PHILIPPINE
Vol. 23, No. 2 February 2011
FACTSHEET The Month’s Highlights Political
The Commission on Appointments has confirmed the appointments of Health Secretary Ona, Labor Secretary Baldoz, DOST Secretary Montejo, Defense Secretary Gazmin, Executive Secretary Ochoa, Budget Sec. Abad and Transportation Secretary de Jesus. Former Philippine Ambassador to the US, Albert del Rosario, was sworn in as the new secretary of the Department of Foreign Affairs, replacing Alberto Romulo. Malacanang released E.O. 23, signed Feb 1, declaring an indefinite moratorium on the cutting and harvesting of timber in the natural and residual forests of the entire country. The President has ordered DENR Sec. Paje to suspend all large-scale mining applications while the government reviews pending and inactive mining claims this year. Former Armed Forces chief Angelo T. Reyes, embroiled in a probe of alleged corruption in the military, died in an apparent suicide.
Economic
poverty, with nearly a million more Filipinos joining the ranks of the impoverished from 2006 to 2009. The economic freedom in the Philippines, as measured by a Washington DC-based think tank’s yearly Economic Freedom Index, has worsened to the country’s 115th rank out of 183 countries and territories. A list of PPP projects up for bidding before July has been trimmed to the sale of two light railways and an airport plus the construction of an expressway (MRT3, LRT1, Laguindingan Airport in Misamis Oriental and phase 2 of the NAIA expressway – worth US$ 579 million) Regulators have decided to increase ethanol content in gasoline to 10% from 5%, but will give oil firms and ethanol producers six months to prepare. Local oil companies and ethanol producers have been given another year to prepare for the mandated 10% blending of ethanol in gasoline as the government decided to postpone its implementation to February 2012.
The country’s imports rose 25.2% to US$ 4.93 billion in December, bringing total imports for 2010 to US$ 54.7 billion, up 26.5% from 2009. Philippine exports grew by 25.3% in December to US$ 4.1 billion, raising total exports for 2010 to US$ 51.39 billion, up 33.7%. 2010 ended with a trade deficit of US$ 3.27 billion, lower than the deficit of US$ 4.66 billion recorded in 2009.
The BOI has given tax perks to the P630 million twin projects of sister companies Palawan Palm and Vegetable Oil Mills and Agumil Palm Inc. for the production of crude palm oil in Palawan for export to Singapore, Malaysia and China.
The country’s inflation hit a four-month high at 3.5% in January from 3.0% in December on the back of higher food, oil and energy prices.
The BSP has issued the guidelines on the additional single borrower’s limit for exposure of banks to proponents of major infrastructure or development projects (25%), oil companies (15%) and trust corporations.
The economy grew 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%. Economic growth has not led to gains versus
The government’s budget deficit in December hit P40.142 billion, bringing the full-year deficit to P310 billion, well below the P325 billion ceiling.
The Philippines is eyeing entry into the TransPacific-Partnership (TPP) given a longstanding desire to forge a bilateral pact with the US, a major trading partner which has said it would rather forge regional deals.
The government is targeting to come up with the feed-in tariff scheme by the end of March. Meanwhile, the DOE is set to cancel at least 50 service contracts on renewable energy which were found non-compliant. Remittances of Filipinos abroad went up by 8.2% to hit a new record of US$ 18.76 billion in 2010. Investment pledges filed with four incentivegranting agencies rose by 72.7% to P542.6 billion last year with Filipino firms leading the pack. The growth of foreign portfolio investments eased to 13.5% in January from 54.9% in December. The inflow reached US$ 193.09 million in January. The country’s balance of payments registered a surplus of US$ 1.6 billion in January, up 31% from US 1.23 billion in the same month of last year. The country’s gross international reserves hit US$ 63.54 billion as of the end of January. Malacanang detailed 17 measures it wants Congress to prioritize, scheduling a February 28 meeting with the LEDAC to push the agenda. Included are bills on fiscal responsibility, rationalization of fiscal incentives, amending the BOT Law, tweaks to the EPIRA law, the Anti-Money Laundering Act and amending the Labor Code to allow night work for women and the Whistle Blowers’ Act. Not included are the Reproductive Health bill and the Freedom of Information bill. Foreign direct investments went back into positive territory in November, posting a net inflow of US$ 304 million. Net inflows for the 11month period stood at US$ 1.374 billion, down 22.7% from the same period in 2009. The LGU of Pagbilao in Quezon is again considering the sale of the 700-MW coal-
fired power plant sometime in March, despite ongoing negotiations with the national government, again raising uncertainties about the government’s IPPA program.
Business
Ayala Land Inc. hit a record P4.04 billion in net earnings in 2010, up 35% from 2009, on brisk sales across all business segments. The company has earmarked P33 billion for capital expenditures this year to bankroll aggressive expansion. Sun Life Financial Philippines has acquired a 49% equity in Grepalife Financial Inc. and formed Sun Life Grepa Financial Inc.; both companies control insurance assets worth P140 billion. Holding firm UEM Development Philippines plans to issue P2 billion worth of shares to businessmen Henry Sy Jr. and Robert Coyuito Jr. as part of a share-swap deal that will allow the company to gain control of the privatized electricity superhighway operated by National Grid Corporation of the Philippines. SM Prime Holdings Inc. reached P7.9 billion in net income last year, a 12% increase over 2009.
2010 to P5 billion. The DOE has approved the entry of a unit of the Royal Dutch Shell group into an oil exploration area off Palawan. Australia’s Nido Petroleum Ltd. announced Shell Philippines Exploration B.V.’s ‘farm-in’ agreement into Service Contract 54B cleared by the DOE. San Miguel Corp. is acquiring a 70% stake in Philco Aero, the Filipino partner in the Filipino-Korean consortium that submitted an unsolicited proposal to undertake the development and operation of the DMIA Terminal II project in Clark for US$ 144 million. Meanwhile, a committee of the Clark International Airport Corp. proposed to end and reject negotiations with Philco Aero. US-based Clenergen Corp. has forged another agreement with Napocor to solidify its intent to put up biomass facilities that can provide 10-MW in additional capacities to certain off-grid areas, such as Romblon, Kalinga and Palawan. BPI marked a corporate milestone as its net income rose 33% to P11.3 billion in 2010.
in the next few years, with capital expenditure of P30 billion planned for this year.
Investments
Chemrez Technologies Inc., the country’s top biodiesel, resins and oleochemicals producer, is planning to invest almost P400 million on the construction of a new manufacturing plant for green technology products to be exported. West-Zone concessionaire Maynilad Water Services, Inc. is prepared to invest an additional P2.5 billion to increase the capacity of its Putalan water treatment plant, which was inaugurated in January. Maynilad invested P1.4 billion for the plant. Northern Access Mining, Inc. will spend up to P600 million for its exploration activities in five Leyte towns. Yokohama Rubber Co., Ltd. announced an expansion program to increase production capacity to 10 million tires a year from 7 million, with the infusion of an additional investment of US$ 244 million in Clark free port.
Infrastructure
RCBC posted a 28% increase in net earnings to P4.24 billion in 2010.
The government is planning a third-quarter auction for the proposed Batangas-Manila natural gas pipeline (BatMan-1) project.
Empire East Land Holdings, Inc., the middleincome housing company of real estate investor Andrew Tan, has offered to acquire the 103-hectare Food Terminal Inc. in Taguig for P14 billion.
More power generation facilities under Napocor’s Small Power Utilities Group (SPUG) will cease operations by end-March when they finally run out of fuel because of Napocor’s inability to pay for the fuel supplies.
Jollibee Foods Corp. reported a 16% increase in net earnings to P3.06 billion in 2010.
San Miguel Corp. failed to secure another extension for an exclusive period to decide whether to acquire control of an Australian mining firm (Indophil) that has a stake in the US$ 5.2 billion Tampakan copper-gold project in Mindanao.
PLDT has signed a deal with telecommunication companies in Japan and Singapore to build a US$ 430 million ‘next generation, high bandwidth’ optical fiber underwater cable system called Asia Submarine-cable Express.
Negros Navigation Co., Inc. has increased its stake in Aboitiz Transport System Corp. to 98.12% by nearly 5% after completing a buyout of minority stakeholders that cost P226 million.
Australian budget carrier Jetstar Airways is keen to add other Philippine destinations aside from Manila to its network but will need better airports and a friendlier tax policy here (common carriers tax and gross Philippine billings).
DMCI Holdings Inc. reported a net income of P8.85 billion for 2010, up 89% from 2009.
San Miguel Corp. is prepared to invest US$ 1 billion to convert and expand the 620-MW Limay combined cycle power plant in Bataan into a LNG facility with 1,200-MW capacity.
Security Bank hit a record P7.2 billion in net earnings in 2010, up 134% from a year earlier. The merger of Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco Corp. resulted in an unhealthy 93% market share. The net income of Manila Water Co. Inc. rose 24% to P3.99 billion in 2010.
Singapore-based budget carrier Tiger Airways said it would buy a 32.5% stake in SEAIR for US$ 6 million. China Bank Corp.’s net profit jumped 21.9% in
PLDT is ramping up spending in 2011 to ensure that its network is ready for the exponential growth of the mobile broadband services seen
CongressWatch
The House committee on public works and highways has approved a bill that will allow congressmen to have a say on the disposition of proceeds from the road user’s tax, an authority viewed as similar to the so-called pork-barrel fund for public works projects.
Agriculture
The Department of Agriculture will push for the creation of agro-industrial plantations through the ‘Convergence Initiative’ rather than supporting calls from the private sector for an amendment of CARP.
Economic Indicators BANKING INDICATORS
MERCHANDISE EXPORTS In Million USD JAN-DEC 2010 31,079
JAN-DEC 2009 22,182
(%) Change 40.1
Clothing Accessories
1,702
1,525
11.6
Coconut Oil
1,266
595
112.9
Woodcraft & Furniture
1,181
959
23.2
Elect. wiring harness
1,107
752
47.2
Gold
187
250
-25.1
Metal Components
775
481
61.0
Bananas
319
360
-11.4
Tuna
335
327
2.5
Petroleum Products
371
293
26.7
8
22
-62.3
Electronics and Components
Footwear
T-Bills primary issues (%p.a.) WAIR Auction Auction Date - (February 21, 2011 ) 91 days
1.655
182 days
2.414
364 days
3.058
(NI - no issuance) Reserve Money (February 7 - 11 2011) 1,039,844 (million PHP)----Dollar Deposit Rates (% per annum) (February 14 - 18, 2011) Savings Deposits 0.345 Time Deposits 60 days and below
0.866 0.963
238
264
-9.8
61-90 days
Shrimp and Prawns
49
52
-6.4
91 - 180 days
1.110
Basketwork
45
40
12.8
1.212
153
146
4.7
0.3105
Pineapple
OTHERS
12,576
10,187
23.5
TOTAL EXPORTS
51,393
38,435
181 days and above LIBOR/SIBOR (% per annum) (February 25, 2011) Libor 90 days
33.7
Sibor 90 days
0.3088
Libor 180 days
0.4640
Dessicated Coconut
MERCHANDISE IMPORTS In Million USD Electronics and Components Telecommunication Eqpt. and Electrical Machinery Industrial Machinery
JAN-DEC 2010 18,551
JAN-DEC 2009 15,167
(%) Change 22.3
807
858
-5.9
2,483
1,756
41.4
Mineral fuels, lubricants
9,522
7,361
29.4
Transport Equipment
3,429
2,260
51.7
588
550
6.9
Cereals
2,200
1,887
16.6
Iron and Steel
1,222
920
32.8
702
562
25.1
1,177
768
53.3
Metal Products
568
439
29.6
Power Generating Machinery
430
352
22.0
Misc. Manufactured Articles
578
504
14.8
Paper and Paper Products
601
482
24.6
Dairy Products
715
456
56.6
Textile Yarns, Fabric
Chemicals Plastics
OTHERS
11,129
8,771
26.9
TOTAL IMPORTS
54,702
43,092
26.9
Sibor 180 days 0.4744 Banking Lending Rates (% per annum) (February 14 - 18, 2011) All maturities 6.815 (one year and below)
6.815
(more than 1 yr. - 2 yrs.)
6.815
(over than 2 yrs.)
6.815
GROSS INTERNATIONAL RESERVES In Million U.S. Dollars January February March April May June July August September October November December
2011 63,541
Source: National Statistics Office / BSP
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2010 45,592 45,764 45,579 46,944 47,690 48,704 49,042 49,906 53,754 57,154 60,566 62,371
BOI approved investment project
Peso Exchange Rate (end month)
January - September 2010 SUMILON ISLAND TANKERS INC. Operator of domestic/inter island shipping - project cost P 614,960,000 GENSAN SHIPYARD AND MACHINE WORKS, INC Operator of shipbuilding and ship repair of twin slipways project - project cost P 360,676,754 SMITH BELL MINI-HYDRO CORP Mini-hyrdro plant in Solano, Nueva Vizcaya - project cost P 180,365,000 CENTURY PEAK CORP Producer of nickel and chromite ore - project cost P 144,403,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
2011 USD 44.09 43.84
2011 EURO 60.04 60.28
43.96
60.16
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 2010-2011
PHOENIX PETROLEUM PHILS. INC. Storage, marketing, and distribution of petroleum products - project cost P 108,000,000 TAIPHIL PROTECH INDUSTRIAL INC. Producer of electronic transformer - project cost P 14,921,000 MANILA TYPESETTING CO., INC. BPO - project cost P 6,160,000 MANILA CROWN AND IMPLANT LABORATORY INC. Export producer of dental prosthesis - project cost P 4,000,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ave.
Philippines Metro Manila 2011 2010 2011 2010 3.5 4.3 3.9 3.6 4.2 4.1 4.4 5.0 4.4 5.3 4.3 4.6 3.9 4.1 3.9 4.1 4.0 4.5 3.5 3.5 2.8 2.2 3.0 3.6 3.0 3.4 3.5 3.8 3.9 4.0
Outside MM 2011 2010 3.4 4.6 4.3 4.1 4.1 4.2 3.9 3.8 3.8 3.5 2.9 2.8 2.8 3.4 3.7
Source: National Statistics Office (NSO)/BSP
Balance of Trade by Major Trading Partners: January – December 2010 (F.O.B. Value in Million U.S. Dollars) Country
Total Trade
Imports
Exports
Bal. of Trade
Total
106,094.40
54,701.86
51,392.54
-3,309.32
1. Japan
14,544.74
6,746.66
7,798.08
1,051.42
2. United States
13,413.38
5,856.57
7,556.81
1,700.24
3. Singapore
12,515.81
5,184.50
7,331.31
2,146.81
4. China
10,301.29
4,600.08
5,701.21
1,101.13
6. Hong Kong
7,716.35
3,383.64
4,332.71
949.07
5. Korea, Republic of
6,055.94
3,827.76
2,228.18
-1,599.58
7. Taiwan
5,421.17
3,669.27
1,751.90
-1,917.37
8. Others
36,125.72
21,433.38
14,692.34
-6,741.04
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. 19, No. 2, February 2011
THE MONTH’S HIGHLIGHTS New Cities Survive. The 16 new cities, including three in Cebu (Bogo, Carcar and Naga) were given fresh lease on life with the Supreme Court ruling upholding the constitutionality of the cityhood laws. However, the League of Cities of the Philippines may file a motion for reconsideration, its first under the new ruling. Pesos 11 M Pushed For Treatment of Landfill’s Wastewater. The Department of Environment and Natural Resources (DENR) gave the city government until 31 March to improve the landfills’ waste discharge quality otherwise they will impose a penalty, a minimum of Pesos 10,000 a day, once the city fails to meet the deadline. To avoid the penalty, the city councillors pushed for an appropriation of Pesos 11.8 million for the construction of wastewater treatment facility for leachate produced by the Inayawan Sanitary Landfill. Cebu Central Visayas To Focus on Agriculture, Research & Development. One of the programs under the Central Visayas Medium-Term Development Plan will focus on research and development, aimed at making the region’s agriculture, industry and services more competitive. Approved by the Regional Development Council, the plan seeks to establish modern agricultural facilities and research centres in the region. The region, under the plan, will also establish facilities for product quality assurance, science fairs and training and scholarship programs. ‘Keep Business Permit Process Simple’. Local officials who want to attract more businesses need to limit their business permit requirements to those specified by law, zoning ordinances or other regulations. Mayors were requested to give conditional permits to businesses that lack clearances from the Social Security System, PhilHealth and Pag-ibig Fund. Among Southeast Asian nations, the Philippines is the second most difficult place to start business, next to Laos. The report said it takes 15 steps to register a company here versus just one in Canada, while hitting difficulties in securing construction permits, accessing credit and closing a business. Firm Sets Aside $1.5 B For Projects. Aboitiz Power Corp., the power business of the Aboitiz Group of Companies, is setting aside $1.5 billion to finance seven power projects that will start
construction this year. The $1.5 billion in capital expenditures will be spent until 2014 to finance the construction of new power plants, including the 300-megawatt coal plant in Davao, the 600megawatt coal plant in Subic and five hydropower plants in Mindanao and Benguet, with a total capacity of 55 megawatts.The hydropower plants are targeted to be completed by 2012, the coal power plants by 2013. Aboitiz Hints FBMA Shipyard May Re-Open. While the Philippines still remains as the fourth largest shipbuilder in the world, the Aboitiz Group, part-owner of FBMA Marine Inc, is considering to re-open the facility that was closed in 2009. As the market is seen to be recovering, Aboitiz said it is possible to re-open the FBMA facility. FBMA is the only shipbuilding facility for catamarans or fast crafts in the Visayas. It was established in 1997 and built high-speed ferries, roll-on-roll-off vessels and other specialty vessels for countries in Europe, Asia and Australia. In 2009, FBMA closed its facilities in West Cebu Industrial Park because of the declining orders from its clients abroad. European Firm Eyes Cebu As Asian Hub. A European translation company is set to put up its Asian headquarters in Cebu within the next few months and to hire around 100 workers within two years of its operations. As the first translation company to locate in Cebu, Lingo 24 is optimistic about its prospects. Aside from Cebu being a hub with all direct international flights that gives it accessibility to and from other countries, the optimism is also fuelled by the openness of the people including academe. All the universities of Cebu have committed to help in any way to start up its operations. Lingo 24 operates in the United Kingdom, the United States, Paris, Berlin, Cham, Zurich, Stockholm, Panama, Christchurch, Timisoara, Tokyo and Shanghai. It offers translation services for French, German, Swiss, Swedish, Spanish, Romanian, Japanese and Chinese. Cebu Career Centre Hub. Noting that many jobseekers from other parts of the country converge in Cebu, a job-site is taking a step further by offering a career centre for three months. Jobstreet announced that it is opening the first Cebu Career Centre Hub at the SM City Cebu. The hub features a hiring corner every Friday where four companies can hire on the
sport. Saturdays will feature free career services with career consultations. For the rest of the week, instructional videos and career advice and computers for jobseekers to sign up with Jobstreet and browse through the job offerings will be available. Doctors See Need To Invest In Medical Facilities. For Cebu to gain a strong foothold in becoming a medical tourism site, medical practitioners recommend the improvement on medical facilities. Hospitals should continue to invest and upgrade their medical facilities. In Cebu, only Chong Hua Hospital has an international accreditation from the Joint Commission International (JCI), an international agency that sets international standards and evaluates facilities based on the quality and safety of patient care. Cebu City To Train Scholars For BPO, KPO Jobs. Stakeholders will continue to sell Cebu as a call centre destination, but they also want to improve and increase the pool of highly skilled workers with technical knowledge so Cebu can lead in the booming knowledge process outsourcing (KPO) sector. To help achieve this, Cebu City Hall will focus its call centre training program on its 5,000 college scholars focusing on special skills and higher level of knowledge. Demand For Aerial Tours Taking Off. Cebubased aviation service provider Aviatour reported an increasing demand for aerial tours, as local and foreign tourists try a new way of discovering the country’s tourist attractions. The company’s aerial tour demand increased by 25% in 2010 with an average of 20 flight tours in a day. HRRAC, CATO: Restroom Ordinance “AntiBusiness”. The Hotel, Resorts and Restaurants Association of Cebu (HRRAC) as well as the Cebu Association of Tour Operators (CATO) are strongly opposed to the proposed ordinance in the Cebu City Council that compels all business establishments to open their comfort rooms for public use. HRRAC and CATO described the proposed ordinance as “anti-business”. The associations argued that opening the doors of any establishment to non-transacting clients who wish to use their comfort rooms will lose the privacy and exclusivity of their customers. They instead urged the city government to provide restrooms for the public saying that it is the government’s responsibility to provide the needed public restrooms.