1September 2013

Volume 24 No. 09 September 2013

Investments registered with the country’s four major investment promotion agencies (IPAs) reached P300.91B in the first semester of 2013, a 39-% increase over the P216.19B generated in the same period last year.

The Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) – both agencies attached to the Department of Trade and Industry (DTI) – led the IPAs in investment generation.

Local investors led the BOI and PEZA approvals with P193.68B, 14% better than the P170.63B recorded last year, while foreign investors committed P91.91B, up 139% over last year’s P38.49B.

The rise in investment commitments is attributed to the government’s effort to address issues that affect the business sector, such as corruption, infrastructure, and the business climate.

Once fully operational, total investments registered in the first half of the year are expected to generate 77,892 jobs or 17% more than the 66,416 jobs spawned during the same period last year.

Robust investments in the first half were accompanied by high investor confidence in the Philippines as evidenced by the increasing number of investment missions visiting the country.

“The DTI recorded a total of 363 companies and organizations for

H1 investments hit P300.91B

Investment Approvals of 4 Major IPAs

H1 2013 (In Billion Pesos)

Agencies Amount Growth over H1 2012 (in %)

Board of Investments (BOI) 201.90 22Philippine Economic Zone Authority (PEZA) 83.69 92 Subic Bay Metropolitan Authority (SBMA) 13.95 440Clark Development Corporation (CDC) 1.37 - 73

inbound missions in the country for the first semester of the year,” DTI Undersecretary for Trade and Investment Promotions Group (TIPG) Ponciano C. Manalo Jr. said.

Aside from the United States (U.S.) and European countries, business groups from Japan, India, Australia, and Malaysia also looked into

economic and business exchanges in the country.

Visiting foreign investors were particularly interested in the country’s information technology and business processing management industry as well as automotive, construction, energy, electronics, tourism, shipbuilding, and even aerospace industries.

Philippine Business Report2

INDUSTRYTRENDS

PHL garment manufacturers to supply increasing U.S. demandPhilippine garment manufacturers expect more opportunities in the United States (U.S.) market as demands in apparel rose by 65%.

"We got a consensus that all of our members are really receiving more purchase orders now from their principals,” Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young said.

Buyers who stopped their orders five years ago because of the recession have started to negotiate again with local suppliers, Young added.

He also said that American clients demand particularly for children knit playwear and women woven sportswear categories.

For instance, the Board of Investments (BOI) recently approved the investments of two garment manufacturing firms — H&S Inc. and I2 Industries Manufacturing Inc. — which are set to export children’s wear to the U.S.

H&S Inc. has expanded its initial investment to increase its annual production capacity to 554,400 pieces of garments from 374,400 apparels to meet the increasing demand in the U.S.

For the same reason, I2 Industries Manufacturing Inc. in Bulacan is set to produce 300,000 pieces of children’s garments in a year to be exported also to the U.S.

Aside from American buyers, European enterprises are also interested to get more orders from the Philippines.

Young said the Philippines has a lot of niche products that are in demand in overseas market.

"The basic items in the garments are denims and T-shirts. These are easy to stitch and are not complicated. On the hard goods, we have the placemats, the bowls made out of acacia wood and woven, and the abaca-woven bags," he said.

Industry roadmaps on trackThe Board of Investments (BOI) is confident that sectoral roadmaps are moving forward and on track, with 20 out of 33 industries or sectors already submitted their respective roadmaps as of July 30, 2013.

To date, five roadmaps are set to be finalized this year while seven have just been commissioned by their respective industries.

The Philippine Institute for Development Studies (PIDS) leads the facilitation of the formulation of sectoral roadmaps.

Several sectors have already been moving forward in their implementation such as the auto assembly and auto parts manufacturing sector, which is currently working on the details of policy interventions of the proposed auto policy.

The mass housing sector, on their part, has submitted a position paper to the Bureau of Internal Revenue (BIR) regarding revenue regulations concerning housing developers. It also conducted cluster meetings with the cement, ceramic, and copper sectors to identify possible areas of collaboration.

Meanwhile, the chemical sector, including the petrochemicals and plastics, have submitted position papers to the Food and Drug Administration (FDA) on codification, licensing, and product registration procedures, product categorization, and labeling requirements, to facilitate the registration and harmonize labeling requirements for consumer products.

The furniture sector, on the other hand, has already prepared a Product Development and Sourcebook for launching this month.

They submitted a proposal to the Department of Trade and Industry (DTI) for shared service facility (SSF) in the proposed Furniture Academy.

The copper and copper products sector likewise prepared a pre-feasibility study on the creation of a copper wire facility and identified Leyte Industrial and Development Estate (LIDE) in Isabel, Leyte as proposed industry cluster zone.

The Information Technology-Business Process Management (IT-BPM) sector is currently developing promo collaterals specific to the media and investors.

The electronics, creative, and bamboo sectors have submitted their draft roadmaps to BOI while the shipbuilding, garments and textile, mining, medical travel, and processed food sectors have just commissioned the drafting of their respective roadmaps.

Home accents sector eyes 10-% increase in 2013Exporters in the home accents sector are hopeful of achieving a 10-% growth this year as local and global sales improve.

Importers from the United States (U.S.) have been eyeing the Philippines as supplier of home accent items because of lower prices compared to other countries, Home Accents Group of the Philippines, Inc. (HAPI) Chairman Luis Sicat said.

The country’s home accents are more competitive aesthetically, making it as an edge over its competitors, Sicat said.

3September 2013

Aside from an increasing demand from U.S., local exporters also see European countries, Asia, and South America as potential destinations for home accents.

Self-sufficiency in sugarcane, milkfish reachedThe Philippines has already become self-sufficient in sugarcane and milkfish production and supply in recent years, the Bureau of Agricultural Statistics (BAS) report titled “The Role of Agricultural Statistics in Strengthening Food Security in the Philippines” showed.

Citing data on the country’s self-sufficiency ratios for certain commodities from 2005 to 2011, BAS Director Romeo S. Recide said the country is self-sufficient in sugarcane and milkfish from 2006 to 2011.

Sugar output grew by 9.6% year-on-year to 2.46M metric tons (MT) in June 2013 from last year’s 2.24M MT.

The increase in land area available for plantation and the good weather condition this year contributed to the increased output, Sugar Regulatory Administration (SRA) Manager for Planning and Policy Rosemarie S. Gumera said.

The 4,000-ha increase in sugarcane area, from a total 422,000 ha to 426,000 ha this year, gave better sugar yield and cane tonnage in sugar output, Gumera said.

Meanwhile, domestic consumption of raw and refined sugar has increased by 15% and 9.5%, respectively, SRA Administrator Regina Bautista-Martin reported.

On the same note, milkfish or bangus, considered as the backbone of the country’s aquaculture industry, recorded a 5.45-% increase per year for the period 2005-2009.

In 2009, the country’s milkfish production, which primarily came from Pangasinan, Bulacan, Iloilo, and Capiz, totaled 356,935 MT.

Major markets of Philippine milkfish include the United States (U.S.), Canada, the United Kingdom, Korea, and Australia.

Cement sales increase in Q2; industry growth seenCement sales grew in the second quarter on the back of strong construction sector, data from the Cement Manufacturers Association of the Philippines (CeMAP) showed.

Sales in the second quarter increased by 8.8% to 5.35M metric tons (MT) sold from 4.91M MT in the same period last year.

It expects the industry to grow on the back of increased building construction, infrastructure projects, and “farm-to-market roads”, which will now be built using cement.

The expansion in construction projects will help the cement industry grow in volume, the association added.

The country’s infrastructure spending is expected to grow this year as the government has budgeted around P299.4B, or 2.5% of the country’s gross domestic product (GDP), for projects.

Cement sales in the first semester also went up by 6.2% to 10.14M MT from 9.55M MT last year.

Companies are now increasing capacities to meet high demand in the local market, CeMAP said.

Survey: BPO industry forges aheadAll of the country’s information technology-business process outsourcing (IT-BPO) players are planning to keep its workforce in the next 10 months, a survey conducted by the Information Technology-Business Process Association of the Philippines (IBPAP) showed.

The survey of the industry, which has a total of 850 players with total workforce of 770,000 as of 2012, showed that training

existing staff in specialized skills is the number one strategy for moving up the value chain.

Industry players found the need to move up the value chain as more companies reported generating more revenues from doing high-value products.

Based on the survey, 43% of respondents stated that 80%-100% of their revenues were from high-value services.

High-value services products

• Animation• Development engineering• Enhanced entry• Executive search finance and accounting• Management payroll• Research • Sales• Software development• Supply support technology• Trouble shooting• Underwriting value

Basic services products

• Call center• Data encoding• Helpdesk• Medical transcription• Monitoring• Order• Outbound/inbound calls• Payroll• Simple customer service• Support testing• Virtual voice

High-value services include knowledge-based, complex services requiring specialized skills and techniques, in-depth analysis, and specific expertise to produce desired outcomes or highly innovative results.

Basic services, on one hand, are operations that include routine processes comprised of simple transactions, data input, and non-complex analysis not requiring specialized skills.

The industry baseline target of USD 20-B revenue can be achieved within two years or as early as next year, IBPAP Senior Executive Director Gillian Joyce Virata said.

Philippine Business Report4

TRADE ANDINVESTMENTS

Under the revised 2013-2016 roadmap, the industry revenue is expected to hit USD 15.8B this year from USD 13.2B last year.

The industry has to grow 17% annually for three years to attain its end goal of USD 25B by 2016 and 1.3M jobs from the current 770,000 jobs.

H1 infra spending up 42.2% to P125.5BGovernment spending for infrastructure and other capital outlays (CO) in the first half of 2013 jumped to P125.5B, the Department of Budget and Management (DBM) reported.

The DBM noted that this was higher by P37.2B or 42.2% from last year’s outturn.

Meanwhile, total government spending for the period reached P890.8B, P95.4B or 12% higher than the P795.3B tracked in the first semester of 2012.

The sustained momentum in public spending is also reflected in the 14.9-% year-on-year increase in disbursements for the second quarter, which is almost 6% higher than the 9.1-% first quarter growth, DBM said.

The local government is eyeing at least 1,000 ha of forest land in Sitio Lammin as the coffee plantation site.

Piddig Mayor Eduardo G. Guillen hopes that the project will create jobs and business opportunities for residents.

Cote said the plantation could generate at least 5,000 jobs, excluding part-time jobs during the peak seasons of planting, harvesting, grading, and processing of coffee.

Since coffee grows well under the shade of trees, Cote assured residents that no tree will be cut once the project is implemented.

The project needs an initial capital of P12M for the propagation of seedlings, labor, and organic fertilizer.

The initial planting is scheduled at the onset of the rainy season in 2014.

Korean Rural Dev’t movement helps replicate cluster farming in BatangasThe Philippines is replicating in Batangas the Saemaul Undong project of South Korea which will plant cacao under coconut farm clusters, requiring USD 5.4M in investment over six years.

The proposed project in Malvar, Batangas aims to increase income of the town’s farmers and raise coconut productivity through organic fertilizer application, soil fertility management, and control of coconut scale insects through environment-friendly means.

“We aim to achieve higher yields for farmers, sustain living soil, keep the land sustainable and free from toxic chemicals and poisons, and contribute to carbon sequestration,” Villegas Organic and Hobo Farms (VOHO) Founder and Chief Executive Officer (CEO) Pablito Villegas said.

A 15-man delegation from South Korea supporting Saemaul Undong,

operations in June 2014 and will employ some 80 personnel.

“The storage facility is designed to handle various unprocessed, semi-processed raw materials, finished products, perishable commodities such as fruits, vegetables, livestock and poultry products, and processed marine products,” the statement read.

It can house up to 3.41M pallets per year for cold storage and 9.7M kg annually for blast freezing.

“Investments in cold storage and other post-harvest facilities aim to meet the challenges of the growing demand of agricultural products,” the statement read, noting that cold storage facilities are considered support systems for the agriculture and agribusiness sector which are preferred activities under the Investment Priorities Plan (IPP).

The Cold Chain Association of the Philippines (CCAP) has underscored the need for more cold storage facilities in meeting rising demand for food.

CCAP is eyeing to put up facilities in the southern part of Mindanao and in Northern Luzon, Central Luzon, and Central Visayas.

Coffee farm to rise in ‘basi’ capital of IlocosAiming to boost tourism and exports in the country, Arabica coffee producer and exporter Rocky Mountain Arabica Coffee Co. (RMACC) has proposed to build a 1,000-ha arabica coffee plantation in Piddig, Ilocos Norte.

The firm will put up a modern eco-friendly coffee plantation and milling center, RMACC Director Pierre Yves Cote said.

AGRICULTURE/AGRIBUSINESS AND FISHERY

BOI approves P476-M cold storage facilityThe Board of Investments (BOI) has given the go signal for the Royale Cold Storage North Inc.’s P476.5-M cold storage facility to house perishable and processed goods of agribusinesses based in Bulacan and Northern Luzon.

The facility – located in Marilao, Bulacan – will begin commercial

5September 2013

a rural development movement in South Korea in the 1970s, visited the VOHO Sustainable Agriculture and Entrepreneurship Learning Center in Malvar, Batangas recently.

Components of proposed investments

Activity/ Amount Amount Procurement of Equity of Grant (in USD) (in USD)

Cacao bean production 906,720 4.5M Integrative enterprises 275,000 510,000 Drying and fermentation 250,000 95,000 equipment Seedling nursery 69,200 156,500 Technology demonstration 10,876 11,546 Certification 24,000 30,000

Targeted area for cacao bean production

Year Hectarage

1 20 2 100 3 2004 300 5 4006 500

Korean-assisted rice processing complex in Davao inauguratedThe local government of Davao Del Sur recently inaugurated a USD 3.25-M Korean government-assisted rice processing complex (RPC) in Matanao.

The rice processing center is equipped with state-of-the-art, post-harvest facilities, and technologies that will improve the efficiency of rice production, milling, drying, and storage thereby reducing post-harvest losses and enhancing rice quality.

The complex, with a total area of 10,000 sqm, has a drying capacity of 3,600 metric tons (MT) per year; a milling capacity of 3 MT or an equivalent of 60 cavans per hour; a milling recovery of 65%, and a storage capacity of 22,000 bags.

Korean Ambassador Lee Hyuk stressed South Korea’s recognition of the importance of agriculture and rural development.

“This facility emphasizes the primacy Korea puts on agriculture. More importantly, it represents what the Korean government and people deeply care about – the alleviation of poverty and hunger and the promotion of economic growth,” he said.

The rice processing center project was made possible through a USD 13-M grant from the Korean government.

The project is being implemented by the Korea International Cooperation Agency (KOICA) in partnership with the Department of Agriculture (DA) and the local government units (LGUs) of the project sites.

Aside from Davao del Sur, the Korean government also established rice processing centers in Aurora, Pangasinan, Bohol, and Iloilo.

DA to put up banana packing facilitiesThe Department of Agriculture (DA), in partnership with small banana growers and exporters, mostly based in Davao region, will put up common packing facilities that comply with required export standards.

The DA, in tandem with the Mindanao Banana Farmers and Exporters Association (MBFEA), will initially put up two banana packing facility, worth P3.1M each, in Barangays Kinnamon and Casig-an, both in Sto. Tomas, Davao del Norte, DA Secretary Proceso J. Alcala said.

The DA, through the Bureau of Plant Industry (BPI), is currently inspecting small banana packing facilities in the Davao Region and subsequently accredit those that meet required standards, Alcala said.

Alcala urged the MBFEA members to form themselves into clusters so they could be served by common or central accredited packing facility.

BPO

Teleperformance opens Davao branchBusiness process outsourcing (BPO) company Teleperformance expands in Southern Philippines as it recently inaugurated its 11th branch in the country located at SM City Davao.

Davao City’s growing economy was considered in deciding to locate there, Teleperformance Asia Pacific President David Rizzo said.

They also paid close attention to the market and where it is going and towards areas where there is available talents, Rizzo added.

“Indeed, we are privileged to be in one of the Philippines’ most competitive business destinations…,” he said.

Currently hiring for positions at all levels, Teleperformance Davao aims to complete its full operation of 2,000 seats by 2014.

EXPORT

Handicraft makers on track to mark 10-% growth targetHandicraft exporters in the country are positive they will reach their 10-% target this year based on 2012’s USD 130-M sales as major markets continued to book orders.

“There are companies indicating revenue increases. These are mostly producing baskets made from natural resources,” Philippine Chamber of Handicraft Industries, Inc. (PCHI) President Dennis A. Orlina explained.

Orlina said that from January to June of this year, total sales of the sector went up by 6%-7%, more than half of its full-year target.

To meet or even exceed this year’s target sales, PCHI is further enhancing the industry’s overseas trade through developing more varieties of indigenous raw materials and maximizing their use, he added.

Philippine Business Report6

brought about by global market slowdown coupled by the natural calamities that we recently experienced. These are indications of the region’s strength,” Antonino said.

Crude and refined coconut oil remained as the top export products of the island-region last year, cornering 21.26% of Mindanao’s total exports, she stated.

PHL exports more rice to Singapore, exceeds 100MT targetThe Department of Agriculture (DA) announced that they had just completed shipment of the second batch of aromatic rice exports to Singapore, bringing the total rice exports above DA’s target of 100 metric tons (MT) for 2013.

DA, in partnership with farmers’ groups and the private sector, had exported 45MT of aromatic, long-grain rice to Singapore last July 22, 2013. This brought the country’s total export to 106.55MT of premium and organic black rice, DA Secretary Proceso J. Alcala said.

“Presently, the Philippines has plenty of rice and along with this development, we can say that the Philippines is truly on its way to rice self-sufficiency by the end of the year,” Alcala added.

PHL rice exports (as of July 22, 2013)

Recipient Export volume (in MT)

Singapore 45

Dubai 35

Kuwait, Hong Kong 15

Germany, Hong Kong, 11.55Macau, Canada, the Netherlands

Visayas coco oil export increasesCoconut oil exports from Eastern Visayas more than tripled in the first half of the year as new markets were tapped and demand increased.

“The emergence of the new market within Asia and the economic recovery in the United States have contributed to the high volume and value of export despite economic slowdown in our traditional market in Europe,” Philippine Coconut Authority (PCA) Regional Manager Edilberto V. Nierva said.

The value of coconut export in the first six months of 2013 rose to USD 48.19M from last year’s USD 27.39M as outbound shipment dramatically increased, PCA said.

The region’s oil exporters are Tacloban Oil Mills, Inc., based in Tolosa, Leyte; New Leyte Edible Oil Manufacturing, Inc., in Tanauan, Leyte; and Samar Coco Products Manufacturing Corp., in Calbayog City, Samar.

Citing reports from these mills, the PCA crude coconut oil accounts the biggest share of export value at USD 30.26M.

Coconut oil export breakdownCountry Value Volume (in Million (in MT) USD) Japan 12.94 21,500Indonesia 9.8 12,000Malaysia 8.6 12,000Singapore 7.02 8,500United States (U.S.) 2.9 6,000Taiwan 2.4 3,150China 2.1 11,300South Korea 0.9 4,500Viet Nam 0.6 6,000

GREEN PROJECTS SUWECO gears up for two more projects this yearLocal renewable energy developer Sunwest Water and Electric Co. Inc. (SUWECO) is gearing up for the construction of two more hydropower projects within this year.

Suweco is looking to start the construction of a 60-megawatt (MW) hydropower plant in Peñablanca in Cagayan Valley and the 9.6-MW Villasiga 2 project within this year, Suweco President Jose Silvestre M. Natividad said.

He specifically cited the development of unique fiber groups from abaca.

Agri exports up 42%The Bureau of Agricultural Statistics’ (BAS) quarterly report showed that the country’s total agricultural export revenues for the first quarter climbed year-on-year by 41.50% to USD 1.64B from USD 1.16B in the same period last year.

The agricultural sector brought in 13.8% of the country’s total export earnings, which amounted to USD 12.08B.

Total earnings from the country’s top 10 agricultural exports went up by 45.82% to USD 1.16B in the first quarter from USD 796.4M in the same period of 2012.

Top 10 agricultural exports

• Coconut oil• Fresh bananas• Tuna• Centrifugal sugar• Pineapple and by-products• Manufactured tobacco• Seaweeds and carrageenan• Copra oilcake• Desiccated coconut• Unmanufactured tobacco

MinDA cites Mindanao agri exportsDespite having been devastated by typhoons last year, Mindanao’s agricultural producers contributed more than half of the country’s agricultural exports in 2012, thereby keeping the region as the country’s premier food source, the Mindanao Development Authority (MinDA) said.

Mindanao exporters shipped more than USD 3B worth of farm products, comprising 60% of the Philippines’ total agricultural exports last year, MinDA Chairman Luwalhati R. Antonino said. “This positive trend only goes to show that Mindanao remains resilient as an agriculture-based economy despite the challenges

7September 2013

SUWECO is planning to start construction of the Villasiga 2 project in Antique by the end of the year, Natividad said.

The P2-B Villasiga 2 project is expected to be completed in 2017.

Ilocos Norte site eyed for 81-MW wind farmNorthern Luzon UPC Asia Corp. (NLUPC) is taking on a 81-megawatt (MW) wind farm project to be situated in Pagudpud, Ilocos Norte.

NLUPC is a joint venture of Ayala’s AC Energy Holdings Inc. (ACEHI) and UPC Philippines Wind Holdco I B.V. owned by UPC Renewables Partners (UPC) and the Philippine Investment Alliance for Infrastructure (PINAI) Fund.

ACEHI and UPC Philippines signed an investment framework and shareholder’s agreement for the project.

Meanwhile, NLUPC signed turbine supply, installation, and service availability agreements with Siemens Wind Power A/S and Siemens Inc.

Initial equity for the project is USD 220M which would be funded by ACEHI with 64% equity, PINAI with 32%, and UPC with 4%.

The project, which has received a declaration of commerciality from the Department of Energy (DOE) recently, is expected to be connected to the grid by June 2014.

Mini-hydro power plant to rise in Oriental MindoroOrmin Power Inc. (OPI) of Jolliville Holdings Corporation (JOH) will build a 10-megawatt (MW) mini-hydroelectric power plant worth P1.5B in Oriental Mindoro.

The Inabasan River in San Teodoro, Oriental Mindoro would be tapped to power the mini-hydro plant that is expected to go commercial by 2016.

Power to be generated by the plant would be sold to Oriental Mindoro Electric Cooperative Inc. (ORMECO)

that provides power to Calapan City and 14 municipalities.

INFRASTRUCTURE/PUBLIC-PRIVATE PARTNERSHIP

Firms express interest in CALAXEleven companies have already purchased pre-qualification documents after the invitation to prequalify and bid for the Cavite-Laguna Expressway (CALAX) has been issued by the Department of Public Works and Highways (DPWH) under the Public-Private Partnership (PPP) Program.

The CALAX project worth P35.42B would connect the Manila-Cavite Expressway (CAVITEX) and the South Luzon Expressway (SLEX) via a four-lane, 47-km closed system tolled expressway.

Deadline for submission of the pre-qualification documents is on September 23, 2013.

Interested companies (as of July 26)

• Aboitiz Land, Inc.• AC Infrastructure Holdings Corporation• AlloyMTD Philippines Inc.• EGIS Projects Developer of Infrastructure

and Service• Korea Expressway Corporation• Leighton Contractors (Philippines), Inc.• Macquarie Infrastructure Holdings

(Philippines), Pte. Limited• Makati Development Corporation (MDC)• Megawide Engineering Excellence• Metro Pacific Tollways Development

Corporation (MPTDC)• San Miguel Corporation (SMC)

SMC engages DMCI for NAIA Expressway ProjectSan Miguel Corporation (SMC) subsidiary Vertex Tollways Development Inc. (VTDI) signed an agreement with DMCI Holdings Inc. construction arm D.M. Consunji Inc. for the engineering, procurement, and construction of the Ninoy Aquino International Airport (NAIA) Expressway.

Under the contract, DMCI will handle 2.2 km at-grade works

in the PAGCOR Entertainment City area as well as a 5-km, four-lane elevated viaduct to connect an existing Skyway off-ramp to NAIA Terminal 3.

SMC, through the Optimal Infrastructure Development, Inc., was awarded the project after winning the bid at P11B. The project is estimated to cost P15.52B to build. Construction of the project’s first phase is targeted to start by 2014 and be completed by March 2015. Phase 2 is expected to be completed by September 2015.

PPP takes on Poro PointThe Public-Private Partnership (PPP) Center and the Project Development and Monitoring Facility (PDMF) Board has approved the P69-M fund for the feasibility study of the development of the Poro Point San Fernando Airport under the Bases Conversion and Development Authority (BCDA) in La Union.

The study is expected to be completed by mid-2014. The PPP Center will also facilitate the eventual bidding of the project which is projected to start right after the study completion.

The proposed project will have the airport upgraded to meet the safety standards of the International Civil Aviation Organization (ICAO) and to be able to accommodate larger aircraft for international flights.

The project will also include the construction of a terminal with commercial complex.

DepEd PPP project gets biddersThe Public-Private Partnership (PPP) for School Infrastructure Project (PSIP) Phase II of the Department of Education (DepEd) worth P8.8B was vied for by three bidders.

Under the PSIP-Phase II, 10,679 one- and two-storey classrooms will be constructed in 5,033 public schools in 14 regions nationwide.

Philippine Business Report8

The winning bidder will design and finance the construction and furbishing which includes furniture, fixtures, and toilets.

Project bidders

• Bright Future Educational Facilities, Inc.-Riverbanks Development

Corp. consortium• BSP & Co. Inc. - Vicente T. Lao

Constructors Consortium• Megawide Construction Corp.

EB Magalona LGU conducts port feasibility studyThe local government unit (LGU) of the municipality of Enrique B. Magalona (E.B. Magalona), Negros Occidental begun a feasibility study to construct a roll-on, roll-off (RORO) port in Barangay Tuburan.

Interested private investors will also conduct their own feasibility studies. The municipal government’s said the study may take two to three months to complete.

The port may become a public-private partnership (PPP) project if the study proves that it will generate return of investments.

Initial estimated cost of the project from two years ago was P70M.

POWER

NGCP earmarks USD 500M for Leyte transmission lineThe National Grid Corporation of the Philippines (NGCP) is allocating USD 500M for the creation of a 400-km transmission line called the Leyte-Mindanao Interconnection Plan (LMIP).

The project is targeted to connect Mindanao to the power grid as it is the only island group not connected to the national grid.

A hydrographic survey is being conducted and is targeted to finish in mid-2014, NGCP Senior Adviser Joseph Ferdinand M. Dechavez said.

The LMIP construction is slated in 2016 and is expected to be completed in 2018.

Data from the Asian Development Bank (ADB) showed the project will strengthen the reliability of subsystems, reduce the needed reserve capacity, and enable least cost generation expansion.

Maynilad allots P77M to replace Malabon water pipesMaynilad Water Services, Inc. is spending about P77M for a pipe replacement activity in Malabon City, which will start by the third quarter of this year.

The project will involve 23.6 km of secondary and tertiary pipes and will benefit more than 12,800 households within the area.

Barangay beneficiaries

• Acacia • Dampalit• Baritan • Hulong Duhat• Bayan-bayanan • Tinajeros

NGCP embarks on P662.7M expansion projectThe National Grid Corporation of the Philippines (NGCP) seeks the Energy Regulatory Commission’s (ERC) approval for a P662.7-M power supply expansion project in Metro Manila.

NGCP plans to add another 300-megavolt ampere (MVA) transformer to boost Las Piñas Substation’s capacity. It also intends to meet the increasing demands of Manila Electric Company (Meralco) customers in the area.

“If the Las Piñas Substation suffers overloading, we will then have to resort to load shedding. By carrying out this project, we can avoid this scenario since the substation will be more capable of handling larger load,” NGCP Deputy Assistant Chief Technical Officer for Planning and Engineering Rico C. Vega said.

LWUA assists Ilagan City to complete P22-M water projectThe Local Water Utilities Administration (LWUA) gave

financial and technical assistance to Ilagan City for the completion of their P22-M water project.

The project is used for infrastructure improvements and expansion of the city’s safe and potable piped-water supply.

The new facilities have two deep wells with fully-equipped pumping stations and 12 km of additional transmission and distribution pipelines that can service water to 2,500 residents in four more barangays in Ilagan, Ilagan City Water District (ICWD) General Manager Jose Mari Claravall said.

DOE allows P2.4-B solar project for Mirae Asia firmThe Department of Energy (DOE) issued a certificate of commerciality to South Korean-led firm Mirae Asia Energy Corp. (MAEC) for its P2.4-B solar project in Ilocos Norte.

The company will start processing the remaining permits for the project and the construction will begin in the last quarter of this year, MAEC Vice President Lito Badua said.

The project is expected to start full commercial operations by end-2014.

SMC unit builds 600-MW plant in MindanaoSan Miguel Corp. (SMC) Global Power Holdings Corp. has started its planned 600-megawatt (MW) coal-fired power plant in Mindanao to address the growing power crisis in the region.

“It will help balance the power supply differential between north and south Mindanao and provide reliable and continuous supply of electricity at a lower cost,” SMC President and Chief Operating Officer (COO) Ramon Ang said.

The new plant will operate modern, state-of-the-art circulated fluidized bed combustion technology, which will allow it to minimize effects on the environment.

The plant is scheduled to be operational in 2015.

9September 2013

Iloilo power project gets P6-B loanPalm Concepcion Power Corp. (PCPC) signed a P6-B loan with Asia United Bank Corp. (AUB) and China Banking Corporation (ChinaBank) to finance the construction and operation of the 135-megawatt (MW) coal-fired power plant in Iloilo.

The term loan facilities project’swill partially cover the engineering, procurement, construction, and financing costs.

The project, which is seen to help improve the power supply of the Visayas region, is estimated to be completed in early 2016.

Gov’t allots P7.4B for sitio power projectThe government allotted almost P7.4B for the electricity of over 10,000 sitios in the Philippines.

The power project is part of the Sitio Electrification Program (SEP) by the National Electrification Administration (NEA).

The government aims to finish the electrification of 32,441 sitios before 2015 ends, Department of Energy (DOE) Secretary Carlos Jericho L. Petilla said.

They also plan to spend P4.5B next year for the “energization” of 7,107 sitios and P4.6B in 2015 for the remaining 7,257 sitios.

Ayala unit, Power Partners tie up for power projectAyala Corp. AC Energy Holdings Inc. (ACEHI) signed a joint-venture agreement with Power Partners Ltd. Co. to build and operate a 405-megawatt (MW) thermal power plant in Lanao del Norte.

The facility is composed of three power units, each capable of generating 135MW.

“Ayala is also keen on participating in a power project in Mindanao,” ACEHI Head for Corporate Strategy and Development John Eric Francia said.

ACEHI allocated USD 1B this year to finance its energy and infrastructure projects over a five-year period.

REAL ESTATE

Affordable housing seen to earn P7B for FilinvestFilinvest Land Inc. (FLI) of Filinvest Development Corp. (FDC) has set aside P5B-P6B for 20 affordable housing projects under their Futura Homes line expected to earn the company P7B in revenues.

Some of the areas targeted are Pasig, Valenzuela, Palawan, and Davao.

Meanwhile, a total of 600 units have already been constructed in Laguna, Cavite, and Batangas with 1,000 more units seen to be built within the year.

FLI targets to build some 15,000-16,000 units under the project. Each unit would be sold at P600,000-P1.8M.

Vista Land builds high-rise residential condo in MindanaoVista Land & Lifescapes Inc., through its condominium development arm Vista Residences Inc., is building its first high-rise residential property in Cagayan de Oro City.

The Loop, which will have two 25-storey buildings connected to a mall, will rise in Limketkai Center. The property will be the firm’s second vertical project in Mindanao, following mid-rise condominium Northpoint in Davao City.

The Loop will cater to almost all income segments, serving the needs of mid-income to upper-middle and high-end income markets.

Combined, The Loop and Northpoint’s fourth tower

Liverpool are expected to generate at least P4B in sales upon completion.

Primary Homes unveils Astele community in CebuCebu-based property developer Primary Homes, Inc. (PHI) recently unveiled Astele, a suburban community designed to complement the local tourism sector in Mactan Island.

Astele is an exclusive gated housing development of 64 single-detached units in a 3-ha lot along Buyong Road in Barangay Maribago, Lapu-Lapu City.

With six model houses sold for P3M-P15M, it is PHI’s seventh project in the island this year.

The development is nestled in Mactan to reflect the island’s modern and vibrant international community, PHI Vice President for Sales and Marketing Ramero F. Espina said.

Based on PHI’s latest market study, Mactan has emerged as a progressive address or a second-home destination sought after by long-stay tourists like Koreans, Japanese, and Europeans.

Espina said majority of these foreigners intend to move to Mactan for investment or retirement purposes.

Astele, which is included in the company’s P1.5-B project in Mactan this 2013, is set to be completed in 18 months.

RETAIL

7-Eleven aims 1,300 storesby 2014Philippine Seven Corp. (PSC), the local franchise holder of 7-Eleven, is planning to expand to 1,300 stores nationwide by 2014.

PSC will continue to expand in Luzon and Visayas and is also preparing to open outlets in Mindanao.

Philippine Business Report10

BILATERALAGREEMENT

Korean firms eye manufacturing in PHLSouth Korean businessmen are interested in putting up manufacturing facilities after the recent visit of the Korea Importers Association (KOIMA) delegation in the Philippines.

“If we find a partner here, it will be a big investment. Aluminum is very important because the packaging industry is important in the Philippines. If somebody will produce here, it will be a good industry,” KOIMA Chairman Thomas T.Y. Shinn said

Korean firms also said they want to explore investment potentials in food processing, electronics, auto parts, construction, and allied manufacturing.

Australia, Canada give USD 20M for PPPsAustralia and Canada are giving the Philippines additional grants worth about USD 20M to support 15 public-private partnership (PPP) projects, the Asian Development Bank (ADB) said.

The government of Australia, through the Australian Agency for International Development (AusAID), is providing USD 12M to the Project Development and Monitoring Facility (PDMF). Both the governments of Australia and Canada are also adding USD 3M each for capacity building and institutional strengthening.

Meanwhile, the Philippines’ counterpart contribution to the PDMF is expected to increase to USD 22.3M.

ADB’s own funding for the project is USD 2M.

Super Metro chain expands to Bogo CitySuper Metro recently opened its first store with a hypermarket concept in Bogo City, Cebu.

The two-storey store spans a total 3,500 sqm floor area and provides employment to over 250 Cebuanos.

Officials said the opening of Super Metro in the city will jumpstart the company's series of aggressive efforts to expand in many other key areas in the Philippines as they extensively develop the "hypermarket concept" within their next few years of operations.

"By year-end, Super Metro will have opened six hypermarkets in the country, particularly in the cities of Bacolod, Bogo, Cebu, and Quezon," Metro Supermarket Director Eric Poiret said.

Basic Energy earmarks USD 2.5-M capexBasic Energy Corporation (BSC) has earmarked USD 2.5M in capital expenditure (capex) this year.

BSC will use a significant amount for its Indonesian joint venture with Malaysian firm Petrosolve Sdn Bhd.

COMPANY NOTES

The remaining capex will also go to its geothermal projects in the country.

“The company spent ‘very little’ in 2012 compared to what it is going to spend this year,” BSC President and Chief Executive Officer (CEO) Oscar de Venecia said.

Unioil advances 5-year expansion plan to 3 yearsUnioil Petroleum Philippines, Inc. has shortened its plan to put up 60 stations in five years to three years with a P400-M annual budget.

The company opened three stations in August, two of which were in Quezon City while the other one was in Balanga, Bataan.

“For this year, we are on-track for the expansion. We’re actually advanced and has achieved the full-year target by mid-year,” Unioil President Kenneth C. Pundanera said.

Enterprise Bank opens P40-M support centerEnterprise Bank Incorporated (EBI) recently inaugurated its first support center in Buhangin, Davao City.

“The P40-M facility will serve as support system to their four branches in the city,” EBI Chief Executive Officer (CEO) and Vice President (VP) Ronald E. Alvizo said.

Alvizo said they installed a central server that will take care of their entire database, automated teller machines (ATMs), and other cash machines.

The company has 29 7-Eleven stores in Visayas and will achieve at least 60 outlets before the year ends.

Aside from Cebu, PSC is looking at other provinces in the region including Bacolod and Iloilo, PSC President and Chief Executive Officer (CEO) Jose Victor Paterno said.

The retailer is spending P1.5B in capital expenditures (CAPEX) this 2013, up 50% from a year ago, to renovate existing outlets and roll out new stores. It has targeted to end 2013 with 1,000 stores.

11September 2013

ASEANWATCH

ON THECALENDAR

Ph

ilip

pin

e P

ost

al P

erm

it N

o. 5

04

Manila FAME October editionManila FAME, The Design and Lifestyle Event, is the Philippines' premier trade platform for exports and design. It is one of the longest running trade shows in the Asia-Pacific, and is the only trade event in the country approved by Union des Foires Internationales (UFI), the global association of the exhibition industry. Come and visit at SMX Convention Center, Seashell Lane, Mall of Asia (MOA) Complex, Pasay City on October 17-20, 2013.

Design Week PhilippinesThe Design Week Philippines is a seven-day national celebration that brings up local and global awareness on the Filipinos’ creativity and design capability. It helps to highlight and promote the country as one of Asia’s best design hubs, a leading knowledge center in design, and premier tourism destination in art culture and heritage. SMX Convention Center will serve as the venue for the event on October 14-20, 2013.

Davao Trade ExpoThe Davao City Chamber of Commerce and Industry, Inc. organized this year’s most anticipated Davao Trade Expo (DATE) that will feature the C’s in agriculture – corn, coconut, cacao, cassava, cardava, and camote. It will be held on October 17-19, 2013 at the SMX Davao Convention and Trade Center.

SMX showcases exhibitions, forumsMore exhibitions and forums at SMX Convention Center (MOA) will be held on October 10-12, 2013.

• Print and Label Philippines is an international exhibition for printing, packaging, and labeling technologies

that will focus on new emerging industry trends.

• Plastics Philippines will once again reinforce its position

as “the only one” professional exhibition to evaluate profitable investment decisions in plastic, printing, packaging equipment, and technology industries.

• Philtronics Expo 2013 will help companies and individuals participating in the global semiconductor industry thrive by cultivating productive relationships with their customers and technology partners.

• Manufacturing Technology World Series is the largest forum for domestic and international manufacturers and distributors to display the full range of manufacturing machinery, plant-floor automation technology, and support products. This is the place to source and compare leading-edge production technology and innovation.

• Woodmach Philippines, the 18th International Wood,

Woodworking and Furniture-Making Machinery

and Technology, Furnishings and Furniture Accessories Exhibition, is the first and only dedicated trade exhibition that is exclusively focused on the woodworking business.

AEC to boost pharmaceuticalsThe Association of Southeast Asian Nations (ASEAN) member countries’ impending integration will help improve pharmaceutical care and scientific research in the region.

“The harmonization of the ASEAN Economic Community (AEC) in 2015 will allow faster access to medicine if the member states acknowledge the same registration procedures to speed up procedures in bringing new molecules to the market,” Novartis Healthcare Philippines, Inc. President and Managing Director Thomas Weigold said.

“The region is already preparing a platform for research collaboration in the ASEAN and Asia-Pacific,” ASEAN Network for Drugs, Diagnostics, Vaccines and Traditional Medicine (ASEAN-NDI) Coordinator Jaime C. Montoya said.

ASEAN remains Guangxi’s biggest trade partnerThe Association of Southeast Asian Nations (ASEAN) remained as south China's Guangxi Zhuang Autonomous Region's largest trade partner in the first half of the year, with trade volume hitting USD 6.14B.

The figure accounted for 44.5% of the region's total foreign trade and grew 29.1% year-on-year, the regional statistics bureau said.

The trade between Guangxi and ASEAN amounted to USD 12.05B last year, up 26% from 2011.

Philippine Business Report12

0123456

Sep-13Aug-13Jul-13Jun-13May-13Apr-13

Interest Rate (%)

39404142434445

Sep-13Aug-13Jul-13Jun-13May-13Apr-12

Peso per US Dollar Rate

Economic Indicators

As of September 10, 2013 As of September 10, 2013

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

Editorial Team: Anne L. Sevilla, Editor-in-Chief • Vic S. Soriano, Managing Editor • Jam A. Hourani, Assistant Editor • Cresenciano P. Par, Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya, Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation.

September 2013Philippine Business Report

*GNI - Gross National Income

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2013

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

Jun-13May-13Apr-13Mar-13Feb-13Jan-13

Imports (In USD Billion)

0

2

4

6

8

10

1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013)

GNI Growth Rate (%)

0

2

4

6

8

10

1Q (2012) 2Q (2012) 3Q (2012) 4Q (2012) 1Q (2013) 2Q (2013)

GDP Growth Rate (%)

131.5132

132.5133

133.5134

134.5

Jul-13Jun-13May-13Apr-13Mar-13Feb-13

Consumer Price Index(2000 base year)

0100020003000400050006000

Jul-13Jun-13May-13Apr-13Mar-13Feb-13

Exports(In USD Billion)

0

1

2

3

4

Aug-13Jul-13Jun-13May-13Apr-13Mar-13

Inflation Rate (%)(1994 base year)