philippine business report (nov.2014)

1November 2014

Volume 25 No. 11 November 2014

Revenues from Philippine merchandise exports grew by 10.5% to USD 5.47B in August this year from USD 4.96B in the same period last year on the back of the strong performance of electronic products.

The Philippine Statistics Authority (PSA) said shipments of electronic products, which accounted for 41.6% of total receipts, grew by 10% to USD 2.28B in August from the previous year’s USD 2.1B.

Total receipts from the country’s top ten exports reached USD 4.44B, or 81% of the total exports.

For the January-August period this year, the country’s merchandise exports registered a 9.2-% growth to USD 40.75B from USD 37.33B in the same period in 2013.

National Economic and Development Authority (NEDA) Deputy Director-General Emmanuel F. Esguerra said the double-digit growth of exports for the month is likely to be sustained for the rest of the year.

“This expectation is primarily anchored on increasing global demand alongside business expansions and new product launches for garments and information technology sectors,” Esguerra said.

For his part, Philippine Exporters Confederation, Inc. (Philexport)President Sergio Ortiz-Luis Jr. said the group is upbeat that total merchandise exports for the year would grow by 10%.

PHL exports up 10.5% in August

PHL’s Top 10 Export ProductsAugust 2014

In USD Million

Products Amount

Electronic Products 2,277.0Other Manufactures 373.6Machinery and Transport 331.1 Equipment Other Mineral Products 318.3Woodcrafts and Furniture 251.9Ignition Wiring 245.5Chemicals 171.1Articles of Apparel and 168.9 Clothing Accessories Coconut Oil 159.1Metal Components 140.3

Source: Philippine Statistics Authority (PSA)

PHL’s Top 5 Export MarketsAugust 2014

Country % Share Amount (In USD Million)

Japan 19.1 1,044.00People’s Republic 15.0 820.74 of ChinaUnited States 14.6 799.62 of AmericaHong Kong 8.7 476.24Singapore 7.4 405.67

Source: Philippine Statistics Authority (PSA)

“One of the reasons we are confident we will achieve 10% is that the semiconductor sector is doing well,” he said.

Philippine Business Report2

INDUSTRYTReNDS

FDIs rise 56% to USD 4B in 7 monthsForeign direct investments (FDIs) rose by 56% in the January-July period this year amid the country’s strong macroeconomic fundamentals, the Bangko Sentral ng Pilipinas (BSP) said.

Net FDI inflows amounted to USD 4B as of July, up 56.1% from USD 2.57B in the same period last year.

“This reflected continued favorable investor sentiment on the Philippine economy on the back of the country’s strong macroeconomic fundamentals,” the BSP said.

Equity capital or investments made by foreign companies in their Philippine units went up 46% to USD 866M from USD 593M.

The BSP said most of the investments during the period came from the United States (U.S.), Hong Kong, Japan, Singapore, and Taiwan.

These funds went into financial and insurance, real estate, manufacturing, wholesale and retail trade, and transportation and storage activities.

entrepreneurs optimisticFilipino entrepreneurs remain optimistic that the country’s economy would improve for the rest of the year.

The Global Entrepreneur Indicator released by the local chapter of the Entrepreneurs Organization showed 60% of business owners in the country expected a better operating environment, while 40% believed it would stay the same.

Notably, business sentiment in the Philippines is more positive than the global average. About 33.24% of global respondents

expected improvement while 2.72%, deterioration, and 61.8%, status quo.

About 73.3% of local businesses reported a favorable business environment while 93.33% predicted it would be better in the next six months.

The GEI, released globally every year for the last five years, uses five indicators namely, job creation, outlook, employment, debt, and revenues to forecast global trends.

It reflects the sentiments of the 2,800 members of the Entrepreneurs’ Organization, mostly small and medium enterprises (SMEs), across 46 countries, including the Philippines.

The Philippine data were based on the responses of local chapter members.

12 Korean firms keen on PHLTwelve Korean manufacturing firms are interested in setting up factories in the Philippines, the Department of Trade and Industry (DTI) said.

DTI Management Services Group (MSG) Undersecretary Nora K. Terrado said the Association of Southeast Asian Nations (ASEAN)-Korea Centre organized a trade mission composed of 12 firms to allow them to check out opportunities here.

The firms that formed part of the trade mission are involved in food processing and the manufacture of electronic products.

“They are mostly looking at PEZA [Philippine Economic Zone Authority] zones,” Terrado said.

She said the Korean companies are also looking at the Philippines as a gateway to the region as the ASEAN is set to establish a single market and production base by next year.

“Any ASEAN country is a candidate, so we have to do a good job in giving them a value proposition. Not all of them will be a match but if we can find a company that will match, we will sell,” Terrado said.

Korean firms expressed interest in the country given its improving business climate and the success of existing Korean companies here.

“It’s about the improving business climate, testimonies of successful Korean business so they want to investigate. It’s really the experience of other Korean companies and the overall business climate,” Terrado said.

The Philippine government is luring more investments into the manufacturing sector to make economic growth more inclusive through the creation of jobs.

Singapore firms urged to invest in PHL infra sectorThe government is encouraging Singapore-based firms to consider opportunities in the Philippine infrastructure sector.

Department of Trade and Industry (DTI) Industry Promotions Group (IPG) Undersecretary Ponciano C. Manalo Jr. said he recently attended an infrastructure road show in Singapore organized by the Makati Business Club (MBC) and the Philippine British Business Council.

Eight PPP projects

q Daang Hari - South Luzon expressway link road

q PPP for School Infrastructure Project (PSIP) Phase 1

q PSIP Phase 2q Modernization project for the Philippine

Orthopedic Centerq Ninoy Aquino International Airport

expresswayq Automated fare collection system

projectq Mactan Cebu International Airport

expansion projectq Light Rail Transit (LRT) Line 1 Cavite

extension and operation and maintenance

“We pushed for infrastructure during the event,” Manalo said.

He said Singaporean companies were interested to know more

3November 2014

about business opportunities in the country.

During the event, Philippine government officials presented opportunities in the infrastructure sector, particularly projects under its flagship Public-Private Partnership (PPP) program.

The government also encouraged investments in other infrastructure projects including roads, railways, airports, water, and healthcare.

Japan firms looking to invest in PHLThe Department of Trade and Industry (DTI) recently welcomed a 20-member delegation of the Kansai Economic Federation (Kankeiren) from Japan that plan to either expand or start new businesses here.

“Our survey mission in the Philippines has a definite objective in the light of movements toward the ASEAN [Association of Southeast Asian Nations] economic integration as well as negotiations both for EPA [Economic Partnership Agreement] and FTA [Free Trade Agreement],” Kankeiren Vice Chairman Masayuki Matsushita said.

Matsushita led the delegation composed of senior business executives from manufacturing, trade and services, and financial sectors.

Kankeiren members

q Daikin Industries, Ltd. q Daiwa Institute of Research Ltd. q Hitachi Zosen Corp.q Itochu Corp.q Japan Bank for International Cooperationq Kyoei Steel Ltd.q Mitsui & Co., Ltd.q Mitsubishi Corp.q Marubeni Corp.q Obayashi Corp.q Sojitz Corp.q Sumitomo Corp.q Takenaka Corp.

Kankeiren, a non-profit economic organization based in the Kansai region in Japan, represents 1,400 businesses and organizations seeking to promote Kansai as an

attractive location for business as well as strengthen the region’s links with other countries.

Matsushita said the visit aims to learn about the country’s economic conditions, industrial policies and investment environment, and use the findings to expand business exchanges between Kansai, Japan and the Philippines.

DTI Industry Development Group (IDG) Undersecretary Adrian S. Cristobal Jr. said that Kankeiren’s visit is timely as the Philippines is now one of the fastest growing economies in the region.

With the approaching regional economic integration of ASEAN member states, the economic outlook for the Philippines remains highly favorable, with continuing stable and positive investment grade credit ratings by major rating agencies such as Fitch Ratings, Standard and Poor’s, and Moody’s, as well as Japan’s Credit Rating Agency, Ltd.

“Japan is a strategic partner in the Philippine growth story. After we signed the Philippines-Japan Economic Partnership Agreement (PJEPA) in 2006, Japan has become our number one trading partner and one of the top sources of investments to the Philippines,” Cristobal said.

He said the government, which is currently working on revitalizing the industrial sector particularly manufacturing, wants to attract investments in the sector to create more jobs.

To date, a total of 30 industry roadmaps in various stages of implementation have beensubmitted through the initiative launched in 2012.

“Japan has been instrumental in improving the Philippines’ business environment and addressing infrastructure developments through its Overseas Development Assistance (ODA). We greatly value and welcome inputs

of the Japanese in rolling out the country’s major infrastructure projects to sustain the upward momentum of the Philippine economy,” Cristobal said.

DTI eyes increase in PHL coffee productionThe Department of Trade and Industry (DTI) wants to increase the country’s coffee production to cash in on its rising demand in the domestic and international markets.

“There are vast opportunities in the regional and global production networks that we can take advantage of. The quality of our workers and the quality of our coffee beans will be key to the success of Philippine coffee in the domestic and international markets,” DTI Assistant Secretary for Industry Development Group (IDG) Ceferino S. Rodolfo said.

Apart from the domestic market, there are opportunities for the country to cater to the demand in the Association of Southeast Asian Nations (ASEAN), which has a population of 600M.

Coffee, like most goods in ASEAN, has been trading at zero tariff under ASEAN Trade in Goods Agreement since 2010, in preparation for the regional economic integration next year.

The ASEAN Economic Community (AEC) seeks to allow free flow of goods, services, skilled labor, investments, and capital within the region.

To tap opportunities, the DTI is implementing programs to support the growth of the country’s coffee production.

“Interventions include branding and promotions, availability of financial loans, capacity building and trainings, and capital equipment,” Rodolfo said.

In the Cordillera Administrative Region (CAR), where some 112 micro, small, and medium enterprises


(MSMEs) depend on coffee growing and trading for their livelihood, the DTI, in partnership with other government agencies, provides shared service facilities (SSF) or machines for roasting and grinding.

“Collaboration to support the coffee industry exists both on the national and local levels. Government agencies, coffee growers, and traders have been working since 2011 to prioritize the development of the coffee industry in the Cordilleras,” DTI-CAR Regional Director Myrna P. Pablo said.

7 foreign firms eye PHL for game developmentSeven firms engaged in game development and publishing expressed plans to set up operations in the Philippines.

The firms

q Activision q Blizzard Entertainmentq Electronic Artsq Microsoft Studiosq Square Enix-Eidosq Ubisoftq 2K

“Filipino-American game development executives and expatriates in Canada and the United States (U.S.) have also expressed support for the growth and promotion of the Philippine game development industry,” DTI Undersecretary for Industry Promotions Group (IPG) Ponciano C. Manalo Jr. said.

The firms expressed their interest to explore opportunities in the Philippines during the External Development Summit (XDS) held in Vancouver, Canada last September.

The DTI, in collaboration with the Game Developers Association of the Philippines and Animation Council of the Philippines, Inc., organized a Philippine delegation to participate in the XDS.

During the event, the Philippine participants met with 28 major

game development companies and publishers, and encouraged them to consider opportunities here.

“Anchored on a robust, thriving and globally competitive content industry, and supported by a technologically-savvy, passionate and creative talent pool, the Philippines is poised to become the leading game development hub and offshore destination in the Asia-Pacific region,” Manalo said.

The country’s game development industry aims to capture 10% of the projected USD 243B worth of revenues of the global animation and gaming development market by 2016.

PEZA wants Korea, Batangas ports partnershipThe Philippine Economic Zone Authority (PEZA) is pushing for a partnership agreement between Korea’s Port of Pyeongtaek and the Port of Batangas to increase traffic between the two ports.

PEZA Director-General Lilia B. de Lima said a team from the Port of Pyeongtaek was set to visit the Port of Batangas.

“We have very good prospects in Korea. This Port of Pyeongtaek is a very big port. So I think it should link up with the Batangas Port,” De Lima said.

De Lima signed a mutual cooperation agreement with Korean officials for increased business prospects with the Port of Pyeongtaek.

The Philippines is the second biggest client of Pyeongtaek Port, next to China in terms of shipments.

Pyeongtaek Port ships out not only Hyundai and other Korean cars to Batangas Port, but also European cars bound for the Philippine market.

The Korean port has 63 berths and plans to add 13 more in the next few years.

“Right now, majority of the shipment of vehicles from Korea are shipped from Pyeongtaek Port to Batangas Port,” said De Lima.

She said other Korean companies were also keenly looking at the Philippines for possible investment opportunities.

Car sales up 41.7% in SeptemberCar sales in the Philippines rose by 41.7% to 20,924 units in September this year compared to the same month in 2013, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) reported.

Top car sellers in PHLSeptember 2014

1. Toyota Motors Philippines, Corp. 2. Mitsubishi Motors Philippines, Corp.3. Ford Motor Company Philippines, Inc. 4. Isuzu Philippines Corporation5. Honda Cars Philippines Inc.

Soucre: Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI)

CAMPI President Rommel Gutierrez said the September monthly sales figure is another record for the local automotive sector.

"Increase in sales is mainly due to the introduction of new models and equally aggressive promotional support," Gutierrez said.

Both the passenger car and commercial vehicle categories posted double-digit increases in September. Passenger car sales jumped by 65.1% year-on-year (YOY) to 8,477 units while sales of commercial vehicles rose by 29.3% YOY to 12,447 units.

In the January-September period, total car sales rose by 29.2% on year to 169,727 units.

CAMPI said earlier that sustained demand for automobiles in the country would allow importers and local assemblers to sell 250,000 units this year.

5November 2014

TrAdE AndINVeSTMeNTS

PHL closes in on India as top BPM siteThe business process management (BPM) industry in the Philippines is expected to grab from India roughly USD 30B in earnings, the Associated Chambers of Commerce and Industry of India (Assocham) said.

“The majority of lost business relocated to the Philippines, where an estimated 30% of graduates are employable, compared to just 10% in India,” the business chamber said.

Filipino graduates’ fluency in English and their Western accents have added to the country’s attractiveness as a preferred site. Most of the world’s larger providers of BPM services have call centers in the Philippines, including Accenture and Convergys, which together employ over 60,000 people.

A ranking of the top 100 BPM destinations published by consultancy firm Tholons in 2014 listed Manila as the second most-preferred BPM destination worldwide, relegating Mumbai to third place.

Although India’s southern city of Bangalore remains as the top BPO destination, Philippine cities are rising. Seven Philippine cities made it to Tholons’ Top 100 list, including two in the top 10, with Cebu ranked eighth.

The IT and Business Process Association of the Philippines (IBPAP) estimates that employment will reach 1.04M by the end

AGRICULTURE/AGRIBUSINESS & FISHERY

GrainPro builds modern grain dryer American storage and preservation systems company GrainPro Inc., which manufactures most of its products in the Subic Bay Freeport through wholly-owned subsidiary GrainPro Philippines Inc., recently introduced its patented solar bubble dryer (SBD).

The SBD is a bubble-like collapsible drying facility that traps solar radiation to heat the agricultural commodities and then vaporizes and expels out moisture with the use of ventilators to protect commodities from unexpected rain.

The facility can hold up to 1 metric ton (MT) in one drying cycle and can be used to dry rice, coffee, cocoa, wheat, corn, millet, and beans.

AVIATION

Cathay Pacific completes 5-airline transferCathay Pacific Airways completed the five-airline transfer from the Ninoy Aquino International Airport Terminal 1 (NAIA 1) to NAIA 3, offering 36 flights a week between Hong Kong and Manila.

Cathay Pacific said their first arrival flight, CX913, at NAIA 3, signals the start of carrying out its flights and operations there.

“The move to Manila’s largest airport will give passengers a more comfortable traveling experience, as the 65-ha Terminal 3 provides larger departure and arrival immigration halls, more seating areas, smoother flow from airport entrance and departure gates, and more diverse shopping and dining choices,” the airline said.

Emirates mulling operational plan in PHLEmirates is reviewing its master plan for its operations in the Philippines, following its recent transfer to Ninoy Aquino International Airport Terminal 3 (NAIA 3).

“We are constantly in talks with the Philippine authorities for expansion. We are thankful to the government for allowing us to operate three daily flights to Manila. Terminal 3 is a more efficient airport, and we are very happy to be servicing our passengers here,” Emirates Divisional Senior Vice President for Commercial Operations in the East Barry Brown said.

He said the Philippines, being an “extremely significant market” for Emirates, would see the largest passenger aircraft flying in and out of Manila in about five years.

BANKING

rizal Microbank boosts provincial microlending Rizal Microbank has expanded its network by setting up more containerized microfinance banking offices (MBOs) in the provinces.

The container vans that were converted as MBOs have reached to 10, mostly located in Batangas and Mindoro, RCBC Retail Banking Group Head Raul Victor Tan said.

“We’re expanding the network in terms of number of branches of Rizal Microbanks in the countryside,” Tan said.

UCPB vows to infuse fresh capital The United Coconut Planters Bank (UCPB) is preparing to complete

PHL Cities in Tholons’ Top 100Outsourcing Destinations (2014)

Cities RankManila 2Cebu 8Davao 69Star Rosa (Laguna) 82Bacolod 93Iloilo 95Baguio 99Source: Tholons 2014

of the year from only 101,000 in 2004.

The BPM sector is a major growth industry in the Philippines, with export revenues hitting USD 13.3B last year, from only USD 1.3B in 2004.


the proposed share sale that will inject fresh capital for the lender within the year.

“We are striving to maintain our timetable for the recapitalization of UCPB,” UCPB Senior Vice President and Marketing Group Head Norman Martin Reyes said.

UCPB planned to increase its capital stock from the current P20.71B to P40B through a sale of the government’s equity holdings. The government has a 72-% equity stake in the lender.

ENERGY

Petron starts USd 2-B refinery upgradePetron Corp. has started operations of its USD 2-B Refinery Master Plan (RMP)-2 with the opening of one of the plant’s major units – the Vacuum Pipestill (VPS) 2 last September.

In all, the refinery consists of 19 additional process units.

Petron projected the RMP-2 to double their current gasoline production from 18,000 barrels-per-day to 36,000 barrels-per-day

The company said the RMP-2 will improve Petron’s refinery in terms of processing and energy efficiency, operational availability, and complexity.

It would also allow the Petron Bataan Refinery (PBR) to convert all negative margin fuel oil into high-margin products such as gasoline, diesel, and petrochemicals.

FOOD

Fiorgelato opens in LagunaFiorgelato Ice Cream opened its newest franchise outlet in Biñan,

Laguna last month to add to its growing list of expansion sites.

The outlet will serve its signature gelatos, pastries, and freshly- brewed coffee mixes to Biñan residents and tourists.

GREEN PROJECTS

BOI grants perks to new rE firmFilipino-owned Emerging Power Inc. (EPI) has received tax incentives from the Board of Investments (BOI) as a new renewable energy (RE) developer, putting up a 40-megawatt (MW), USD 185-M geothermal power project in Naujan, Oriental Mindoro.

The project is seen to start operations by the third quarter of 2016, EPI Chairman Martin Antonio G. Zamora said. Proponents will build the geothermal plant on a multi-use zone that straddles Barangays Montelago, Montemayor, and Melgar-B in the municipality of Naujan.

nrEB approves more wind projectsThe National Renewable Energy Board (NREB) is proposing to the Department of Energy (DOE) a 150-% increase in the installation target for wind energy projects from 200 megawatts (MW) to 500MW, NREB Vice Chairman Ernesto B. Pantangco said.

The proposed increase would entitle more wind energy developers to a feed-in tariff rate of P8.53 per kilowatt-hour, which is considered as incentives to renewable energy (RE) producers.

Pantangco said several companies were already building wind power projects such as the Energy Development Corp. (EDC), Ayala Corp., Trans-Asia Oil and Energy Development Corp., and Petroenergy Corp.

NREB Chairman Pete H. Maniego, Jr. said the 200-MW allocation target for wind projects was expected to be exceeded by December this year.

“Total wind projects on the pipeline exceed 700MW and can be finished by 2015,” Maniego said.

He said based on industry simulations, wind installations would help alleviate power shortage in 2015 and 2016 at lower costs compared to the rates of electricity produced by generator sets and the interruptible load program.

AQA Global secures 15 rE projectsAQA Global Power Inc. has secured 15 renewable energy (RE) contracts from the Department of Energy (DOE) for its hydropower projects with a total capacity of 288 megawatts (MW).

The hydropower facilities will be put up in Palawan and Lanao del Sur.

Two of the largest projects are located in Lanao del Sur, namely, Lake Dapao and the Maitling River – each having a capacity of 50MW.

AQA’s hydroelectric power (HEP) projects in Palawan and capacity

HEP Projects Capacity (Megawatt)

q Ilian River Kaliwa 20 MWq Barabakan River 1 15 MWq Bato-Bato Kaliwa 12 MWq Ilian River Kanan 12 MW q Inaguan River 12 MWq Marangas River 12 MWq Sologon River 12 MWq Culasian River 10 MWq Malasgao Kaliwa 10 MWq Busuanga River 1 8 MWq Estrella River 8 MW

Source: AQA Global Power Inc.

INFRASTRUCTURE/PUBLIC-PRIVATE PARTNERSHIP

Cebu gets USd 141-M loan for bus rapid transit projectThe World Bank (WB) has granted a USD 141-M financial package to the Philippine government for the development of the Cebu Bus Rapid Transit (BRT).

The WB said the package will be made up of a USD 116-M loan and a USD 25-M Clean Technology

7November 2014

Fund and will help finance the construction of a 23-kilometer BRT system along a major transport corridor in Cebu City.

The Philippine government, for its part, will provide USD 87.5M for the project.

The project is planned to be built from Bulacao to Talamban in Cebu City and seen carrying 330,000 passengers daily. The WB said since the BRT will run on its own designated lane, it will make traveling faster and safer.

“The project will also install a state-of-the-art computerized traffic management system in the entire city to ensure smoother overall traffic flow and will provide other improvements to integrate the BRT with other modes of transport,” the WB said.

IT-BPM

Teradata opens second BPO officeTeradata Philippines LLC plans to double its workforce in the Philippines to 1,000 by 2015, as it opens another office at the Bonifacio Global City.

“Our aim is to double the volume of business in about four years and provide opportunities to new graduates while the expansion was a part of the company’s ongoing effort to support customers’ data-driven transactions,” Teradata Philippines Vice President for Professional Service David Klumb said.

“The new Philippine office will provide additional services capabilities for our big data analytics, database migration, and managed services segments – areas we see the most demand from our clients,” Teradata Philippines Vice President and Americas Development Center Head Robert Cromer said.

Transcosmos launches PHL operationsTranscosmos, Inc. has launched its Philippine operations to expand its presence in Southeast Asia.

The company said it established Transcosmos Asia Philippines, Inc. to provide outsourcing services in the Association of Southeast Asian Nations (ASEAN) region.

Transcosmos Philippines provides a variety of services beginning with contact center services for companies expanding into the Philippine market, Transcosmos Philippines President Hideki Yamashita said.

LOGISTICS

ICTSI to spend USd 65M for new facilities The International Container Terminal Services, Inc. (ICTSI) is allotting USD 65M for the construction of new yard facilities at the Manila International Container Terminal (MICT) and a new inland container depot (ICD) in Laguna.

The total approved amount forms part of the USD 310M estimated capital expenditures (capex) for the entire ICTSI Group.

ICTSI Asia, Pacific, and Sub-Continent Head Christian Gonzales said the ICTSI is fast-tracking MICT expansion and ICD to add more than 20% to the existing static yard capacity.

The supplementary capacity is for the projected 40-% raise in cargo movements following the lifting of the Manila truck ban. Upon completion, the new yard is expected to raise the overall capacity of the MICT to 3M twenty-foot equivalent units (TEUs) and Asian Terminal Inc.’s South Harbor to 1.2M TEUs.

MANUFACTURING

STIHL Group allots P2.5B for Batangas plantGerman power tool maker STIHL Group is spending P2.5B for a

manufacturing facility at the First Philippine Industrial Park, Batangas for its subsidiary ZAMA Corp.

Expected to be operational by 2016, the planned 60,000-sqm. plant will produce a wide selection of products including carburetors for small fuel engines.

STIHL Executive Board Chairman Bertram Kandziora said this is ZAMA’s biggest building investment to date and a milestone in the history of their subsidiary.

Kandziora said STIHL is impressed with the steps that the Philippine government is undertaking to improve the business environment.

“We are confident that our decision to locate in the Philippines will prove to be beneficial to all stakeholders,” Kandziora added.

MASS HOUSING

Pro-Friends eyes completion of 8 projectsPro-Friends Group Inc. is looking to complete eight property projects over the next 10 years.

Pro-Friends Chief Executive Officer Guillermo Choa said they currently have nine projects in the pipeline, eight of which are targeted to be finished before 2024.

Choa said three subdivision projects in Cavite are due for completion by next year, while another subdivision development in Pampanga is expected to be completed by 2016.

The company is also undertaking larger developments of at least 70 ha in Cavite as well as in Iloilo.

MOTOR VEHICLES

dTI woos Volkswagen, European firmsThe Department of Trade and Industry (DTI) said it will pursue more than USD 700M worth of investments from European companies led by German car maker Volkswagen AG, on top of the


USD 2.3B committed during President Benigno S. Aquino III’s trip to Europe last September.

DTI Secretary Gregory L. Domingo said a number of potential investments were not included in the USD 2.3-B tally, such as that of Germany’s Volkswagen.

The President invited Volkswagen to build a manufacturing hub in the Philippines.

Domingo said other prospective investments were still in early stages of negotiations, but there were others that were being seriously considered.

On a related note, German STIHL Group has recently started the construction of a P2.5-B automotive parts factory at the First Philippine Industrial Park in Sto. Tomas, Batangas.

The company’s affiliate, Zama Precision Industry Manufacturing Philippines Inc., broke ground last September 2014 its 60,000-sqm manufacturing plant, the largest local investment of a German company. The facility is expected to be completed and in full operations by 2016.

POWER

nGCP set to energize 600-MVA Cavite transformer The National Grid Corporation of the Philippines (NGCP) plans to energize the 600-megavolt ampere (MVA) transformer at its substation in Dasmariñas, Cavite to support the load growth in the Manila Electric Company’s (Meralco) franchise area.

The new transformer is part of the Dasmariñas substation’s P600-M expansion project that aims

to maintain the provision for single-outage contingency during the maximum dispatch of the following plants:

q 1,200- megawatt (MW) Ilijan natural gas plants

q 600-MW Quezon Power Philippines coal plant

q 420-MWPagbilaocoal-firedpowerplant.

REAL ESTATE

Filinvest earmarks P4B for QC projectThe Filinvest Group will allot at least P4B starting next year to add 85,000 sqm. of office space in Quezon City.

Filinvest Group Head for Offices Maricel Brion-Lirio said Filinvest Land Inc. (FLI) will put up mixed-used developments in the company’s recently acquired properties in Cubao and near GMA-7 in Quezon City.

ALI, STI join hands for P3-B QC dev’tAyala Land Inc. (ALI) and STI Education Systems Holdings Inc. are teaming up to develop an integrated community development in Quezon City that will feature a school, a mall, and a residential area.

STI Chairman Eusebio H. Tanco said the firms are investing up to P3B for the project which will be developed in a 2.1-ha. property and scheduled to break ground in a couple of months.

STI President and Chief Executive Officer (CEO) Monico V. Jacob said the property houses the Jose Abad Santos Memorial School (JASMS).

“We are constructing by March of 2015 a new nine-storey building to house JASMS in Quezon City as well some college courses in the same building,” Jacob said.

RETAIL

SSI opens Central Square BGCSSI Group, Inc. has opened Central Square, a four-level

retail destination located at Bonifacio Central in Bonifacio Global City (BGC).

SSI Group President Antion Huang said Central Square will be the site of many other stores the local market offering for the first time international brands such as C Wonder, Cortefiel from Spain, and British fashion brand Reiss.

SSI Group, Inc. is the largest specialty retailer in the Philippines, retailing more than 100 international brands through 670 stores all over the country.

FamilyMart banks on franchise program The Philippine FamilyMart CVS Inc. looks to open 500 stores by 2018 through its recently launched franchise scheme.

The company plans to have 70% of the targeted number of stores in the next five years to be composed of franchises.

To date, 65 branches of the Japanese convenience store operate in Metro Manila, and 100 more stores are targeted to be opened before the end of 2014.

FamilyMart’s franchise program is open to college graduates at least 25 years of age who can invest from P4M up to 8M.

TELECOM

P35B earmarked by PLdT for 2015The Philippine Long Distance Telephone Co. (PLDT) is allotting P30B to P35B for its capital expenditures for 2015.

The amount is 18% to 20% of the company’s estimated revenue next year. Network upgrades for broadband and mobile data will get most of the fund.

The company’s domestic fiber optic network (DFON) expansion has reached 70% completion, now

9November 2014

reaching 8,000 km. with the finishing of its Bohol leg, strengthening the Visayas-Mindanao fiber optic backbone.

PLDT also conducted a unification project for its Sun Cellular and Smart Communications Inc. clients, that activated nationwide domestic roaming except in Metro Manila.

SEA-U.S. cable project construction set by 2016Globe Telecom Inc. will allocate 80% of USD 85M it infused in the USD 250-M Southeast Asia and United States (SEA-U.S.) undersea cable system project for its construction that will start by 2016.

Construction for the 15,000-km. SEA-U.S. undersea cable system project is seen to take two years to complete.

Globe’s investment in the project is spread across three years with the bulk to be used in 2016.

The project, seen to benefit 1.5B users, will have an additional capacity of 20 terabits per second. (Tbps) and will use transmission equipment with 100 billions of gigabits per second (Gbps).

The undersea cable system will bypass areas in East Asia that are prone to earthquakes, and will be routed through the North Pacific.

Consortium members

q GTI Corporation (Globe Telecom Inc. subsidiary)

q Hawaiian Telcom (HTEL)q PT Telekomunikasi Indonesia International

(Telin)q RAM Telecom International (RTI)q TeleGuam Holdings, LLC (GTA)q Telkomunikasi Indonesia International

(USA), Inc. (Telkom U.S.A.)

SEA-U.S. cable systemconnections

q Davao, Philippinesq Manado, Indonesiaq Los Angeles, California, U.S.A.q Oahu, Hawaii, U.S.A.q Piti, Guam

COMPAnY NOTeS

More 7-Eleven stores targeted for 2014Philippine Seven Corp. (PSC) aims to end the year with 25% more 7-Eleven stores to 1,250 from 1,009 last year.

By end-September this year, a total of 1,170 7-Eleven stores were operating across the country.

To reach its goal, PSC will have to open 80 new stores in the last quarter of the year.

7-Eleven’s annual store expansion is at an average of 20% to 25%, with 70% of shops operated by franchisees.

The 1,000th 7-Eleven store in the country, located at the IT Building in Greenfield District, Mandaluyong City, opened in January this year.

Family-owned retail chains eyed by rustan’sRustan’s Supercenters Inc. (RSCI) is in talks with some established, family-owned retail chains for the possible acquisition of smaller stores.

“There is a whole movement on concentration and consolidation in the retail market in the Philippines,” RSCI Chief Executive Officer (CEO) Pierre Olivier Deplank said.

The small retail brands being eyed are operating in the provinces, while some are in the Greater Manila Area (GMA).

To capitalize on the market the retail chains have established, RSCI will retain the brand name of the stores they will acquire.

FedEx in the Philippines going strong after 30FedEx Express, a unit of FedEx Corp., continues its investments and outreach programs in the

country, even after reaching 30 years here.

FedEx recently launched P500M worth of gateway and clearance facilities in Manila and Cebu. The facilities are fitted with the latest sorting system that can process 1,500 to 3,000 packages hourly, boosting the firm’s shipment volume.

The company has also widened its network by partnering with 2GO Express and establishing 313 FedEx Authorized Ship Centers (FASCs) in 2GO Express and Universal Storefront Services Corporation (USSC) outlets.

Vitarich to revitalize PHL pangasius industryVitarich Corp. looks to re-launch its core and food products starting with its Golden Dory line’s Cook’s Golden Dory that will take its raw supply from local cream dory farmers.

“Our first target for Cook’s Golden Dory is to displace the imports with locally farmed dory” Vitarich Chief Operating Officer (COO) Ricardo Manuel M. Sarmiento said.

The company will enter the aquaculture industry with a venture in local pangasius production, aiming to take advantage of the decrease in Viet Nam’s pangasius production.

Vitarich also hopes for the Philippine cream dory to gain a sizable share of the export market.

The pangasius farming industry is seen to attract investments of up to P650M, earn P945M in sales, and employ around 3,000 workers.

Watsons eyes 50 new stores The Philippine arm of Watsons Your Personal Care Store plans to open up to 50 new stores before the end of 2014 to take advantage of the P135B value of the local pharmaceutical industry.

“Hopefully, we can also achieve double-digit growth in 2015,” Watsons Philippines Health


COUNTRY-TO-COUNTRY

Business Director Danilo S. Chiong said.

Watsons currently has 387 stores all over the country.

The country’s pharmaceutical industry is seen to be growing at an average of 4% to 5% at the moment.

Meanwhile, with the country’s generics industry estimated to have a worth of P10B, the health and beauty care firm also plans to put up Watsons Generics stores to serve markets in the lower-income bracket.

The Watsons Generics brand will carry various over-the-counter medicines approved by the Food and Drug Administration (FDA) and manufactured by pharmaceutical companies certified with the Good Manufacturing Practice.

MC Home depot opens doors in PampangaMC Home Depot Inc. launched their first store in San Fernando, Pampanga last October.

The Pampanga store is located in a 5,000-sqm. site along Jose Abad Santos Avenue in the town of Dolores, and will employ at the start around 90 workers.

3M sustains PHL operations3M Co. said it has managed consistent growth in the Philippines across its businesses through the years of its stay in the country.

“The Philippine business remains one of the strongest contributors for 3M Southeast Asia region,” 3M Philippines President and Manager Anthony Bolzan said.

Bolzan said all of their five business groups deliver a strong performance.

The company’s total domestic sales is growing faster than the country’s gross domestic product (GDP) and their trades continue to execute very well, with majority of them posting a “double-digit” growth, he said.

PHL, Kazakhstan ink dealThe National Chamber of Entrepreneurs (NCE) of Kazakhstan and the Philippine Chamber of Commerce and Industry (PCCI) signed a cooperation agreement to improve trade and investments between the two countries.

PCCI Chairman Miguel B. Varela and Republic of Kazakhstan Deputy Foreign Minister Askar Mussinov signed the agreement. Mussinov came to the country as part of a four-man delegation composed of officials from the Kazakhstan Ministry of Foreign Affairs.

With the agreement, the PCCI is expecting increased trade promotion activities between the two countries.

Industries where Kazakhstancan invest in

q Agro-industryq Constructionq Information Technologyq Logisticsq Manufacturingq Tourism

Trade promotion activities to be spurred by the agreement

q Business matchingq Exchange visitsq Sharing of information

Philippine products exported to Kazakhstan

q Laminated safety glassq Other articles of plasticsq Other builder's joinery and carpentry of woodq Pneumatic rubber tires for motor vehiclesq Vegetable fats and oils

Source: Philippine Chamber of Commerce and Industry (PCCI)

Ethiopia signs ASA with PHLAir talks opened by Ethiopia with the Philippines led to the signing of an Air Service Agreement (ASA) between the two countries last October.

The agreement determined the countries’ air travel affiliation and consensus in air traffic rights.

Under the ASA, weekly flights from Manila to Ethiopia can reach up to seven, while allowed flights from Ethiopia to all airports in the Philippines, excluding the Ninoy Aquino International Airport (NAIA), is unlimited.

Passengers traveling to and from countries in Africa and the Middle East make use of Ethiopia as a transition point.

“The agreement therefore offers opportunities for the enhancement of our air connectivity and the development of our aviation network, especially that Africa is an emerging market and growth area,” Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said.

Countries with concluded aviation talks with the Philippines

to date

q Canada q New Zealandq France q Singaporeq Macau q South Africaq Myanmar

Countries with air agreements with the Philippines

signed in 2013

q Australia q Italyq Brazil q Japanq Israel q Macau

Source: Civil Aeronautics Board (CAB)

Taiwan pursues visa-free entry in PHLThe Philippines and Taiwan committed to improve bilateral relations with the latter asking for visa exemptions for Taiwanese citizens entering the Philippines.

In the 103rd National Day of the Republic of China (Taiwan) celebration, Taiwan Representative to the Philippines Dr. Gary Song-Huann Lin asked Philippine officials to grant Taiwanese citizens visa exemptions to boost more tourism and business between the two countries.

11November 2014

On THECALEndAr

Ph

ilip

pin

e P

ost

al P

erm

it N

o. 5

04

ASEAnWATCH

PHL rears ASEAn financial watchdogThe Philippines signed an agreement that institutes the Association of Southeast Asian Nations (ASEAN)+3 Macroeconomic Research Office (AMRO) to conduct surveillance to further strengthen the region’s financial stability.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. signed the agreement representing the Philippines in Washington D.C., U.S.A. with the other ASEAN+3 member countries last October. According to BSP, the AMRO agreement will be transformed into an international organization.

“This is expected to enable AMRO to conduct objective surveillance, contributing further to regional financial stability along with the strengthened Chiang Mai Initiative Multilateralization (CMIM),” the BSP said.

ASEAn brands can use region’s strengthThe cooperation among Southeast Asia’s franchising industry players is seen to be critical with the impending Association of Southeast Asian Nations (ASEAN) economic integration at the end of 2015.

The region’s franchise players have been urged to work together to compete in the global marketplace and to have an advantage from the ASEAN Economic Community (AEC).

“The most crucial thing that we need to learn in the era of the AEC

There will be a lecture, workshop on actual experiment, and hands on activities which include the use of computer software for experimental design. Seminar date: 8-9 December 2014

Analyzing Business Markets & Business Buying Behavior, dealing with CompetitionThis training module discusses the dynamics of organizational buying with emphasis on the roles of the participants in the business-buying process. It will also cover an analysis of the major influences on buying decisions specifically in the purchasing and procurement process. For more inquiries, please contact Henette Florentino at [email protected]. Seminar date: 9 December 2014

Marketing thru Social MediaThe half-day seminar will train participants about marketing through social media. It will engage attendees to build relationships and grow their customer-base by using the social media. Registration fee costs P700. Please contact Denmark Tan at [email protected] for other inquiries. Seminar date: 9 December 2014

All workshops will be held at the Philippine Trade Training Center (PTTC) Building, Sen. Gil Puyat Ave. Cor. Roxas Boulevard 1300 Pasay City.

For more information, pleased visit the PTTC webiste at www.pitc.gov.ph.

is to learn to collaborate with each other rather than compete with each other,” Philippine Retailers Association and Philippine Franchise Association Vice President Ma. Alegria “Bing” Sibal-Limjoco said.

PHL, Thai business groups explore partnershipsKey business groups from the Philippines and Thailand have identified some sectors for possible collaboration ahead of the Association of Southeast Asian Nations Economic Community (AEC) in 2015.

Representatives of the Philippine Chamber of Commerce and Industry (PCCI) and the Federation of Thai Industries recently held a meeting organized by the Philippines-Thailand Business Council and Thailand-Philippines Business Council to discuss possible partnerships.

The joint councils agreed to support the establishment of an ASEAN Trade and Investment Center as a future platform where ASEAN business circles could exchange information and conduct business matching.

Logistics ManagementThis two-day seminar deals with managing the flow and storage of goods/materials from the point of origin to the point of consumption to satisfy customer’s requirements and needs. The registration fee costs P2,500. For more inquiries, please contact Henette Florentino at [email protected]. Seminar date: 4-5 December 2014

Process Optimization through design of ExperimentsThis course emphasizes the role of design of experiments, touching on experimental design’s effective use of products. It also features the use of design of experiments in enhancing process development and troubleshooting activities.

The Philippines is currently the ninth largest source of tourists in Taiwan. Similarly, Taiwan is the ninth-largest number of visitors in the Philippines.

Statistics showed that some 200,000 Taiwanese visit the Philippines every year.


5.25.45.65.8

66.2

Nov-14Sep-14Sep-14Aug-14Jul-14Jun-14

Interest Rate (%)Lending Regular

economic Indicators

As of 11 November 2014

Published monthly by the Knowledge Management and Information Service, Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, MakatiCity 1200,Philippines •Phone (+632) 895.3611 • Fax (+632) 895.6487 •To subscribe, e-Mail:[email protected] •Online: https://issuu.com/dtiphilippines/stacks

Editorial Team: Patricia May M. Abejo/Editor-in-Chief •Vic S. Soriano/Managing Editor •Resty P. Par/Assistant Editor •Jam H. Raposon, Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya/Writers •Ren C. Neneria /Design Layout •Al Aquino /Circulation.

Philippine Business Report

*GNI - Gross National Income

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2014

November 2014

As of 11 November 2014

Sources: Bangko Sentral ng Pilipinas (BSP) NationalStatisticsOffice(NSO)

0

2

4

6

8

10

1Q (2013) 2Q (2013) 3Q (2013) 4Q (2013) 1Q (2014) 2Q (2014)

GdP Growth rate (%)

6

6.5

7

7.5

8

8.5

1Q (2013) 2Q (2013) 3Q (2013) 4Q (2013) 1Q (2014) 2Q (2014)

GnI Growth rate (%)

0100020003000400050006000

Aug-14Jul-14Jun-14May-14Apr-14Mar-14

Exports(In USd Billion)

4,000

4,500

5,000

5,500

6,000

Aug-14Jul-14Jun-14May-14Apr-14Mar-14

Imports (In USd Billion)

137138139140141142

Sep-14Aug-14Jul-14Jun-14May-14Apr-14

Consumer Price Index(2000 base year)

44.24.44.64.8

5

Oct-14Sep-14Aug-14Jul-14Jun-14May-14

Inflation rate (%)(1994 base year)

42.543

43.544

44.545

Nov-14Sep-14Sep-14Aug-14Jul-14Jun-14

Peso per US dollar rate

philippine business report (nov.2014)

Documents