PHILIPPINE
Vol. 23, No. 1 January 2011
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 debtto-GDP cap of 55%. The President lobbied for the Fiscal Responsibility Bill which seeks to require Congress to ensure that revenueeroding measures be matched with revenuegenerating ones.
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.
The Philippines will sign a logistics supply deal with China to source military equipment to combat domestic security threats.
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 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 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’.
The Senate concurred with Malacanang’s grant of amnesty to soldiers who rebelled against the Arroyo administration.
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 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 state prosecutors.
Economic
An industry-led fourth quarter acceleration allowed the economy to grow by 7.3% (GDP) in 2010, a pace well over target and the fastest in more than two decades. The industry sector expanded by 12.1%, services grew by 7.1% while agriculture shrank by 0.5%.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The Aboitiz clan is exiting the shipping business
The government has set aside roughly P3
Infrastructure
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 MERCHANDISE EXPORTS In Million USD
BANKING INDICATORS T-Bills primary issues (%p.a.) WAIR Auction Auction Date -(January 24, 2011 ) 91 days
N.I
182 days
N.I
364 days
N.I
JAN-NOV 2010 28,824
JAN-NOV 2009 20,294
(%) Change 42.03
Clothing Accessories
1,564
1,393
12.21
Coconut Oil
1,161
507
128.87
Woodcraft & Furniture
1,068
891
19.93
Elect. wiring harness
1,009
666
51.35
Gold
146
237
-38.31
Metal Components
709
434
63.33
Bananas
274
337
-18.60
Tuna
307
302
1.60
Petroleum Products
299
258
15.80
7
21
-65.28
60 days and below
0.829
61-90 days
0.959
Electronics and Components
Footwear Pineapple
(NI - no issuance) Reserve Money (January 10 - 14, 2011) 1,078,803 (million PHP)----Dollar Deposit Rates (% per annum) (January 17 - 21, 2011) Savings Deposits 0.346 Time Deposits
208
239
-12.71
Shrimp and Prawns
45
48
-5.82
91 - 180 days
1.015
Basketwork
41
36
12.78
1.176
136
137
-0.68
0.3044
OTHERS
11,424
9,315
22.64
TOTAL EXPORTS
47,220
35,115
181 days and above LIBOR/SIBOR (% per annum) (January 31, 2011) Libor 90 days
34.48
Sibor 90 days
0.3090
Libor 180 days
0.4538
Dessicated Coconut
MERCHANDISE IMPORTS In Million USD Electronics and Components Telecommunication Eqpt. and Electrical Machinery Industrial Machinery
JAN-NOV 2010 16,845
JAN-NOV 2009 13,907
(%) Change 21.1
903
675
33.7
2,247
1,556
44.4
Mineral fuels, lubricants
8,581
6,600
30.0
Transport Equipment
3,055
2,049
49.1
530
516
2.8
Cereals
2,049
1,798
14.0
Iron and Steel
1,105
859
28.6
643
516
24.7
1,078
700
53.9
Metal Products
501
393
27.4
Power Generating Machinery
388
319
21.7
Misc. Manufactured Articles
527
465
13.3
Paper and Paper Products
548
448
22.3
Dairy Products
658
399
64.8
Textile Yarns, Fabric
Chemicals Plastics
OTHERS
10,114
7,954
27.2
TOTAL IMPORTS
49,772
39,155
27.1
Sibor 180 days 0.4655 Banking Lending Rates (% per annum) (January 17 - 21, 2011) All maturities 6.779 (one year and below)
6.779
(more than 1 yr. - 2 yrs.)
6.779
(over than 2 yrs.)
6.779
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 62,371
Source: National Statistics Office / BSP
visit us at www.eccp.com
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)
SEMI-CALACA POWER CORPORATION Power generation - project P 22,990,000,000 NIDEC SUBIC PHILIPPINES CORP. Producer of fluid dynamic bearing, motors, and parts for vertical magnetizing technology for HDD - project cost P 955,301,000 INOZA AGRO DEVELOPMENT CORPORATION Producer of broiler chicken - project cost P 352,494,000 MT. MAKILING INTERNATIONAL OIL INC. Producer of crude palm oil based products - project cost P 93,815,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
2011 USD 44.09
2011 EURO 60.04
44.09
60.04
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
2010 EURO 65.30 62.95 59.39 59.08 57.49 57.50 57.50 57.50 57.50 57.50 57.50 57.50 58.89
Source: BSP
Annualized Inflation 2009-2010
DAVAO PACKAGING CORPORATION Producer of consumer pack plastic bags - project cost P 70,163,422
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
COSTAMEX INC. Producer of fresh pineapple - project cost P 32,000,000 TAIPHIL PROTECH INDUSTRIAL INC. Producer of electronic transformer - project cost P 14,921,000 DMSI INTERNATIONAL FIBER MANUFACTURING Producer of fiber optic products - project cost P 4,695,100
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 3.0 4.4 3.4 4.0 3.8 3.4 4.0 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 2.8 4.5 3.7 4.1
Source: National Statistics Office (NSO)/BSP
Balance of Trade by Major Trading Partners: January – November 2010 (F.O.B. Value in Million U.S. Dollars) Country
Total Trade
Imports
Exports
Bal. of Trade
Total
96,992.11
49,771.61
47,220.50
-2,551.11
1. Japan
13,304.70
6,149.35
7,155.35
1,006.00
2. United States
12,304.99
5,312.19
6,992.80
1,680.61
3. Singapore
11,657.44
4,776.06
6,881.38
2,105.32
4. China
9,229.02
4,123.97
5,105.05
981.08
6. Hong Kong
7,209.59
3,276.50
3,933.09
656.59
5. Korea, Republic of
5,453.16
3,410.54
2,042.62
-1,367.92
7. Taiwan
4,884.72
3,309.43
1,575.29
-1,734.14
8. Others
32,948.49
19,413.57
13,534.92
-5,878.65
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. 19, No. 1, January 2011
THE MONTH’S HIGHLIGHTS A 4.5% increase from 2009 was seen in Central Visayas’ tourism industry during the first 6 months of 2010. The number of tourist arrivals in the region reached 1.173 million. Cebu Province had the most number of visitor arrivals in Central Visayas during the first semester of 2010. Mandaue City launched its P30-million full automation project connecting its 27 barangays, 13 remote offices and two Business One-Stop Shops to City Hall via wireless connectivity. Aside from faster completion of business permits, the project is inclusive of tax mapping provision such that the category of a business and its background would already be encoded in the city’s computers. Data gathered from the survey would determine which businesses have or have not paid taxes and/or secured business permits. The European Chamber of Commerce of the Philippines (ECCP) and Makati Business Club (MBC) introduced the Integrity Initiative Project to the Cebu business community. The project begins by getting top management of companies to lead by example in the fight against corruption and operate their businesses ethically and with integrity. The project envisions an eventual certification and accreditation system for companies, just like the ISO system, to make it sustainable. At the end of the forum groups have thrown in their support for the Integrity Initiative. Companies such as 33 Point 3 Exports, Inc., Alenter Resort Hotels, Inc., Christ Philippines, Inc., CP Kelco Philippines, Inc., Dedon Manufacturing Inc., East Asia Utilities Corp., Interior Crafts of the Islands, Inc., Kor Landa Corp., Primary Software Development Corp., and Ramon Aboitiz Foundation, Inc. have signed the Integrity Initiative Pledge. Cebu City Government has allocated an additional budget to support Cebu Investments and Promotions Center (CIPC) to aid in the promotion programs of IT/BPO and tourism sectors. According to CIPC, a budget of P3 million a year limits its trips to participate international promotion events resulting to
serving only the visiting investors of Cebu. No specific amount was disclosed. A skills assessment conducted by CIBI Information showed a 7.4 % gap in verbal abilities between those who are still studying and those who are already in the industry. A gap between the graduating talent pool and employable talent pool has been observed by service providers, especially those in knowledge process outsourcing. To cater to the growing Overseas Filipino Workers in the region, the Ayala Center Cebu is set to construct and complete its Phase 2-B project by 2013. The P2.8 billion project will be constructed at the South Surface Parking catering to a bigger Rustan’s department store as well as luxury signature retail brands such as Zara and some locally-owned brands. The four-level structure will also feature eco-friendly architecture such as the recycling of grey water to be used for its landscaping irrigation, cooling towers and flushing of water closets in the restrooms. Korea Southern Power Co. wants to put a power plant in Cebu. The company wants to apply renewable energy technologies such as wind farms and solar plants. The Provincial Government of Cebu has assured the company of its support for the project to take off. Gardenia Bakeries Philippines, Inc. opened a bread manufacturing plant in Lapu-Lapu City. The plant is serving Bohol, Cagayan de Oro, Butuan, Iligan, Malaybalay and Davao City. The P25-million facility is an expansion of Gardenia’s Laguna plant. An additional P100 million by the end of the year is planned to be invested to improve logistics and capacity expansion depending on the performance of the operations. Gardenia is also looking at possible expansions in Mindanao in three years time. The Majestic Legacy Development Corporation introduces its flagship project—the P200 million Lot8 condominiums in Mabolo City, offering a total of 231 middle to high end units. Lot8 will be completed in the 4th quarter of 2012. MLDC
is also preparing for the launch of an 8-hectare facility, in San Francisco, Camotes Island, the first commercial seaside development. Nexus Real Estate Corp. will put up three residential projects including a condotel property in Mandaue City and Minglanilla. The housing project 48-unit Kamalaya II Residences in Tunghaan, Minglanilla is targeted to finish by first quarter of this year and will be sold from P1.5 million to P3 million. The second horizontal project called Maple Point will be built in Paknaan, Mandaue near the North Reclamation Area. Shemberg will sell its 18-hectare property in Basak, Mandaue to the BPO/IT sector. From the sales, P1.5 billion will be used to build modern seaweed processing factories in Indonesia, Cebu and Zamboanga. The company also wants to double its capacity for iota carrageenan, an ingredient for toothpaste and pharmaceutical products, to 3,000 tons from the current 1,500 tons per year. Mactan Cebu International Airport is ready to accommodate more flights with its P178million expansion project expected to be done by November. The expansion will include the addition of two more air bridges and tubes for both domestic and international terminals that are expected to quicken the movement of passengers. The home and fashion accessories exporters still see Original Product Manufacturing (OPM) strategy as their ‘lifeblood’. A lot of established signature and luxury brands still considers Cebu as the best OPM location compared to China. The Cebu Gift, Toys and Houseware sector expects a 5 to 7% increase in export sales considering the positive growth of the US market. In its year-end report, South Road Properties Management Office recorded the P2.7 billion earnings from SM, Pilipinas Water Resources, Inc. and the collection of P342 million from Filinvest Land Inc. as payment to its purchased lots.