Philippine Business Report (May2013)

1May 2013

Volume 24 No. 05 May 2013

The Philippines has fi nally achieved its fi rst-ever investment grade rating after credit rating agency Fitch Ratings raised the country’s rating to BBB- from BB+ on the back of “resilient economic growth” and fi scal reforms.

"The Philippines has experienced stronger and less volatile growth than its 'BBB' peers over the past fi ve years," Fitch said.

President Benigno S. Aquino III said the upgrade could lead to a "virtuous cycle of growth, empowerment, and inclusiveness that will redound to the benefi t of Filipinos across all sectors of society."

Manila-based Asian Development Bank (ADB) called the upgrade as "unprecedented in the Philippines."

Fitch cited remittances, the resilient economy, and reforms as among the reasons for the credit rating upgrade.

“The Philippines’ sovereign external balance sheet is considered strong relative to ‘A’ range peers, let alone ‘BB’ and ‘BBB’ category medians.

A persistent current account surplus (CAS), underpinned by remittance infl ows, has led to the emergence of a net external creditor position worth 12% of GDP by end-2012, up from 6% at end-2010,” Fitch said.

Besides the faster-than-expected growth of the economy last year, Fitch also lauded reforms undertaken by the government in fi nances.

“Any investment grade is always a positive as it means improvement in your competence,” Summit Securities President Harry Liu told PhilStar.com.

Aquino also said the credit rating upgrade is seen to encourage more companies to consider the Philippines an investment destination.

“Investment grade for sovereign debt should also lead to lower borrowing costs for Philippine companies in the international markets, consequently allowing for higher valuations for their schedules. This in turn enables industries to expand and generate more jobs for our countrymen,” Aquino added.

The ADB said the rating "can trigger the kind of investment that will help carry the country into its next phase of development.”

On the same note, multinational bank Barclays expected the Philippines to secure an investment grade from three major rating agencies ahead of Indonesia.

Barclays said the Philippine government’s debt situation continued to improve, driven by fi scal consolidation, and strong real growth. It projected that the country would receive its second investment grade in the next six months.

“We believe that the Philippines will be rated investment grade by all three major rating agencies before Indonesia, as political concerns and external vulnerability are likely to remain a key ratings constraint for the latter in the coming 18 months,” Barclays said.

[Editor’s Note: As of this writing, the Philippines has received its second investment grade rating, this time from Standard & Poor’s (S&P)].

PHL gets investment grade

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INDUSTRYTRENDS

Foreign funds to fl ock in PHLGlobal fund managers are expected to allot more funds to the Philippines, after the country recently received its fi rst two investment grade credit rating.

BNP Paribas Investment Partners is betting on Southeast Asia, especially Indonesia and the Philippines.

“For us, Asia is our safe-haven investment most of the time,” said Fischer Francis Trees & Watts’ John Morton.

“In the past few years, we’ve been reallocating money out of emerging Europe and redeploying it in Asia, primarily in Indonesia and the Philippines,” Morton said.

The Philippines received its fi rst two investment grade ranking when Fitch Ratings and Standard & Poor’s (S&P) raised it one level to BBB- recently.

After the Fitch upgrade, S&P and Moody’s should follow suit, which will “add fuel to the fi re of confi dence,” Templeton Emerging Markets Group Head Mark Mobius said.

“We are now offi cially an investment grade country with this upgrade by Fitch and S&P, and this is an achievement that we all should be proud of. We have been talking about this in the past 12 months and we think it is well deserved,” Philippine Stock Exchange (PSE) President and Chief Executive Offi cer (CEO) Hans Sicat said.

“Hopefully, Moody’s will follow suit so we can start seeing more investors participate in the growth of our listed companies and the economy,” Sicat said.

PHL BPO industry revenues to hit USD 16B this yearThe Philippine business process outsourcing (BPO) can sustain its growth momentum, with annual revenues reaching USD 16B this year as the country remains one of the world's top BPO destinations.

"The country's economy is growing and so is the need for support services. The BPO industry is well prepared to address this," Transcom Philippines' Country Manager Siva Subramaniam said.

The Luxembourg-based Transcom is one of Europe's biggest (BPO) fi rms.

Philippine BPO revenues have risen steadily since 2009. Last year alone, BPO companies raked in USD 13.5B in revenues, or 22% higher than in 2011.

"Our outlook is similar to that of the Information Technology and Business Process Association of the Philippines (IBPAP)," Subramaniam said.

The IBPAP forecasts the Philippine information technology and business process management (IT-BPM) and global in-house center (GIC) will generate USD 16B in revenues at the end of 2013.

The IT-BPM and GIC industry is expected to further grow in the next three years with revenues reaching USD 25B by 2016 while providing direct employment to 1.3M Filipinos and supporting 3.2M indirect jobs.

Singapore brands explore business opportunities in PHLThe Philippine Franchise Association (PFA) and the Philippine Retailers Association (PRA) recently hosted a delegation of Singaporean businesspeople wanting to establish their brands in the country.

PFA President Elizabeth “Yvette” Pardo-Orbeta said this is a testament that the Philippine market has grown very attractive to international brands, noting that PFA has been getting lots of inquiries of expansion opportunities in the country from as near as Singapore to as far as Sweden.

“This also serves as a reminder for Philippine companies to raise their global competitiveness in light of the expected infl ux of foreign brands with the country’s improving economy,” She added.

“The optimistic economic outlook has also inspired Philippine brands to set their sights in overseas markets, especially in Asia where the center of growth is gradually shifting,” she said.

Cement gets big boostDemand for cement rose by 18% in 2012, the steepest in 15 years, the Cement Manufacturers Association of the Philippines (CeMAP) reported.

Prospects for the industry remain good for 2013, with the growth rate this year seen at 10%.

CeMAP President Ernesto Ordoñez said higher government spending on infrastructure would boost turnover.

Increased investments by the private sector in building developments are also expected to fuel the sector’s expansion this year.

“Given the rapid growth in construction investments, the outlook for the cement industry is positive, and most players are engaged in expansion plans to meet the growing demand for cement, aggregates, and concrete,” Lafarge Holdings President Don Lee said.

Several of the largest companies in the sector had posted strong earnings in 2012 due to private sector increased investments.

3May 2013

Gov’t spending on infra projects up Government spending on infrastructure and other capital outlay rose by 57.7% to P250.8B last year, the Department of Budget and Management (DBM) reported.

DBM Secretary Florencio B. Abad said the increase refl ects the Aquino Administration’s goal of advancing infrastructure development to support the country’s long-term growth strategy.

“Last year’s spending levels will buoy our growth strategy this year as we look forward to pouring more investments into infrastructure and capital outlay in 2013. The development of roads and bridges, for example – as well as ongoing initiatives to increase access to tourism hotspots and improve irrigation facilities – will help generate jobs and create thriving markets for local industries,” Abad said.

Spending for maintenance and other operating expenses (MOOE) rose by nearly 28% to P256.7B.

Personal services went up by 8.4% to P542.6B largely due to the implementation of the last tranche of the Salary Standardization Law (SSL) III.

Export opportunities for PHL agri aboundMore exports of Philippine agricultural products can be expected following the country’s participation in a German trade fair, the European Chamber of Commerce of the Philippines (ECCP) said.

ECCP Executive Vice President Henry Schumacher said the presence of a Philippine Pavilion at the Fruit Logistica Germany would allow the country to further expand and diversify the markets for locally produced fruits and vegetables.

“We believe that fresh produce coming from the Philippines can be competitive in the European market and Fruit Logistica was the best venue to showcase the country,” Schumacher said.

“During the expo, we have seen a demand for good quality fruits and vegetables from the Philippines in the world’s fresh produce market,” he said.

Roadmap expands PHL auto productionGovernment is crafting a new motor vehicle industry roadmap to ensure that the country gains a bigger share of the Association of Southeast Asian Nations (ASEAN) region’s growing automotive production volume.

Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said the new roadmap will be different from the past Motor Vehicle Development Program (MVDP).

“We will come up with a new plan for the automotive sector that will bring us closer to our aspiration to give us a larger share of the production volume in ASEAN,” said Domingo.

He said the plan assumes an expanding domestic market as the country’s economic growth would trigger a motorization age.

“As we motorize, domestic production will increase. And with that, we’re hoping that we can have an environment good enough for the big auto manufacturers to actually locate some of their regional production outside,” Domingo said.

Silk exports upSilk exports rose 17% last year on higher international demand for silk fabrics, the Fiber Industry Development Authority (FIDA) reported.

Export earnings from silk and silk products reached USD 457,177 last year, up from USD 390,796 in 2011.

The country shipped 54,810 sqm of silk fabrics last year and most of them were exported to India, the United States (U.S.), and Germany.

FIDA Administrator Cecilia Soriano said her offi ce is working on its silkroadmap to revive the silk industry and increase the country’s exports earnings.

Soriano said the agency expects to complete this year the silk roadmap to help the industry propagate silk production to other areas in the country, and capture the gap in the worldwide silk supply.

She said that the short-term approach (2014 to 2017) would focus on the development of more silkworm nurseries and expansion of areas planted to mulberry, the only food source for silkworms.

For the long term (2018 to 2027), FIDA hopes to establish silk-weaving facilities that would be linked to funding and marketing from the private sector.

Food exports seen growing 10%Food exports are projected to grow 6%-10% annually over the next two years, the Philippine Food Processors and Exporters Organization, Inc. (PHILFOODEX) reported.

PHILFOODEX President Roberto C. Amores said the country’s food exports reached USD 3.55B in 2012.

Amores, however, cited the need to resolve various concerns in the sector, including access to technology and cheaper inputs,

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TRADE ANDINVESTMENTS

investment and fi nance regulations, the peso appreciation against the dollar, and market access.

GDP to rise on strong remittancesRemittances from Filipinos working abroad exceeded USD 21B in 2012, an 8-% growth in January, better than the 5-% offi cial target.

“Remittances from our overseas Filipinos (OFs) will continue to be a steadying factor,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said during the 29th biennial convention of the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII).

The balance of payments (BOP) is also seen to remain in surplus, which in turn will support an even higher level of gross international reserves (GIR). At end-2013, the GIR is projected to reach USD 86B.

The country posted a BOP surplus of USD 9.3B in 2012 and USD 10.2B in 2011.

Notably, the foreign exchange reserves hit an all-time high of USD 84B in 2012, enough to cover a year of import requirements. They were also up by about 12% from USD 75.3B in 2011.

Mining investments to reach USD 1BWith the lifting of the moratorium on the acceptance of new applications, mining investments in the country are expected to reach USD 1B this year, exceeding government’s revised target of USD 718M, the Mines and Geosciences Bureau (MGB) said.

Memorandum Order No. 2011-01, which was issued two years ago, suspended the acceptance of all types of mining applications including exploration permits, mineral production sharing agreement, fi nancial or technical assistance agreement, and industrial sand and gravel licenses.

MGB Director Leo Jasareno said that 1,200 mining areas previously

AGRICULTURE/AGRIBUSINESS AND FISHERY

Thai fi rm eyes USD 120-M investment in PHLCharoen Pokphand Foods (CPF) Philippines Corporation plans to invest a total of USD 120M in the Philippine agribusiness sector, CPF Philippines Finance Offi cer Kasem Manoi said.

“We are expanding our livestock and aquaculture business in Pampanga in the next three years,” Manoi said.

CPF also plans to boost the operations for shrimp hatchery and fi sh culture nationwide.

PEZA lists Alliance Select GenSan facilityThe Philippine Economic Zone Authority (PEZA) has registered the tuna cannery and salmon processing areas of listed food company Alliance Select Foods International, Inc. (ASFI) as an agro-industrial zone.

ASFI said a registration agreement was signed for the establishment

of Alliance MHI Properties, Inc.’s (AMHI) 82,016-sqm Foodport Processing Zone (FPZ) in Barangay Tambler, General Santos City.

AVIATION

PAL to acquire new aircraftThe Philippine Airlines (PAL) is set to acquire four new aircraft as part of its re-fl eeting program involving the purchase of 100 airplanes.

“We are looking if we can buy additional four Airbus long-range aircraft. If we are able to close the deal this month, the delivery could be as early as next month,” PAL President and Chief Operating Offi cer (COO) Ramon S. Ang said.

The airline is looking at acquiring either Airbus A330 aircraft that can be used for long-haul fl ights to Honolulu, Australia, or Japan or A340 that can be used for transpacifi c destinations such as the United States (U.S.), Vancouver, or Europe.

Ang added that the company would likely acquire 70 new aircraft this year including 69 Airbus aircraft from European Aeronautic Defence and Space Company (EADS) and three from Boeing Company.

Cambodia Airlines and SMC sign joint venture agreementCambodia Airlines, a majority-owned Cambodian company, and San Miguel Corporation (SMC) have signed a joint venture agreement to set up a Cambodia-based airline to service domestic and regional fl ights.

covered by mining permit applications that were canceled during the two years that the moratorium was in effect would now be open to new mining applications.

“We see a positive outlook in the mineral-development sector and the revised target of USD 718M will likely be surpassed,” Jasareno said.

He said the MGB has already reviewed 2,100 mining applications, including 500 that passed the MGB standards. Another 400 mining applications were still under appeal.

5May 2013

“These are exciting times for the local aviation industry. The establishment of a full-fl edged Cambodia-based airline is a natural step for Cambodia,” Cambodia Airlines President Kith Meng said.

SMC President Ramon S. Ang said the joint venture is another strategic move of San Miguel to continue their diversifi cation into fast-growing industries and economies.

The agreement states that Cambodia Airlines will have a 51-% share while SMC will have the remaining 49%.

BANKING

PNB starts renovatingThe Philippine National Bank (PNB) has started the renovation of its branches to carry the new retail branch design after its merger with Allied Banking Corporation in February.

“The branch follows the new branch design which provides a comfortable and enjoyable banking experience to the clients,” PNB said.

PNB continuously expands its branch network throughout the country, which now comprises 627 branches and 800 automated teller machines (ATMs) nationwide.

PNB also aims to make all branches a one-stop shop for clients’ banking needs.

BPO

Emerson to invest P2B for expansionEmerson is set to invest P2B in expanding its business process

outsourcing (BPO) operations in Metro Manila over the next several years.

“Emerson is making signifi cant investments in Metro Manila and continues to expect operating for many years in Manila,” Emerson Manila Shared Services General Manager George Mulligan said.

Mulligan said the investment would exclude the company’s expenses on training and human resource development program.

Talent2 opens new 500-seat shared service centerThe Human Resource Business Process Outsourcing (HR BPO) company Talent2 has opened a new 500-seat shared service center in Eastwood, Quezon City to give better service to its clients.

“We picked the Philippines because of talent, time zone, English-speaking profi ciency, and its fun people,” Talent2 Global Managing Director Mary Sue Rogers said.

Rogers said the fi rm chose Philippines not only for its ideal location but also for its being an important market where the company could grow.

The new facility provides HR advisory, recruitment, payroll, and learning to clients from the Philippines, Malaysia, Singapore, Hong Kong, and Australia.

Transcom Worldwide expects manpower growthTranscom Worldwide (Philippines), Inc. is expecting manpower to grow by at least 35% this year on the back of sustained expansion of the business process outsourcing (BPO) sector.

“Our outlook and forecast is similar to that forecast by Information Technology and Business Process Association of the Philippines (IBPAP). We expect employees to grow 35% by the end of this year,” Transcom Country Manager and Head of Sales Siva Subramaniam said.

Subramaniam said the Philippine IT and BPO management and global

in-house center industry was expected to further grow in the next three years, with revenues reaching USD 25B by 2016, providing direct employment to 1.3M Filipinos and supporting 3.2M indirect jobs.

JPMorgan business support to transfer to PHLThe United States (U.S.)-based JPMorgan Chase & Co. is likely to transfer more of its business support functions to Manila, a move that is expected to generate more jobs for the country’s business process outsourcing (BPO) sector.

House Deputy Majority Leader and Pasig City Representative Roman Romulo said JPMorgan is seen to move more of its support operations to the global in-house center (GIC) in Manila to reduce costs in the next 24 months.

“This augurs well for our fresh college graduates and young professionals looking for gainful outsourcing service jobs,” Romulo said.

Global corporations “have aggressively conveyed non-core, labor intensive, and information technology (IT)-enabled business support jobs to the Philippines, a lower cost location with ample supply of fl uent English-speaking college graduates,” he added.

ENERGY

Malampaya consortium readies USD 1-B expansionThe Shell-led consortium behind the Malampaya deep water-to-gas power project is now preparing for the second and third phases of the landmark natural gas facility.

Pilipinas Shell Petroleum Corporation Country Chairman Edgar Chua said the consortium is investing an additional USD 1B for Malampaya 2 and 3, most of which would be in-country investments.

Shell Philippines Exploration BV and its joint partners Chevron Malampaya LLC and Philippine National Oil Company-Exploration

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Corporation (PNOC-EC) operate the Malampaya project in offshore Palawan.

NGCP seeks ERC okay on P2.4-B transmission projectThe National Grid Corporation of the Philippines (NGCP), the country’s power transmission highway operator, is seeking the Energy Regulatory Commission’s (ERC) approval for a P2.41-B transmission project in Northern Luzon.

In a petition fi led before the ERC, NGCP sought for a provisional authority for the implementation of its Tuguegarao-Lal-lo (Magapit) 230 kilovolt (kV) transmission line project which would improve the power quality and supply reliability in the northern part of Luzon. The project is targeted for completion by 2016.

First Gen eyes USD 100-M gas pipelineFirst Gen Corp. said it plans to invest USD 100M to convert a 117-km oil pipeline into a facility that transports natural gas in Metro Manila.

First Gen President Francis Giles B. Puno said the company was studying the conversion of the Batangas-Manila white oil pipeline, which has not been operating due to an oil leak problem since 2010, into a natural gas pipeline.

Puno said the pipeline conversion, if approved, could be done in two to three years and deliver natural gas to fi re up power plants with 300 megawatts (MW) of generating capacity.

Cofely eyes biomassCofely GDF Suez of France has proposed to operate the P1-B,

9.9-megawatt (MW) biomass plant of San Jose City I Power Corp. in Tulat Road, San Jose City, Nueva Ecija.

Cofely GDF Suez Southeast Asia General Manager Raymond A. Marquez said the company was in talks with SJC IPower to operate the biomass project controlled by Puregold Price Club, Inc.

“We proposed to them the operations and maintenance (O&M), and hopefully they would accept the offer. We come in maybe six months before the commissioning of the plant. We’ll be the one to operate the plant,” Marquez said.

Jetti puts up 3 branches in Q1Independent oil fi rm Jetti Petroleum Inc. has opened three additional stores in the fi rst three months of the year.

Jetti said two of the new gas stations are in Iloilo and the third is in Davao. The company has also recently launched its newly renovated fl agship branch in Macapagal Boulevard, Pasay City.

The company's expansion plans also include setting up stations in Novaliches, Quezon City; Bacolod; Kalibo, Aklan; and Roxas City.

Basic Energy, Malaysian fi rm tie up for oil search ventureBasic Energy Corp. and Malaysia’s Petrosolve Sdn Bhd have formed a joint venture company, Grandway Group Ltd., for the two fi rms’ oil exploration business.

Basic Energy said it would own 70% of the Hong Kong-based joint venture while 30% would be owned by Petrosolve.

“The joint venture company shall operate as the corporate vehicle for Basic and Petrosolve to enter into business relationships and transactions with respect to the management and operation of oil wells,” Basic Energy said.

Trans-Asia plans to drill 3 oil wellsTrans-Asia Oil and Gas Development Corp., a unit of the Phinma Group, said it will participate in the drilling of three exploration wells in west Palawan, northwest Leyte, and Cagayan province this year.

Trans-Asia said the drilling involved one offshore and two onshore wells, including a deepwater well in offshore west Palawan under service contract (SC) 55; an onshore well in San Isidro, Leyte under SC 51; and another onshore well in Gattaran, Cagayan under SC 52.

GREEN PROJECTS

First Maxpower to spend P4.9B for wind projectFirst Maxpower International Corp., a Filipino-owned power generation fi rm, is looking to spend P4.9B for a 50-megawatt (MW) wind project in Negros Occidental, which is expected to operate by late 2015.

First Maxpower is also looking to start construction within the year, once all other requirements are complied with so that by second half of 2015, the project may start commercial operations.

The wind farm will be connected to the existing Bacolod-Kabankalan 138-kilovolt (kV) transmission line of the National Grid Corp. of the Philippines (NGCP), through a proposed 20-km, 69-kV transmission line that will be installed along the Bago-Maao national secondary road.

Aboitiz Power sets P2B for each hydropower projectAboitiz Power Corp. unit Hedcor Inc. is looking to spend P2B for each hydropower project that it intends to develop within the next few years upon the Department of Energy’s (DOE) approval.

Hedcor President Rene B. Ronquillo said the company is planning to work on around 60 mini-hydropower projects,

7May 2013

which has a collective capacity of about 400 megawatts (MW).

SUWECO to commission Sorsogon hydro plantRenewable energy fi rm Sunwest Water and Electric Co. (SUWECO) has set for commissioning this year its 600-kilowatt (kW) mini-hydropower plant in Bicol.

The company is investing P80M in the power project in Barangay Guinlajon, Sorsogon City. To date, 81% of the project have been completed and is targeted for commissioning by June.

The project is expected to generate 2.786-gigawatt per hour (GWH) annually.

Negros wind power project to start this yearFirst Maxpower International Corp. (FMIC) is eyeing to start within the year a 50-megawatt (MW) wind project in Pulupundan, Negros Occidental.

The project, which costs USD 122M, is targeted to start commercial operation within the second half of 2015.

MANUFACTURING

Antony Morato to open new stores Italian men’s wear Antony Morato is opening three to four new stores in the Philippines this year to take advantage of the Filipino consumers’ rising purchasing power.

Brand Manager Pamela Cristina De Jesus said the clothing line will open a new store in Glorietta Mall and still looking for more locations.

She said the brand intends to increase its presence in the country amid favorable economic prospects.

De Jesus said Antony Morato has good sales since its opening last year and exceeded its target by 20%.

MASS HOUSING

Vista Land seeks BOI perksTwo units of listed Vista Land and Lifescapes Inc. are seeking tax perks from the government for their mass housing projects.

The Board of Investments (BOI) said Household Development Corp. (HDC) is applying for registration as a new developer of low-cost mass housing project Camella Montego with a capacity of 299 housing units on a non-pioneer status.

The project is located in Barangay San Isidro in Antipolo City.

In a separate notice, the BOI said Communities Batangas, Inc. applied for registration as an expanding developer of low-cost mass housing projects Camella Lipa Phases 2 and 3 on a non-pioneer status.

The two projects have a combined capacity of 344 housing units.

MINING

Coal Asia fi nds P4.1-B coal reservesCoal Asia Holdings Inc. has found P4.1B worth of coal reserves in a portion of its mining area in Mindanao.

“Despite the recent volatility of coal prices, the key fi nancial indicators of the Bactinan and Macopa coal deposits, as determined by the feasibility study, speak volumes of the lucrative nature of this project,” Coal Asia Chairman Harald Tomintz said.

“The updated study confi rms Titan’s [Titan Mining and Energy Corp.] coal proven reserves stand at 5M metric tons (MT), which is just a fraction of the whole 123M MT resource and reserve fi gure identifi ed in the Philippine Mineral Reporting Code (PMRC) standard

geological report done in April 2012,” Coal Asia said.

Coal Asia, through Titan, is seen to produce 600,000 MT of high grade coal per year and has secured offtake contracts for domestic and international coal customers.

ORE to develop nickel processing plant The mining unit of Oriental Peninsula Resource Group Inc. (ORE) is hoping to start development of its nickel processing plant by 2014 to generate more revenues from its Palawan operations.

Citinickel Mines and Development Corp. President Ferdinand Pallera said the company is coordinating with various government agencies and stakeholders for the proposed USD10-M smelting plant which will use blast furnace technology.

MOTOR VEHICLES

Honda to open CamSur dealershipHonda Cars Philippines, Inc. (HCPI) is set to open a new dealership in the province of Camarines Sur in line with its expansion plans.

The new dealership will be located along San Jose, National Highway, Pili. Operations will start within the second-half of the year.

REAL ESTATE

Megaworld to partially open P65-B Taguig project by 2016The construction of Uptown Bonifacio project, a 15-ha township, is now in full swing, said Megaworld Senior Vice President for Sales and Marketing Noli D. Hernandez. Uptown Bonifacio is Megaworld’s high-end, cosmopolitan-themed township project accessible via Kalayaan Avenue in the northern part of Fort Bonifacio.

The township project will feature two luxury condominiums, a shopping mall, and corporate offi ce towers.

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The One Uptown Residence and Uptown Ritz condominium towers are set to be completed in July 2016 and June 2017.

Meanwhile, Uptown Place Mall will be a fi ve-storey, six-basement structure with a 47,962-sqm total fl oor area and 36,689-sqm total leasable area.

Uptown Bonifacio’s offi ce component, on the other hand, will feature fi ve offi ce buildings measuring 15 storeys each, as well as the planned 25-storey Alliance Global Tower. LRWC to spend P5.2B for hotels, BPOHotel and recreation fi rm Leisure and Resorts World Corp. (LRWC) is eyeing further revenue growth as it plans to spend about P5.2B for hotels and business process outsourcing (BPO) investments within the year.

LRWC Chairman Reynaldo P. Bantug said several investments are in the fi rm’s current pipeline including the P1-B equity investment in Belle Grand Manila Bay; another hotel and casino that will rise in PAGCOR’s Entertainment City, Parañaque City; expansion of its Midas Hotel; and the completion of the fi rm’s fi rst BPO offi ce building.

Waterfront allots P500M for Manila Pavilion renovationManila Pavilion Hotel is undergoing a P500-M facelift that will develop guest preference for the hotel. Hotel operator Waterfront Philippines Inc. said the amount would be used to renovate its rooms and suites, with the aim to increase

the hotel’s room revenue by 50% as a result of more expected bookings from premium corporate and travel clients. The hotel operator said 250 superior rooms and suites at the lower fl oors will be renovated, including the upgrade of function rooms and food and beverage facilities. The redevelopment allowed Waterfront to offer a new set of exclusive Ambassador Club rooms that will enhance the hotel’s position in the corporate market.

Alcantara Group, ALI tie up for Davao City projectAlcantara Group and Ayala Land Inc. (ALI) announced that they will jointly develop a 25-ha integrated mixed-use community in Davao City.

This development will be allocated for residential and commercial lots, low-to-mid-rise towers and a retail component.

It will add more than 2,000 condominium units and about 7,000 sqm of leasable space to ALI’s growing residential and commercial leasing portfolio, respectively.

Next gen Park Inn opens in DavaoSM Hotels and Conventions Corp. (SMHCC), a subsidiary of SM Investments Corp. (SMIC), opened in March the Park Inn by Radisson Davao, the fi rst “next generation” mid-scale hotel brand by the company to be established in Asia Pacifi c.

The 204-room Park Inn by Radisson Davao is situated beside the SM Lanang Premier Mall and the SMX Convention Center in Davao.

Park Inn by Radisson is Carlson Rezidor Hotel Group’s full-service mid-market global brand with 126 hotels throughout the world and 53 hotels under development.

Century allots P1B for new projectsReal estate fi rm Century Properties Group Inc. has allotted P1B

for a two-tower development project in Taguig City.

The project will expand Century Properties’ portfolio to include commercial and tourism developments.

The property fi rm said it partnered with automotive distributor Asian Carmakers Corp. (ACC) of businessperson Jose Ch. Alvarez to launch a P1-B, two-tower project this year.

“ACC shall form a new corporation with Century Properties to construct two towers: one for commercial offi ces and the other for a hotel with an expected gross fl oor area of 30,000 sqm,” said Century Properties Chairman Jose E.B. Antonio.

Robinsons Land to launch 4 malls this yearRobinsons Land Corp. (RLC) will launch four malls this year to add to its portfolio around the country.

The new malls will be located in Malolos, Bulacan; Santiago, Isabela; Roxas City; and Butuan.

As of end-September last year, RLC was operating 32 shopping malls composed of seven malls in Metro Manila and 25 malls in other urban areas throughout the Philippines.

It plans to construct seven new malls and undertake two expansion projects within the next two years.

Avida Land to invest P12B for South Park developmentAvida Land Corporation (ALC) of the Ayala Land Inc. (ALI), is investing P12B for the 10-year development of the 6.6-ha South Park District.

ALI President Antonino Aquino said this will be a complimentary addition to ALI’s roster of developments which will be situated along the National Road in Alabang, Muntinlupa.

The Southpark District brings together residential condos,

9May 2013

regional mall, and offi ce buildings anchored by a central park.

“With the upbeat macroeconomic environment, low interest rates, and growing middle class, we will continue with our expansion into new geographies and new products to cater to our target market of middle class home buyers,” Avida Land President Christopher Maglanoc said.

RESEARCH AND DEVELOPMENT

STI breaks ground for two academic centersSTI Holdings Inc. (STI) started construction of its two new academic centers located in the cities of Calamba and Las Piñas, which have a combined land mass of about 16,200 sqm.

The four-storey STI Academic Center Calamba will rise on a 6,200-sqm property along National Highway, Calamba, while the six-storey STI Academic Center Las Piñas will stand on a 10,000-sqm property located at the corner of Alabang-Zapote Road and V. Guinto Street in Las Piñas City.

The new STI Academic Centers are to be completed in May 2014.

Bayer to expand seed production capacityBayer CropScience Inc. Philippines is investing P40M this year to expand the production capacity of its seed processing facility in Calauan, Laguna in anticipation of increased demand for hybrid rice seeds.

The company will also establish a new breeding station in the same site which will be used for testing new hybrid rice varieties for the Southeast Asian market, including the Philippines.

POWER

Trans-Asia Energy Development Corp. to pour P1.5B in SLTECTrans-Asia Oil and Energy Development Corp. (EDC) of the

Phinma Group is pouring P1.5B in South Luzon Thermal Energy Corp. (SLTEC), its joint venture with the Ayala Corp, to fi nance construction of the second unit of 135-megawatt (MW) thermal plant.

The proponents are optimistic on the plant’s business prospects because of the open access regime, which would soon be in place.

Under the scheme, large power users will be able to choose their own suppliers, in contrast with the current system where they are limited to the supplier that has jurisdiction over their areas.

South Korean company to build USD 22-M biomass power plantThe Korea Environment Corp. (KEC), a South Korean power company, is eyeing to build a USD 22-M biomass power plant in Iloilo that is seen to boost the supply of energy in Panay Island.

The state-run company, focusing on eco-friendly energy projects, has signed a memorandum of agreement (MOA) with the Iloilo provincial government and the International Builders Corp. (IBC) for the project.

The agreement covers the conduct of a feasibility study, acquisition of licenses and other legal requirement, sourcing of funds, and obtaining land and bioresources.

DMCI to build power plant in PalawanDMCI Power Corp. is set to build a power plant in Palawan to avert a looming power crisis in the province.

DMCI Power will use the newest and cleanest coal technology in the proposed 15-megawatt (MW) coal-fi red power plant in the southern part of the province.

Also called the “clean-coal” technology, the circulating fl uidized bed combustion technology prevents the formation of acid rain by effectively reducing the emission of sulphur oxide and nitrous oxide in the atmosphere.

DMCI Power also said the project would not affect the wildlife and cockatoo sanctuary in the area.

PUBLIC-PRIVATE PARTNERSHIP PROJECTS

P1.9B approved for NAIA-3 rehabDepartment of Budget and Management (DBM) Secretary Florencio B. Abad said the government will spend P1.89B for the completion and rehabilitation of Ninoy Aquino International Airport Terminal 3 (NAIA-3).

Abad said the project aims to decongest the NAIA Terminal 1 and ensure operational effi ciency in both terminals.

“Once the development of NAIA-3 is completed, some of the operations of NAIA-1 will be transferred to Terminal 3. This is particularly crucial, given the administration’s drive for better public infrastructure and other services that support our growing tourism industry,” he said.

TELECOM

PLDT earmarks P29BPhilippine Long Distance Telephone Co. (PLDT) has earmarked P29B this year, including P16B for capital expenditures of mobile units Smart Communication, Inc. and Digitel Telecommunications Philippines, Inc.

PLDT said its 2013 budget for consolidated capital expenditures

Philippine Business Report10

BILATERALAGREEMENT

ASEANWATCH

PPP project to represent ASEAN in 2013 awardsThe country’s fi rst public-private partnership (PPP) social infrastructure project will be the only entry from the Association of Southeast Asian Nations (ASEAN) in the internationally acclaimed Partnerships Awards 2013, the PPP Center announced.

It said the Department of Education’s (DepEd) PPP for School Infrastructure Project Phase I (PSIP I) has been shortlisted for the “Best Pathfi nder Project” category in the Partnership Awards.

Partnerships Awards 2013 is an annual event organized by the Partnerships Bulletin and PPP Bulletin International to recognize and reward outstanding achievements in PPP worldwide.

Measures cited to attract more investments in SEACountries in Southeast Asia (SEA) will have to work on having consistent laws, assuring repatriation of dividends, fi ghting corruption, and putting in place infrastructure to attract investments

Prime Global Corp. signed contracts to provide nationwide logistics services to Master Chef Sea Salt of Arvin International Inc. and Royal Brands FishSauce from Royal Brands of Thailand. “Using its extensive distribution network covering relevant trade channels and modern selling technology systems, Prime Global will assist the two companies expand their product availability and market reach,” Splash said.

COMPANY NOTES

Philippines (IBPAP) and the Technical Education and Skills Development Authority (TESDA) established a partnership with the government of Korea to train Filipino animators and game developers.

The Korea International Cooperation Agency (KOICA) and the Korean Chamber of Commerce and Industry (KCCI) under the International Cooperation Program of the government of Korea sponsored the training program.

The partnership would allow the animation and game development sectors to market to potential clients here and abroad.

PHL, Germany explore pension fund coopThe Philippines and Germany are in talks for a bilateral agreement on social security.

Negotiations on the agreement on social security took place at the Federal Ministry of Labour and Social Affairs (BMAS) in Berlin in March.

Social Security System (SSS) President and Chief Executive Offi cer (CEO) Emilio de Quiros Jr. led the Philippine delegation that discussed with their German counterparts details of social security cooperation such as coverage periods, export of benefi ts, and mutual administration assistance.

The aim is to help overseas Filipinos (OFs) in Germany and Germans working in the Philippines.

PHL, South Korea tie up for animation, game dev’tThe Philippines and South Korea have joined hands to compete head-on with India in the global animation and gaming market that is expected to double over the next three years.

The Information Technology and Business Process Association of the

was P29B, of which P13B was budgeted for Smart, P12 B for PLDT, and P3B for Digitel.

TRANSPORT PPA allots P2.6B for priority projectsThe Philippine Ports Authority (PPA) has earmarked P2.6B this year for various priority projects to cope with the anticipated increase in passenger and cargo volume.

PPA General Manager Juan C. Sta. Ana said this year’s budget for capital expenditures would include a P900M carry over from last year’s budget.

Sta. Ana said the remaining P1.7B would be used for priority programs particularly for the development and expansion of fi ve major ports.

Hungry Juan opens new franchiseHungry Juan, a franchised business of San Miguel Foods, Inc. (SMFI), has opened its newest branch along V. Luna Road in Quezon City.

To date, the chain has 186 branches and caters to on-the-go consumers.

Splash unit to provide logistics servicePrime Global Corp. – the sales, marketing, and logistics arm of personal care manufacturer Splash Corp. – will provide logistics services to two food companies.

11May 2013

ON THECALENDAR

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yuan’s appreciation that does not bode well with export-driven China.

Finally, the United States’ vow to keep its “pivotal” presence in Asia — amid China’s rise — has also secured some investments from the world’s largest economy itself. Based on estimates, US FDIs to ASEAN-6 more than doubled to USD 19.9B as of September 2012.

ASEAN-wide bank integration pushedCentral banks and banking sectors across the 10 states of Association of Southeast Asian Nations (ASEAN) are stepping up preparations for fi nancial integration in two years.

The Bangko Sentral ng Pilipinas (BSP) noted that policy frameworks being drafted now should implement a smooth ASEAN integration process with banking industries in the trade bloc having the fl exibility of adopting a regional system when the 2015 ASEAN economic community takes effect.

The BSP said they view the Asian Development Bank’s (ADB) report entitled ‘The Road to ASEAN Financial Integration - A Combined Study on Assessing the Financial Landscape and Formulating Milestones for Monetary and Financial Integration in ASEAN’ as “important reference for ASEAN to further guide its fi nancial integration process.”

The report reviewed ASEAN’s fi nancial integration framework in the areas of fi nancial services, capital account, payments and settlement systems, and capital markets. It highlighted the implementation process

of “key milestones” that have to be managed effectively.

The ADB stresses the point that ASEAN should nurture globally-competitive banks, andthat the integration of the region’s banking institutions will create an environment conducive to the emergence of such banks.

as the region is heading toward economic integration.

“One purpose of economic integration is to attract investments,” said Head of the Association of Southeast Asian Nations (ASEAN) Studies Centre in Singapore Ambassador Rodolfo Severino.

Investments, he said, will go to countries where there is consistency in implementation of policies, repatriation of dividends is guaranteed, and anti-corruption efforts are in place.

Infrastructure is likewise needed to attract investments.

ASEAN FDIs growing at par with ChinaForeign direct investments (FDIs) to Southeast Asia are now at par with that of China, which had to deal with tensions with its neighboring countries and rising labor costs, an investment bank said.

“FDIs to ASEAN have risen strongly in recent years, converging with FDIs to China. This is in sharp contrast to a decade ago, when there were widespread fears that ASEAN would be marginalized by China’s rise,” Bank of America-Merrill Lynch (BofA-ML) Economist Chua Hak Bin said.

Hak Bin said three reasons have driven investors to the region.

First is “demographic divergence” between China and the ASEAN, where the latter’s young population bodes well as a labor force than the former’s ageing ones.

Based on the bank’s estimates, the Philippines will enjoy the highest labor force growth rate of 31.3% in the next decade, followed by Singapore’s 22.4%, and Malaysia’s 18.7%.

The “growing wide gap” in FDIs to both regions has also been largely driven by rising labor wages and the

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Philippine Business Report12

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May-13Apr-13Mar-13Feb-13Jan-13Dec-12

Interest Rate (%)

40.240.440.640.8

4141.241.4

May-13Apr-12Mar-12Feb-13Jan-13Dec-12

Peso per US Dollar Rate

Economic Indicators

As of May 6, 2013 As of May 6, 2013

012345678

3Q (2011) 4Q (2011) 1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012)

GNI Growth Rate (%)

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3Q (2011) 4Q (2011) 1Q (2012)2Q (2012)3Q (2012)4Q (2012)

GDP Growth Rate (%)

Published monthly by the Trade and Industry Information Center (TIIC), Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 • To subscribe, e-Mail: [email protected] • Online: http://www.dti.gov.ph/dti/index.php?p=116

Editorial Team: Anne L. Sevilla , Editor-in-Chief • Vic S. Soriano , Managing Editor • Cresenciano P. Par , Assistant Editor • Jam A. Hourani, Elaine M. Lazaro, and Emman R. Caleon, Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation.

May 2013Philippine Business Report

*GNI - Gross National Income

Entered as Third-Class Mail at theMakati Central Post Offi ce

under Permit No. 504valid until 31 December 2013

0100020003000400050006000

Feb-13Jan-13Dec-12Nov-12Oct-12Sep-12

Exports(In USD Billion)

4,4004,6004,8005,0005,2005,400

Feb-13Jan-13Dec-12Nov-12Oct-12Sep-12

Imports (In USD Billion)

130.5131

131.5132

132.5133

Mar-13Feb-13Jan-13Dec-12Nov-12Oct-12

Consumer Price Index(2000 base year)

0

1

2

3

4

Mar-13Feb-13Jan-13Dec-12Nov-12Oct-12

Inflation Rate (%)(1994 base year)