1February 2016

Volume 27 No. 02 February 2016

Gov’t mulls more perks for investors

The Board of Investments (BOI) is studying the possibility of providing incentives to three to five industries and revive the manufacturing sector under the Manufacturing Resurgence Program (MRP).

MRP aims to rebuild the existing capacity of manufacturing industries, strengthen new ones, and maintain the competitiveness of industries with comparative advantage.

“To achieve long term inclusive growth, the much needed quality jobs in the economy, and sustaining the competitiveness of the country, the manufacturing resurgence that we are experiencing now should be sustained,” Department of Trade and Industry (DTI) Secretary Adrian S. Cristobal Jr. said.

Cristobal cited the Comprehensive Automotive Resurgence Strategy (CARS) program, under Executive Order No. 182, s. 2015, which serves as a perfect example of a focused, targeted, and high impact incentive package with the country’s automotive manufacturing industry as the initial beneficiary.

Under the CARS program, P27B worth of fiscal incentives will be made available to local car manufacturers that produce 200,000 units for each of the three models during the six-year model life.

This year, MRP has a P289-B budget, which is higher than last year’s allocation of P239B.

The MRP will help achieve the goals of the Philippine Manufacturing

PHL seen to remain among East Asia’s fastest-growing economiesThe Philippines will remain among the fastest-growing economies in East Asia and the Pacific this year with a growth forecast of 6.4%, the World Bank (WB) said in its January 2016 Global Economic Prospects report.

Titled “Spillovers Amid Weak Growth,” the WB report projected the Philippines to fare marginally better than East Asia and the Pacific’s (EAP) 6.3%, developing countries’ 4.8%, and the world’s 2.9%; only behind China’s 6.7% and Viet Nam’s 6.6%.

The Philippine economic growth is expected to accelerate as a result of public-private partnerships (PPP) and government spending.

“The region is expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability, and continued favorable conditions in global financial markets,” the WB said.

First Metro Investment Corp. (FMIC) likewise sees Philippine GDP to expand by 6%-6.5% amid uncertainties in the global economy.

University of Asia and the Pacific Economist Victor A. Abola shared the same view, citing important factors such as election spending and the continuing low oil prices that give more purchasing power to the consumers.

Meanwhile, the National Economic and Development Authority (NEDA) reported that the Philippine gross domestic product (GDP) grew 5.8% in 2015.

NEDA cited significant improvements in government spending and household consumption. On the same positive note, the Bangko

“To achieve long term inclusive growth, the much needed quality jobs in the economy, and sustaining the competitiveness of the country, the manufacturing resurgence that we are experiencing now should be sustained.”

DTI Secretary Adrian S. Cristobal Jr.

Selected MRP Implementing Agencies

q Department of Energyq Department of Science and Technologyq Department of Labor and Employmentq Technical Education and Skills

Development Authorityq Commission on Higher Educationq Philippine Coconut Authority

Roadmap through the projects of Department of Science and Technology (DOST), Department of Labor and Employment (DOLE), Department of Energy (DOE), Technical Education And Skills Development Authority (TESDA), (CHED), and Philippine Coconut Authority (PCA).

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INDUSTRYTRENDS

Sentral ng Pilipinas (BSP) expected foreign direct investment (FDIs) to reach USD 6B last year.

FDI is a key source of jobs and capital for the local economy.

PHL on top 3 in global business optimismThe Philippines posted an optimism rating of 84% to remain the third most confident among 36 countries included in the Q4 2015 International Business Report (IBR) released by the Grant Thornton.

India topped the business perception survey with 89% followed by Ireland with 88%.

The survey revealed that businesses in the Philippines remain resolute in their optimism with expectations for revenue, selling prices, employment, and profitability.

Similarly, business optimism in the Asia-Pacific region rose from 20% to 31% in the last quarter of 2015.

However, optimism declined in neighboring countries such as Thailand (from 26% to 10%) and Malaysia (30% to 20%) from 2014 to 2015.

“At the same time, increasing numbers of firms across Asia-Pacific are looking further afield in 2016 and exploring growth opportunities around the world. This is reflected in their improved levels of optimism,” P&A Grant Thornton Chairperson and Chief Execuitive Officer Marivic C. Españo said.

“Those businesses with an instinct for growth will be best placed to spot these emerging pockets of opportunity, build new trade links, and make the most of the brighter outlook being reported for 2016,” Españo said.

PHL industrial output up 7.5% in NovThe country’s manufacturing sector registered a 7.5-% increase in volume in production index (VoPI) in November last year despite the weak global demand for consumer products, according to the Monthly Integrated Survey of Selected Industries (MISSI) conducted by the Philippine Statistics Authority (PSA).

November’s VoPI was higher than the 1.7-% growth recorded the previous month.

Manufacturing’s value of production index (VaPI), likewise, inched by 1%, which was the first positive rate since April last year.

The sector was expected to grow further until December 2015 mainly due to domestic demand, increased inflow of remittances, stable inflation, and low fuel prices.

Meanwhile, the factory sector’s average capacity utilization rate slightly grew to 83.6% in the period from 83.5% in 2014, with basic metals posting the highest utilization rate of 88.6%.

Increases in VoPI and VaPI were registered in consumer goods, intermediate goods, capital goods, and transport.

The food subsector, however, experienced low supply and demand.

PHL Industrial OutputQ4 2015 (in%)

Sector Volume Value

q Consumers goods 52.7 54.1 Tobacco q Intermediate goods 23.7 24.9 Leather goodsq Capital goods - 25.1 11.3 Basic Metal q Transport sector 9.5 8.7

Investors satisfied with BOI servicesThe Board of Investments (BOI) received a 78% or excellent net satisfaction rating from investor

clients in the agency’s recent Stakeholders’ Engagement Survey conducted by Novo Trends PH.

The Novo Trends PH is an independent social research survey company that focuses on analyzing and collecting social, political, economic, and business data. The BOI commissioned the survey company to find out if the clients and stakeholders were satisfied with BOI’s services.

Survey respondents included BOI-registered companies; prospective and would-be investors who previously made investment inquiries with the agency; and industry groups, associations and business chambers.

“The high level of satisfaction was attributed to the agency’s staff complement wherein three out of four respondents said were knowledgeable, helpful, and courteous,” the Novo Trend PH said.

The survey, conducted in the first half of 2015, looked into the stakeholders’ level of awareness on the services and facilities available at BOI and the stakeholders’ level of satisfaction upon their availment of various BOI services.

ARMM sees more investments coming in 2016The Regional Board of Investments in the Autonomous Region in Muslim Mindanao (RBOI-ARMM) approved the P1.3-B oil palm plantation in Maguindanao in January this year.

Also in the investment pipeline are the P45-M industrial waste treatment and the P80-M water facilities in Polloc, Maguindanao.

RBOI-ARMM targets to generate new jobs in the region for 2016.

Last year, RBOI-ARMM approved eight major investment projects of which 65% are agri-based, 24% are energy related, and the rest are on mining and quarrying. Specifically, these investments are:

3February 2016

q P3.7-B cavendish banana plantation in the province of Maguindanao by

Al-Sahar Agri Ventures q P472-M nickel ore project by Chan

C. Mining in Tawi-Tawiq P687-M 5.5-MW expansion

project of Lamsan Power Corp. in Sultan Kudarat, Maguindanaoq Tawi-Tawian Petroleum Trading

Corp. in Panglima Sugala, Tawi-Tawiq Petroleum project by DS3 Fuel

Tanking and Services Inc. in Polloc Free Port, Parang, Maguindanao

q 474 hectare-napier grass plantation by Maguindanao Enegry Farms Inc. in Sultan Kudarat, Maguindanao

q Cassava starch milling plant by Matling Industrial and Commercial Corp in Malabang, Lanao del Sur; and

q OilrefineryprojectbySouthseaIndustrial Energy Corp.

in Simunul, Tawi-Tawi

DTI aims to update classification of MSMEs The Department of Trade and Industry (DTI) plans to update the classification of micro and small enterprises and differentiate them from medium-sized firms, DTI Secretary Adrian S. Cristobal Jr. said.

Secretary Cristobal said micro and small enterprises should be looked at differently because the projects needed to support them from starting their business to financing and marketing are different from medium enterprises.

DTI aims to further strengthen micro, small, and medium enterprises (MSMEs) by positioning them at the core of the Department’s policies and programs; hence, the need to reclassify and identify MSME needs.

MSME initiative is one of the country’s advocacies during the Asia-Pacific Economic Cooperation (APEC) 2015 Summit hosting.

APEC in Manila advocacies for MSMEsinclude:q Boracay Action Agenda and the

Iloilo Initiative which aim to boost competitiveness of MSMEs

by easing barriers to trade and simplifying business processes

q Cebu Action Plan to improve MSMEs’ access to capital through inclusive financing

q Asia-Pacific Economic Cooperation Women and the Economy (APEC WE) Fora aims to advance the small and medium enterprises (SMEs) visibility in the regional and global markets.

Classification of MSMEs according to capitalization under Republic

Act No. 9178 or the Barangay MicroBusiness Enterprises Act of 2002

q Micro enterprises - P3M and below q Small businesses - P3,000,001 to P15Mq Medium enterprises - P15,000,001 to P100M

PHL exporters upbeat on 2016Strong fundamentals will make the economy robust enough to withstand global shocks in 2016 and enable the country to remain a “bright spot” in Asia, Philippine Exporters Confederation, Inc. (PHILEXPORT) President Sergio R. Ortiz-Luis Jr. said.

Ortiz-Luiz said the strong economic fundamentals coupled with large percentage of growth from domestic market can sustain economic expansion and help the country to be relatively insulated from global upheavals compared with other more open economies in Asia.

To boost the economy, he advised that assistance, especially access to trade finance, be made available to micro, small, and medium enterprises (MSMEs) to increase their competitiveness.

He urged the government to allocate P20B in loans for MSMEs without going through the usual collateral requirements, interest rate issues, strict repayment period, and long documentation processes.

Also, he asked for domestic reforms and measures to increase the country’s competitiveness which include developing infrastructure, transportation and communications facilities to unclog roads and other bottlenecks, addressing loopholes

in the supply chain, and promoting innovation and productivity.

IT-BPM industry on track to breach USD 21-B revenuesThe country’s information technology-business process management (IT-BPM) industry is expected to generate USD 25B this year, higher than the USD 18.9B raised in 2014.

Pinnacle Real Estate Consulting Services Inc. estimates that the IT-BPM industry ended 2015 with a total of 1.2M employees and will grow to 1.3M this year.

The BPM industry revenues, which was growing in double-digit in the past two years, is seen to surpass dollar contributions of overseas Filipinos (OFs) in two to three years.

The projection takes into account the personal remittances from OFs in 2013 that reached USD 26.9B.

IT-BPM growth impacts the real estate sector in terms of rental of traditional offices and commercial and retail establishments, as well as housing for its employees.

There was a brisk take-up of approximately 200,000 sqm. of office space in the past three months, most of which were preleased, the Pinnacle reported.

IT-BPM industry expansion outside Metro Manila

qBaguio CityqDavao CityqDumaguete CityqIloilo CityqLipa CityqMetro Bulacan (Baliuag, Calumpit,

Malolos City, Marilao and Meycauayan City)qMetro Cavite (Bacoor City Dasmariñas City and Imus City)qMetro Laguna (Calamba City, Los Baños

and Sta. Rosa City)qMetro Naga (Naga City and Pili)qMetro Rizal (Antipolo City, Cainta and Taytay)

Source: IT and Business Process Association of thePhilippines (IBPAP)

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Electric vehicle makers target 6,000 units in 2018Electric vehicle (EV) manufacturers plan to roll out 5,000 electric tricycles (e-trikes) and 1,000 electric jeepneys in the next three years.

To do so, the industry made two big investments in EV manufacturing with each factory costing P200M to increase production.

Currently, EV manufacturers have 400 units that promote awareness of benefits in using eco-friendly vehicles.

To further finance expansion, the industry is in discussion with the Development Bank of the Philippines (DBP) and Landbank of the Philippines for access to “green” credit lines.

In 2015, the Electric Vehicle Association of the Philippines (EVAP) was able to sell about 100 units of EVs (refer to motors, jeepneys, etc). E-jeepney sales went up 56% while e-trikes increased by 47% compared to 2014.

Presently, EV firms have combined monthly production capacity of 300 units of e-trikes and 75 units of e-jeepneys.

The Department of Trade and Industry (DTI) and EVAP plan to execute the roadmap and formulate development plans for the industry. An Electric Vehicle Working Group was formed as a sub-cluster of the Automotive Industry Technical Working Group for this purpose.

PHL biz urged to tap USD 2-T halal marketBusiness players in the country, especially those in the food sector, are encouraged to get certified to access into the USD 2-T international halal market.

Local businesses are advised to secure halal certification by a credible halal certifying body recognized by the importing country.

Apart from food products, halal also covers pharmaceuticals, fashion, and services such as finance, tourism, and logistics.

In the Philippines, the number of halal-certified companies has reached 514.

Key halal markets are Indonesia, Malaysia, Gulf Cooperation Council (GCC) member countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (UAE),North African countries, Pakistan and other Middle Eastern countries. Other halal markets in non-Muslim countries include India, China, European countries, the Americas and South Africa.

The halal market has been growing owing to rising awareness about the halal concept and the rising disposable income of majority of Muslim countries. The Muslim population is projected to comprise 26% of world population by 2030.

USD 500M worth of snacks from PHL to be shipped to ChinaChina is importing USD 500M worth of various food snacks from the Philippines for the requirements of its Emporium City, a 71-ha., high-end entertainment, residential, and commercial complex in Pinghu, Zhejiang.

The order was made by China’s largest global importers association headed by Chinese businessman Chen Jian which imports products from Europe, America, Australia, and Asia.

“The Filipino food products are very competitive and Filipino exporters are very good and friendly,” Chen told Center for International Trade Expositions and Missions (CITEM) Executive Director Rosvi C. Gaetos after viewing the products at HallONE, the Philippines’ year-round sourcing facility for the global export market, located at the International Trade Center, Roxas Boulevard cor. Gil Puyat Ave., Pasay City.

Among the food export products presented at the business-to-business (B2B) matching session, the banana chips emerged as the common favorite.

Managed and operated by CITEM, HallONE drew the Chinese association’s interest during a

recent business-to-business (B2B) matching session participated in by 14 Filipino food manufacturers and exporters.

HallOne PHL Exhibitorsq Aisha-Fil Food, Inc.q Andy Albao Corporationq Big “E” Food Corporationq Green Leaves Companyq Fenor Foodsq Grand Alphatech International Corporationq Gustazo-Alimentos Corporationq Kwality Philfood, Inc.q Magic Melt Foods, Inc.q Mapagmahal Foodsq Monde Nissinq Nyogi Pure Coconut Water Philippinesq Philippine Moringa and More Corp.q RPM Pili Nuts

With Chen at the meeting was Chinese businessman Jack Zhang, who also praised Philippine food exports.

“Each country has its own special products, and we want to bring those [Filipino] products to China. We are not just talking about the quality but also the price because we want every Chinese family to afford imported food products,” Zhang said.

Zhang and Chen were introduced to the B2B meeting by Commercial Vice Consul Maria Cynthia B. Ricafort of the Philippine Trade and Investment Center of Shanghai and got included in CITEM’s Very Important Buyers (VIB) program at the Manila FAME.

The VIB program can be applied by companies to avail incentives such as VIP assistance and services. They also have pre-arranged visits to exhibitors’ factories and showrooms. There will also be hotel booking arrangements for the VIB.

Food Products in HallOne

q Biscocho q Biscuits q Bread sticks q Coconut waterq Cookie variantsq Crackersq Kutsintaq Maja blancaq Malunggay corn snacks with chili and garlicq Mammon tostadoq Otapq Rosquillosq Pili nutsq Ube

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Chen sought assurance from the exporters on volume, supply, prices, and packaging of products.

Other products sampled at the meeting were various natural fruit juices, biscuits, nuts, cookies, sardines, snacks, and other famous and traditional Filipino snack mixes produced from local materials such as banana, pili, malunggay, mango, ube, calamansi, dalandan, coconut, rice, sweet potato, garlic, pineapple, lemongrass, mangosteen, bangus, and galunggong.

China’s criteria for food selection

q Healthbenefitsq Minimum of one-year shelf lifeq Low to medium priceq Right aroma indicative of its origin

TRADE ANDINVESTMENTS

With the production process using a minimal number of machinery, the project is expected to generate some 35,000 jobs for skilled and unskilled workers.

“It will be a direct employment and the company will employ the locals,” he said.

The park will also have a recreation and tourism component.

URC opens modern slaughterhouse, meat fabricatorFood firm Universal Robina Corp. (URC) opened a state-of-the-art slaughterhouse and meat-fabrication facility in Antipolo City.

URC said the facility employs equipment and processes that will ensure adherence to food quality and safety requirements of both good manufacturing practice (GMP) and hazard analysis and critical control points (HACCP) protocols.

GMP and HACCP protocols are aimed at preventing contamination, instead of end-product evaluation, thus shifting the responsibility to the food producer rather than relying on food inspectors to detect food safety problems to ensure that the product is safe for consumption.

“The level of quality that is expected is unprecedented as the overall system employs specialized equipment and processes rarely seen in the local industry,” URC Vice President and General Manager Vincent Henry Go said.

URC’s facility has a jet-scalding system that uses fresh water on every pig in contrast to the traditional system where the same water is continuously reused and changed only after every operations.

In addition, the facility employs a blood-suction system that removes any contact of the pigs’ blood with the external surrounding to guarantee food grade quality.

The slaughterhouse’s key processes, like stunning, scalding, singeing and washing, are fully automated,

AGRIBUSINESS AND FISHERY

P10B put in bamboo businessAn Italian firm is investing P10B to set up a bamboo plantation and processing plant within an industrial park in Iloilo province, the Philippine Economic Zone Authority (PEZA) reported.

Construction of the plantation and processing plant started last month and will cover 15,000 ha. of land, while the industrial park will have another 187 ha.

Bamboo Technology and Development Park, Inc. Chairman Enriko Caranza said the company plans to produce textiles, garments, and paper using bamboo.

“This is all green and no waste because everything will be processed and utilized for the production,” Caranza said.

The company will export the products to Europe and the Middle East.

practically minimizing any human contact with the carcass.

“The facility can slaughter 1,000 pigs per eight-hour shift and can fabricate 14 metric tons (MT) of meat cuts per eight-hour shift,” Go said.

The cold-chain system uses a chiller room, two cold storages, fabricating room, ante rooms and has its blast freezer to ensure that the required temperature is attained in every step, securing the meat’s freshness.

URC said its Agro-Industrial Group is set to join the export market.

MANUFACTURING Ionics, IBM team up Ionics-EMS, a unit of electronics manufacturer Ionics Inc., has teamed up with global technology firm IBM to develop high-tech products that ride on the Internet of Things (IoT) using cloud, mobile, and big data analytics.

IoT refers to a network of objects like gadgets, consumer appliances, or industrial equipment with technology that allows communication and interaction with each other.

Under the venture, Ionics-EMS will work with IBM to build a platform for the development of cloud-based applications for clients on Bluemix via the IBM Internet of Things Foundation, Ionics-EMS Chair and Chief Executive Officer Lawrence Qua said.

Bluemix is an implementation of IBM’s open cloud architecture based on open source platform Cloud Foundry.

Cloud computing lets users access big volumes of files and applications over the Internet.

Big data refers to voluminous data from traditional and digital sources that could be generated for valuable insights on human behavior such as trends, patterns, and associations.

“The dramatic increase of connected devices provides organizations the

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ability to gather near real-time data and extract new insights that weren’t possible until now,” IBM Philippines President and Country General Manager Luis Pineda said.

With access to services and APIs [application program interface] or a set of routines, protocols, and tools for building software applications, Bluemix could easily extend an Internet-connected device such as a sensor or controller into the cloud, build an application alongside the device to collect the data and send real-time insights.

Also, the collaboration is seen to enable manufacturing clients to develop applications for predictive analytics and draw on data from IoT to enhance various areas such as asset performance management, operational risk management, and predictive maintenance.

More firms venture into e-vehicles makingAs climate change issues have highlighted the agenda among developed nations, more mainstream automotive manufacturers are venturing into the production of electric vehicles.

The Electric Vehicle Association of the Philippines (EVAP) said big names in the auto industry are joining the bandwagon and are set to launch their respective e-vehicles globally this year.

“The Tesla Model S, BMW X5 eDrive, BMW Series 3 Plug In, VW Passat GTE Plug in, Audi A3 E-tron, Audi Q7 Plug In, Chevy Volt 2.0, Volvo XC90 T8, Volvo S60 Plug In, Mercedes Benz GLE, E and C class Plug in, Mitsubishi Outlander Plug In, BYD Tang and Rimac Concept One are but some of the electric vehicles either being sold or will be

introduced in the coming months,” EVAP said. In the Philippines, EVAP is counting on the modernization of the country’s public transport system in pushing its e-vehicle program.

“With 350,000 old public utility jeepneys and 1.2M tricycles that need replacement, it makes sense to start with these two vehicles in developing the domestic EV industry,” EVAP President Rommel Juan said.

Juan said his group is reaching out to local government units (LGUs) this year to offer them e-vehicle mass transport solutions for implementation in various areas of the country.

HOSPITALS

MPIC Hospital buys minority stake in Manila DoctorsMetro Pacific Hospital Holdings Inc., the hospital arm of Metro Pacific Investments Corp. (MPIC), said it has completed its acquisition of a minority stake in the firm that owns Manila Doctors Hospital.

The MPIC Hospital said it already owns 20% of Manila Medical Services Inc. (MMSI), owner of the Manila Doctors Hospital, after it bought shares worth P368M from Metrobank Foundation Inc.

Manila Doctors is a 300-bed tertiary hospital in the City of Manila, which is now constructing an 18-story building that will house new doctors’ clinics, patient rooms, outpatient-diagnostic services, and additional parking facilities.

Administrative Order No. (AO) 68-A, Series of 1989, Revised Rules and Regulations Governing the Registration, Licensure and Operation of Hospitals in the Philippines defines a tertiary hospital as having capabilities to support certified medical specialists and other licensed physicians in various medical fields.

Construction of the new facility is projected to be finished by the end of 2016, increasing its bed capacity to about 500 beds.

ENERGY

PTT rolls out small stationsPTT Philippines Corp., the local unit of Thailand’s largest petroleum company, is set to roll out smaller stations as part of its aggressive expansion in the country this year.

The mini stations will range between 800 to 1,000 sqm. to meet the head office’s standards for fire safety and fuel tanks, PTT Philippines President and Chief Executive Officer (CEO) Sukanya Seriyothin said.

PTT’s regular stations measure from 1,200 sqm. to 1,800 sqm. of land area. The firm also has a 2,000-sqm. property in Pampanga, its biggest station.

Seriyothin said construction of a regular station will take three months to build while a compact station can take 15 to 20 days only.

“Later on, we will have in some areas compact stations. But we will still go with the big station (for our expansion),” he said.

For 2016, PTT Philippines will open 15 new stations across the country, which does not include the compact stations.

“We will go to dealer-owned stations to help the dealer save on costs, and then operate the station eventually,” said Seriyothin, noting that investments for the compact stations will be through dealership.

3 wind plants to generate 165 MW A total of 165 megawatts (MW) is expected to be generated by three wind plants which are scheduled to be completed this year and by 2017, the Department of Energy (DOE) announced.

The first wind plant is Energy Logics Philippines Inc.’s 48-MW

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Pasuquin East power project in Pasuquin, Ilocos Norte which will be completed by June this year. The project is estimated to cost P6.05B.

The second is Alternergy Sembrano Wind Corp.’s 72-MW wind project in Mabitac, Laguna, valued at P7.06B, which is due for completion by April 2017.

Next is Northern Luzon UPC Asia Corp.’s 45-MW Balaoi wind power project in Pagudpud, Ilocos Norte which is expected to be completed by August 2017.

P300-M drilling in Batangas to startBasic Energy Corp. is set to start drilling its P300-M geothermal well in Batangas province in May this year.

The Mabini geothermal project would account for bulk of the company’s capital expenditure in 2016, Basic Energy Senior Vice President Anthony Cuaycong said.

Basic Energy and partner Trans-Asia Oil and Energy Development Corp. signed in November 2015 a joint operating agreement for the project.

With the agreement, Basic Energy now owns 75% of the service contract, while Trans-Asia holds the remaining 25%.

Trans-Asia decided to share in the cost of the first exploration well after undertaking due diligence on the project, including geophysical work, validating prospective estimates that the project could generate between 20 megawatts (MW) and 60 MW of energy.

Maibarara expands geothermal projectThe 12-megawatt (MW) geothermal power plant expansion in Batangas province by Maibarara Geothermal Inc. has started as the firm prepares for full commercial operations in 2017.

Maibarara Geothermal President Francisco Delfin Jr. said his company operates the existing 20-MW Maibarara geothermal power

project in Sto. Tomas, Batangas under a joint venture with Trans-Asia Oil and Energy Development Corp. and PNOC Renewables Corp.

The service contract was awarded to the firm in February 2010 following an open and competitive selection process in October 2009.

It became the newest geothermal power facility in the country and the first under the Aquino administration, when it started commercial operations last February 2014.

The Maibarara expansion project involves the installation of a new 12-MW unit adjacent to the existing 20 MW Maibarara-1 geothermal project and is expected to add at least 95,000 MW-hours to the plant’s annual generation.

Delfin said the capacity expansion, once completed, would enhance Maibarara Geothermal’s revenues.

PUBLIC INFRASTRUCTURE AND LOGISTICS

P27.9-B Cebu-Cordova bridge project awardedThe Metro Pacific Tollways Corporation (MPTC) has received the Notices of Award for the P27.9-B Cebu-Cordova Bridge project.

MPIC said the notices from both the City of Cebu and the Municipality of Cordova is for the financing, design, construction, implementation, operation, and maintenance of the 8.25-km. tollroad.

The project will be implemented through an unincorporated joint venture among MPTC, the City of Cebu, and the Municipality of Cordova.

It is envisioned to decongest the traffic in the two existing bridges (Marcelo Fernan Bridge and Mandaue Bridge) between Mactan and Cebu.

The tollway includes the construction of the connections

to Cebu City and Cordova town, the main bridge structure, viaduct, causeway, roadway, and toll facilities.

It is located around 7.5 km. south of the Mandaue Bridge and will take off from the Cebu South Coastal Road crossing the Mactan channel to Mactan Island.

DOTC signs P3.81-B MRT-3 maintenance deal with Busan groupA Korean-Filipino group won the P3.81-B maintenance contract of the Metro Rail Transit Line 3 (MRT-3), particularly the rolling stock and signaling system, to improve the operations of the mass transit system.

The Department of Transportation and Communications (DOTC) signed the contract with the joint venture (JV) of Busan Transportation Corporation, Edison Development & Construction, Tramat Mercantile, Inc., TMICorp Inc., and Castan Corporation.

“We are one step closer to having a safer and more reliable MRT-3 system with our new world-class rail maintenance service provider. With the operator of the Busan railway network in South Korea sharing their technical expertise, the riding public can expect an increase in the number of running trains and the efficiency of operations,” the DOTC said.

The joint venture has started the maintenance works of the rolling stock and signaling system – considered the most critical maintenance portion of the project.

The contract also covers the general overhaul of 43 coaches for three years and the total replacement of the signaling system within 24 months.

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PUBLIC-PRIVATE PARTNERSHIP PROJECTS

First school PPP project completedThe Aquino administration reported the delivery of the first school building project under its public-private partnership (PPP) program worth P16.43B, its third completed PPP venture to date. “The Department of Education (DepEd) and its private partners have completed the PPP for School Infrastructure Project (PSIP) Phase I,” the Public-Private Partnership (PPP) Center said.

The PSIP Phase 1 is expected to benefit over 400,000 students.

In December 2015, a total of 9,296 classrooms were already constructed and delivered in three regions, namely Region I (Ilocos Region); Region III (Central Luzon); and Region IV-A (Cavite-Laguna-Batangas-Rizal-Quezon).

The 10-year build-lease-transfer contract covers the design, financing and construction of the one- and two-storey classrooms, including furniture and fixtures.

Citicore Holdings Investment, Inc.-Megawide Construction Corp. and BF Corp.’s Bright Future Educational Facilities, Inc. both won the contract in October 2012.

“The objective of the government is to expand the supply of classrooms in the public school system as fast as it could reasonably be done and cut the current shortage of around 66,800 classroom units nationwide,” the PPP Center said.

The PSIP has a second phase, which costs P3.86B.

“The PSIP Phase 2 involves the designing, financing, and construction of 4,370 one-storey, two-storey, three-storey and four-storey classrooms, including furniture, fixtures, and toilets in 1,735 public schools in five regions: CAR, Region 1, Region 3, Region 10, and CARAGA” the Center said.

The contract for the second phase was awarded to the Consortium of BSP & Co., Inc. and Vicente T. Lao Construction and Megawide in September and October 2013, respectively.

“For the Phase II of the PPP for School Infrastructure Project, there were already 1,690 completed and delivered classrooms as of October 31, 2015,” the PPP Center said.

So far, contracts for 12 PPP projects cumulatively worth some P217.4B have been awarded since the flagship program was launched in the third quarter of 2010.

Rollout of 8 more PPP projects eyedThe government plans to roll out eight more public private partnership (PPP) projects before the end of the Aquino Administration.

PPP Center Executive Director Cosette V. Canilao said three PPP deals which have secured the approval of the National Economic and Development Authority (NEDA) Board will be established before the end of President Benigno S. Aquino III’s term.

Canilao named the projects as the Light Rail Transit (LRT) Line 6; LRT Line 4; and the North Luzon Expressway (NLEX)–South Luzon Expressway (SLEX) Connector Road.

The P65.09-B LRT Line 6 project covers a proposed 19-km. railway from Niyog, Bacoor to Dasmariñas City.

The P42.89-B LRT Line 4, on the other hand, involves the construction of the 11-km. rail line running west from the SM City in Taytay, Rizal to the intersection of Ortigas Avenue and EDSA.

Meanwhile, the P23.20-B NLEX-SLEX Connector Road Project will entail the construction of an 8-km, four-lane toll road to link the existing NLEX and SLEX, passing through Metro Manila and using the existing Philippine National Railway (PNR) alignment as its route.

PPP deals for NEDA’s approval

q Ninoy Aquino International Airport (NAIA) Development Project, Pasay City

q Batangas-Manila 1 Natural Gas Pipeline Project, Batangas to Manilaq Plaridel Bypass Toll Road Project, Bulacanq Philippine Travel Center Complex Project, Manilaq New Nayong Pilipino at Entertainment

City Project, Manila

The go signal from the NEDA Board chaired by President Aquino is the last approval needed before a PPP project can be offered for bidding.

COMPANY NOTES

Maynilad allots P13.6-B capex Maynilad Water Services Inc. is spending P13.6B to bankroll water and waste-water infrastructure projects this 2016.

Of the amount, some P7.5B will be allocated for water infrastructure projects and around P4B for operation support programs such as the construction, rehabilitation and upgrade of treatment plants, pumping stations and reservoirs, and the laying of primary pipelines for water service expansion.

Almost P2B would also be allotted for Maynilad’s Non-Revenue Water (NRW) reduction program, which covers meter management, leak repairs, pipe replacements, and District Metered Area management.

They would also allocate budget for the modernization of data management and information systems, improvement of existing facilities, development of new water sources, and refurbishment of Common Purpose Facilities (CPF) in the Bicte Basins and Ipo Dam in Norzagaray, Bulacan.

This year’s capital expenditures fund would come from a combination of bank loans and internationally generated funds. The water

9February 2016

In 2013, Puregold Price Club Inc. owner Lucio Co came in the pharmaceutical distribution business by acquiring the ThreeSixty Pharmacy, a Cebu-based drug store chain.

ThreeSixty Pharmacy started in Cebu City in 2010 wherein at the time of acquisition the company had about 63 stores mostly located in Cebu while some are in Leyte and Bohol.

200th Savemore store eyed this yearSM Supermarket’s Savemore targets to reach its goal of opening its 200th

store this year. It aims to continue its expansion plan on the back of their operation’s success for 17 years.

As of end-September 2015, Savemore has expanded to 130 stores since its first store opened in 1998 at the Riverbanks, Marikina.

According to SM Senior Vice President for Investor Relations Corazon P. Guidote, Savemore was well-placed to take advantage of growth opportunities across the Philippines.

“We wanted to bring SM’s brand of shopping experience nearer to the consumer and nearer to the neighborhoods. We can only do that if we put up standalone stores. This is part of SM’s calling to go to areas where you can serve better,” Savemore President Jojo T. Tagbo said.

Moreover, some Savemore stores have been awarded Top Taxpayers by local governments and the majority of its branches are recipients of Gold Bagwis Seals for service excellence from the Department of Trade and Industry (DTI).

company aims to create around 41,243 jobs from its projects.

“We start the year right by providing the necessary investments to continue meeting our service obligations and contributing to the job generation efforts of the government,” Maynilad President and Chief Executive Officer (CEO) Ramoncito S. Fernandez said.

Vista Land finishes 1st tranche of Starmalls’ acquisitionVista Land & Lifescapes Inc. (VLL) has progressed in gaining Starmalls with the completion of the first stage of its acquisition.

“We disclose that the first tranche of the acquisition has been completed on 22 December with the crossing from the Fine Group to VLL of a total of 6.69B common shares representing approximately 79.43% of the total outstanding common capital stock of Starmalls,” according to VLL.

The company is acquiring about 88.25% of Starmalls’ outstanding common capital stock.

In November 2015, VLL acquired Starmalls in a deal valued at P33B.

This acquisition reinforces Vista Land as the Philippines’ fourth largest integrated property developer and permits the company to seal partnerships for self-contained communities.

7-Eleven to finish building stores in Davao City by H1 2016A total of 70 7-Eleven stores will operate in Davao City once all the constructions are completed by the middle of 2016.

Some 34 stores have already opened in the area with a daily income averaging P32,000 per store, according to City Investment Promotions Center Chief Ivan C. Cortes.

Cortes said 7-Eleven did not take over or buy out a local chain of convenient stores. It has extended to other towns and cities in and around the Davao region.

“[The city is] very attractive to investors, and we would expect not only the foreign investors to come in, but also local investors.” Cortes added.

Globe, Bayan merge networksGlobe Telecom Inc. anticipates Bayan Telecommunications Inc.’s broadband speed to further improve this year with the completion of their merging.

“We operate as one already. The modernization of their network is hand-in-hand with additional expansion that Globe is doing. Together, that is one project,” Globe President and Chief Executive Ernest L. Cu said.

Globe’s goal was to offer Bayan subscribers a broadband speed of up to 100 megabits per second.

Moreover, the company planned to spend between USD 200M and USD 300M on the next two years for the fixed-line infrastructure modernization including that of Bayan’s.

According to Globe Chief Commercial Officer Alberto M. de Larrazabal, the first phase of the modernization of Bayan’s infrastructure would be in the cities of Quezon, Manila, Cebu, and Davao.

Globe now owns 98.57% of Bayan’s outstanding capital after it attained the remaining stake in the telecom company for P1.83B.

Puregold enters into pharma distributionPuregold Price Club Inc. will now enter the pharmaceutical distribution business to expand its product offerings to its customers.

The Securities and Exchange Commission (SEC) permitted the amendments of its articles of incorporation to include “selling pharmaceutical and medical goods, cosmetic, medicines, medical formulations, food supplements, etc. in the primary purpose of the company.”

Philippine Business Report10

Also, Savemore opens job and business opportunities for locals wherein the company has hired about 21,000 employees. Notably, 80% of its workforce is sourced from the host communities.

COUNTRY-TO-COUNTRY

PHL seeks better trade terms with JapanThe Philippines sought zero duties and scrapped quotas for certain agricultural products, including bananas and pineapples, in the first general review of the Philippines-Japan Economic Partnership Agreement (PJEPA) this February 2016.

“The Department of Trade and Industry’s focus now is more on increased access for agricultural products to Japan, as the Philippines is already breaching the quotas set under the bilateral economic partnership,” DTI-Industry Development Group (IDG) Undersecretary Ceferino S. Rodolfo said.

Under the PJEPA, some of the country’s agricultural exports to Japan were already enjoying preferential rates. However, since the demand for local produce has seen significant increases over the past years, the export volumes have risen and are starting to breach the prescribed quotas, Rodolfo explained.

Likewise, the government plans to add teachers and engineers for the movement of natural persons between the Philippines and Japan as the existing agreement covers only nurses and caregivers.

The PJEPA was signed on 9 September 2006 in Helsinki, Finland by former President Gloria Macapagal-Arroyo and former Japanese Prime Minister Junichiro Koizumi. It was ratified by the Philippine Senate in 2008.

PJEPA’s objectives

q Liberalize and facilitate trade in goods and services between the two countries

q Increase investment opportunities q Enhance protection of intellectual

property q Promote transparency in government

procurementq Establish a framework for further bilateral

cooperation and improvement of the Philippine business environment

PEZA to sign investment deal with Osaka governmentThe Philippine Economic Zone Authority (PEZA) and the Osaka Prefecture Government of Japan, led by Osaka Governor Ichiro Matsui, signed last month a memorandum of understanding (MoU) to explore the business expansion of Osaka firms in the Philippines.

PEZA zones offer an inviting business environment, as PEZA locators enjoy incentives such as income tax holidays, government tax exemptions, zero value-added tax (VAT) on utilities, employment of foreign nationals up to 5% of the total employees, and special visas for immediate family members, PEZA Director General Lilia B. De Lima said.

Japan remains to be PEZA's top investor together with Netherlands as the 2015 Top 1, followed by Singapore. De Lima expects increased Japanese investments in the country this year.

To date, there are 867 Japanese firms in the country mostly involved in manufacturing, metal fabrication, information technology (IT), and contact centers.

In 2015, Japanese investments in the Philippines amounted to P295.09B, a 5.58% increase from investments in 2014 which amounted to P279.48B.

"The Philippines is expanding; it has a very good future and we are expecting Osaka companies to come to the Philippines," Osaka Vice Governor Hiroshi Ueda said.

INTERNATIONAL/REGIONALWATCH

ASEAN to set 2016 as a communityThe Association of Southeast Asian Nations (ASEAN) welcomed 2016 as a community, promising its people for an open and integrated market with more product choices at competitive costs.

Together, the ASEAN has a combined market of 600M. To date, 98.6% of goods are traded among member countries at zero tariff.

The ASEAN Community was formally launched on 31 December 2015, marking ASEAN’s further consolidation since its creation in 1967.

3 pillars of the ASEAN Community

q Political security. It follows the principles of the ASEAN Charter, uses consultation and consensus-building, and adheres to the use of peaceful means in resolving disputes.

q Economic. It shapes with the free movement of goods, services, capital and skilled labour, with a view to improving the lives of ASEAN citizens. It will be a single market and production base, a highly competitive economic region and equitable economic development and one fully integrated into the global economy.

q Socio-Cultural. It focuses on bringing out the human dimension of ASEAN cooperation in areas such as health, education, environment and disaster management, and an abiding commitment to address the region’s aspiration to lift the quality of life for its people.

“It is a day we have all been waiting for. It is a day that we – ASEAN – can be proud of,” ASEAN Chair for 2015 Malaysian Prime Minister Najib Tun Abdul Razak, said at the opening of the 27th ASEAN Summit and Related Summits on 21 November 2015 in Kuala Lumpur, Malaysia.

“The realization of the ASEAN Community has set a milestone in

11February 2016

The ASEAN integration has also brightened prospects for inbound investments, Ocampo said.

“Every week we get visitors from international friends—private equities, strategic investors looking to acquire Philippine corporations. This is going to be bigger,” he said.

For some players, he said it would open up opportunities to secure cheaper raw materials while noting that in agriculture, there are still non-tariff barriers to deal with.

ASEAN has now formalized the creation of a single market and production base that allows the free flow of goods, services, investments, and skilled labor, and the freer movement of capital across the region by yearend.

As a unified economy, ASEAN is the seventh largest in the world with a combined gross domestic product of USD 2.4T and could be fourth largest by 2050 if growth trends continue. With more than 600M people, it is the world’s third most populous region next to China and India.

This economic bloc includes countries with higher per capita income like Singapore and Brunei and the middle-income economies like Indonesia, Thailand, Malaysia, the Philippines, and Viet Nam. There are also the “new frontiers” like Myanmar, Laos, and Cambodia.

the integration process and will ensure lasting peace, security and resilience in an outward-looking region, with economies that are vibrant, competitive and highly integrated, and an inclusive community that is embedded with a strong sense of togetherness and common identity,” ASEAN Leaders (composed of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam) said in their Declaration on the Establishment of the ASEAN Community issued during the summit.

ASEAN Leaders have committed to continue regional integration over the next decade by adopting the Kuala Lumpur Declaration on ‘ASEAN 2025: Forging Ahead Together’ that sets targets to meet by 2025.

This is the culmination of various initiatives of regional integration which have taken place over nearly five decades. It marks the completion by ASEAN Member States of the blueprints for the three Community pillars after ASEAN Leaders in 2007 decided to move the goal of establishing the ASEAN Community to 2015 from the original target of 2020.

BIMP-EAGA to prioritize food, transport, travelThe Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN (Association of Southeast Asian Nations) Growth Area (BIMP-EAGA) will draft a policy framework for the sub-region’s development from 2017 to 2025 by identifying priority projects to lure investments.

“Our priorities are consistent with developing Mindanao and Palawan and will provide us leverage with the national government to ensure that the two areas are developed,” Mindanao Development Authority Investment Promotions and Public Affairs Director Romeo M. Montenegro said.

The projects to be proposed will develop Mindanao and Palawan as

food baskets, destinations, and connecting points within the ASEAN Economic Community (AEC).

“If we improve the ports in Mindanao and Palawan, it will also result in an increase in traffic across BIMP-EAGA and across ASEAN,” he said.

At the Kota Kinabalu meeting last December, the four countries agreed on the BIMP-EAGA Vision 2025, which is to “develop a resilient, inclusive, sustainable and economically competitive sub-region.”

“We continue to recognize that improvement in connectivity is vital for the seamless movement of goods and people from EAGA,” the group said in a joint statement.

The first BIMP-EAGA blueprint was drafted for 2012-2016. On its part, the Philippines implemented among other infrastructure projects, such as the upgrade of the road between the cities of Davao and General Santos, which both have seaports, and the port in Puerto Princesa City.

M&A deals to rise in AECThe beginning of the unified Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) has created a wave of mergers and acquisitions (M&A) involving not just top-tier Philippine corporations but also second-tier companies looking to beef up operations to a more competitive environment, First Metro Investment Corp Executive Vice President and Investment Banking Group Head Juan Justino Ocampo said.

Ocampo has seen a strong potential for cross-border acquisitions given the healthy balance sheets of local companies and access to ample domestic acquisition funds.

For privately-held Filipino food firms seeking offshore acquisitions, he said the next phase would be to go public.

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Philippine Business Report12

01234567

Feb-16Jan-16Dec-16Nov-15Oct-15Sep-15

Interest Rate (%)Lending Regular

46

46.5

47

47.5

48

Feb-16Jan-16Dec-15Nov-15Oct-15Sep-15

Peso per US Dollar Rate

ECONOMIC INDICATORS

As of 29 February 2016

P u b l i s h e d m o n t h l y b y t h e K n o w l e d g e M a n a g e m e n t a n d I n f o r m a t i o n S e r v i c e , D e p a r t m e n t o f T r a d e a n d I n d u s t r y, 2 F T r a d e a n d I n d u s t r y B u i l d i n g , 3 6 1 S e n . G i l J . P u y a t A v e n u e , M a k a t i C i t y 1 2 0 0 , P h i l i p p i n e s • P h o n e( + 6 3 2 ) 8 9 5 . 3 6 11 • F a x ( + 6 3 2 ) 8 9 5 . 6 4 8 7 • To s u b s c r i b e , e -M a i l : p u b l i c a t i o n s@d t i . g o v . p h • w w w . d t i . g o v . p h

Editorial Team : Patr icia May M. Abejo /Edi tor- in-Chief • Alfonso M. Valenzuela /Managing Edi tor • Cresenciano P. Par /Assistant Editor • Jamila Joy H. Raposon, Kristina S. Andaya, Renaldo C. Neneria/Writers •Renaldo C. Neneria/Design Layout •

Philippine Business ReportFebruary 2016

Sources: BangkoSentralngPilipinas(BSP) Philippine Statistics Authority (PSA)Photos: Google.com

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2016

As of 29 February 2016

012345678

3Q (2014)4Q (2014)1Q (2015) 2Q (2015 3Q (2015)4Q (2015)

GDP Growth Rate (%)

01234567

3Q (2014) 4Q (2014) 1Q (2015) 2Q (2015) 3Q (2015) 4Q (2015)

GNI Growth Rate (%)

0

0.5

1

1.5

2

Feb-16Jan-16Dec-15Nov-15Oct-15Sep-15

Inflation Rate (%)(1994 base year)

140.5141

141.5142

142.5143

143.5

Feb-16Jan-16Dec-15Nov-15Oct-15Sep-15

Consumer Price Index(2000 base year)

0100020003000400050006000

Jan-16Dec-15Nov-15Oct-15Sep-15Aug-15

Exports(In USD Billion)

0

2000

4000

6000

8000

Dec-15Nov-15Oct-15Sep-15Aug-15Jul-15

Imports (In USD Billion)