in July this year than that of the same period last year, a recently released labor force survey by the Department of Labor and Employment (DOLE) said. The results also showed the
number of underemployed individuals in the region was reduced to 13.8% in July this year from 16% a year ago. In absolute terms, the number of under employed individuals in the region stood at 401,000 this year from 436,000 last year. Labor Tripartite Councils Organized For BPO, Tourism. To address labor relations and issues concerning business process outsourcing, information technology and tourism, a tripartite council for these industries has been created. Department of Labor and Employment 7 launched the Industrial Tripartite Council for the BPO and IT and the Industrial Tripartite Council for Tourism. Both councils will have the same objectives but will apply different strategies. The councils will tackle problems arising in these sectors such as labor relations, cultural differences and health and safety problems of workers. GTZ To Shift Focus To Mindanao. After pouring in assistance to the Visayas through its private sector promotion program, GTZ, an international cooperation enterprise for sustainable development, said it will shift its focus to Mindanao to promote more civil peace service projects starting next year. The GTZ Projects will focus on conflict transformation in Mindanao, particularly in the Caraga region. The German government has allotted 1.3 million euros as technical assistance for new projects from 2009 – 2012. Creative Council Formed In Cebu. To help Cebu’s creative industry become a bigger player in the economy, a group of art professionals and entrepreneurs recently formed the Cebu Creative Council. The council, registered as a non-stock, non-profit association, with the Securities and Exchange commission, aims to recognize the creative sectors of Cebu and enhance their role in helping boost Cebu’s economy. The sector includes businesses involved in multimedia, audio-visual design, industrial design, space design, fashion design, handicrafts, performing arts and culinary arts.
Retailers See “Healthy Growth”. Cebuano retailers see a “healthy growth” for the industry this year, especially with the onset of the Christmas season. Philippine Retailers’ Association (PRA) Cebu said the retail industry continues to have a positive outlook with robust consumer spending. PRA Cebu also said that they will be supporting the stand of the national retail industry on specific bills that directly affect the sector. Abaca Pulp Top Export From Cebu Port. Abaca pulp made up most of the exported products from the Port of Cebu from January to September. Based on data, 12.6 million kilos of abaca pulp valued at US $99.6 million were exported for the period. Coming in second was copper concentrate, which reached up to 27 million kilos valued at US $45.5 million. Dried mangoes made up 4.5 million kilos in exports worth US $32.9 million; placing third most exported products from Cebu. Profood International Corp. exported most of these dried fruits, accounting for 7.3 million kilos worth US $39.6 million. SM Signs Lease For Consolacion Mall. SM Prime Holdings Inc., announced that it has signed a long term lease with Everjust Realty Development Corp. for a 46,926 sq.m. lot in Barangay Lamac, Consolacion, Cebu. SM Prime plans to build its second mall in Consolacion. They expect to finish the project by 2011. SM earmarked Pesos 800 million for the upscale mall, which will have a supermarket, department store and a variety of shops. Filinvest, Partner Set To Open 2 More Hotels. Aside from a resort and spa in Mactan, the partnership between Filinvest Land Inc. and Filarchipelago Hospitality is also preparing to open two other hotels in Cebu and Manila. The Grand Cenia condominium-hotel across the Cebu Business Park is slated to open by the end-of-the-year while another hotel is expected to open in Alabang.