1October 2014

Volume 25 No. 10 October 2014

The Philippines has sustained its leap in competitiveness on the back of reforms that have enabled the country to make the biggest gains among economies tracked since 2010, the Global Competitiveness Report 2014-2015 released by the World Economic Forum (WEF) showed.

The country moved up to 52nd out of 144 economies this year from its previous 59th spot in last year’s survey that assessed economies on the so-called 12 “pillars of competitiveness” that drive productivity.

Notably, the Philippines has already notched a steady improvement of 33 places since 2009, which the Forum noted as “the largest over that period among all countries studied.”

“The results suggest that the reforms of the four years have bolstered the country’s economic fundamentals,” it said.

“The trends across most of the 12 pillars are positive and, in some cases, truly remarkable,” it added.Switzerland remained the most competitive in the world for the sixth year, followed by Singapore, the United States (U.S.), Finland, Germany, Japan, Hong Kong, the Netherlands, the United Kingdom (UK), and Sweden.

The Philippine government’s “recent success. . . In tackling some of the most pressing structural issues provides evidence that bold reforms can yield positive results relatively quickly,” the Forum said.

“In particular, there are signs that the efforts made against corruption have started bearing fruit. In terms of ethics and corruption, the country has moved from 135th in 2010 to 81st this year,” the report noted.

Progress was likewise observed in terms of government efficiency (69th), protection of property rights (63rd), and technological adoption (69th).

“The country is one of the best digitally connected developing Asian nations, close behind Malaysia (60th) and Thailand (65th),” it said.

“We’ve had great improvements in governance and macroeconomic management, but we still have lots of work and catching up to do in infrastructure, especially airports and ports,” National Competitiveness Council (NCC) Private Sector Co-Chairman Guillermo M. Luz said.

PHL competitiveness up

Ranking of ASEAN economies in Global

Competitiveness Report 2014-2015

Economies RankingSingapore 2Malaysia 20Thailand 31Indonesia 34Philippines 52Viet Nam 68Laos 93Cambodia 95Myanmar 134

Source: World Economic Forum (WEF)

The latest competitiveness report was based on hard data and a poll conducted between February and June this year of over 14,000 business leaders worldwide. For the Philippines, a total of 120 executives were polled.

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INDUSTRYTReNDS

PHL hits 6.4% GDP in Q2The Philippine economy rose by 6.4% in the second quarter of the year, higher than the 5.6% rate reported in the first quarter, making the country among Asia’s top performers, the National Economic and Development Authority (NEDA) reported.

“We remain as a bright spot in the region, the second fastest growing economy among major Asian countries for the period,” Economist Arsenio M. Balisacan said.

The country's second quarter GDP growth tied with Malaysia's performance and was ahead of Indonesia's 5.1% and Thailand's 0.3%.

On the demand side, net exports contributed 4.2% and household consumption contributed 3.6% in the overall GDP. “This profile is in line with a more positive global economy, favorable business sentiment, and robust inflows of overseas Filipinos' remittances,” he said.

On the supply side, however, most sectors posted strong growth, except for the construction sector.

The agriculture sector, meanwhile, made a major turnaround from the 0.2-% contraction in the second quarter in 2013 to a 3.6-% growth this year.

Business activity in trade, real estate, renting and business activities, transport, storage, and communication pushed the services sector to a 6-% share.

FDI inflows hit USD 473M in MayForeign direct investment (FDI) inflows in the Philippines reached USD 473M, a turnaround from the USD 62-M net outflow recorded in the same period last year,

The PEDP 2014-2016 is the export-sector component of the Philippine Development Plan (PDP) 2011-2016, the government's primary economic and social development program.

PHL could be in the Top 20 economies The Philippines exudes the potential to become one of the world’s Top 20 economies, renowned Architect and Urban Planner Felino Palafox Jr. said.

Palafox cited a study by the United States (U.S.)-based consulting firm A.T. Kearney Inc. that ranked Manila second in ‘emerging cities of the future,’ lagging behind Jakarta, Indonesia.

The study said Manila is likely to progress in the next two decades because “it is bolstered by a relatively sharp increase in human capital indicators, with an especially notable improvement in healthcare quality and availability.”

He also cited some other positive indicators such as population growth, marine diversity, and the growing business processing management (BPM) industry.

More firms relocating to PHLMore Fortune Global 500 firms are seen relocating to the Philippines as well as to neighboring Indonesia and Malaysia to tap these countries’ young and educated talent base amid rising labor costs in China, global solutions provider ManpowerGroup reported.

In its report titled “The Next Big Thing in Southeast Asia,” a wider array of demographic sweet spots are attracting investors.

The report said the three Southeast Asian countries have large populations, high productivity, and significant market potentials given their educated workforce.

“Combine these indicators with a projected influx of a large number of new workforce

the Bangko Sentral ng Pilipinas (BSP) reported.

FDI inflows in January to May period rose by 34% to USD 2.92B from USD 2.18B posted in the same period last year.

PHL’s major sources of FDIs (January-May 2014)

q United States (U.S.)q Singaporeq United Kingdom (UK)q Japanq Germany

PHL’s top sectors for FDIs (January-May 2014)

q Financial and insuranceq Real estateq Manufacturingq Wholesale and retail tradeq Professional,scientific,andtechnical

activities

Source: Bangko Sentral ng Pilipinas (BSP)

EDC targets USD 100B in 2016The Philippine Export Development Council (EDC) has set a USD 100-B export target for 2016 based on the draft three-year Philippine Export Development Plan (PEDP).

Department of Trade and Industry (DTI) Undersecretary for Industry Promotion Group (IPG) Ponciano C. Manalo Jr. said the EDC has proposed the creation of comprehensive packages of export support and promotion programs for selected sectors defined in the industry road maps to achieve the target.

Included in the proposals are the removal of unnecessary regulatory impediments to movements of goods and the upgrading of the quality and standards of exports.

“With the upcoming ASEAN [Association of Southeast Asian Nations] integration in 2015, Philippine products will need to be more competitive and accessible. The export industry must participate in high-value activities and become more diversified and sophisticated,” Manalo said.

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the fiscal and non-fiscal support to be given to players.

Incentives will be granted to automotive firms that will export locally-assembled vehicles. Members of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) point to the need for an industry road map to be able to meet the country’s rising car demand and maximize opportunities in the upcoming economic integration in Southeast Asia.

CAMPI is calling for measures to reduce the cost of manufacturing vehicles here as the cost gap between a locally produced car and an imported one is around USD 2,000.

Car sales up 32% in JulyThe number of cars sold in the Philippines rose by 32.1% to 20,730 units in July this year compared to the sales recorded in the same period in 2003, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) reported.

CAMPI President Rommel Gutierrez said the local automotive sector posted the highest monthly sales record in July on the back of strong demand for passenger cars and aggressive marketing campaigns.

Passenger car sales in July jumped by 64.6% on year to 8,339 units while commercial vehicles sold during the period rose by 16.6% on year to 12,391 units.

Toyota Motors Philippines Corp. continued to lead the industry in July with a market share of 48.8%, followed by Mitsubishi Motors Philippines Corp. with 18.2% and Ford Motor Company Philippines, Inc., with 8.3%.

In the January to July period, the local automotive sector sold a total of 129,687 units, 26% higher than the 102,917 units sold in the same period last year.

Earlier, CAMPI said the combined sales of importers and local

assemblers would grow by 17.5% on year to 250,000 units on the back of sustained demand for cars in the country.

Mining road map preparedA multi-sectoral committee is pushing for a mining road map that will guide the development of a more viable downstream industry for gold, nickel, chromite, iron, and manganese.

Members of mining multi-sectoral committee

q Department of Trade and Industry (DTI)q Department of Environment and Natural

Resources (DENR)q Department of Science and Technology (DOST)q Department of Finance (DOF)q National Economic and Development

Authority (NEDA)q Union of Local Authorities of the Philippines (ULAP)

The Minerals Industry Coordinating Council (MICC) has tasked a group of mining consultants to prepare said road map.

MICC began preparations for a broader mining road map after the technical working group (TWG) on the copper industry roadmap successfully created a viable downstream industry plan to reinvigorate the copper-based industries in the country.

The Philippine Associated Smelting and Refining Corp. (PASAR), the country’s lone copper smelter, led the crafting of the copper industry road map which aims to increase exports by at least 15% to USD 2.45B by 2030.

PASAR President Angel Veloso said the industry road map envisioned a fully integrated copper industry from mining to manufacturing by 2030.

The industry’s short-term plan until 2016 includes the operation of one or two world-class copper mines. Within the medium term or by 2022, the world-class copper mines should

entrants and an emerging middle class, and it becomes apparent why forward-thinking companies are considering investments in the region,” the report added.

The so-called “relocation triad” also boasts of a young population, which would provide a deeper talent pool in the future, the report said.

The share of China’s population of young people, ages 0-14, is only 19.5%. Meanwhile, the Philippines, Malaysia, and Indonesia enjoy much higher ratios of 34.3%, 29.1%, 26.6% respectively.

“The impact is clear: incoming talent will be far more available in these three countries, which were the center of attention in years past,” ManpowerGroup said.

Businesses also need to establish their presence in these three fast-growing markets to take advantage of the rising middle class, the report said.

Top reasons for relocation of businesses to PHL

q Significanttaxincentivesq Simplifiedexportandimportproceduresq StrategiclocationnearthePacificOceanq Huge English-speaking populationSource: ManpowerGroup

DTI finalizing car industry road mapThe Department of Trade and Industry (DTI) is finalizing the road map that will contain the strategies and support for the country’s competitive automotive industry.

“We are finalizing the policy and support we will give to ensure resurgence and a competitive automotive industry,” DTI Industry Development Group (IDG) Undersecretary Adrian S. Cristobal Jr. said.

Cristobal said the DTI needs to refine the draft executive order for the road map as the government is still assessing

Source: Minerals Industry Coordinating Council (MICC)

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TRaDe aNDINVESTMENTS

be working at full capacity while new mines are being developed.

Copper wire rod casting plants should have been established and fully operational as well by 2030.

PHL poised to become hub for healthcare information management serviceThe Philippines has the potential to become the global leader in the healthcare info management -business process management (HIM-BPM) industry in the next few years with revenue growth seen hitting USD 2.4B in 2016.

“The Philippines right now has a unique advantage. We got workforce, we got nurses, and we got developed economy that can deliver this kind of services,” PwC South East Asia Consulting (SEAC) Public Sector and Healthcare Leader David McKeeringn said.

Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP) President Josefina Lauchangco said the country’s HIM-BPM industry can generate up to USD 2.4B in revenue by 2016 and employ some 120,000 full-time workers.

Globally, the HIM-BPM technology industry is estimated to grow at a steady pace of 10% year on year and is expected to hit USD 162B in 2015, according to Lauchangco .

“We can be the leader because one of the things that most countries don’t have is the sizable talent pool. We have 250,000 nursing graduates, no other countries have that workforce resources,” Lauchangco said.

As of end-2013, the country’s HIM-BPM industry revenues stood at USD 988M with around 66,000 full employees, which expanded by 114% from 2012 to 2013, as reported by HIMOAP.

BPMs rev up convenience store marketThe market for convenience stores in the country is fast growing with

owners of international convenient store chains starting to be lured by the aggressively expanding business process management (BPM) industry in the Philippines.

Jones Lang LaSalle (JLL) Head for Market Tenant Representation Lizanne Tan said there is now an influx of convenient store chains in the country, which drives the growth of the local retail market.

“Because of the booming BPM industry, there is now a need for 24/7 type of retail operations. The growth goes hand in hand with the BPM industry,” Tan said.

“The influx will continue in the next few years because the demand is here to stay,” she said.

Office space supply hits record highOffice space availability in Metro Manila is seen to hit a new record-high this year on the back of strong demand from the business process management (BPM) sector, property consultancy firm Colliers International Philippines said.

“We expect more than 400,000 square meters (sqm) of new office supply per year starting this year until 2016. It will be reaching all-time highs,” Colliers International Philippines Director Julius Guevara said.

For this year, Guevara said new office space supply in Metro Manila is expected to hit a record-high of 481,068 sqm.

The highest office stock in Metro Manila was last seen in 2009, when supply reached 476,000 sqm.

Guevara said new office space supply is seen to reach 449,481 sqm next year and to rise to 486,726 sqm in 2016.

He said the unprecedented level of new supply is driven primarily by the strong demand coming from the BPM sector.

“Most of the supply is absorbed by BPMs. Around 85% to 90% of the supply is taken by them,” he said.

Also seen driving demand for office space are multinational firms expanding their operations in the country.

BPM/IT-BPM

iMEDGlobal to spend USD 3M to boost PHL operationsiMEDGlobal Corp. is investing USD 3M for its service facilities in the Philippines as it eyes to expand its local talent of tech-savvy healthcare professionals.

“The investment goes into building state-of-the-art facilities and processes in the Bonifacio Global City, and most importantly the growing of people base of medical doctors, registered nurses, and pharmacists,” iMEDGlobal Chairman and Chief Executive Officer (CEO) Prashanth Visweswaran said.

Starting local operations last January, iMEDGlobal currently has 65 people in Manila and plans to increase 100 by the end of 2014.

Visweswaran expects the expansion program to further enhance service levels in clinical operations, data management, product safety, regulatory services, and life science-related information technology (IT) solutions.

Barclaycard US, EGS launch PHL headquartersSolutions firms Barclaycard US and Expert Global Solutions (EGS) launched their partnership to deliver high-quality service

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to customers at their flagship site in Manila, with the end goal of delivering 9M phone calls or interactions annually.

EGS opened its headquarters called the EGS Centris in Quezon City last June, bringing its total sites to eight and employment to 16,000 agents.

The new site currently has close to 4,000 seats. Once at full capacity, it is expected to accommodate up to 6,000 employees.

ENERGY

Otto eyes more drilling in Galoc fieldAustralian-based Otto Energy Ltd. is planning further drilling activities at the Galoc oil field in offshore Palawan late this year or early 2015.

In a disclosure to the Australian Stock Exchange, Otto said it expects further activities after initial drilling yielded successful results.

“Before the end of 2014 or early 2015, a recommendation is anticipated regarding further activities to unlock the upside potential of the Galoc mid-field area and/or to undertake additional drilling and infill activities to complement existing production at the central field area,” Otto said.

Early this year, Otto started a series of activities to incorporate its Phase 2 drilling results to a detailed analysis of the Galoc oil field.

The company said drilling activities in the early part of the year resulted in a clearer understanding of the structure and reservoir distribution between the Galoc central field, mid, and north areas.

Thus, Otto expects to complete further studies by the fourth quarter of the year.

Phoenix Pet opens Batangas facilityPhoenix Petroterminals and Industrial Park Corp. (PPIPC), a subsidiary of Phoenix Petroleum Philippines, inaugurated recently its new port facility in Batangas.

The facility is in line with the ongoing construction of the power plant of South Luzon Thermal Energy Corp. (SLTEC), expected to be operational by the end of this year.

Furthermore, the oil company said the new port facility enhances its capability to accept more shipments from its current and prospective locators.

FOOD

Hawaii’s top burger joint to open 9 PHL branchesHawaii’s top burger joint Teddy’s Bigger Burgers is eyeing to open their first nine outlets in the Philippines by 2015.

Entering the local market through an international franchise held by Sumo Burger Global Inc., Teddy’s Bigger Burgers plans to open three corporate branches by yearend and two branches early next year.

Malaysian food firm bullish on PHL Perfect Food Manufacturing Sdn Bhd, the company behind Malaysia’s Julie’s biscuits, is expecting a 200-% growth in its third year of operations in the country since its entrance into the local market in 2011.

“Our market is still very small in the Philippines since we are here only for three years, but we believe there’s still plenty of room for us, as market acceptance is getting better and better,” Perfect Food Manufacturing Business Development Manager Wilson Lim said.

Lim noted that the company’s expansion of distribution

and introduction of new products would help in achieving higher sales volume. He said they would continue with their aggressive marketing campaign to make their products known to Filipino consumers.

GREEN PROJECTS

SunPower sets P9-B expansion of Batangas facilityAmerican solar cell manufacturer SunPower Corp. is investing P9B to expand its existing manufacturing facility in Batangas.

The Philippine Economic Zone Authority (PEZA) has already approved the additional investment with incentives to its local unit SunPower Philippines Manufacturing Ltd.

SunPower maintains two manufacturing facilities in the country — one at the Laguna Technopark in Biñan, Laguna, and another at the First Philippine Industrial Park in Sto. Tomas, Batangas.

MPIC to build P700-M waste-to-power plant in DavaoMetro Pacific Investments Corporation (MPIC) is investing P600M-P700M for its pilot waste-to-power project in Tagum City, Davao del Norte.

The pilot waste-to-power plant will generate an initial 2 megawatts (MW) of energy and 10,000 liters of biodiesel a day. It can later be expanded to produce 6 MW a day although biodiesel output will remain the same.

MPIC President Jose Ma. K. Lim said they will start construction of the plant later this year or early next year which will take about six months to complete.

Aboitiz hydropower project startsSN Aboitiz Power is starting its first major project under its Greenfield Development Program with the approval of its 350-megawatt (MW) hydroelectric power facility in the municipalities of Mayoyao and Lagawe, Ifugao.

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SN Aboitiz Power Inc. (SNAP)-Ifugao is a joint venture between SN Power of Norway and Aboitiz Power.

SNAP officially received from the Department of Energy (DOE) an approved renewable energy service contract (RESC) for an integrated hydropower complex composed of three facilities: the 100-MW Alimit plant, the 240-MW pumped storage facility, and the 10-MW Olilicon plant.

HOSPITAL/MEDICAL SERVICES

Medical City opens healthcare facility at Clark’s Logistics CityThe Medical City Clark is set to open in December this year, The Medical City Clark Chief Executive Officer (CEO) Cenon R. Alfonso said.

The hospital is the maiden infrastructure to be established within the Sabah Al-Ahmad Global Gateway Logistics City (GGLC), a key development project of the Global Gateway Development Corp. (GGDC) in Clark, Pampanga.

Officials said the 150-bed Medical City Clark is already more than95% complete.

INFRASTRUCTURE/PUBLIC PRIVATE PARTNERSHIP

Gov’t allots P230B for transport networkThe government has earmarked some P230B out of the proposed P2.61-T 2015 national budget for the development of efficient national transport infrastructure networks to sustain economic growth.

Of the total transportation budget, P174.5B will go to the Department of Public Works and Highways’ (DPWH) roads and bridges program, featuring the new construction design specifications of thicker concrete pavement.

Meanwhile, about P7.02B has been set aside for infrastructure

projects by the Department of Transportation and Communications (DOTC) covering the development of integrated transport systems for the South Coastal, northern and southern areas as well as upgrade of road transport information technology infrastructure.

The total budget is expected to reduce cost and time for transporting goods and people, thereby spurring more trade and making investments safer, faster, and cheaper.

The government will also build more airports and seaports in order to accelerate economic activity and boost employment.

Aviation-related projects were allotted a budget of P13.3B, 45.8-% higher year-on-year.

The budget for ports development has also been increased to P1.5B from P1.1B in 2014. The amount will be used to construct, develop, repair, and rehabilitate 40 seaports.

For rail projects, the government has proposed a budget of P16.85B in a bid to reduce transfer time by 50% and transport cost by 8.5%.

Aviation-related projects and budget allotted

q Bicol International Airport - P1.55Bq Puerto Princesa Airport - P1.55Bq Clark Airport - P1.2Bq Busuanga Airport - P1.02Bq General Santos Airport - P959Mq Kalibo Airport - P950Mq Iloilo Airport - P791Mq Ozamis Airport - P695Mq Calbayog Airport - P678Mq Camarines Sur Airport - P670Mq Ninoy Aquino International Airport - P592M

Rail projects and budget allotted

q ExtensionofLRT1SouthCavite-P4.77Bq Rehabilitation of LRT 1 and 2 - P2.82Bq ExtensionofLRTLine2eastextension to Masinag - P2.4Bq Subsidy of MRT 3 - P4.66Bq MRT 3 infrastructure - P804Mq LRTline2westextension-P200M

Source: Department of Budget and Management (DBM)

P9.48-B Cebu Bus Rapid Transit project gets go signalThe government has given the go signal to the Department of Transportation and Communications (DOTC) to establish a high quality, viable and sustainable bus rapid transit system in Cebu through the Bus Rapid Transit (BRT) project.

The Department of Budget and Management (DBM) said it has approved the funding strategy and also issued a Forward Obligational Authority (FOA) to the DOTC for the Cebu BRT project amounting to P9.48B.

As approved by the National Economic and Development Authority (NEDA) Board, the DBM noted that the Cebu bus rapid transit system will be undertaken this year and finished in 2018, with a total project cost of P10.62B.

Gov’t releases P1.6B to jumpstart CALAThe government has released P1.6B to jumpstart the much awaited P35.4-B Cavite-Laguna (CALA) Expressway.

The Department of Budget and Management (DBM) said the budget would partially cover the acquisition of right-of-way (ROW) and contract services for the proposed 47.02-kilometer, four-lane expressway from the end of the Cavite Expressway (CAVITEX) in Kawit, Cavite to the South Luzon Expressway (SLEX) Mamplasan Interchange in Biñan, Laguna.

“The construction of the CALA expressway would definitely improve access to transportation and open more opportunities for investment in economic and industrial zones,” DBM Secretary Florencio B. Abad said.

MRT-7 project seen to take off this yearThe Department of Transportation and Communications (DOTC) expects the construction of the P63-B Metro Rail Transit line 7 (MRT-7) to start before the end of the year as diversified conglomerate San Miguel Corp. (SMC) already obtained

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a performance undertaking from the Department of Finance (DOF).

The proposed train project, which would start at Tala, Caloocan City and pass through Lagro and Fairview, Novaliches, Batasan, Diliman, Philcoa before ending at EDSA corner North Avenue in Quezon City, is expected to serve 2M commuters.

The proposed 22.8-kilometer (km) train line will have 14 train stations from San Jose del Monte in Bulacan to the corner of North Avenue and EDSA in Quezon City.

Daang Hari-SLEX link to be completed in Q1 2015The P2.01-B Daang Hari-South Luzon Expressway (SLEX) link will be completed by February next year, Ayala Corp. Managing Director John Eric Francia said.

The Daang Hari-SLEX link was the first PPP project auctioned off and awarded under the flagship infrastructure program of the Aquino Administration. Ayala Corp. through AC Infrastructure Holdings Corp. bagged the toll road project.

The Daang Hari-SLEX Link Road project involves the construction of a new 4-kilometer, four-lane toll road, from the junction of Daang Reyna and Daang Hari in Las Piñas and Bacoor, Cavite to SLEX through the Susana Heights Interchange in Muntinlupa, traversing the New Bilibid Prison (NBP) Reservation.

Clark Water to invest P3.93BClark Water Corporation (CWC) pledged to invest P3.93B after its concession agreement was extended.

CWC said it has signed a contract with Clark Development Corporation (CDC) extending the concession agreement by another 15 years to 2040.

The capital investment pegged for the whole concession term will be used for various improvements of CWC’s water and used water facilities to promote the Freeport Zone as an ideal business hub for multinational companies.

LOGISTICS

Logistics City at Clark pushed, first container depot opened Global Gateway Development Corp. (GGDC) expressed its commitment to accelerate the development of the USD 3-B Sabah Al-Ahmad Global Gateway Logistics City (GGLC) at the Clark Freeport Zone in Pampanga.

GGDC has invested to date over USD 100M in the project with another USD 150M in planned investments by end-2015.

GGDC’s PHL investments as of August 2014

q World-class horizontal infrastructure including over 30 hectares (ha) of fully developed lot inventory

q Pre-leasing of a world-class 20,000-square meters (sqm) hospital to the Medical City

q Fiveofficetowerswithagrossfloorareaof 145,000 sqm

q Retail and gas plazaq Hotelandservicedapartmentcomplex

Source: Global Gateway Development Corp (GGDC)

Meanwhile, a 3-hectare (ha) container depot has been opened in Clark Freeport to help decongest the Port of Manila and other ports in Northern and Central Luzon.

“This is the first container yard ever in an eco-zone, and this is the first time in the history of Clark Development Corp. that we will be addressing issues on clogged ports and traffic congestion apart from settling the concerns of our locators,’’ CDC President and Chief Executive Officer Arthur Tugade said.

The container yard in Clark Freeport will help clear up some roads of Metro Manila that are used as parking spaces for empty shipping containers which triggered heavy traffic situation in the city.

MASS HOUSING

FLI seeks BOI incentives for Pasig projectFilinvest Land Inc. (FLI) is seeking incentives with the Board of

Investments (BOI) for its mass housing project in Brgy. Rosario in Pasig City.

FLI is applying for registration with the BOI for its low-cost mass housing project, Sorrento Oasis Buildings M1 and M2, with a capacity of 200 housing units on a non-pioneer status.

MINING

Subanon tribe okays TVI’s Balabag projectThe Subanon tribe has given the TVI Resource Development Philippines Inc. (TVIRD) its consent for the development of ancestral domain areas of its Balabag gold-silver project in Zamboanga del Sur.

The local arm of Canadian miner TVI Pacific Inc. said the tribe’s leaders have signed a memorandum of agreement (MOA) with the company last August for the granting of a Free Prior and Informed Consent (FPIC) after consultations conducted with the National Commission on Indigenous Peoples (NCIP).

The Balabag gold-silver project covers a mineral production sharing agreement (MPSA) area of 4, 779 hectares (ha).

RTG gets permit for Bunawan gold projectAustralia-listed RTG Mining obtained an exploration permit for the Bunawan gold project in Agusan del Sur covering 677 hectares (ha) of working area.

The company gained access to the Bunawan project after its merger in June with Australian miner Sierra Mining Limited in June.

Several highly prospective areas and walk-up drill targets were identified in RTG’s previous site investigation in the exploration area. It is seen to have high-grade gold and is located next to a mine owned by Medusa Mining Limited in the municipality of Bunawan.

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MOTOR VEHICLES

Toyota to invest P2B in Sta. RosaToyota Motor Corp. is pouring in more than P2B for the new Innova production which will undergo full model change and localization.

“We need additional investment for model change and localization. The preparations already started. We are going to hit more than 40% local content,” Toyota Motor Philippines Corp. (TMPC) President Michinobu Sugata said.

The Innova model being assembled at TMPC’s plant in Sta. Rosa, Laguna has 30-% local content at present.

Isuzu studies higher PHL pick-up truck productionIsuzu Philippines Corp. plans to increase local production of vehicles to further optimize the utilization of its plant in Biñan, Laguna.

The company was currently utilizing 80% of its plant capacity only, or about 12,000 units per year, Isuzu Product Development Head Joseph Bautista said.

“We can probably do 15,000 units. There’s still room for another 3,000 units,” Bautista said.

Japanese firm to produce 500 EV unitsBeet Philippines, Inc., a subsidiary of BEMAC-Uzushio Electric Company of Japan, will initially produce 500 units of e-vehicles (EV) this year at its plant in Carmona, Cavite.

BEMAC has partnered with Almazora Motors Corp. to bring to the Philippine market a well-designed and technologically advanced EV.

RESEARCH AND DEVELOPMENT

Phinma allots P3B for school acquisitionsPhinma Corp. is earmarking as much as P3B for potential schools acquisitions in Metro Manila or Cebu to add to its network of tertiary institutions.

The budget being allocated for a potential buyout of a school in the provinces, meanwhile, is around P250M to P500M.

The amount really depends on the location of the school and the number of students, Phinma Education Network Chief Finance Officer (CFO) Daisy C. Montinola said.

The company is also looking for prospects in Davao, Baguio City, Batangas, and the Bicol region.

SHIPBUILDING

Tsuneishi set to boost production Japan’s Tsuneishi Shipbuilding Co. Ltd. is increasing the production capability of its Cebu facility, which is being developed to become the “mother shipyard” in Southeast Asia.

The Philippines has great potential to further grow its robust shipping industry with the expansion of Tsuneishi’s operations in Cebu, Tsuneishi Heavy Industries (Cebu) Inc. President Hitoshi Kono said.

The plan is to increase the shipbuilding output in Cebu to as many as 30 vessels yearly starting 2017 or 2018, from the current level of 21 ships yearly.

Herma Group eyes ships for NavyHerma Group of Companies said it hopes to build ships for the Philippine Navy in the coming years, following the launch of its 16th locally-built oil tanker.

The Herma Group recently launched M/Tkr Matapat, which is certified by the American Bureau of Shipping as an A1 class oil carrier.

"We dream of building ships for the Philippine Navy in the next

years," Herma Group Chairman and Chief Executive Officer (CEO) Herminio S. Esguerra said.

POWER

First Gen speeds up USD 500-M gas plant constructionFirst Gen Corp. will be accelerating the second phase of the construction of its USD 500-M Santa Maria gas plant in Batangasto meet its targeted commercial commissioning by March 2017.

The Lopez group’s grand salvo on gas-fired projects portfolio expansion starts with the 414-megawatt (MW) San Gabriel power facility in the province. The Santa Maria plant construction is its follow-up project.

First Gen President and Chief Operating Officer (COO) Francis Giles B. Puno said financing for the next unit will be less at USD 500M, with some economies of scale attained from the first phase of its three-tiered gas projects.

First Gen’s three-phased gas facility expansion will give additional 1,350MW of aggregate capacity, beefing up its existing portfolio of 1,500MW for the Santa Rita and San Lorenzo assets.

CIPC inaugurates new Palawan power stationsCalamian Island Power Corp. (CIPC), a joint venture of Gigawatt Power Inc. (GPI) and Vivant Corporation’s wholly owned subsidiary, Vivant Energy Corp., launched two new power plants in Palawan last August.

The 7.73-megawatt (MW) Coron Power Station and 910-kilowatt (kW) Busuanga Power Station will supply the power requirements of Busuanga Island Electric Cooperative (BISELCO) for 15 years.

Local officials and the business community commended CIPC for addressing the islands’ growing power needs, welcoming the projects as important business investments that would ensure reliable power supply. This would

9October 2014

significantly enhance opportunities for and improve the development of the island’s eco-tourism industry.

PUBLICATION

Japanese printing firm to invest P100M in PHLJapanese company Mr. Printer is planning to invest up to P100M in the local printing industry in the next two years.

Mr. Printer, which is a joint venture by Japanese and Filipino companies, aims to open 50 shops nationwide by 2016 with the goal of serving the local small and medium enterprises (SME).

The firm also plans to introduce online ordering within the year to make its products and services even more accessible to small businesses.

REAL ESTATE

ALI to enhance Makati CBD for P65BFurther improvements in the Makati Central Business District (CBD) will be conducted by Ayala Land Inc., (ALI) with a P 65-B, five-year redevelopment plan to start in 2015.

The investment is on top of another P60B the company previously allocated, also for the redevelopment of the Makati CBD in six years which began in 2012.

Part of the improvement plan is the construction of more office space, hotels, and residential units in four major areas of focus.

Among the areas of focus is the Ayala Center, which had its gross floor area (GFA) brought to 228,000sqm with the construction of three hotels during the first phase of redevelopment completed in 2012.

The second phase of the Ayala Center redevelopment is expected to start after 2015.

The Makati CBD makes-up 30% of ALI’s profits.

Focus areas in Makati City

q Ayala Centerq Ayala Triangle Gardens–North Tipq Circuit Makatiq City GateSource: Ayala Land Inc. (ALI)

2nd Manila Bay reclamation project eyed by SMSM Land Inc. of the SM Group submitted a proposal to reclaim 300 hectares (ha) along Manila Bay under the jurisdiction of Parañaque City.

Previously, a similar proposal for the area under Pasay City was submitted by the company which was awarded by the city’s local government unit (LGU).

Both projects are seen to cost a total of P109B, each at P54.5B, while the net cost is estimated at P36,000/sqm, excluding the area for the Philippine Reclamation Authority (PRA) and common area that the law requires.

RETAIL

Robinsons introduces neighborhood grocery line Robinsons Supermarket Corporation entered the neighborhood grocery business with the launching of Robinsons Easymart.

Robinsons Easymart aims to offer smart deals on fresh food and household needs as well as ease of access with other services provided to customers.

“We are bringing the grocery experience closer to communities in order to provide households ease of accessibility and convenience of shopping for their everyday needs and spare them the stress from traffic and high transportation cost,” Robinsons Supermarket Corporation General Manager Jodi Gadia said.

The firm plans to open 10 to 11 Robinsons Easymart stores by the end of 2014.

Each branch, to be built near residential areas, will occupy around 300sqm to 800sqm.

FamilyMart gears for franchisingPhilippine FamilyMart CVS, Inc. (PFM), which manages the Philippine operations of FamilyMart, plans to open up the Japanese convenience store brand for local franchising by the end of 2014.

The firm is targeting to have 90 to 100 stores by the year’s end, having opened 31 outlets last year after its inaugural store in Glorietta 3, Makati started operations in April 2013.

As of June, there are already 46 FamilyMart stores in the country.

The franchising scheme is seen to fast-track the expansion of FamilyMart in the country and provide business opportunities for Filipinos.

TELECOM

Globe joins consortium for USD 250-M cable projectHomegrown telecommunications firm Globe Telecom Inc., invested over USD 80M for the USD 250-M Southeast Asia and United States (SEA-US) undersea cable system project to be embarked upon by a consortium of seven international companies.

Consortium members

q GTI Corporation (Globe Telecom Inc. subsidiary)

q Hawaiian Telcom (HTEL)q PT Telekomunikasi Indonesia International

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

(USA), Inc. (Telkom USA)

SEA-US cable system connections

q Davao, Philippinesq Manado, Indonesiaq Los Angeles, California, USAq Oahu, Hawaiiq Piti, Guam

Source: Globe Telecom Inc.

The SEA-US project, expected to be finished by the fourth quarter of 2016, will have a length

Philippine Business Report10

COMPANY NOTeS

of 15,000 kilometers (km) and will be strategically placed to utilize a wide array of routes from the North Pacific and avert areas susceptible to earthquakes in East Asia.

Japan-based NEC Corporation will serve as the system supplier for the project that will be outfitted with 100 gigabytes per second (Gbps) transmission equipment to provide 20Tbps terabytes per second (Tbps) additional capacity.

Local, global fiber optics network expanded by PLDTThe Philippine Long Distance Telephone Company (PLDT) looks to complete its P1.3-B domestic fiber optic network (DFON) project in 2014 and its Asia-Africa-Europe 1 (AAE-1) Cable System by 2016.

PLDT international submarine cables completed as of 2013

Project Local landing stationAsia-America Bauang, La Union Gateway (AAG) AsiaPacificCable Nasugbu,Batangas Network 2 (APCN2) Asia Submarine-Cable Daet, Camarines Express(ASE) NorteSoutheast Asia-Middle Nasugbu, Batangas East-West Europe 3 (SEA-ME-WE3) Source: Philippine Long Distance Telephone Company (PLDT)

Its DFON subsurface installation’s last stage, that links Ilocos Norte to Tuguegarao, Cagayan, was completed last August.

The project is seen to increase the network’s resilience against natural disasters and man-made damages, as well as its connectivity through additional loops that will serve as alternate paths for data and communication traffic.

As of August, PLDT’s national data transmission network was close to being 100% underground, while its provincial distribution network, targeted to be completely below ground by the middle of 2015, was around 50% subterranean. The DFON, by August, has already connected the country via more

Group the Pancake House shares for P2.98B. Max’s Group then conducted an offer which allowed it to secure 89% of Pancake House.

Walter bread acquires Japanese cheesecake franchiseC. Walter Co. Inc., the maker of Walter loaf breads, has acquired the master franchise of Japan’s popular cheesecake brand “Uncle Tetsu.”

C. Walter Co. Inc. President Walter Co signed a 60-40 joint venture called Cheesecake Worx Inc. in favor of his Filipino-Chinese business partner, the Choi Group.

The Choi Group will invest in the establishment of at least 10 stores, he said.

The joint venture has opened its first outlet in SM Fairview last July and plans to build three to four stores before the year ends.

NutriAsia eyes to break P10-B net sales markNutriAsia, Inc., is optimistic of achieving its P10.5-B net sales’ target this year.

NutriAsia President and Chief Operating Officer (COO) Angie Go-Flaminiano said the company is on its way to exceed last year’s P9.6-B net sales.

Sales growth is being driven by strong local consumption in line with the country’s growing population and widening export market, Flaminiano said.

The company is currently in talks with an Indonesian company to make its products penetrate the mainstream market in Jakarta. This is to further expand NutriAsia’s export market.

MPIC to invest in REThe Metro Pacific Investments Corporation (MPIC) is eyeing to penetrate the renewable energy (RE) sector and is planning to build a portfolio of waste-to-energy facilities that will have the capacity to generate 300 megawatts (MW).

The first of its projects is a 2-MW plant in Tagum, Davao del Norte, that may be expanded to 6MW, and can generate 10,000 liters of biodiesel daily.

The company has allocated P700M for the construction of the plant slated to start within the fourth quarter of the year.

It is expected that the plant, which will utilize pyrolysis technology, will take six months to complete.

Global Green International Energy Philippines, Inc. will be the technology provider for the project. Pancake House to change name to Max’s GroupPancake House Inc. is changing its name to Max’s Group with the approval of the former’s board of directors.

According to Pancake House, the board “approved the change of name of the company to Max’s Group and the corresponding amendment to the amended articles of incorporation of the company.”

The board also approved to alter Pancake House’s PCKH trading symbol on the Philippine Stock Exchange to MAXS.

Last December, Pancake House Holdings Inc. sold to Max’s

than 88,000 kilometers (km) of on-land and undersea fiber optic cables with landing stations.

Upon completion, the DFON will have a gross capacity of 5.15Tbps.

11October 2014

ON THecaLeNDaR

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aSeaNWATCH

Manila FAME 2014The longest running design and lifestyle event in Asia, Manila FAME celebrates its 60th staging on 16-19 October 2014 at the SMX Convention Center, Mall of Asia Complex, Pasay City. They will once again showcase exceptional handcrafted products from furniture and furnishings to holiday decor and fashion. The event is organized by the Department of Trade and Industry’s export marketing arm, the Center for International Trade Expositions and Missions (CITEM).

The Malaysian market has opportunities for exporting electrical items and electronics as well as agriculture-based products, Malaysia External Trade Development Corp. (MATRADE) Commissioner Har Man Ahmad said.

“Filipino consumers may seek to find opportunities in providing raw materials to the strong manufacturing base of Malaysia,” Ahmad added.

“We hope to further increase our presence as we move progressively towards an integrated economic community where we are encouraged to trade freely and to take advantage of the opportunities offered in this huge market of 625M people with a total trade of USD 2.37T,” he said.

ASEAN 2015 may worsen gender inequalitySoutheast Asian countries’ plan to establish a European Union (EU)-inspired single market in 2015 could worsen inequality and is likely to benefit men more than women, according to the United Nation’s (UN) International Labor Organization and the Asian Development Bank’s joint study.

The study said that the single market could add extra 14M new jobs and increase Southeast Asia’s annual growth to 7.1% by 2025.

However, it cautioned that the gains may not be distributed evenly and the plan could increase larger gaps between rich and poor across the region.

The Association of Southeast Asian Nations (ASEAN) targets to create by 2015 a single economic market across the 10-nation bloc that is home to some 600M people.

“Unless decisively managed, this could increase inequality and worsen existing labor market deficits — such as vulnerable and informal employment, and working poverty,” the study said.

Also, the study found out that the share of new jobs going to women across the region would be smaller than those going to men.

This was due to the sectors that were likely to be boosted by integration, such as construction and transport, International Labour Organization (ILO) Economist and Researcher Sukti Dasgupta said.

PHL signs air pact with South AfricaThe Philippines and South Africa signed a new air agreement to boost trade, investments, and tourism between the two countries.

Civil Aeronautics Board (CAB) Executive Director Carmelo Arcilla said the new memorandum of understanding (MOU) on air services aims to provide seven flights per week for each country.

“Air services between the Philippines and South Africa would improve our aviation network and connect us to the emerging markets of Africa,” Arcilla said.

PHL seeks measures to aid SME trade The Philippines pushes for measures that will make it easier for small and medium enterprises (SMEs) to trade in the Association of Southeast Asian Nations (ASEAN) region.

“We are always pushing for SME trade facilitation so that it will be easier for SMEs to export and trade with other members,” Department of Trade and Industry Secretary Gregory L. Domingo said.

Domingo said simplified rules are not only intended for Philippine SMEs but for all small businesses in the region.

PHL urged to ship more goods to MalaysiaThe Philippines is urged to consider shipping more goods to Malaysia to toughen the two countries’ trade relations in the upcoming Association of Southeast Asian Nations (ASEAN) Economic Integration.

Philippine Business Report12

5.25.45.65.8

66.2

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

Interest Rate (%)Lending Regular

42.543

43.544

44.545

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

Peso per US Dollar Rate

Economic Indicators

As of 26 September 2014

Published monthly by the Knowledge Management and Information Service, Department of Trade and Industry, 2F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, MakatiCity1200,Philippines •Phone(+632)895.3611•Fax (+632)895.6487•Tosubscribe,e-Mail:publications@dti.gov.ph•Online:http://www.dti.gov.ph/dti/index.php?p=116

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

Philippine Business Report

*GNI - Gross National Income

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2014

October 2014

As of 25 September 2014

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

136137138139140141142

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

Consumer Price Index(2000 base year)

0100020003000400050006000

Jun-14May-14Apr-14Mar-14Feb-14Jan-14

Exports(In USD Billion)

0

2,000

4,000

6,000

8,000

Jun-14May-14Apr-14Mar-14Feb-14Jan-14

Imports (In USD Billion)

0

2

4

6

8

10

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

GDP Growth Rate (%)

6

6.5

7

7.5

8

8.5

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

GNI Growth Rate (%)

0

2

4

6

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

Inflation Rate (%)(1994 base year)