1June 2016

Volume 27 No. 06 June 2016

PHL economic growth is fastestThe Philippines’ gross domestic product (GDP) grew 6.9% in the first quarter this year, making it one of Asia’s best performers.

The country’s growth for the period outpaced its Asian peers such as China with 6.7%; Viet Nam, 5.5%; Indonesia, 4.9%; and Malaysia, 4.2%.

Robust domestic demand, together with increased government spending for public goods and services ahead of the 2016 elections, were the main drivers for the period’s economic expansion.

Services industry increased by 7.9%, its highest growth in five consecutive quarters. Investments with fixed capital also boosted the economy with 25.5% growth.

BOI approvals up in Q1 The Board of Investments (BOI) approved P61.94-B worth of investments in the first quarter of the year, or 16.8% better than the P54.62B recorded in the last quarter of 2015.

The approved investments came from 73 projects from various sectors, which are expected to generate at least 12,841 jobs when fully operational.

The higher investment figure was attributed to energy projects cumulatively worth P29.34B that accounted for 47% of the total approved inflows and double the P13.76B recorded in the previous quarter.

Investments in real estate projects, largely low-cost housing, rose by

Local investments accounted for 86% of total BOI-approved commitments for the first quarter at P53.49B while P8.45B or the 14% balance came from overseas.

BOI-Approved InvestmentsTop Foreign Sources (Q1 2016)

Country Cost Share (%) (Php million)

Netherlands 5,950 70United States 54 7United Kingdom 49 6Singapore 29 3China 14 2

DTI-Industry Development Group (IDG) Assistant Secretary Rafaelita M. Aldaba said fiscal incentives remain the biggest factor behind the investment decisions of companies in the Philippines.

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The first-quarter figure matched the 6.9% posted in the fourth quarter of 2014.

Election spending is expected to boost second-quarter growth to over 7%. The economy is on track

to hit this year’s GDP growth target of 6.8% to 7.8%.

Previous elections showed a 0.3% to 0.4-% point contribution to the GDP during the election season.

96.56% to P17.87B from P9.10B in the same period last year. These accounted for 29% of approved pledges in 2016’s first quarter.

The other projects came from transportation and storage, with investments of P9.22B or a 15% share; manufacturing with P4.78B or 8% of the total; and the accommodation and food services activities sector with P350M or 1% share.

BOI-Approved InvestmentsMajor Manufacturing Subsector (Q1 2016)Sector Amount (in Php M)

Motor vehicles, 122.00 trailers and semi-trailersLeather and other 62.00 related products Food products 3.99 Other manufacturing 5.94 products

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INDUSTRYTRENDS

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“Investment incentives have become significant factors in the decision of firms given intense competition arising from increasing globalization and regional economic integration,” Aldaba said.

Ecozone investments climb 18.6% in Jan-AprilResurgence in manufacturing activities increased investment pledges registered with the Philippine Economic Zone Authority (PEZA) to 18.6% in the first four months of the year amounting to P48.75B from P41B in the same period a year ago.

PEZA-approved projects in the four-month period also rose by 11% to 208 from 187 projects a year earlier.

Exports of locators in economic zones slightly went up by 0.7% to USD 7.06B in the first two months of 2016 from USD 7.03B in the same period in 2015, PEZA Director General Lilia B. De Lima reported.

Manufacturing remained the biggest contributor to inbound investments but information technology (IT) is catching up, De Lima said.

Investments in the IT sector jumped 129.1% to P9B from P4B compared to the same period last year. The number of IT projects also grew 28.8% to 85 from 66, while IT exports grew 21.4% to USD 1.75B from USD 1.4B.

Direct employment by all enterprises in economic zones reached 1,255,476 as of end-April, up from 1,287,505 a year earlier.

IT accounted for almost half of the manpower at 581,565 people as of end-April, up 12.1% from 518,739 in the same period in 2015.

The biggest IT project approved this year was Daiichi Properties which committed P2.92B to develop a financial center at the Bonifacio Global Center in Makati City.

Last year, PEZA-approved investments increased by 5.58% to P295.09B from P279.48B the previous year.

“Our outlook is always bright especially in the recent past because at this stage in the history of the Philippines, never have I seen such interest by other countries and prospective investors to come to the Philippines,” De Lima said.

Total industry productivity index more than double in 3 yearsThe country’s total manufacturing productivity index has more than doubled for the period 2009 to 2012 as companies poured their investments to upgrade equipment, technology, and processes, DTI-Industry Development Group (IDG) Assistant Secretary Rafaelita M. Aldaba reported in her study titled “A Commitment Beyond 2016: Securing the Future of Philippine Industries.”

Aldaba’s research found that the total factor productivity index among manufacturing industries in the country has grown from 2 to 4.5 from the period 2009 to 2012 using 1996 the base number.

According to a study by researchers William Easterly and Ross Levine, total factor productivity accounts for most of the income and growth differences across countries. Thus, the improvement in the index validates the claim that the country’s economy is experiencing rapid growth.

The research used data from the firm level taken from key leaders, game changers, and stakeholders from various Philippine industries and sectors, government agencies, and development partners.

According to Aldaba, the total factor productivity index is a more relevant

measure of productivity because it includes all the factors of production such as labor, raw materials, and capital.

Top PerformersAccording to total productivity factor index

Industry Sector Productivity Index

Machinery and equipment, 4.90 and computer machineries Electrical machinery and 3.70 apparatus (radio, TV equipment) Wood and wood products 2.45 (cork and furniture) Basic metals and fabricated 2.30 metal products machinery and equipment Motor vehicles, trailers, 1.70 and transport equipment Refined petroleum and 1.40 other fuels (rubber products)

The first two industry performers showed there have been lots of investments being poured into the electronics industry with new technology, modern facilities, and processes.

The study established the trend that industries are moving up in their overall productivity.

“This is a good indicator that we are doing right in our efforts to push for the growth in the manufacturing sector, that we are giving support to industries with potentials and not the losing ones. The study results are compatible with what the government is doing,” Aldaba added.

PHL on track to meet competitiveness target this yearThe Philippines expects to hit at least the 63rd rank in the global competitiveness index this year as a result of government agencies’ efforts to streamline the process of starting a business and online transactions for taxes and social payments.

National Competitiveness Council (NCC) Private Sector Co-Chairman Guillermo M. Luz expressed confidence that the Philippines will meet its target when the next issue of the World Bank - International Finance Corp.’s annual “Doing

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Business Report” is released in October this year.

“We are on an upward trend whether 63rd or better but moving in that direction. Everyone wants services to move faster,” Luz added.

Gains have been made in the past five years. The Philippines ranked 148th in 2010 and gradually rose to 103rd in 2015 or a 45-notch improvement during the five-year period.

The Ease of Doing Business Task Force, chaired by the Department of Trade and Industry (DTI), has announced additional streamlining for starting a business and paying taxes and social payments which include:

• Integrated Business Registration System for Corporations and partnerships. The Securities and Exchange Commission (SEC) has put in place a one-stop shop that enables companies to get their SEC Registration Number, Taxpayer Identification Number, and Employer Registration Numbers for Social Security System (SSS), Pag-IBIG, and PhilHealth in a single transaction within the day. A total of 23,128 companies have been incorporated at the SEC under this system from 15 April 2015 to 15 March 2016, with over 99% receiving their registration papers in one day.

• Online payment. Pag-IBIG and PhilHealth have made it easier for companies employing 10 or more workers to pay monthly contributions through online payment systems of Land Bank of the Philippines and Development Bank of the Philippines.

• Electronic tax filing and e-payment through G-cash.

Tax payers can use mobile phones to remit payments instead of queuing at the Bureau of Internal Revenue (BIR) offices and banks.

• Online portal for business applications. The Quezon City government has streamlined its

procedures through an online portal to accomplish business applications, reducing process time from six days to two days. Also, taxpayers can remit their payment for real estate and business taxes through online banking with Landbank.

“We are optimistic and persistent. While we thought it was impossible, we’ve moved 45 notches up since we implemented gameplan 4.0,” Luz said.

Ease of Doing Business Task Force

ChairDepartment of Trade and Industry (DTI)Members:National Competitiveness Council (NCC)Department of Finance (DOF)Department of Interior and Local Government (DILG)Department of Justice (DOJ)Bureau of Internal Revenue (BIR)Bureau of Customs (BOC)Land Registration Authority (LRA)Credit Information Corporation (CIC)Securities and Exchange Commission (SEC)Social Security System (SSS)Home Development Mutual Fund (HDMF)Philippine Health Insurance Corporation (PHIC)

Source: Administrative Order (AO) No. 38, s. 2013

PHL sustains strong growth amidst difficult global environmentAmong the developing Southeast Asian economies, the Philippines and Viet Nam have the strongest growth prospects, with both countries being expected to grow by more than 6% in 2016, World Bank’s East Asia and Pacific Economic Update reported.

Buoyed by strong private consumption and election spending, the Philippines is projected to grow 6.4% in 2016 before tempering slightly to 6.2% in 2017.

“In the recent years, the Philippines has continued to deepen macroeconomic stability, promoted transparency and put a lot of resources in infrastructure and services that helped poor and vulnerable families,” World Bank Country Director for the Philippines Mara Warwick said.

The East Asia and Pacific Update is the World Bank’s comprehensive review of the region’s economies.

WB Forecast for Asia

• Developing East Asia is expected to ease from 6.5% in 2015 to 6.3% in 2016 and 6.2% in 2017-18

• China’s growth is expected to be 6.7% in 2016 and 6.5% in 2017, compared with 6.9% in 2015

• Asia’ developing countries will grow from 4.7% in 2015 to 4.8% in 2016 and 4.9% in 2017-18 — driven by growth in the large Southeast Asian economies

• Cambodia’s growth will be slightly below 7% during 2016-18

• Indonesia will grow by 5.1% in 2016 and 5.3% in 2017, contingent on the success of recent reforms and implementation of an ambitious public investment program

• Small economies such as Lao PDR, Mongolia, and Papua New Guinea will continue to be affected by low commodity prices and weaker external demand

DTI pushes for global marketing of PHL education services The Department of Trade and Industry (DTI) is urging local schools to market their curriculum to the global market.

At the World Education Expo Festival (WEEF) 2016 held in Jakarta, Indonesia last February, Philippine universities including representatives from Enderun Colleges, WCC Aviation Company Inc., and Asian Institute of Aviation recently discussed and assessed opportunities for the country’s education sector to over 10,000 participating students.

WCC Aviation Company already noted that over 10 Indonesian students are seeking higher education at their institution and several agencies already tapped Asian Institute of Aviation for possible partnerships.

“Schools and other institutions can coordinate with DTI’s initiatives to maximize different government-sponsored outbound business missions in tapping global markets,” DTI-Export

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TRADE ANDINVESTMENTS

Marketing Bureau (EMB) Assistant Director Anthony B. Rivera said.

Many American aviation schools have recognized local universities’ instructional materials and curriculum being globally compliant.

In 2012, a total of 7,776 foreign students, particularly Koreans, Iranians, Chinese, Americans, and Indians, were enrolled in the country’s higher education institutions.

The increase of foreign students in the country is attributed to the proficiency of Filipino teachers in English and the use of English as a medium of instruction in educational institutions.

In a survey conducted by Global English Corporation in 2012, Philippines ranked first with a Business English Index (BEI) of 7.11 among 76 countries represented. The Philippines is the lone country categorized under intermediate level and was followed by Norway (6.54) and Estonia (6.45).

DTI-EMB plans to further tap regional and preferential trading agreements to expand market access with existing trade partners to boost exports in the services sector other than the information technology and business process management (IT-BPM) industry.

“We project probably for both variants — the sedan and the hatchback — around more than 20,000,” Mitsubishi Marketing Vice President Froilan G. Dytianquin said.

The initial production will only be a fraction of the 200,000 units required under the six-year CARS program which is an incentive-based scheme to boost the local automotive industry.

Mitsubishi has enrolled the Mirage sedan and hatchback under CARS, a program led by the Department of Trade and Industry (DTI) that provides fiscal incentives worth USD 1,000 for each car manufactured in the country.

The car company has allotted P4.3B for the initial phase of the program.

Dytianquin believed that with the increasing demand for small cars, the additional volume can be absorbed by the local market. The company sold 54,087 units last year in what it described as a “record-breaking performance.”

Under the program, Mitsubishi expects to double its workforce in the next six years.

“Probably right now we are 900. That will go up to 1,800. That’s only for us,” he said, noting that more jobs will be generated as the program requires car makers to source car parts from local manufacturers.

He also estimated that by the end of the program, the company should have sourced 70% its requirements from parts sourced from Philippine auto parts makers.

Mitsubishi said the Philippine economy has a high potential for growth with the country’s average age of 23 years old, making its 100-M population a lucrative market for automobiles.

AGRIBUSINESS AND FISHERY

SL Agritech pours in P200M for new plantHybrid rice and seed producer SL Agritech

Corp. is investing P200M in a new seed processing plant in Davao del Sur to boost its production.

The firm intends to double its farm area planted with hybrid variety to 500,000 ha. for crop year 2016-2017.

SL Agritech Chairman and Chief Executive Officer (CEO) Henry Lim Bon Liong said the company is also set to expand its existing Davao Oriental plant by an additional 600 to 700 ha.

The firm ships five to six containers of rice on a monthly basis to countries in Europe, Middle East, as well as to the United States (U.S.), among others.

Lim said Malaysian and Singaporean private firms are interested to import SL Agritech’s Doña Maria premium rice.

As a major hybrid rice producer in the country, the company holds 70% of the total market share of hybrid variety in the Philippines, producing the Doña Maria brand of premium rice in Miponica and Jasponica varieties.

Bayer plans to expand PHL marketGerman multinational firm Bayer is bent on further promoting the use of hybrid rice technology in the Philippines, expressing its intent to invest further in the country.

“The strong demand for our hybrid rice offers shows our close alignment with the country’s growing rice production needs. It motivates us to leverage on science to develop the technology to help farmers live better lives and contribute to the Philippines’ food sufficiency and security

MANUFACTURING

Mitsubishi to produce Mirage locally by 2017Mitsubishi Motors Philippines Corp. will start manufacturing in

the Philippines its Mirage sedan model in January 2017 under the government’s Comprehensive Automotive Resurgence Strategy (CARS) program.

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goals,” Bayer Seeds for the Crop Science Division Head Recher Ondap said.

In 2015, the group expenditures amounted to EUR 2.6B, while its allotment for research and development expenses rose to EUR 4.3B.

The company said hybrid rice helps increase yields by 33% versus inbred certified seeds. Hybrid rice is a type of rice produced by crossbreeding different kinds of rice.

Greater production of rice, it said, means Filipino farmers are able to earn higher incomes, providing greater supply of local rice in the market that translates into more affordable prices for consumers.

ECONOMIC AND LOW-COST HOUSING

8990 Holdings allots P3B in Las Pinas dev’tMass housing developer 8990

Holdings Inc. is pouring in P3B for the development of the 3.4-ha. lot in Las Piñas City that it recently acquired from SBS Philippines for P858.97M.

8990 Chief Executive Officer (CEO) Januario Jesus Atencio said the project will either be similar to its affordable housing condominium projects in Ortigas, Pasig City and in Tondo, Manila or a four-story condominium in Muntinlupa City.

The firm’s low-cost condominium township project located in Vitas, Tondo houses 13 residential buildings and a two-story mall called DecaMall, while a similar project along Ortigas Avenue offers 26 residential buildings, a shopping mall, and two information technology and business process management (IT-BPM) office towers.

Atencio said the new project in Las Piñas will have commercial spaces which will be completed in four years.

ENERGY

MERALCO, Semirara expand partnershipSemirara Mining and Power Corp. and MERALCO Powergen Corp.

have boosted their link as they agreed to jointly develop a 700-megawatt (MW) coal-fired power plant in Calaca, Batangas.

The two companies said they entered into a joint venture (JV) agreement for the purpose of owning, constructing, and operating the power facility.

The power plant will be made up of two generating units, each with a capacity of 350 MW. St. Raphael Power Generation Corp. will serve as the project company for the power plant.

To date, Semirara has four generating units in Calaca, including those operated by its subsidiary, South Luzon Power Generation Corp. (SLPG).

In the third quarter of 2015, SLPG signed a power supply agreement (PSA) with the MERALCO group’s Retail Electricity Supply (RES) company.

The PSA was for the supply of 120 MW of power from 26 March 2016 to 25 December 2018 and may be extended up to four years.

As such, MERALCO is sourcing part of its power requirements from SLPG, which is the corporate vehicle for the expansion of the Calaca coal-fired power plant in Batangas.

Hydro plant to rise in Labayat, QuezonRepower Energy Development Corp. (REDC), the mini hydropower business of holding company Pure Energy Holdings Corp. (PEHC), broke ground for a run-of-river hydro facility in Upper Labayat, Quezon Province.

The project will be built in the upper cascade of the Labayat River, while the power station will be built in Maragondon, Real, Quezon.

With an installed capacity of 3 megawatts (MW), the power plant will generate over 16 gigawatt (GWh) of energy annually, which is equivalent to the consumption of around 20,000 households.

The high-pressure hydropower plant station is scheduled to begin its operations in the fourth quarter of 2018 and will produce energy for the local community.

Upon completion, the power plant is expected to last for 100 years and will be the first mini hydropower project in Quezon province.

“This is one of the projects that we’re building to benefit the local community as we will provide clean, reliable, and sustainable energy. This project will directly address the province’s overdependence on coal power plants as its primary energy source,” REDC Chief Executive Officer (CEO) Dexter Y. Tiu said.

The hydro project is in partnership with Frabelle and TSP Marine Group, a food and fishing conglomerate that recently ventured into the renewable energy business in the country.

Frabelle Group’s President Francisco Tiu Laurel said the project will not only provide power needs in the local community, but also supply their own factories and shipyards.

“The hydropower project, once constructed, will generate more energy than our own factory requirements and, at the same time, stabilize the energy needs of the communities here,” said Laurel, referring to the municipality of Real, Quezon, where the project is located.

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PUBLIC INFRASTRUCTURE AND LOGISTICS

Cavitex-C5 South Link road project startsThe Metro Pacific Investments Corp.

(MPIC) held the groundbreaking ceremony for the implementation of the 7.7-km. Cavite Expressway C5 South Link Project.

The P12-B, six-lane project is a joint venture between the Philippine Reclamation Authority (PRA) and MPIC unit Cavitex Infrastructure Corp.

The project is aimed at decongesting traffic by linking major business districts in Makati City and Taguig City to the southern cities of Parañaque, Las Piñas and Cavite, targeting cargo trucks, vans, and buses.

The C5 South Link will stream from the end of C5, just before entering the South Luzon Expressway, to Cavitex near the Parañaque Toll Plaza.

“South Metro Manila is composed mostly of residential areas. Most people living here are working in Makati, Taguig, and Ortigas. So during rush hour, there is a large volume of vehicles that travel daily, resulting in traffic congestion on EDSA [Epifanio Delos Santos Avenue] and C5,” Cavitex Infrastructure President Luigi Bautista said.

“The Cavitex C5 South Link will enable residents of Cavite, Las Piñas, and parts of Parañaque to avoid EDSA, and take a direct link to and from C5 to the Cavitex,” Bautista said.

The first phase of the project construction will start in 2016 to link C5 and Merville, Parañaque by way of a flyover. The second phase will commence in 2017 to build the link between Merville and Cavitex. It’s full completion is expected before 2020.

Bautista said that aside from decongesting traffic in the south, the toll road will help increase productivity and economic activity in the area.

The construction, operation, and maintenance of the project is projected to generate at least 1,000 jobs.

Panguil bridge project to startThe national government has signed a USD 100-M loan with Export-Import Bank of Korea-Economic Development Cooperation Fund (KEXIM-EDCF) for the Panguil Bay Bridge project that will connect the City of Tangub in Misamis Occidental and the Municipality of Tubod in Lanao del Norte.

The signing will commence the project that is expected to accelerate growth in Mindanao with reliable and efficient transport infrastructure connecting the northern and western areas in the region.

The loan will finance the construction of a 4.19-km. bridge across Panguil Bay. The project is scheduled to be completed in 2018.

MNTC allots P3.9B for NLEX-SCTEXThe Manila North Tollways Corporation (MNTC) is putting in P3.9B for enhancement works at North Luzon Expressway (NLEX)-Subic-Clark-Tarlac Expressway (SCTEX ).

MNTC President Rodrigo E. Franco said the company is doing simultaneous works on both expressways, including pavement maintenance, road widening, and toll plaza expansion.

The P2.6-B road widening project covering Segments 2 and 3 of NLEX already started as early as March to accommodate the growing number of vehicles plying the tollway.

MNTC is also investing P1B for the pavement improvement of the entire 94-km. stretch of SCTEX from 2016 to 2018.

The 2016 pavement upgrade amounting to P305M will include asphalt overlay

and road patching of Porac in Pampanga to Concepcion in Tarlac, while the 2017 upgrade involves the repair from Porac to Floridablanca and from Concepcion to San Miguel.

In 2018, pavement works will be from Floridablanca to Tipo in Pampanga and from San Miguel to La Paz in Tarlac.

PUBLIC-PRIVATE PARTNERSHIP PROJECTS

CALAX construction to start in Q1 2017MPCALA Holdings Inc. is eyeing to commence the

P35.42-B Cavite-Laguna Expressway (CALAX) project in the first quarter of 2017 under the government’s public-private partnership (PPP) program.

A sub-unit of Metro Pacific Investments Corp.’s (MPIC) tollroads arm Metro Pacific Tollroads Corp. (MPTC), MPCALA received the notice of award for the 35-year contract to build-operate and maintain the 44.6-km. toll road through Cavite and Laguna.

“We are hoping to break ground early next year,” MPTC Chief Executive Officer (CEO) Rodrigo Franco said.

Should the groundbreaking proceed in the first quarter of 2017, Franco said, the project would be completed within two years.

AVIATION

PAL buys six wide-body Airbus

planes for U.S., Europe flightsThe Philippine Airlines (PAL) has acquired six A350-900s from Airbus, with the option to get six more, for non-stop flights to the United States (U.S.) and Europe.

“With the A350, we will introduce a whole new level of comfort for long-haul flights, with more personal space in all classes, a quieter cabin, and the very latest on-board amenities,” PAL President and Chief Operating Officer (COO) Jaime J. Bautista said.

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PAL is now defining the final layout of the aircraft, which will be reconfigured with three classes as to business, premium economy, and regular economy.

As early as February this year, PAL announced its plans to deploy the planes to new routes in North America and Europe, with the first plane scheduled for delivery in 2018.

Lufthansa service center in Alabang opensGerman airline Lufthansa is opening a new service center in Alabang in Muntinlupa City this month, a move that is expected to generate more than 400 jobs for service consultants as it capitalizes on the country’s skilled workforce.

“The Lufthansa Group is expanding its portfolio of Global Service Delivery Centres. Two business units of Lufthansa — Lufthansa InTouch (LIT) and Lufthansa Global Business Services (LGBS) — have teamed up to establish a company called Lufthansa Services Philippines,” the group said.

The facility will occupy 4,000 sqm. and will have 440 employees after two years.

“Lufthansa InTouch and LGBS will jointly run their business units under one roof. Both partners have a mutual interest in Manila due to the availability of highly skilled local workforce,” the company said.

The set-up also allows both parties to create synergies in back-office and administrative functions.

With its 190 Manila-based employees, LIT assists airline passengers of Deutsche Lufthansa AG, with services ranging from reservations, booking and sales of flight tickets, and assistance in baggage inquiries.

Meanwhile, LGBS’ 250-strong local work force provides services in finance, revenue accounting, human resources, and procurement.

Cebu Pacific receives new aircraft Local carrier Cebu Pacific (CEB) received its 36th A320 aircraft last

April from the Airbus factory in Toulous, France.

The plane is equipped with a fuel-saving wingtip device called Sharklets and is coated with CEB’s revamped livery which features shades of the country’s land, sea, sky, and sun.

This latest addition to CEB is the 57th in the fleet with 6 Airbus A330, 36 Airbus A320, 7 Airbus A319, and 8 ATR 72-500 aircraft.

“We are looking forward to taking additional planes this year until 2021, to serve the ever-growing domestic and international markets,” CEB Vice President for Corporate Affairs Atty. Paterno S. Mantaring Jr. said.

BANKING

Metrobank pushes expansion of retail banking operationMetropolitan Bank and Trust Co. (Metrobank) is tapping more

segments and new products including electronic banking as it expects to sustain its momentum in its growing retail sector.

Metrobank Senior Vice President Jett C. Gamboa said their retail banking area on the average has maintained a 15-% to 16-% growth in the last three years.

Gamboa said the strength of the Philippine economy will continue to prop up consumer spending and this consumption growth will in turn, propel retail banking.

“We expect loans to grow by 12% to 15%,” he said, noting that the middle market, small and medium enterprises (SMEs), and the consumer sector remain the bank’s priority areas.

Metrobank Research Head Mark Bautista said they expect the economy to grow by 6.3% this year and the per capita income to hit more than USD 3,000. He expects inflation to average at 2% this year.

Metrobank is the country’s second largest bank next to Banco de Oro (BDO). In 2015, its consolidated net income rose by 20% year-on-year to P18.6B.

EastWest Bank acquires 2 StanChart units in PHLEast West Banking Corp. has bought two subsidiaries of Standard Chartered Bank as well as an agreement to handle the foreign bank’s retail business in the country.

In separate disclosures to the Philippine Stock Exchange (PSE), EastWest Bank said it has acquired Assurance Solutions Insurance Agency Inc. (Asia) and Price Solutions Philippines Inc. (PSPI).

Both Asia and PSPI will become subsidiaries of EastWest Bank, pending approval of the Monetary Board of the Bangko Sentral ng Pilipinas.

In another disclosure, EastWest Bank entered into an agreement with StanChart Philippines under which “credit cards, personal loans, wealth management and retail deposits of Standard Chartered Bank in the Philippines will be migrated to EastWest.”

EastWest and Standard Chartered Bank are expected to work closely in the coming months to collaborate on a range of retail banking opportunities and to provide a seamless transition for the retail banking clients and staff to EastWest.

IT-BPM Concentrix looking to grow PHL operationsConcentrix Corp.

is developing its operations in the Philippines and will set up a branch in Lapu-Lapu City, Cebu by the second half of 2016.

The company will operate under Megaworld Corp.’s township Mactan Newtown, initially occupying around 2,600 sqm. of office space.

“The entry of Concentrix in Cebu, through The Mactan Newtown, is a

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clear indication of our continuing commitment to build the largest cyberpark in Mactan and to further strengthen Cebu’s position as the country’s top BPO [business process outsourcing] hub,” Megaworld Senior Vice-President Jericho P. Go said.

Concentrix provides outsourced assistance to automotive, financial, consumer electronics, government, health care, insurance, media, retail and e-commerce, technology, travel and tourism, and transportation industries.

The Cebu branch will add up to the company’s existing operations in Cagayan De Oro City, Davao City, Naga City, Sta. Rosa, Laguna, Eastwood City, and Quezon City.

Teleperformance opens 17th PHL siteTeleperformance unveiled its 17th

site in the Philippines last April in Ugong, Pasig City. The new branch is expected to generate 2,000 job opportunities, which will bring the company’s total number of employees to 42,000 people.

Teleperformance Silver City will feature contemporary amenities such as fitness and wellness gym, spacious cafeteria, full-service clinic, comfortable sleeping quarters, game and recreation rooms, individual lockers, and a shower room for the employees.

According to Teleperformance Philippines Managing Director Travis Coates, the company’s growth is credited to the employees’ persistence and hard work over the last two decades.

“We would not be able to achieve this remarkable growth without the hard work and dedication of the 40,000 Teleperformance team members who choose to work with us. The opening today of our 17th site signifies our strong commitment to the Philippines’ BPO sector,” Coates said.

After the Silver City’s inauguration, the company will also look for other

provincial cities wherein they can put up more branches.

“There’s a strong talent pool in the provinces; we want to leverage those areas,” Coates said.

Facebook opens PHL officeSocial networking giant Facebook launched its office in the Philippines, a milestone for the company.

The new Manila office targets to strengthen the company’s investment in the country.

Facebook Vice President for Asia Pacific Dan Neary noted that 49M Filipinos access Facebook every month to connect with their friends and loved ones, accounting for over 91% of the country's Internet population.

“The Philippines is a highly engaged mobile-first nation filled with people who are creative, entrepreneurial and have a strong sense of community,” he added.

REAL ESTATE

Filinvest allots P44-B capex in 2016Filinvest

Development Corp. (FDC) raised its capital expenditures (capex) budget by 47% to P44B this 2016 from P30B in 2015.

According to FDC President and CEO Josephine Gotianun-Yap, more than half of the amount will be invested in real estate while the 25% would be used to strengthen the company’s operations. The rest of the capex will be allotted to their hotel and banking business.

The company also aims to do a corporate loan of P2B to 5B for the expansion of their hotel business.

The company aims to own or manage 5,000 hotel rooms by 2020 as they target to pour in more investments in the Philippines’ tourism sector.

The group also plans to open a 192-room luxury hotel on Boracay Island, Aklan this 2016. It will be the third Crimson hospitality brand after the first and second Crimson hotel in Mactan, Cebu and in Alabang, Muntinlupa respectively.

Conrad Manila hotel opens Conrad Manila is added to Pasay City’s cityscape with the primary targets of lifestyle tourists and the MICE (meetings, incentives, conferences, events) market.

“We aim for it to be the leading luxury hotel in Manila and we seek to establish it as the market leader. We are confident and we have a very good feeling that there will be lots of opportunities for us,” Conrad Manila General Manager Harald Feurstein said.

Moreover, the global brand is banking on the local business sector’s continuous growth and the country’s economy as a whole.

“The economy and business are buoyant now. The Philippines has been the tiger economy for the past years. There are more developments. Tourism numbers are going up. The more infrastructure develops, the more the demand will follow,” he added.

Rockwell eyes bigger share of commercial marketRockwell Land Corp. is expanding its leasable space by about 160,000 square meters as it aims to have bigger share of the successful commercial business space in the Philippines.

The company is now developing the Rockwell Business Center-Sheridan in Mandaluyong City and Santolan Town Plaza, which will be a retail-office development in Quezon City.

The company is now focusing in improving their commercial space sector for it has done more efforts in their residential establishments the past years.

9June 2016

COMPANY NOTES

Also, The Rockwell Business Center-Sheridan intends to provide an attractive setting primarily for the country’s top information technology and business process management (IT-BPM) companies.

RETAIL

SM Prime expands to northSM Prime Holdings Inc. (SM Prime) is

opening its 57th mall in San Jose, Del Monte Bulacan as it expands its presence in the North area. It is the third SM Mall in Bulacan after SM City Marilao and SM City Baliwag.

“We continue to expand in the provincial areas as we remain optimistic about their huge potential for growth. The opening of SM City San Jose Del Monte in Bulacan is a testament to this strategic direction as we remain steadfast in developing premier destinations around the country,” SM Prime President Hans T. Sy said.

This newest retail and dining destination will add 101,000 sqm. in gross floor area, to bring SM Prime’s total retail space to 7.4M sqm., the largest footprint in the coutry.

Robinsons Retail spending P5BRobinsons Retail Holdings Inc. is spending P5B to roll out more stores in 2016.

The company increased its capital expenditure to P5B from 2015’s P3.14B to expand their network to 200 stores this year.

Part of their plan is to continue to acquire and merge with other ventures to build supermarkets and convenience stores.

“We have also gotten into a good start this 2016 . . . as we benefited from increased consumer spending from a still robust domestic economy,” Robinsons Retail President and Chief Operating Officer Robina Gokongwei-Pe said.

TELECOM

PLDT, Globe buy SMC telco for P69BPhilippine Long Distance Telephone Co. (PLDT) and Globe

Telecom have jointly acquired San Miguel Corporation’s Vega Telecom Inc. for P52.08B and the assumption of about P17.02B in liabilities.

The acquisition deal, according to PLDT and Globe, include the prized 700-megahertz (MHz) frequency which will significantly upgrade their Internet services.

“This will enable existing operators to provide significantly improved Internet and data services to the public and to our customers in the shortest possible time,” PLDT Chairman and CEO Manuel V. Pangilinan said.

In utilizing the 700 MHz, it would allow the deployment of a high-capacity Long Term Evolution (LTE)-based wireless and fixed-broadband network to deliver higher data rate and LTE broadband service.

The acquisition was done under a 50-50 venture.

The firm will close the year with as much as P3.5B in profits on the back of strong revenues from election-related and regular ads, as well as its growing consumer business.

“Consumer business is also helping us. Sky direct-to-home will be launched this month. So, hopefully that will also help meet our profit guidance,” Cerrado said.

Jollibee in full control of Mang InasalFilipino-owned food firm Jollibee Foods Corp. (JFC) now owns 100% of Mang Inasal Philippines Inc. after acquiring the remaining 30-% stake held by the Sia family for P2B. This is in line with the shareholders agreement entered into between JFC and the Sia family.

Agreements

• JFC representatives will completely comprise the board of directors of Mang Inasal

• No changes in the business conduct and direction of Mang Insasal

• JFC Group of Companies headed by founder Tony Tan Caktiong will continue its business relationship with businessman Edgar Sia through DoubleDragon Properties Corp.

• JFC brands will continue their network expansion with CityMalls

• DoubleDragon will continue to develop the Jollibee Tower office building

JFC Total Outlets as of 31 March 2016

Local Jollibee 924Mang Inasal 458 Chowking 445Greenwich 236Red Ribbon 370Burger King 60OverseasYonghe King (China) 319Jollibee 149San Pin Wang 58Chowking 45 Hong Zhuang Yuan China 42Red Ribbon 32 Dunkin Donuts China 2

JFC acquired the 70-% stake of barbecue fast-food chain operator Mang Inasal in 2010 as part of continuing efforts to beef up its business portfolio. In all, the JFC Group has 3,143 stores worldwide.

ABS-CBN to construct P8-B soundstage facilityBroadcasting network ABS-CBN Corp. will construct its P1-B soundstage facility in Bulacan this year, the firm’s Chief Finance Officer (CFO) Aldrin M. Cerrado said.

The facility is a soundproof and hangar-like infrastructure which aims to increase film and television productions’ quality and reduce costs associated with on-location shoots.

Philippine Business Report10

COUNTRY-TO-COUNTRY

Gardenia opens 12 more community bakeriesGardenia Bakeries Philippines Inc. has opened 12 outlets of Big Smile Bread Station catering to the mass market in the cities of Pasig, Taguig, Makati, and Muntinlupa and in the provinces of Laguna, Rizal, Batangas, and Cavite, Gardenia Bakeries President Simplicio Umali Jr. said.

The firm is aiming to open at least 1,000 Big Smile Bread Station stores in Luzon and 500 more outlets in the Visayas over the next few years through a franchising scheme.

Last September, it announced its maiden venture into the unpackaged segment of the bread industry with its foray into artisanal and community bakeries.

Villar retail arm eyeing for a coffee shop expansionVillar Group’s retail arm All Value Holdings Corp. will venture into the coffee business by introducing up to 20 stores of its Coffee Project shops in the next 12 months.

“I think there is a big room for coffee shops in the country. There are different niches for this,” All Value Chairman Manny B. Villar said.

“We will very quickly open another four in the next three to four months. Right now we have one in Alabang, one in Imus, and this is the third, in Quezon City. The next four will be in Sta. Rosa, in Evia in Daang-Hari, in Taguig, and the other one would be in Lake Front. So another four,” Villar said.

Its retail arm would house Coffee Project shops in each of the Villar group’s Starmall and Vista Land developments.

The project offers a wide array of coffee products that are brewed from both local and imported beans.

PHL, Switzerland to improve bilateral agreementsThe Philippines

and Switzerland are reviewing their existing bilateral agreements to attune more recent developments after the signing of the free trade agreement (FTA) between the Philippines and the European Free Trade Association (EFTA), said DTI-Industry Promotion Group (IPG) Undersecretary Nora K. Terrado, who co-chaired the second meeting of the Joint Economic Commission (JEC) between the two countries last April 2016 in Bern, Switzerland.

The total bilateral trade between the Philippines and Switzerland valued at USD 556M as of April 2016. The figure is foreseen to increase with the FTA coupled with trade promotion and cooperation activities under the JEC.

The Philippines has sought to become a priority country for the Swiss Import Promotion Program (SIPPO) which was identified as a tool for country’s exporters to be educated on Swiss and European product standards, expansion of business networks, and implementation of cooperation projects.

JEC discussion has focused on the broader market access of the Philippines in Switzerland through the FTA and the activities proposed to be undertaken as part of the communication plan to promote and advocate the FTA in both countries.

Regional and multilateral economic issues were also discussed.

“The JEC between the Philippines and Switzerland fully complements and enhances the PH-EFTA FTA allowing both countries to create an environment conducive for our private sector to seize the benefits,” said Terrado.

The private sector expressed satisfaction in doing business in the Philippines and welcomed the improvements made in the area of competitiveness, innovation, and economic freedom reflected in various global reports.

The Philippines-Switzerland JEC is a venue to discuss trade, investment, economic cooperation, and related matters to forge closer bilateral trade and investment ties between both countries. It also aims to promote sound business-to-business cooperation.

PHL-UK trade stays strong in 2015Trade between

the Philippines and the United Kingdom (U.K.) has reached USD 1.88B in 2015, a 38-% improvement over 2014 with the surplus in favor of the Philippines, UK Trade and Investment Director Mike Moon said.

“We’re very happy to see the growing interest of UK companies to the Philippines and vice versa. We see exports from the UK to the Philippines growing and exports from the Philippines to the UK also rising. The two-way trade is increasing,” Moon said.

In terms of investments, UK remained the largest European investor in the country with a net foreign direct investment stock of over USD 5B, Moon added.

“The Philippines is an emerging market that remains abundant with business opportunities that British companies can take advantage of and we are here to support and assist them in their exporting journey,” British Chamber of Commerce Philippines (BCCP) Chairman Chris Nelson said.

“It’s a very exciting time here in the Philippines with more British companies signifying their interest to export or do business in the market. There is a lot of interest here. With what’s going on with the UK companies coming here, we see that trend of growth continuing,” Nelson said.

11June 2016

INTERNATIONAL/REGIONALWATCH

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“Private investment growth is expected to remain robust owing to improvements in public infrastructure and implementation of public-private partnership projects,” the IMF added.

To support growth, IMF said structural reforms would also be needed to raise the low rate of government revenue and infrastructure investment, opening up the economy to greater competition and foreign investment, and benefiting from the demographic dividend by addressing skill mismatches and inequality of opportunity.

DTI markets PHL chemical sector in ASEAN-Japan meetThe Department of Trade and Industry (DTI) promoted the local chemicals industry during the 21st Meeting of the Association of Southeast Asian Nations (ASEAN) Economic Ministers-Ministry of Economy, Trade and Industry of Japan Economic and Industrial Cooperation Committee’s (AMEICC) Working Group on Chemical Industry (WG-CI).

“We are encouraged by the sustainable progress of our domestic chemical industry. By continuously improving products and processes, we plan to further this growth to achieve sustainable inclusive growth of the economy and generate quality jobs,” DTI-Industry Development Group (IDG) Undersecretary and Board of Investments (BOI) Managing Head Ceferino S. Rodolfo said.

The meeting identified the best practices in chemicals regulation, as well as the lock-in concrete interventions needed to address chemical safety issues and promote chemical safety management.

The Philippine chemical industry saw a strong and sustained double-digit growth of 16.5% in 2015, according to the Philippine Statistics Authority (PSA). This 2015 growth was faster than the industry’s 4.9% growth a year ago.

The chemical industry is one of the largest manufacturing sectors in the

country, involving the manufacture of basic chemicals, rubber products, plastic products, and other chemicals.

The industry has extensive connections with other industries including agriculture/agribusiness, automotive, cement, creative, construction, energy, fishing, health, housing, and pharmaceutical industries.

“Our goal is to be more responsive to the growing consumer need for environment-friendly products. We are working closely with stakeholders, relevant agencies, and the private sector to develop a stronger chemicals sector that thrives in the regional and global markets,” Rodolfo added.

The sector has an existing Chemicals Industry Roadmap, which aspires to create a wide range of higher value products that serve both domestic and global markets with the best customer value. It envisions the industry as a major player in the region by 2016 and a leading exporter by 2022.

The AMEICC is a body for policy consultations among ASEAN member states and Japan to enhance industrial cooperation, improve the region’s competitiveness, and develop cooperation assistance to new member countries.

The 22nd Meeting of the AMEICC WG-CI will be held in Malaysia in April or May 2017.

PHL to outperform other economies in AsiaThe Philippines will continue outperforming other top economies in Asia this year and in 2017, multilateral lender International Monetary Fund (IMF) reported based on its latest regional outlook released in May 2016.

IMF maintained its growth forecast for the country at 6% this year and 6.2% in 2017. The forecast was higher than Indonesia’s 4.9% and 5.3%; Malaysia’s 4.4% and 4.8%; and Thailand’s 3.0% and 3.2%.

“The modest uptick in growth is expected to be driven by the continued strength of domestic demand,” the IMF said.

Domestic demand would benefit from higher public consumption and investment growth, but private demand was also expected to remain buoyant, helped by low unemployment, low oil prices, and higher workers’ remittances.

There are 14 UK companies currently eyeing partnerships with local firms in pharmaceuticals, information technology (IT), and beverage sectors. Two firms have already been successful in their forays in the country, namely Paywizard — a software subscriber management firm, and Augentius — a private equity fund management. The other British firms in near agreement with local partners include:

• Rosemount Pharmaceutical• A & C Associates • Bruntys Premium Cider • Guralp• Westrade• Semafone • Symphony Environment Ltd. • Tectonic Interactive • PRQA • Miomni Gaming Ltd. • Big OZ (cereal products)• University of Derby

Philippine Business Report12

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Peso per US Dollar Rate

ECONOMIC INDICATORS

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

Editorial Team: Patricia May M. Abejo/Editor-in-Chief • Alfonso M. Valenzuela/Managing Editor • Cresenciano P. Par/Assistant Editor • Kristina S. Andaya, Renaldo C. Neneria/Writers • Renaldo C. Neneria /Design Layout • Ric A. Kagahastian /Circulation Officer •

Philippine Business ReportJune 2016

Sources: Bangko Sentral ng Pilipinas (BSP) Philippine Statistics Authority (PSA)Photos/graphics: Coutesy of Google.com

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2016

As of 28 April 2016As of 30 June 2016 As of 30 June 2016

012345678

4Q (2014)1Q (2015) 2Q (2015 3Q (2015)4Q (2015)1Q (2016)

GDP Growth Rate (%)

012345678

4Q (2014) 1Q (2015) 2Q (2015) 3Q (2015) 4Q (2015) 1Q (2016)

GNI Growth Rate (%)

0

2

4

6

8

Jun-16May-16Apr-16Mar-16Feb-16Jan-16

Interest Rate (%)Overnight Lending Facility

0

0.5

1

1.5

2

Jun-16May-16Apr-16Mar-16Feb-16Jan-16

Inflation Rate (%)(1994 base year)

380040004200440046004800

May-16Apr-16Mar-16Feb-16Jan-16Dec-15

Exports(In USD Billion)

0

2000

4000

6000

8000

May-16Apr-16Mar-16Feb-16Jan-16Dec-15

Imports (In USD Billion)

141.5142

142.5143

143.5144

144.5

Jun-16May-16Apr-16Mar-16Feb-16Jan-16

Consumer Price Index(2000 base year)