BALANCED LIFESUSTAINABLE FUTURE

GENERAL MEMBERSHIP

MEETING27 November 2015

sanfernando@tileexpress.com.phMobile:

0922850612709178727035

OUR MISSION, OUR VISION

We do not just create jobs, but entrepreneurs

Balanced life, sustainable future

OUR FOOTPRINT

3 brands4 organic stores

55 retail stores in LuzonDigital presence nationwide

One of the fastest growing economies in Asia

2014 GDP at 6.1%, second in Asia Pacific after China

With GDP growth forecasted to be 6.5% in 2015

Expected to lead the growth in ASEAN region

ASEAN countries GDP at only 4.6 to 5.1%

PHILIPPINE TAILWINDS

KEY ECONOMIC GROWTH DRIVERS

OFW Remittances

IT-BPM Industry

Tourism and Services

Public-Private Partnership

By 2017, the IT-BPM Industry

will overtake OFW remittances,

with revenue of USD 29 billion

in U

SD b

illio

n

8.9 11.0 13.2 16.1 18.1 21.3

18.720.1

21.323.4

24.325.6

2010 2011 2012 2013 2014 2015

GREAT TIME FOR THE PROPERTY SECTOR

Demand for residential properties is being driven by the middle class

Of the USD 24.3 billion repatriated by Overseas Filipinos in 2014, a third or USD 7.0 billion went to property investments

The performance of the IT-BPM industry is translated to higher demand for office requirement

Retail market and developments of hotels are also expected to buoy the property market

By 2018, half of retail property supplies will be in the provinces

2010 48.6%

2030 56.3%

2050 66%

Source: CNN Philippines, 4 August 2015

Percentage ofpopulation living in urban areas

REGIONAL GROWTH RATES

9.2

5.46.8

6.2

4.4

6.7

1.3

8.1

3.4

7.4

5.36.7

8.4

5.9

3.2

5.76.4

9.0

5.1

6.5

4.2 4.5

8.4

7.2

9.4

6.4

NCR CAR Ilocos CagayanValley

CentralLuzon

Calabarzon Mimaropa Bicol WesternVisayas

CentralVisayas

NorthernMindanao

Davao Socsargen

2012-2013 2013-2014

Central and Northern Luzon Southern Luzon MindanaoVisayas

Fastest growth in 20142nd fastest

growth in 2014 3rd fastest

growth in 2014

36% of GDP

9% of GDP

17% of GDP

Source: Philippine Statistics Authority

CONSTRUCTION PROJECTS: 2Q 2015

CAR, 1.0%

Region I, 6.8%

Region IVA, 27.7%

Region IVB, 2.0%

Region VI, 4.0%

Region VII, 8.1%

Region IX, 3.2%

Region II, 2.9%

Region III, 10.7%

NCR, 8.2%

Region V, 2.8%

Region VIII, 4.5%

Caraga, 3.1%

Region XI, 5.7%

Region XII, 2.0%ARMM, 0.0%Source: Philippine Statistics Authority

No 2

No 1 No 3

No 4

No 5

THE ASPIRATIONAL MARKET

The future of the market is withthe growing middle class

Consumers are now giving in toaspirational needs

Middle class is now spendingmore for holidays and homeimprovements

Upscale Filipino is alreadycomfortable financially and likefiner things in life

They set the standards for theaspirational middle class

As the Philippines sees more of both kinds of consumers, the challenge for

brands and the markets is to understand them, and offer not only products and services but experiences that touch on

their inner needs

129208

320

Disposable Income

2009 2013 2018

In U

S$ b

illio

n

FILIPINO MIDDLE CLASS

43

III, 12

IV-A, 19

2 3

VI, 7

VII, 6

3 2 3 4 3

NCR, 26

20

2

I II IIIIV

-AIV

-B V VI VII

VIII IX X XI XII

NCR CA

RAR

MM

CAR

AGA

Out of 21 million households, the middle class

accounts for 3.6 million or 17%

With monthly family income between Php

31,500 to Php 78,900

Combined lower middle and upper middle is

about 9.87 million households or 47%

1/3 of Overseas Filipino Workers belong to the

lower middle class, at 5.8 million households

Source: Rappler, 8 July 215 using data from the Philippine Statistics Authority

In P

erce

nt (%

)

OUR 2.3 MILLION HEROES

NCR10.5

CAR2.2

I8.2

II6.7

III15.5

IV-A17.9

IV-B2.1

V3.4

VI8.6

VII6.5

VIII1.1

IX2.6

X3.4 XI

2.7

XII4.6

CARAGA2 ARMM

1.8

In P

erce

nt (%

)

CALABARZON, Central Luzon,

National Capital Region,

Ilocos Region and Western

Visayas

Source: Philippine Statistics Authority, 2014 Survey on Overseas Filipinos

NICHE MARKET

4 2

III, 9

IV-A, 15

4 3

VI, 74

3 14

2 1

NCR, 37

20 1

I II IIIIV

-AIV

-B V VI VII

VIII IX X XI XII

NCR CA

RAR

MM

CAR

A…

The rich numbering 150,000 households or 0.7% of

the national total

With a monthly family income of at least

Php157,800 and above

Combined with the upper income at 320,000

households or 1.5%

The number of high net worth Filipinos (with assets

of USD 30.0 million and above) grew by 4.5% in

2014 to 690 from 660 the previous year

Value of these individuals grew by 5.3% to USD100

billion in 2014

Source: Rappler, 8 July 215 using data from the Philippine Statistics Authority; UBS Ultra Wealth Report 2014

In P

erce

nt (%

)

WHO WILL BE SHAPING THE MARKET

• The Filipino millennials

• In 2014, 27.0 million or quarter of the Philippine population

• Now acccounting for 50% of the current workforce

• Those in the age bracket of 28 to 33 are now getting married

27.0 million with disposable income

Tech-savvy, 70% of internet users

Parents still influence decision

Most prefer to rent than purchase

Prefers luxury over necessity

Sustainability-conscious

PROPERTY CYCLE IN THE PHILIPPINES

Mid end Residential Hotel and Lesiure•Late upswing•Sustained growth in

demand, increasing construction

Luxury Residential•Early downsizing•Positive but falling

demand, increasing vacancy

•Late downsizing•Falling demand,

decreasing vacancy

Office Industrial Retail•Early upswing•Increasing demand,

decreasing vacancy

HOW IT-BPM IS DRIVING THE GROWTH

OfficesOffices

RetailRetail

ResidentialResidential

EducationEducation

Shift to a “township” or “communicities” model”

A “live, work, play environments” versus one-off products

Welcome refocusing by the IT-BPM industry

Compared to others, those in IT-BPM have higher income

2015 TOP10 OUTSOURCING DESTINATIONS

1 Bangalore, India 6 Hyderabad, India2 Manila, Philippines 7 Pune, India3 Mumbai, India 8 Cebu, Philippines4 Delhi, India 9 Krakow, Poland5 Chennai, India 10 Shanghai, China

Metro Laguna 82

Metro Laguna 82

Metro Bacolod

90

Metro Bacolod

90

Iloilo 91

Iloilo 91

Baguio 95

Baguio 95

Metro Clark 98

Metro Clark 98

Source: Tholons

OUTSOURCING AND OFFSHORING

Business ProcessBusiness Process

Specific business processes

Specific business processes

Back Office (Internal functions)

Back Office (Internal functions)

Front Office (Customer Services)

Front Office (Customer Services)

Data and Document Management

Data and Document Management

Knowledge Process

Knowledge Process

Business process with more complexity

Business process with more complexity

EngineeringEngineering

LegalLegal

MedicalMedical

Information TechnologyInformation Technology

Infrastructure, software

development to maintenance

Infrastructure, software

development to maintenance

Application developmentApplication

development

Staff augmentationStaff augmentation

InfrastructureInfrastructure

Professional Services

Professional Services

Subject matter expertise on a specific

field

Subject matter expertise on a specific

field

Business processBusiness process

EngineeringEngineering

Environment and Sustainability

Environment and Sustainability

PHILIPPINE IT-BPM INDUSTRY

13,200

16,06718,100

21,300

25,000

2012 2013 2014 2015 2016

Revenue in US$ billion

69%

20%9% 1% 1%

Voice Non Voice

Health Information Animation

Engineering Services

0.8M 0.9M 1.0M

1.2M 1.3M

Source: IBPAP

ARCHITECTS IN THE IT-BPM SPACE

IT-BPM Industry

Architectural Designers:

Offices, Homes, Retail,

Recreation

Fit-Out Contractors:

IT-BPM Offices

IT-BPM Talents:

Engineering Service

Outsource

TYPICAL IT-BPM CENTER

Meeting Room Training Room Coaching Room

Pantry/Canteen

Rest/Break Area

Clinic Comfort Rooms

Lockers/Pigeon Holes

WHERE ARE THE 1.3 MILLION JOBS

Central Luzon Hub 3%

Metro Manila75%

Calabarzon Hub 3%

Davao-Gensan 2%

Western Visayas 3%

Central Visayas 6%

Other parts8% of the country outside of major

hubs

80% in NCR6% in Central

Visayas (mainly Cebu)

Source: Jones Lang Lasalle

Centers of Excellence

• Metro Manila• Metro Cebu• Metro Clark• Metro Bacolod

Next Wave Cities

Baguio City Davao City Dumaguete Iloilo Lipa City Metro Bulacan Metro Cavite Metro Laguna Metro Naga Metro Rizal

Next Wave Cities

Centers of Excellence

IT-BPM NEXT WAVE CITIES

Source: DOST-IBPAP

OF THE 100 MILLION FILIPINOS…

Metro Manila with an area of 600 km2 out of 300,000 km2

22% in the day time18% in the night time

SUBICSUBIC

BATANGAS

CLARKCLARK

WHERE GROWTH IS NOW HEADING

Regions I and II

Dagupan

Laoag

San Fernando

Urdaneta

Vigan

Tuguegarao

Central Luzon

Balanga

Cabanatuan

Olongapo/Subic

San Fernando

Tarlac City

Other Regions

Batangas City

Purto Princesa

Legapsi

Tagbilaran

Cagayan de Oro

General Santos

Source: DOST-IBPAP

COMPARE CENTRAL LUZON

11,552

1,694

5,1743,365

10,15911,905

3,018

5,717

Population (as of 2010)(in millions)

36

2 3 29

16

2 2

Percent of 2014 GDPIn percentage

Third largest in

the country

Second fastest

growth in 2014

Source: Philippine Statistics Authority

THE “W” GROWTH CORRIDOR

NOT JUST THE CULINARY CAPITAL

Pampanga is now poised for metropolitan development

Within an ideal distance from Metro Manila

A population of 2.3 million, 0.5 million households

Metro Clark is ranked 98 in Tholons Top 100 Outsourcing Destination for 2015

Construction projects at Php 2.0 billion or 215,399 sqm for 2Q of 2015

THE FUTURE: CLARK GREEN CITY

9,450 hectares within the Clark Special Economic Zone

Designed by AECOM Envisioned to become the

Philippines’ most modern and the first technologically -integrated city

With a total project cost of US$ 14.0 billion

Once developed, expected to contribute Php 1.6 trillion to the Philippine economy

1,120,000 residents 800,000 workers.

PHILIPPINE ESO SECTOR

ACE Consultants and Contractors Property Developers

Third Party Providers

Shared Services Captive

Reve

nue

in U

S$ m

illio

n

11,920 FTEs in 2013

228

163172

206216

2009 2010 2011 20112 2013

11,92010,8369,03012,000

There are about 45 engineering design companies in the Philippines

8,579

Source: IBPAP

ENGINEERING SERVICE OUTSOURCE

ManufacturingUpstream product engineering•Concept design•Simulation•Design engineering

ManufacturingUpstream product engineering•Concept design•Simulation•Design engineering

ManufacturingDownstream product engineering•CAD/CAM/CAE•Embedded software•Localization•Plant and process

engineering

ManufacturingDownstream product engineering•CAD/CAM/CAE•Embedded software•Localization•Plant and process

engineering

Architecture design•Design process•Building

Management models

Architecture design•Design process•Building

Management models

ESO AND THE ACE SECTOR

Architectural Construction and Engineering

The sector of the construction industry that provides services on architectural design, engineering design and construction services

This sector is very active in the adoption of Information, Communication and Technology

The Philippine IT-BPM industry is looking at higher value services to sustain its growth

Great potential to be the new jewel of the IT-BPM Industry

GLOBAL ESO MARKET

19%

9%

21%

10%

13%

9%

19%

Automotive

Aerospace

Hi-Tech

Construction

Pharma

Consumer Electronics

Others

US$ 750 billionGlobal spending for engineering

services

US$ 1.1 trillionProjected ESO market by 2020

US$ 15 billionValue offshored or 2%

25.78% CAGREngineering services outsource

growth rate

India accounts for 12% The 88% shared mainly by Canada,

China, Mexico and Eastern Europe By 2020 India is estimated to have

25% of the much larger market Philippines account for 1% of the

current market

Other emerging destinations: Brazil, Russia, Hungary, Czech Republic, South Africa,

Malaysia, Turkey and Ireland

ENGINEERING DESIGN SECTOR

80.080.02009 79.879.82010 85.185.12011 90.290.22012 92.792.72013

In US$ billion

4.34.95.15.87.29.9

19.2

20.1

20.5General Bldg

Transportation

Petroleum

Power

Hazzardous

Water

Sewerage

Industry

Others

Mfg

Telecom

Asia Pacific31%

Canada25%

Europe21%

Middle East11%

Latin America

8%

Africa4%

International Market x USA

ESO is a crucial resource pool of construction companies for engineering expertise and niche project requirementsACE companies relies on the Building Information Modeling (BIM)This indirectly translates to engineering services being outsourced

ESO, ACE AND BIM

IS IT TRUE THAT?

is setting up a “mega” global center in the Philippines

Skidmore, Owings & Merrill LLP, one of the largest and most influential architecture, interior design, engineering, and urban planning firms in the world. Founded in 1936, we have completed more than 10,000 projects across 50-plus countries. We

are renowned for our iconic buildings and our steadfast commitment to design excellence, innovation, and sustainability

ASEAN ECONOMIC COMMUNITY

10 member countries10 member countries

Combined GDP of US$ 2.4 trillion

Combined GDP of US$ 2.4 trillion

Total Population of 626 million

Total Population of 626 million

Land area of 4.46 million km2

Land area of 4.46 million km2

Foreign direct investment of US$ 110 billion

Foreign direct investment of US$ 110 billion

The 7th largest economy in the world

The 7th largest economy in the world

As the Philippine Government opens up the country to free flow of services that include the construction sector, we should look at other member countries not as competitors but rather as collaborators

READY OR NOT, AEC IS NOW UPON US

We must adjust our strategies to take advantage of the opportunities and cope with threats associated with the integration

We need to up-skill, adopt best practices and use of technology

We need to revisit our academic curriculum in order to adopt to the changing world and time

A TRANSFORMATIVE CAPABILITY

A process involving the generation and management of digital representations of physical and functional characteristics of a facility

Building Information Modeling (BIM) is transforming how cities, buildings and systems are designed

With Smart Cities initiative on a global scale, a path to enabling its digital DNA comes from the use of the BIM

DESIGNING FOR SUSTAINABILITY

Balanced life, sustainable future

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