PHILIPPINE
Vol. 22, No. 12 December 2010
FACTSHEET The Month’s Highlights Political
The President signed the 2011 P1.645 trillion budget into law, at the same time vetoing 13 items, while placing a number under conditional implementation. He rejected provisions that limit the power of the Executive branch and those considered as ‘riders’ or are prohibited by the Constitution. Among the vetoed items was the imposition of a debt-to-GDP cap of 55%. The President lobbied for the Fiscal Responsibility Bill which seeks to require Congress to ensure that revenue-eroding measures be matched with revenue-generating ones. The Philippines will sign a logistics supply deal with China to source military equipment to combat domestic security threats. The Supreme Court declared that the Truth Commission, created to investigate alleged corruption by former President Gloria Macapagal-Arroyo, was unconstitutional. Malacanang will appeal the ruling. The Senate concurred with Malacanang’s grant of amnesty to soldiers who rebelled against the Arroyo administration. The Commission on Appointments confirmed the nominations of four Cabinet members: Tourism Sec. Lim, DepEd Sec. Luistro, Agriculture Sec. Alcala and Public Works and Highways Sec. Singson.
The Sandiganbayan Second Division has granted former military controller Carlos Garcia, on trial for amassing P303 million in ill-gotten assets, bail for the non-bailable offense, after Garcia managed to strike a plea bargain with cor. Tindalo St., Makati City, Metro Manila, Philippines state prosecutors.| Website: www.eccp.com ; 759 6690 | Email: info@eccp.com
ean Busi n ess Com m u n ity Economic
The country’s balance of payments hit an alltime high in November with a surplus of US$ 3.9 billion. The surplus for the 11-month period stands at US$ 13.178 billion, compared to the US$ 5.206 billion surplus in the same period of last year.
The country’s current account surplus posted a 13.3% growth to US$ 7.019 billion in the first nine months of the year. A combination of higher revenues and ‘judicious’ spending resulted in a budget surplus in November of P482 million, a result that trimmed the 11-month budget deficit to P268.9 billion. The government is confident of keeping the 2010 deficit below the P325 billion ceiling. The government has cancelled 19 ‘overpriced’ airport civil works contracts with Takenaka Corp., as part of a review that started last July of deals awarded by the Arroyo administration in its ‘few remaining months’. Imports in October rose by 28.4% to US$ 4.89 billion. Exports in October expanded by 26.4% to US$ 4.738 billion, resulting in a trade deficit of US% 112 million. The prospects of the US$ 5.2 billion Tampakan mining project received a boost after national authorities (DILG) stressed the primacy of the 1995 Mining Act over ordinances passed at the local level. The government has ordered South Cotabato to shelve an open pit mining ban but the province governor says the controversial ordinance will stay in place until repealed by local officials or nullified by a court. Annual inflation inched up to 3.0% in November due to higher oil and electricity prices, bringing the average inflation for the 11-month period to 3.8%. The country’s gross international reserves reached a total of US$ 61.05 billion at endNovember, exceeding the country’s foreign debt which stood at US$ 59.8 billion as of end-September. New oil and gas drillings in the country will temporarily be halted after the Department of Energy postponed the public contracting
rounds on oil and gas contracts pending the resolution of a dispute with the Commission on Audit. Sec. Almendras said that the public energy contracting round on coal and geothermal will, however, push through. Foreign direct investments in developing countries like the Philippines grew by 17% in 2010. FDI inflows in the Philippines reached only US$ 1 billion in the first 8 months, down 38% from a year ago. In September, FDI reached a meager US$ 66 million. T h e N a t i o n a l Te l e c o m m u n i c a t i o n s Commission’s last minute decision (3 weeks before the previous administration left office) in choosing Japanese digital television standards (over the European standards) for use in the Philippines, has raised eyebrows of several broadcast sector stakeholders. A total of P200 billion worth of fresh 10- and 20-year bonds was issued by the government after a debt swap intended to lengthen its debt maturity and create bench-mark papers closed on Dec. 10. The strong economic growth is not creating a sufficient number of jobs; the unemployment rate stayed at 7.1% in October. Filipinos abroad sent home at total of US$ 1.67 billion in October, bringing the 10-month remittances to US$ 15.45 billion, 7.9% up from the same period of last year. The ERC has been given an extension until March 31, 2011 to come up with a proposed feed-in tariff for renewable energy. Meanwhile, the DOE is tapping the help of the World Bank to come up with a globally accepted feed-in tariff and renewable portfolio standard for renewable energy projects. The ERC has given the PSALM until March 15, 2011 to submit a revised petition for universal charge to recover Napocor’s stranded costs and debts.
The ERC released draft rules that will eventually force power generation and transmission companies, as well as local distribution utilities, to offer at least 15% of their shares to the public, as mandated by the EPIRA. The BSP reported that the country’s foreign portfolio investments hit a new record level of US$ 4.18 billion as of the end of November.
Business
Local renewable energy firm Alternergy Philippine Holdings Corp. has applied for five more renewable energy service contracts covering its proposed wind power projects. Electricity Generating Public Co. Ltd. of Thailand has increased its shareholding in Quezon Power (Philippines) Ltd. to 52.125%. The BOI has given tax incentives to the P2.8 billion renewable / geothermal energy project of Petroenergy Resources Corp. for its 20-MW project in Sto. Thomas, Batangas and Calamba, Laguna. Manila North Harbor Port Inc., the joint venture company between Romero-led Harbour Centre Port Terminal Inc. and San Miguel Corp., seeks a review of their P14.5 billion, 25-year contract with government to operate and modernize North Harbor, including the value of the entire contract. San Miguel Corp. increased its stake in Petron Corp. to a controlling 68%, but intends to hike to as much as 90% by buying out the remaining stake held by London-based Ashmore group. Meralco is in talks with at least four power generation companies for a possible joint venture, trying to bring to the market additional 150 MW in 2012, 150 MW in 2013, and then for 2014, 2015 and 2016 600 MW, 300 MW and 300 MW, respectively. The 1,200 MW will be either coal or LNG. The Quezon provincial government and the municipality of Pagbilao have issued a final notice of delinquency to Team Energy, operator of the 735-MW coal-fired thermal power plant, in their bid to collect P6.1 billion real property taxes from 1997 to 2010 which should have been paid by Napocor. The Aboitiz clan is exiting the shipping business with the sale of the entire stake in Aboitiz Transport System Corp. to rival Negros Navigation Co. for US$ 81.1 million, a deal that will
create the country’s biggest shipping company. Tata Consultancy Services, the IT services, business solutions and outsourcing arm of the US$ 72 billion Tata Group of India, has opened its first 440-seat BPO center in Southeast Asia in Taguig. Nido Petroleum Ltd. has confirmed the presence of liquid hydrocarbons within Service Contract 58 in offshore Palawan, estimating the area to potentially contain more than 5 billion barrels of oil and substantial quantities of natural gas. Medical City starts construction of a tertiary hospital complex in Clark. Alphaland Corp. has sealed a joint-venture deal with the group of Ambassador Francisco Alba to build a P 1 billion high-end tourism complex besides Caticlan Airport. BPI is taking over ING’s investment unit. The deal is seen to expand the Ayala-led bank’s trust business by 17%. Alcantara-led Conal Holdings Corp. will commission five power plants, four in Mindanao, within the next five years to help boost power supply. The company is expected to invest US$ 1 billion in 2 hydro power and 3 coal power plants. Budget carrier AirAsia plans to launch a jointventure airline operation in the Philippines in 2011with Philippine business leaders, including Tonyboy Cujuangco.
Investments
JG Summit Holdings Inc. will invest US$ 500 million for the construction of the country’s first naphtha cracker. The plant will be located in Batangas, near the company’s polypropylene and polyethylene plants. The cracker will have a capacity of 320,000 tons of ethylene, 190,000 tons propylene and 270,000 tons of Py gas. Incentives have been approved for the planned naphtha cracker facility, the BOI said. Belgium-based renewable energy developer Enfinity has sought government approval of 15 applications for renewable energy service contracts for its proposed solar power projects with a total investment of US$ 1 billion to generate 500-MW.
Infrastructure
The government has set aside roughly P3 billion in 2011 for the expansion of the LRT
train system to reach provinces outside Metro Manila. The Philippine National Railways has secured the P250 million funding it needed to ship to the country donated trains from Japan that will be used to augment the train line’s current passenger and cargo capacity. The planned US$ 1.2 billion Batangas-Manila (BatMan1) liquefied natural gas pipeline project will likely be put under the government’s PPP scheme. Energy Sec. Almendras wants PNOC to study LNG because it has potential to be used for both power plants and vehicles. Energy Development Corp. is set to fast-track the rehabilitation of the 150-MW Bacon-Manito geothermal plants to put these back in operation in the second half of next year. The Depart of Energy intends to cancel the contracts of renewable energy projects that have not been submitting work programs. The DOE is also set to cancel three oil and gas service contracts. The government is considering the inclusion of nuclear energy projects in the PPP scheme. The DOE plans to spend some P3 billion to rehabilitate the Agus and Pulangi hydropower complexes in Mindanao, after Congress approved the deferment of the sale of these facilities in light of the tight power supply in Mindanao. The share of renewable energy in the total power mix may dip in the next five years, as traditional fuels like coal take center stage as the fastest way to boost capacity, according to DOE Sec. Almendras. The Lopez group plans to invest about US$ 150 million in three new mini hydropower generation plants in Mindanao. Swedish investment firm North Investors AB plans to put up hydroelectric power plants in Luzon with an aggregate capacity of 75-MW in partnership with Constellation Energy Group.
CongressWatch
The House Committee on L abor and Employment has approved in principle the proposed Security of Tenure Act seeking tighter rules on subcontracting, limiting, among others, the number of subcontracted workers to 10% 30% of the total workforce.
Economic Indicators BANKING INDICATORS
MERCHANDISE EXPORTS In Million USD JAN-OCT 2010 26,490.15
JAN-OCT 2009 18,144
(%) Change 46.00
Clothing Accessories
1,425
1,259
13.25
Coconut Oil
1,081
471
129.67
Woodcraft & Furniture
934
803
16.29
Elect. wiring harness
914
569
60.51
Gold
105
223
-52.86
Metal Components
644
384
67.72
Electronics and Components
Bananas
254
325
-21.76
Tuna
280
277
0.90
Petroleum Products
227
232
-2.22
Footwear
7
20
-65.32
Pineapple
189
218
-13.49
Shrimp and Prawns
39
41
-6.86
Basketwork
37
33
12.60
122
126
-3.27
OTHERS
10,298
8,270
TOTAL EXPORTS
43,047
31,397
Dessicated Coconut
1.092 1.233
24.52 37.11
Sibor 90 days
32.2
1,990
1,381
44.1
Mineral fuels, lubricants
7,716
5,836
32.2
Transport Equipment
2,656
1,859
42.9
474
475
-0.2
2,074
1,748
18.7
992
764
29.8
Chemicals
576
471
22.1
Plastics
972
635
53.2
Metal Products
444
362
22.8
Power Generating Machinery
356
293
21.6
Misc. Manufactured Articles
459
426
7.7
Paper and Paper Products
490
409
19.7
TOTAL IMPORTS
Time Deposits
181 days and above LIBOR/SIBOR (% per annum) (November 24, 2010) Libor 90 days
598
Dairy Products
(NI - no issuance) Reserve Money (Nov 30, 20101,045,668 Dec 3, 2010) (million PHP)----Dollar Deposit Rates (% per annum) (December 13-17, 2010) Savings Deposits 0.367
91 - 180 days
791
OTHERS
2.383
1.003
(%) Change 20.0
Iron and Steel
1.65
364 days
61-90 days
JAN-OCT 2009 12,686
Cereals
182 days
0.843
JAN-OCT 2010 15,220
Textile Yarns, Fabric
0.775
60 days and below
MERCHANDISE IMPORTS In Million USD Electronics and Components Telecommunication Eqpt. and Electrical Machinery Industrial Machinery
T-Bills primary issues (%p.a.) WAIR Auction Auction Date -(November 30, 2010 ) 91 days
590
362
63.1
9,026
7,195
25.5
44,826
35,501
26.3
N.A. N.A.
Libor 180 days
0.3090
Sibor 180 days Banking Lending Rates (% per annum) (Dec. 13-17, 2010) All maturities
0.4660
6.987
(one year and below)
6.987
(more than 1 yr. - 2 yrs.)
6.987
(more than 2 yrs.)
6.987
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 60,566
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 - December 2010
Peso Exchange Rate (end month)
SYCAMORE GLOBAL SHIPPING CORP. Domestic shipping operator - project cost P 521,000,000
2010 USD 46.74 46.16 44.42 44.69 46.49 46.44 45.56 45.18 43.92 43.31 44.09 43.89 45.07
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
LORENZO SHIPPING CORPORATION Hulled cargo vessel - project cost P 282,500,000 GPH PROPERTIES CORPORATION Tourist accommodation facility - project cost - P 103,921,767 CELEBES COCONUT CORPORATION Export producer of coconut based product - project cost P 47,063,000
2010 EURO 65.30 62.95 59.39 59.08 57.49 57.50 59.41 57.22 59.92 60.50 58.90 58.03 59.64
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
CONSOLIDATED PLYWOOD INDUSTRIES INC. Export producer of laminated finger joints, table tops, kitchen wares and ladder parts - project cost P 31,400,000
Annualized Inflation 2009-2010
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
MALALAG BAY AQUACULTURE AND PROCESSING CORP. Production of fresh and processed milkfish and other marine products - project cost P 30,397.960 SHALDAN PHILIPPINES, INC. Domestic shipping operator - project cost P 19,776,040 MARYGRACE AND RENDELL, INC. Healthcare and wellness products and services - project cost P 10,000,000
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 3.0 2.8 3.6 2.0 4.4 4.0 3.9 3.4 4.1 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 2.8 3.1 4.5 3.8 4.1
Source: National Statistics Office (NSO)/BSP
Balance of Trade by Major Trading Partners: Jan – October 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
12,050.17
5,563.06
6,487.11
924.05
2. United States
11,253.16
4,749.28
6,503.88
1,754.60
3. Singapore
10,762.55
4,344.25
6,418.30
2,074.05
4. China
8,102.84
3,657.39
4,445.45
788.06
5. Hong Kong
6,672.34
3,146.80
3,525.54
378.74
6. Korea, Republic of
4,927.71
3,043.17
1,884.54
-1,158.63
7. Taiwan
4,349.50
2,968.33
1,381.17
-1,587.16
8. Others
20,117.62
12,465.59
7,652.03
-4,813.56
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. 12, December 2010
THE MONTH’S HIGHLIGHTS Two New Airport Bridges For Completion in 2011. The construction of two additional passenger boarding bridges at the Mactan-Cebu International Airport at accost of Pesos 178.6 million will be completed by November 2011. Despite the on -going construction of these two boarding bridges, the Korean International Cooperation Agency (KOICA) proposed three to four more because incoming and outgoing airline passengers may reach five million by the time the projects will be completed next year.
Green Alliance To Make A Stand On Local Environmental Issues. A new alliance composed of more than 30 organizations was formally launched to address environment issues in Cebu Province. The Cebu Alliance for Governance On Health and the Environment was formed because there was a need for stakeholders to make a stand on issues such as fossil fuel use and the plan of the Provincial Government to establish a coal ash secured landfill and the alleged indiscriminate dumping of the coal ash. The alliance will focus on four programs: research or data-gathering, education, legal or community action and livelihood. It is composed of cor. Tindalo St., Makati City, Metro Manila, Philippines ; 759 6690 | Email: info@eccp.com | Website: www.eccp.com lawyers, church leaders, members of the academe and doctors, who ean Busi n ess Com m u n itysigned a manifesto that will be distributed to local government units. DOT-7 To Focus On Community Tourism. For 2011, tourism promotion
will focus on the communities according to the Department of Tourism Region 7 (DOT-7). The department hopes to concentrate on helping communities by empowering townsfolk in training them to be aware of what tourists want. The department hopes to make them proud of their place and willing to assist visitors. Pesos 70M Expansion Eyed. The Islands Group of Companies announced it will spend Pesos 50 to 70 million for 2011 to upgrade its product offerings and services to the growing tourism market. The capital expenditure budget is meant for the acquisition of more bancas for the company’s Islands Banca Cruises, construction of Phase II of the Talima Adventure Park in Mactan, additional Island Souvenir stores and the company’s other tourist related ventures. The company’s products and services were buoyed by renewed market confidence and the growing tourism industry in Cebu. Outsourcing Firm Set To Double RP Work Force. With 500 employees in Cebu, a technology and business process outsourcing (BPO) company hopes to “more than double” its employees by next year. Accenture, which inaugurated its second facility at the Robinson’s Cybergate said they will be adding finance and accounting services for this second facility. Filinvest Land Launched Projects in Cebu. Filinvest Land Inc. (FLI)
launched a four-hectare socialized housing project with 600 units in Sunrise Place Mactan. It also launched Amalfi Oasis , a 150-unit building that is the first of its midrise building projects within Citta de Mare. The project represents part of the 50.5 hectare joint-venture between FLI and the Cebu City Government. And in February, it will open the second project in the Citta de Mare development in the South Road Properties (SRP). San Remo Oasis will consist of eight buildings, with 130 units programmed in the first building. Trans-Asia Shipping Lines To Deploy Largest Vessel. Trans-Asia Shipping Lines, Inc. will deploy its latest addition to the fleet, the MV Trans-Asia 5 for Cebu to Cagayan link. MV Trans-Asia 5 is the largest and fastest newly acquired vessel of the company. With its cruising speed of 16 knots, sailing Cebu to Cagayan waters will be for nine hours only. Aboitiz Sells Transport Unit. Shipping line Negros Navigation will buy a 93.2% stake in Aboitiz Transport System (ATS), operator of the country’s largest ferry service, for $105 million. The merger will make Negros Navigation the biggest ferry operator in the Philippines with 31 vessels. At the same time, ChinaAsean Marine BV will take a controlling stake in Negros Navigation through an equity infusion.