PHILIPPINE
Vol. 22, No. 11 November 2010
FACTSHEET The Month’s Highlights Political
The Supreme Court, in an unprecedented move, ordered First Philippines Industrial Corp. to stop operating a 117-km pipeline after an oil leakage disrupted fuel supply to Manila, polluted deep wells, caused traffic jams and dislodged more than a hundred families from their homes. The court issued a temporary environment protection order against the firm after granting the petition for a ‘writ of kalikasan’ sought by residents in Makati. The Philippines and the EU signed a three-year development cooperation agreement worth 69 million Euros (P4.12 billion), the bulk of which will go to health programs.
Economic
The Philippine economy expanded at a slower pace in the third quarter mainly because of the weak agriculture sector and lower government spending. GDP grew by 6.5% in the third quarter. Services expanded by 7.7%; industry by 9.2% and agriculture shrank by 2.5%. The third quarter performance brought the average GDP growth for the first nine months of the year to 7.5%, well above the government’s full-year target of 5-6%. Imports climbed 24.6% to US$ 4.57 billion in September from a year earlier. Strong demand for semiconductor and electronics drove Philippine exports to a 46.1% increase to US$5.31 billion in September. Exports for the nine-month period reached US$ 38.3 billion, up 38.5% from last year. The Finance and Trade departments will come up with a common position aimed at giving out the least possible tax incentives and other perks to investors. ‘Incentives are necessary, but only insofar as big ticket investments are concerned and would not otherwise come without the incentives’, DOF Sec. Purisima said. The DTI will block requests to lower tariffs on cars imported from Japan when officials meet for a scheduled review of the bilateral trade pact (JEPEPA) next year. Factory output in volume rose 15.9% in September, the weakest growth since December 2009. Continued belt-tightening kept the budget deficit
under control in October. The country recorded a P10.5 billion deficit last month, bringing the 10-month tally to P270.3 billion, well under the P325 billion ceiling set for 2010 and comfortably below the P292.8 billion deficit programmed for the period. Placements in the special deposit account (SDA) facility of the central bank have reached the P1 trillion mark as of end-October, manifesting the sharply growing liquidity in the country’s banking sector. The Philippines, one of the few countries identified as facing the highest risk of natural disasters, will get US$ 1 billion worth of loans over the medium term to fund programs aimed at improving the country’s ability to cope with climate change.
the agency can already approve PPP projects in only six months. The BSP has approved a separate 25% single borrower’s limit on loans, credit accommodations and guarantees by banks to infrastructure projects certified by the NEDA under the PPP initiative. For the first nine months, the combined approved investment pledges of foreign and local investors amounted to P320.2 billion, almost three times the P117.5 billion committed a year ago. The BSP kept interest rates unchanged but cut its inflation forecast up to 2012: full-year inflation 3.6% in 2010, 2.4% in 2011 and 2.8% in 2012.
The BSP has issued a regulatory prohibiting spouses and relatives of key banking officers from occupying sensitive positions in a bank.
The country’s balance of payments surplus surged 75% in the first 10 months this year to hit a new record level of US$ 9.276 billion.
Guarantees, easier access to bank loans and speedier processing were dangled by the government at the rollout of key infrastructure projects that include US$ 3.3 billion worth of rail, road and airport ventures up for bidding next year. The President said that his administration would compensate investors prevented by the courts or Congress from collecting contractually agreed toll or user fees. Meanwhile, the Dept. of Interior and Local Government will come out with policies to reconcile local and national government laws and regulations to make it easier for participants in the government’s PPP program to do business in the Philippines.
PNOC’s intends to sell part of P14 billion ‘banked gas’ that it purchased from the DOE while waiting for the Batangas-Manila (BatMan1) natural gas pipeline project to be completed.
Multilateral institutions are planning to pool funds to support the government’s infrastructure drive, with Manila-based officials expressing willingness to finance PPP projects directly or back government guarantees.
Foreign tourist arrivals in 2010 up to October reached 2.56 million, up 17% compared to the same period of last year. Remittances of Filipinos abroad reached US$ 1.6 billion (+10.6) in September, bringing total remittances for the 9-month period to US$ 13.8 billion, up 7.8% from the same period of last year. The Board of Investments is targeting US$ 5 billion in investments next year, with the bulk to come from the government’s PPP program.
The government will further liberalize the civil aviation industry to increase tourist arrivals, the President said. The full implementation of E.O. 219 (the liberalization of the air travel industry) will be done gradually.
Top government officials, lawmakers and domestic industry leaders are forging alliances to identify immediate and long-term solutions to curb smuggling, which has been robbing the national government some P127 billion in revenues a year.
Amid ongoing changes to the government’s joint venture guidelines and issues surrounding the build-operate-transfer implementing rules and regulations, the NEDA gave assurances that
Foreign direct investments net inflows totaled US$ 80 million in August, bringing total FDI in the first eight months to US$ 1.027 billion, 38% less than in the same period of last year.
Foreign investments in stocks, government securities and peso-denominated assets yielded a net inflow of US$ 1 billion in October or more than double the US$ 494 million recorded in the previous month. This brought the foreign portfolio investments in the first 10 months to a net inflow of US$ 2.5 billion, compared to US$ 358 million in the same period of last year. Heavy dollar-buying by the BSP lifted the country’s gross international reserves to US$ 56.89 billion as of the end of October, from US$ 54 billion in September and US$ 43 billion a year ago. October inflation eased to an 11-month low of 2.8%. Average inflation for the 10-month period stands at
Business
Ayala Land Inc. has raised its stake in Philippine tourism by taking over dormant upscale resort Club Noah Isabelle in Palawan and breaking ground in Fort Bonifacio for the first of its chain of boutique businessman’s hotels.
by another 600-MW and the Pagbilao plant by 400-MW. Team Energy also plans to put up three mini-hydros in Benguet which will have a combined additional capacity of 15-MW for the Luzon grid.
Universal LRT Corp. Ltd., the company that holds the right to develop the US$ 1.2 billion MRT Line 7, is buying out 7.8% partner Hollington Management Ltd.
Groups opposing the toll increase at the South Luzon Expressway asked the Supreme Court again to nullify the contract that the Toll Regulatory Board entered into with a Malaysian investor to operate the highway. Regulations have again postponed a decision on toll hikes at the South Luzon Expressway, saying they still lack Supreme Court clarification of a recent ruling that lifted a restraining order on adjustments.
Manila Water Corp. reported a 31% growth in net income for the nine-month period of this year to P2.975 billion. The company also announced that it will put up a P2 billion water treatment plant in Laguna Lake to provide up to 200 million liters per day in additional supply for its East Zone concession area in Metro Manila.
Profits of Ayala Corp. rose by 17% to P6.8 billion in the nine months that ended September. Alliance Global Group Inc. reported a 63% increase in net profits for the nine-month period to P5.39 billion. Petron Corp. posted a 59% increase in net profits to P5.35 billion in the first three quarters. Lopez Holdings Corp. said its net earnings rose 19% in the nine months to September reaching P13.03 billion on the back of higher revenues of its core businesses and gain on the sale of some investments. Cebu Pacific posted a 153% increase in net profits to P4.83 billion in the first nine months of the year.
Accenture is opening 3 new facilities in the Philippines, increasing its facilities to 15 and its headcount from 14,000 to 20,000.
Norway’s Intex Resources ASA has received a US$ 2 billion offer from a global private pension fund to finance its nickel project in Mindoro.
Procter & Gamble will be investing roughly P2.5 billion to expand its diaper factory in Cabuyao, Laguna.
San Miguel Corp. is investing more money in Liberty Telecom Holdings, Inc., paying P220 million to raise its shareholding to 41.48%.
The engineering unit of Singapore Airlines is set to expand its aircraft maintenance facility in Clark Civil Aviation Complex this month, earmarking P1 billion to put up a second hangar.
In a bid to aggressively expand its energy business, the Alcantara-led Alcan-Resources Inc. has earmarked US$ 500 million for its capital expenditure program over the next three years. Pangilinan-led Metro Pacific Investments Corp., already the single largest shareholder in Meralco, wants to increase its shareholding in the country’s largest power distributor, to 46%. San Miguel Corp. is in talks to acquire up to 100% of Australian mining firm Indophil Resources NL which controls a third of the US$ 5.2 billion Tampakan copper-gold project in Mindanao. UK-based Forum Energy Plc has sealed a US$ 10 million facility to fund its exploration in West Palawan. Twelve banks have completed their migration to the central bank’s electronic remittance system for interbank transfers allowing bank-to-bank remittance settlements.
The Toll Regulatory Board is looking to increase user charges for another key Luzon road, the Subic-Clark-Tarlac Expressway, by roughly 45% in January next year to help the BCDA to pay back its loans.
Ayala Corp.’s wholly owned subsidiary Michigan Power Inc. and Mitsubishi Corp. have formed a joint venture for the development of solar power projects in the Philippines.
The Philippine government is negotiating with the ADB to secure a US$ 1 billion loan with which to fund key renewable energy and energy efficiency projects in the country. The loan is expected to be finalized by mid-2011.
Roxas Holdings Inc. plans to temporarily shift from making fuel ethanol to producing potable and industrial alcohol amid increasing competition from cheap imported bioethanol.
Meralco is set to spend over P10 billion annually for its capital expenditure program starting this year; they are expecting to invest P10.8 billion reaching up to P12 billion by 2012.
Investments
The Public Works department will let other companies challenge (Swiss Challenge) Metro Pacific Investment Corp.’s P21 billion offer to build a road connecting the North and South Luzon expressways by the second quarter of 2011.
La Frutera, Inc. intends to add another 100 hectares to its 1,100-hectare banana plantation to hike volumes. Pepsi-Cola Products Philippines, Inc. plans to build 11 renewable energy plants to provide power for its steam engines. Clean energy firm Asia Renewables Pte. Ltd. plans to acquire landfill, biogas and biomass projects in the Philippines
Infrastructure
Metro Pacific Investments Corp. is in discussion to take over the 29% stake of the Sobrepenas’ Fil-Estate Corp. in Metro Railway Transit 3. Marubeni Corp. has committed to rehabilitate and increase the generating capacities of the 1,200-MW Sual and 735-MW Pagbilao coal-fired power plants. According to Federico Puno, CEO of Team Energy, a venture between Marubeni and Tokyo Electric and Power Co., the company targets to expand the Sual facility
Chevron Corp. and locally listed APC Group Inc. plan to invest US$ 300 million to put up a 100MW geothermal power facility in Kalinga.
CongressWatch
The Finance department plans to take a ‘more active role’ in the granting of incentives based on a new bill it wants Congress to consider. The Senate finance committee recommended second reading approval of the P1.645 trillion budget for 2011, while introducing realignments and new programs. The committee also proposed an interagency body on the P21.9 billion conditional cash transfer (CCT) program approved by the House. The House already approved the 2011 budget.
Agriculture
The government believes it may take at least US$ 1 billion to fund the various PPP projects for agriculture and irrigation. A number of Japanese firms plan to invest in a plantation in the Philippines, with the produce to be exported to Japan, Agriculture Sec. Alcala said.
Economic Indicators MERCHANDISE EXPORTS In Million USD
BANKING INDICATORS
JAN-SEP 2010 23,503
JAN-SEP 2009 15,982
(%) Change 47.06
1,280
1,142
12.10
Coconut Oil
941
393
139.08
Woodcraft & Furniture
816
712
14.62
Elect. wiring harness
814
482
68.76
Gold
102
212
-51.89
Metal Components
563
333
68.85
Electronics and Components Clothing Accessories
Bananas
229
284
-19.23
Tuna
254
258
-1.24
Petroleum Products
208
213
-2.52
Footwear
6
18
-65.38
Pineapple
170
201
-15.56
Shrimp and Prawns
33
35
-7.06
Basketwork
33
29
14.57
Dessicated Coconut OTHERS TOTAL EXPORTS
(NI - no issuance) Reserve Money (November 2-5, 2010) (million PHP)----Dollar Deposit Rates (% per annum) (Nov. 8-12, 2010) Savings Deposits
1,023,285
0.332
Time Deposits 60 days and below
0.877
61-90 days
0.979
91 - 180 days
1.109
113
-6.42 27.62
38,298
27,649
38.52
Sibor 90 days
0.3000
Libor 180 days
0.4469
Sibor 180 days Banking Lending Rates (% per annum) (Nov. 8-12, 2010) All maturities
0.4580
618
615
0.6
Industrial Machinery
1,754
1,190
47.4
Mineral fuels, lubricants
6,814
5,224
30.4
Transport Equipment
2,286
1,666
37.2
419
431
-2.8
2,023
1,671
21.1
Iron and Steel
896
658
36.1
Chemicals
508
422
20.6
Plastics
852
559
52.5
Metal Products
395
316
25.0
Power Generating Machinery
326
265
23.1
Misc. Manufactured Articles
401
387
3.7
Paper and Paper Products
432
359
20.3
Dairy Products
2.394
7,241
(%) Change 21.0
Cereals
1.983
364 days
106
JAN-SEP 2009 11,307
Textile Yarns, Fabric
182 days
9,241
JAN-SEP 2010 13,678
Telecommunication Eqpt. and Electrical Machinery
1.480
181 days and above 1.277 LIBOR/SIBOR (% per annum) (November 24, 2010) Libor 90 days 0.2875
MERCHANDISE IMPORTS In Million USD Electronics and Components
T-Bills primary issues (%p.a.) WAIR Auction Auction Date -(November 15, 2010 ) 91 days
529
317
67.0
OTHERS
39,893
6,307
532.5
TOTAL IMPORTS
39,938
31,692
26.0
7.057
(one year and below)
7.057
(more than 1 yr. - 5 yrs.)
7.057
(more than 5 yrs.)
7.057
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 47,690 48,704 49,042 49,906 53,754 57,153
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
Peso Exchange Rate (end month)
January - September 2010 SOUTH LUZON TOLLWAY CORPORATION Rehabilitation, construction, expansion and maintenance of South Luzon Expressway - project cost P 8,354,000,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
PETRO ENERGY RESOURCES CORPORATION Power generation - wind power generation (Nabas, Aklan) - project cost P 2,546,290,000 PETRO ENERGY RESOURCES CORPORATION Power generation - wind power generation (Sual, Pangasinan) - project cost P 2,543,482,000 THERMA LUZON, INC Power generation project - 700 MW Pagbilao Coal fired thermal power plant - project cost P 1,959,000,000 PHOENIX PETROLEUM PHILIPPINES, INC. Storage, marketing, and distribution of petroleum products - project cost P 615,000,000 WESTERN FEEDMILL CORPORATION Producer of animal feeds - project cost P 90,000,000 BASIC ECOMARKET FARMS, INC. Producer of dried cassava granules - project cost P 50,000,000 KF NUTRI-FOODS INTERNATIONAL, INC Producer of banana chips - project cost P 15,000,000
2010 USD 46.74 46.16 44.42 44.69 46.49 46.44 45.56 45.18 43.92 43.31 44.09
2010 EURO 65.30 62.95 59.39 59.08 57.49 57.50 59.41 57.22 59.92 60.50 58.90
45.18
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
Annualized Inflation 2009-2010
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
Philippines Metro Manila 2010 2009 2010 2009 4.3 7.1 3.6 4.3 4.2 7.3 4.1 4.7 4.4 6.4 5.0 3.2 4.4 4.8 5.3 2.2 4.3 3.3 4.6 0.8 3.9 1.5 4.1 -0.1 3.9 0.2 4.1 -1.0 4.0 0.1 4.5 -1.1 3.5 0.7 3.5 -0.3 2.8 1.6 2.2 1.1 2.8 2.0 4.4 4.0 4.0 3.4 4.2 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 2.9 1.9 3.1 4.5 3.9 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 Trade
Imports
Exports
Bal. of Trade
Total
78,235.89
39,937.87
38,298.02
-1,639.85
1. Japan
10,686.67
4,961.83
5,724.84
763.01
2. United States
10,075.78
4,268.45
5,807.33
1,538.88
3. Singapore
9,480.09
3,922.34
5,557.75
1,635.41
4. China
7,108.49
3,221.16
3,887.33
666.17
5. Hong Kong
6,200.12
3,025.99
3,174.13
148.14
6. Korea, Republic of
4,476.86
2,737.12
1,739.74
-997.38
7. Taiwan
3,872.34
2,641.64
1,230.70
-1,410.94
8. Others
26,335.54
15,159.34
11,176.20
-3,983.14
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. 11, November 2010
THE MONTH’S HIGHLIGHTS Scramble To Explain, Correct. Local government offices that were found by the Commission on Audit (COA) to have committed “violations” in spending or using government resources were requested to explain or promise to correct deficiencies. Examples : Gov. Gwen Garcia met with COA officials to discuss processes, saying they were also part of the delay. The provincial accountant is responsible for an error in dollar exchange rate of USD $500,000 paid by Kepco for the Balili coal ash landfill and would adjust it. The provincial health office reminded town officials to submit the lists of medicines and supplies. Borbon officials braced for refund of undue allowances. Reacting to COA findings is a yearly ritual characterized by blame-throwing over sometimes confusing and impractical rules. Cebu City Ranks 9th In Top Outsourcing List. After constantly ranking high in the list of emerging cities for outsourcing, Cebu finally “emerged”. Cebu ranked no. 9 in the 2010 Tholons list of outsourcing cities. Tholons is a services globalization investment and advisory firm. It decided this year to make a list of top 100 cities instead of just top 50. For the past two years, Cebu ranked first in the emerging cities category and was in fourth place in 2007. Cebu Has Medical Tourism Potential. For leaders of the Canadian Chamber of Commerce in the Philippines, Cebu has the potential to become a destination for medical tourism. To encourage foreigners to choose Cebu for their medical needs, they recommend that the right medical facilities have to be in place. While most hospitals get accreditation from American agencies, the Chamber suggested that medical facilities secure accreditation from Accreditation
Canada, a non-government organization that is also recognized internationally. Wellness Industry Sees 15% Growth This Year. The Spa and Wellness Association of Cebu (Swac) is hoping for a 15% growth by yearend. The medical tourism in particular is picking up. A significant number of tourists are now coming to Cebu for the health checkups, dental and aesthetic services. Swac and the Cebu Health and Wellness Council Inc. (CHWC)) are determined to strengthen Cebu’s wellness industry and make Cebu a favourite destination for wellness services. Accenture To Open 2nd Facility in Cebu. After doing business in the country for 25 years, Accenture, a technology services and outsourcing company, added three more facilites in the country, one of which will begin operating in Cebu next month. The facility in Robinson’s Cybergate is their second in Cebu after the first Accenture facility opened at the Pioneer Building at the Cebu Business Park in 2007. Cebu is part of Accenture’s strategic growth. Cebu is a prime location to source out talent for business process outsourcing (BPO) and technology. Biggest Ship in RP Delivered. Aboitiz Group of Companies and Tsuneishi Heavy Industries Cebu Inc. named and delivered what is said as the largest vessel constructed in the country. The MV Tenshu Maru is a 180,000 DWT type builk carrier that is 286.9 meters long and 45 meters wide, with a gross tonnage of about 92,400. The vessel, which will have a port of origin in Panama, was turned over to its owner, Japanese company Chijin Shipping, S.A.. Tenshu Maru is the 118th vessel constructed by Tsuneishi and is the biggest ship ever built in the Philippines.
Aboitizland To Invest Pesos 350M On Project. The real estate arm of the Aboitiz Group of Companies, Aboitizland, has earmarked Pesos 350 million for the development of Pristina North Residences. Pristina North is the high-end real estate project of the AboitizLand that sits on a 32.5 hectare lot in Talamban, Cebu City. The development has four components – residential, retail and entertainment, office park and village center. Pristina North residences is a house and lot enclave with in Pristina North. US $1.3M Master Plan for MCIAA. The Korean International Cooperation Agency (KOICA) will spend about US $1.3 million for a master plan that will serve as a guide for the Mactan-Cebu International Airport Authority (MCIAA) for the next 20 to 30 years. This is a grant from the Korean government. KOICA consultants will provide all the technical details, the final approval of what they intend to do rests on the Philippine Government. Cobonpue To Provide Trainings For Cebu’s Out-of-School Youth. Famous furniture exporter Kenneth Cobonpue will be providing training and employment opportunities for out-of-school youths in Cebu, through his company Interior Crafts of the Island Inc. Cobonpue, in coordination with Filo D’Oro Upholstery Subcontractor Development, has commissioned at least 10 out-of-school youths to make upholstery requirements for the company, the latest is the order RugNets from well-known fashion designer Giorgio Armani. This special contractor system of Cobonpue is supported by the German Development Service (DED) in cooperation with the Philippine Business for Social Progress (PBSP) through the specified Strategic Corporate Community Partnership.