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Volume 2� No. 02 February 20�0

RP firms more upbeat this yearThe Philippine business sector is more optimistic this year on the back of a resilient local economy.

Private firms’ optimism rose to 68% this year from 65% in 2009, the International Business Report (IBR) by international consultancy group Grant Thornton showed.

“It’s a small uptick, but we’re confident that this signals the start of a more upbeat business community,” said Marivic Españo, Managing Partner and Chief Executive Officer of Punongbayan & Araullo (P&A), a Grant Thornton-member firm.

Out of 36 countries surveyed, the Philippines ranked 6th in the optimism-pessimism index. The country’s Asian neighbors were less optimistic, with Singapore at rank 11; Malaysia, 14; and Thailand, 27.

On expectations of an upturn in the global economy, 37% of local business leaders anticipated a global recovery in the second half

of 2010 while 17% believed the recovery has already taken place. Some 21% expected a worldwide turnaround in 2011.

“Business leaders are cautious about their optimism, but they are seeing the signs that we’re pulling out of the financial crisis,” Españo said.

“Consumer spending is rebounding, thanks partly to strong remittances,” she added.

“We may not be completely out of the woods yet but

the atmosphere is hopeful, and we need that attitude to realize a complete recovery,” she further said.

Both the Asian Development Bank (ADB) and the World Bank (WB) expect the economy to grow by more than 3% this year despite the natural calamities that hit the country in the latter part of 2009.

The IBR is an international survey of the pulse of privately held businesses (PHBs) with sizes ranging from medium to large, covering over 7,400 respondents.

RP businesses remain upbeat on IT investmentsPhilippine firms are more upbeat on information technology (IT) investments despite the current weak global economic condition, a study commissioned by technology firm EMC Philippines showed.

Conducted by research firm IDC, the report indicated that compared with the global trend, which projects a more cautious business overview, “Philippine businesses show a more upbeat outlook.”

“Businesses in the Philippines see these challenging times as an opportunity to focus their priorities on improving customer service levels and employing technology to deliver value to the bottom line,” EMC Philippines Country Manager Ronnie Latinazo said.

The study revealed that improving customer service levels continued to be the key challenge among businesses in the last six months and over the next two years. Also, companies placed emphasis on customer service as a critical component that could provide enterprises with a competitive advantage and differentiator.

As a result, companies from the five countries indicated that they intend to deploy technology products and services in more innovative and strategic ways.

Latinazo noted that this move will also enable enterprises to derive more value from the investment.

He further said companies, which make improvements

to the robustness of its IT infrastructure, can maximize data protection and storage applications as well as consolidate and streamline storage hardware and applications to better optimize its existing information infrastructure.

The IDC study also revealed that minimizing costs, a perennial concern for businesses, is even more important in these challenging times as companies prepare for the economic upturn, and the public sector is no more immune to this than private enterprises.

“In the Philippines, the government is curbing spending by establishing an electronic procurement system which provides more transparency and stricter controls on the purchasing process,” Latinazo said.

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industrytrends

BPO firms urged to locate outside Metro ManilaThe Business Process Association of the Philippines (BPA/P) encouraged investors in the business process outsourcing (BPO) sector to locate into the so-called “10 Next Wave Areas” namely Iloilo, Metro Laguna, Metro Cavite, Davao, Bacolod, Pampanga Central, Central Bulacan, Cagayan de Oro, South Bulacan, and Lipa.

“We are now one of the best known BPO centers in the world, ranked 2nd after India as global BPO destination. We want to bring work where the talent is,” BPA/P Executive Director Ma. Jamea S. Garcia said.

“All BPO activities in the Philippines are concentrated in Metro Manila. In India, they are dispersed. We are encouraging BPOs here to do the same,” she added.

On the same note, Bayan Telecommunications Inc. Vice President for Business Chito Franco said the main draw for new wave cities like Iloilo is its human resources. Iloilo produces 20,000 graduates a year, of which 5,000 are information technology (IT) graduates.

Last year, the local offshoring and outsourcing (O&O) industry hauled in US$7-B revenues. This year, the sector targets to corner 10% of the global market. To achieve this, it needs to hire 1M new employees.

Local food producers urged to take advantage of ASEAN-China zero tariffsThe Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FCCCI) urged local food producers to take advantage of zero tariffs under the Association of Southeast Asian Nations (ASEAN)-China Free Trade Agreement (ACFTA), which took effect on 01 January this year.

FCCCI President Alfonso Uy said Filipino products that can be popular in the Chinese market include seafoods; canned sardines; processed tropical fruits like dried mango, papaya, and pineapple; and fresh fruits.

Even non-food items like decorations, gift items, and Christmas decors could also gain real good market in China, Uy said, citing the strong buying power of the Chinese middle-class consumers and their eagerness to try foreign products.

“When we get into that market, we must first make sure that our product quality is good. So when they try our goods, they will get impressed immediately and they will continue to buy,” he added.

Apart from the Chinese market, Uy said Philippine companies could also bring their products to neighboring ASEAN countries without the need to pay any tariff under ACFTA.

The Department of Trade and Industry (DTI) is also eyeing Macau as a market for processed food products from the Philippines.

Banking on the recently held outbound business mission (OBM) in Macau, Filipino food companies can take advantage of Macau’s proximity to the Philippines and the growing number of Filipinos in that country.

Five Philippine companies displayed their products in the Macau International Fair (MIF) where Philippine products such as dried fruits, banana chips, calamansi juice/concentrates, snack food, fruit preserves, processed milkfish, processed/dried cuttlefish, and anchovies, fruit wine, and lambanog took the limelight.

Philippine participants learned that the Macau market has remained mainly untapped despite its proximity to the Philippines, in the retail, wholesale, and ready to consume product segments.

Filipino exporters are also urged to conduct deeper follow-through studies on the market’s intricacies. Since Macau is a free port, entry requirements of goods are minimal. No specific duties are levied on imported products.

However, exporters must still follow the principles of food safety and labeling.

The delegation also learned of the huge potential for Philippine manpower and construction services because of the infrastructure projects being undertaken there. In 2008, Macau was the Philippines’ 68th trading partner, where bilateral trade between the two amounted to US$27M.

Recommendations to exporters to Macau

• Conductin-storepromotions• Continueandenhancerelationship

buildingbythePhilippinecommercialattachéswithchambersofcommerceandindustry

• Conductafollow-through in-boundbusinessmatchingwhere

businesspeopleinMacauwillbeinvitedtopre-arrangebusinessmatchingwiththeirFilipinocounterparts

RP focuses on US$150-B global halal marketThe government is bent on training Filipino Muslims in producing halal-compliant goods to capitalize on the US$150-B halal market worldwide, the Department of Trade and Industry (DTI) said.

The global halal market, with 1.6B consumers, is spread in 112 countries in five continents.Upgrading the skills of Filipino Muslim slaughtermen, particularly those working on halal meat for exports, is expected to raise the bar of halal conformance in the country.

The introduction of a modified veterinary quarantine certificate issued by the National Meat Inspection Service (NMIS) was recommended to strengthen the acceptability of halal certification issued by Philippine Islamic organizations.

Likewise, improving the institutional capacity of the National Halal Accreditation Board in accrediting halal certifying bodies and training of Filipino Muslim slaughtermen is vital for the industry.

The promotion of halal products in the global market is part of the Philippine Export Development Plan (PEDP) 2008-2010.

Halal standards are complementary with other food standards, such as the Good Manufacturing Practice and the International Organization for Standardization (ISO) standards.

FOBAB urges exporters to offer new productsThe Foreign Buyers Association of the Philippines (FOBAP) Integrated Development

Foundation encourages Philippine exporters to offer new services and products using unique raw materials to regain buyers and tap new ones.

“We need a lot of product development and lot of presentations to get buyers to book with us. Our concern is still how to get back the business that we lost,” said FOBAP Trustee Marian Santos Nash.

Nash underscored the importance of “storyboard selling”, which incorporates product development, interior design as well as raw materials and sourcing compliance.

“When you sell something, you can’t do item selling. It should be part of the story. If you do the spa, you have to also do the candle and teaching the technology should be part of the package. If bathroom is your motif, you should offer all products, which can be found in the bathroom,” she said.

Businesses should use unique raw materials to make their products competitive, Nash said, stressing that Philippine exporters should sell products which will complement what Viet Nam and other countries supply to traditional markets.

To gain more buyers, Nash raised the need for exporters to aggressively market their products. “When the business is bad, it is when you should be active socially. You have to present yourself to more buyers and spend more time in advertising your company,” she recommended.

Pre-need industry expects to recover this yearThe country’s pre-need industry is looking ahead to better times in 2010, specially with the passage of the Pre-need Code of the Philippines into law, transferring the regulatory jurisdiction over pre-need firms from the Securities and Exchange Commission (SEC) to the Insurance Commission (IC).

Philippine Federation of Pre-need Plan Companies, Inc. (PFPPCI) President Caesar T. Michelena said the enactment of the Pre-need Code into law last 04 December 2009 could pave the way for the industry’s recovery.

“The Pre-need Law provides stability to the pre-need industry because it legitimizes and puts

into place the necessary measures needed by the industry,” Michelena said.

Other notable provisions of the law

• AdoptionofthefitandproperrulewhichgivesICthepower

toprescribethequalifications anddisqualificationofdirectors ofpre-needcompanies• Prohibitionofdirectorsandtheir

relativeswithinthefourthdegreeofconsanguinityintheirpersonalcapacitytohavedirectorindirectinvestmentsinexcessofP5Minanycorporationorundertakinginwhichthepre-needfirm’strusthasaninvestmenttoavoidconflict

ofinterest• Prohibitionoftheuseofanypartoftheassetsinthepre-needfirm’strustfundforanypurposeotherthanfortheexclusivebenefitofinvestorstosafeguardtheplanholders’interest

• Establishmentofatrustfundperpre-needplancategorytoensurethedeliveryoftheguaranteedbenefitsandservicesprovidedunderapre-needplancontract

• Depositedaportionoftheinstallmentpaymentcollectedofbythepre-needcompanyinthetrustfund,theamountofwhichwillbe,asdeterminedbytheactuary,basedontheviabilitystudyofthe

pre-needplanapprovedbyIC• RequirementforaP100-M

minimumpaid-upcapitaltolessentheriskofinstabilityinthefuture

• Impositionofstrongcriminal andadministrativepenalties ondirectorsandofficers forself-dealingandconflict ofinteresttransactions• Institutionoflegalactionby

planholdersdirectlyagainsttheofficersand/orcontrollingowners

ofthepre-needcompany,incasetheinsolvencyorbankruptcy

isamerecover-upforfraud orillegality• Publicationintwonewspapersofafullsynopsisoftheannualfinancialstatements,includingthetrustfundannualstatementshowingfullytheconditionsofthecompany’sbusinessandsettingforthitsresourcesandliabilities;and

• Disclosureoftheinvestment ofthecompany’strustfund.

RP’s seaweed industry sets 2012 goalsThe Seaweed Industry Association of the Philippines (SIAP) is targeting a 15-% world market share for raw dried seaweed in 2012, the sector’s export marketing plan showed.

Submitted to the Confederation of Philippine Exporters Foundation Cebu, Inc. (Philexport-Cebu), the plan indicated that the group should work to increase raw material production by 10%-15% annually, the same growth objective set by the Bureau of Fisheries and Aquatic Resources (BFAR).

SIAP encourages all stakeholders, particularly farmers, traders, and processors, to increase production. At present, more seaweed farmers are needed to increase the country’s seaweed production, SIAP President Benson Dakay said.

He said the country’s production had dropped from 100,000 tons yearly in mid-2000 to only 60,000 tons last year as farmers aged and production suffered the effects of climate change.

The plan aims to adopt and support the enforcement of product quality standards for raw dried seaweeds (RDS) and carrageenan or processed seaweed.

Auto sales up 6.4% in 2009Total auto sales in the country last year reached 132,444 units with an overall growth of 6.4%, surpassing forecast of only 4% at the beginning of 2009. In December alone, industry sales surpassed expectations

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as it registered the highest singular monthly sales volume of over 13,596 vehicles in a decade. The total 132,444 vehicles sold last year were much better than the 124,449 units sold in the preceding year.

“Although December sales were expected to be seasonally higher, the stronger spike in December sales was a welcome result. This augurs well for 2010,” Chamber of Automotive Manufacturers Association of the Philippines, Inc. (CAMPI) President Elizabeth Lee said.

“Stronger growth was due to higher replacement rate coupled with stronger than expected growth in overseas Filipino workers’ (OFWs) remittances and aggressive financing packages, which fueled consumption resulting in higher vehicle sales,” Lee said.

Passenger car (PC) sales grew by 4.1% to 46,228 units, while commercial vehicles (CV) increased by 7.7% to 86,216, cornering over 65% of total vehicles sold nationwide.

The CV segment’s overall sales likewise reflected the Filipino buyer’s preference for dual-purpose vehicles.

The light commercial vehicles (LCV) segment, in particular, resulted in a 15.8-% growth to over 52,700 units nationwide. LCVs are comprised of the popular Asian utility vehicles (AUVs), pick-up trucks, vans, and compact wagons. Stronger growth in this segment is seen this year as an important segment that will carry the CV category.

The industry currently projects a 4-% growth for 2010, subject to quarterly review depending on changes in the market.

Factors that will affect stronger sales for 2010

• Fleetdeliveriestothenational andlocalgovernments• Relativelygoodeconomicgrowthforecastofabout4.4-%growth

• Improveddemandresulting fromhigherOFWremittances• Electionspending• Aggressivepromotionsfrom autoplayers• Newmodelintroductions

AVIATION

Delta to open RP branchDelta Air Lines, Inc. is set to launch its Philippine operations. The local office has an authorized capital of P9.4M consisting of 1.5-B common shares and 500,000 preferred share at a par value of US$0.0001 apiece.

Delta Air Lines is the world’s largest airline in terms of passenger traffic, fleet size, and annual revenue, operating an extensive domestic and international network that has a flight to all the continents, except Antarctica.

Last year, the airline merged with Northwest Airline Corp. to form the world’s largest commercial carrier.

In effect, Northwest became a wholly owned subsidiary, which Delta Air Lines said would allow it to better manage economic cycles and volatile fuel prices, among others.

Northwest operates various ticketing office in the country.

BPO

InterGlobe Enterprises open in TaguigIndian business process outsourcing (BPO) firm InterGlobe Enterprises Pvt. Ltd. has opened its US$3-B center in Bonifacio Global City, Taguig.

“Our establishment here reflects our confidence on the airline industry that is coming out slowly from recession. The last few months were fairly good months for the United States’ airline business,” InterGlobe Enterprises Pvt. Ltd. Chief Executive Officer Vipul Doshi said.

Doshi added that in the next 12-18 months, the company would add its initial investment to increase available seats.

“We have enough to consider that we can reach the scale we want in three months,” Doshi said, citing the brisk purchases of airplanes for both international and local travels in the US as a sign that their BPO venture can ride the upswing.

The International Air Transport Association (IATA) reported recently that high jet fuel prices, labor disputes, online ticketing, and competition set by budget airlines forced major air passenger transport businesses in the US to cut costs.

Nevertheless, Doshi said they remain optimistic because under these circumstances, their clients are expected to save more on costs and that could mean expanded outsourcing on several management items like backroom operations.

ENERGY

Finnish firm to spend P2B for jatropha projectA consortium of Finnish investors will spend P2B in Bohol for its jatropha and timber plantation project.

Bohol Governor’s Chief of Staff Antonieto Pernia, who is also the project director of jatropha propagation in the province, said the Finnish investors intend to pour in US$20M or P1B for the first 5,000 has. of timberland and another P1B for the 5,000-ha. expansion area.

“They will also initially invest P500M for the first 5,000 has. of jatropha plantation, for which they will hire a minimum of 50 persons per 100 has. to maintain the plantation for the next 10 years,” Pernia added.

This means the project’s initial phase will “generate a sustainable employment of at least 2,500 farmhands for 10 years, on top of the employment that can be generated when farmers start planting jatropha,” he explained.

The Finnish investors found the project viable considering that Jatropha curcas, the variety planted in Bohol, will start bearing fruits upon reaching eight months old up to its 50th year.

Ecoenerhiya to build P1.7-B biomass plant in Quezon CityLocal renewable energy (RE) firm Ecoenerhiya is eyeing to put up a 10-megawatt (MW) biomass project worth US$36M or P1.7B in Quezon City.

At least P1.2B of the fund will be financed through borrowing and the remaining cost will be coming from equity.

Ecoenerhiya Business Development Director Antonio Lopez said they are negotiating with Banco de

Oro (BDO) for a possible financing package for the project and that they expect to firm up the borrowing by April this year.

This project will be undertaken through a special purpose vehicle company named Unisan Biogen, of which Lopez is also the President.

Lopez said they hope to start the plant’s construction by May this year and expect to finish it by June 2011.

The company has already signed a supply agreement with Quezon Electric Cooperative for the facility, which forms part of the total 24 projects the company is eyeing. Most of these projects are set to be located in Mindanao.

Flying V to diversify Flying V, one of the country’s independent oil players, will have a P500-M diversification project this year.

“As we look into the future, Flying V’s focus shall concentrate on alternative sources of energy and the promotion of biofuels. It shall continue to explore areas under solar, wind, the development of CNG [compressed natural gas], biomass, and other indigenous sources of biofuels,” Flying V Chairman Ramon Villavicencio said.

Flying V now has a total of 203 retail stations nationwide, having built 37 new sites in 2009 alone.

For this year, the firm expects to build 80 more sites and penetrate remote areas to bring petroleum products nearer to the customer.

At present, Flying V has five storage facilities located in key strategic areas – Poro Point, La Union in the North; Sta. Ana and Mandaluyong in Metro Manila; Cebu; and Davao. Four more depots are expected to be completed this year.

Basic Energy pursues ethanol venture Basic Energy Corp. will pursue the development of its renewable energy (RE) projects such as a bioethanol plant in Zamboanga del Norte and a geothermal service contract in Batangas this year.

The firm is eyeing to put up a bioethanol plant in a 6,000-ha. land in Gutalac, Zamboanga del Norte, which will use cassava as feedstock.

The company started developing the area for cassava in 2008 under unit Basic EcoMarket Farms.

“Cassava has an intermediate market and can be a source of revenue while the planned bioethanol plant is still being developed and constructed,” the firm said.

The firm will also start the geophysics and geological studies in its geothermal service contract area in Mabini, Batangas in the first quarter of this year.

Basic Energy is also involved in oil exploration activities through wholly owned subsidiary Southwest Resources, Inc.

Republic Act (RA) No. 9637 or the Biofuels Law requires all gasoline sold in the Philippines to be blended with 5% ethanol. By 2011, the minimum blend would be increased to 10%.

FOOD

RD Corp. invests US$15M for expansion Filipino owned RD Corp. will be investing US$15M for a new plant in General Santos City for its canned tuna export business, bringing its total canneries in the area to seven.

RD Corp. Chairman Rodrigo Rivera, Sr. said they would be starting the new cannery in the first quarter of the year.

The new cannery will increase their output from 140 tons daily to 200 tons and create 1,200-1,500 new jobs.

Rivera said the canned tuna business is a very labor-intensive business. Currently they have 11,000 employees, 7,000 of which are in General Santos City; 90% of their employees are women.

RD Corp. is the country’s biggest canned tuna exporter. Some 37% of its produce, equivalent to 380M metric tons (MT) yearly, are exported. The firm exports 14 containers daily, amounting to US$560,000.

With operations in Indonesia and Papua New Guinea, RD Corp. is composed of four fishing companies, namely:• RD Fishing Industry Inc. • RD Tuna Ventures, Inc.• South Sea Fishing Ventures

Philippines, Inc., and • Asia Pacific Allied Fishing

Ventures Corp.

P480-M banana project in Davao City launched President Gloria Macapagal-Arroyo launched on 05 January 2010 the P480-M Saba Banana Integrated Development Program at the Marco Polo Hotel, Davao City.

Spearheaded by the Department of Trade and Industry (DTI), the project will process fresh saba bananas into microwavable chips, fries, and rolls for the local and export markets.

According to Sagrex Food, Inc., which operates the project, the products have a ready market in the United States, Canada, and the Middle East, where there is a great concentration of Filipino migrant workers. It is also eyeing potential markets in Japan, South Korea, Hong Kong, and Australia.

Exports of the produce are expected to generate US$12-M revenue yearly.

The country already exports banana chips made from the Cardaba variety. However, Cardaba, largely grown in backyard gardens, cannot cope with the growing demand because of its very poor yield.

To ensure steady supply of raw materials, the project proponents have contracted out production to 400 farmer-entrepreneurs. A tissue culture laboratory and nursery have also been set up in support of the venture.

The current saba production is estimated at 10 tons yearly. With the program in full operation, production will rise to 30-40 tons yearly.

At a contracted floor price of per kilo, each farmer with a 2-ha. plantation can gross up to P360,000 yearly.

IT

Thakral to expand RP operationsSingapore-based multinational conglomerate Thakral Group plans to hire additional 100

trade andinVestMents

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employees this year, to beef up its current workforce of less than 200, as it makes the Philippines its center of excellence for some of its information technology (IT) solutions, which could also support its growing business in other emerging Asian markets.

Thakral Group Global Business and Technology Services Director Bikram Singh Thakral said his US$1.5-B company recognizes the Filipinos world-class talents and the advantages of making them part of the organization not only in the Philippines but also in its operations overseas.

“It is a good market because the language and the people’s approach to work are really good. People here understand cultures very easily, thus, supporting other markets is very easy. Some people are very fixed to a culture but Filipinos tend to be a bit more flexible,” he noted.

He said the Thakral Group, through its local subsidiaries, is focusing this year on hardware and distribution; consulting and implementation services; enterprise resource planning (ERP) for retail and distribution industry; and core infrastructure, business intelligence, and share point.

In line with their expansion plan in the Philippine market, Thakral said, they will also increase their offerings from the retail and distribution segment to the services industry.

“We want to focus on the dynamic SME [small and medium enterprise] market to help them be more competitive and efficient with our best-of-breed products and value-added services offerings,” he explained.

The company is optimistic that its Philippine market will grow by 10%-15% this year from the US$20-M revenues it generated last year.

Dell provides servers to SMEsDell Philippines will continue marketing products to small and medium enterprises (SMEs), particularly its new server that could help businesses to be more efficient.

Dell Philippines Country Manager Barry Bunyi said they would be offering servers that are simple and easy to use for companies that have multiple computers.

The new Dell server project is in partnership with chip firm Intel.

“This is virtualization for the non-information technology (IT) professionals. We want to bring efficiency to companies that may not have as many employees but would still need to protect and share data,” Bunyi said.

Smaller companies would be able to double performance at lower costs because the servers use less energy, Intel Dell Asia Account Team Regional Manager Prakash Mallya said.

LOGISTICS

Alphaland puts in P1B for new firm Alphaland Corp. is establishing a P1-B company that would import and distribute heavy equipment and machinery.

The new firm, Alphaland Heavy Equipment Corp., is expected to generate synergies with its parent company’s real estate activities while opening up new revenue streams and plans to offer its products and services to other developers and the public infrastructure sector.

Alphaland President Mario Oreta said the new firm would have a distribution agreement with China’s largest construction equipment maker Xuzhou Construction Machinery Group (XCMG). It will be set up with Fabricom-XCMG Philippines, Inc., a local heavy equipment importer.

Oreta noted that the establishment of the new firm is timely as Alphaland plans to spend up to P5B to launch several new projects in the coming years.

Alphaland will be the new name of listed firm Macondray Plastics, Inc., following the acquisition by RVO Capital Ventures Corp. of Macondray’s 66-% shares.

Alphaland, through wholly owned subsidiary Alphaland Development, Inc., has five major projects, namely:• Shangri-La at the Fort• Alphaland Southgate Tower and Mall• Alphaland Makati Place• Alphaland Bay City, and • Alphaland Makati Tower.

P67.6-M corn processing plant inaugurated in CaragaPresident Gloria Macapagal-Arroyo formally opened Caraga Region’s P67.6-M first Corn Post Harvest Processing Trading Center (CPHPTC) on 06 January 2010.

The CPHPTC is the end-product of a tie-up between the provincial government of Agusan del Sur and the National Agribusiness Corp. (NABCOR), a Department of Agriculture (DA)-attached government-owned and-controlled corporation (GOCC).

Located on a 4-ha. lot in Barangay Mabuhay, the CPHPTC will help increase productivity and lower production cost, resulting in increased profit for the farmers and contributing to the province’s economic development.

Through a simplified buying and selling process, the center buys wet corn ears, sparing the farmers from the cost of drying and shelling. They are paid half of the prevailing price of the dry grain.

INFRASTRUCTURE

SLTC invests P7.6B in SLEX projectThe Board of Investments (BOI) has approved the registration of the P7.6-B South Luzon Expressway (SLEX) project of the Malaysian-backed South Luzon Tollways Corp. (SLTC).

BOI Managing Head Elmer C. Hernandez said the approval of the SLTC registration facilitated the company’s availment of the 1-% preferential duty on its importation of capital equipment needed for the SLEX project.

Hernandez said the company has still to reckon with the issue of income tax holiday (ITH), which approval is dependent on the full compliance with the project milestones.

To date, the civil works, including SLEX road widening, have been completed.

POWER

Global Power allots US$600M to complete projectsGlobal Business Power Corp. has programmed US$600M to complete ongoing projects, including the power facility project in Toledo City, Cebu – a development seen to help improve the power supply reliability in the Visayas.

“Our capital investments this year are focused on the expansion sites in Iloilo City and in Toledo City, Cebu, as both projects have a combined cost of about US$880M. But for 2010, Global Power still needs to spend about US$600M to complete the projects,” Global Power President Jesus Alcordo said.

Alcordo said 11 banks signed the loan agreement with Global Power’s subsidiary Cebu Energy Development Corp. (CEDC) for the 246-megawatt (MW) Toledo clean coal-fired power plant in June last year.

CEDC is a joint venture formed by Global Power, Aboitiz Power Corp. (AP), Vivant Corp., and Taiwan’s Formosa Heavy Industries.

Meralco invests P1.2B for upgradeTo pare down its system loss level to the required 8.5% starting this year, Manila Electric Company (Meralco) has earmarked P1.2B to upgrade and make its distribution system more efficient.

Prior to the 2010 timeframe in meeting the 1-% reduction in system loss cap, Meralco President Jose P. de Jesus noted that the firm has already started investing for system improvements to reduce technical losses.

He added that the company already made inroads on investments since last year and covered even the elevated metering centers (EMCs) to comply with the standards set forth by the industry regulator.

Envent signs US$300M with Leyte electric coopsGeothermal development firm Envent Holding Philippines, Inc. (EHPI) has signed over US$300M worth of long-term supply contracts with five electric cooperatives in Leyte.

Envent Chief Executive Officer (CEO) Gudmundur F. Sigurjonsson said the contracts involved multiple power purchase agreements for 35 megawatts (MW) of clean, renewable electricity at a price range of US$100 and US$113 per MW hour (MWH).

The value of the contracts over their 10-year term is between US$300M and US$338M.

Cagayan taps wind power to help ease climate changeThe construction of a 40-megawatt (MW) wind power system in Aparri, Cagayan by 2011 will go a long way in easing climate change by using clean and renewable energy (RE), Economic Development Consultant Jack Enrile said.

“It reflects a growing global trend towards clean energy from small and independent power producers,” Enrile said, noting it will be Northwind Power Development Corp.’s first venture outside of Ilocos Norte where it operates the 33-MW wind farm in Bangui town.

“Among renewables, wind power is so attractive because it has a low generation cost and does not produce carbon dioxide that contributes to global warming. Wind is also the most abundant for RE technology to tap, with about a 7,400-MW potential in the country,” Enrile pointed out.

Aboitiz, partners to sell powerAboitiz Power Corp. (AP), together with enterprise partners and SN Power Holding Singapore Pte. Ltd., formed a new company that will primarily engage in the business of a retail energy supplier and energy consolidator.

The new company, SN Aboitiz Power-Res, Inc., has an initial authorized capital stock of P1M, of which P250,000 has been paid up.

It will sell and market electricity to end-users and buy and sell hedging instruments for electricity, fuel, currency, and weather.

REAL ESTATE

P6-B Isabela property to be devoted to biofuel farmsEcofuel Land Development, Inc. (ELDI) will spend about P6B for the development of a 24-ha. Ecofuel Agro-Industrial Ecozone facility in Sta. Filomena, San Mariano in Isabela.

The project received fiscal and non-fiscal incentives from the Philippine Economic Zone Authority (PEZA), PEZA Director-General Lilia B. De Lima said.

The firm intended to develop a facility that would serve Green Future Innovations, Inc.’s (GFII) requirements for biofuel production.

De Lima said the project, which is about 30 km. away from the Cagayan Airport, is expected to generate 1,500 jobs. Its construction will start in the first quarter of this year and is scheduled to be completed by late 2011. ALI spending up to P5B for NuvaliAyala Land, Inc. (ALI) is ramping up the development of its Nuvali property in Laguna and is spending P3B-P5B over the next year and a half to put more products in the market.

ALI President Antonino Aquino said they are becoming more active in developing the 1,705-ha. mixed-use community project in Sta. Rosa and Calamba, Laguna as they see better prospects on the back of market recovery.

ALI launched recently the Santiera, its latest residential product for Nuvali, while announcing plans to build more structures for its office and commercial components.

Crown Regency plans more projectsCebu-based Crown Regency is set to complete four more major projects this year with several more in the pipeline, as the hotel and condotel chain pursues its plan to become the biggest and most unique of its kind in the country.

Fuente Triangle Development Corp. Vice President Jose Maria Gianzon said Crown Regency’s new

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MaJOr PrOJeCts

COMPany nOtes Bilateral

agreeMent

projects will support the company’s “rotating lifestyle” business concept, with benefits of property owners and investors in one Crown Regency development transferable to its other units in the country.

Fuente Triangle is set to start the third and fourth towers in its complex in Fuente Osmeña in Cebu City – the Ultimate Residences Tower 3 and the Ultima Prime Tower 4. It is also finishing the Ultima Residences Ramos Tower and Crown Regency Resort and Convention Center in Boracay.

In the pipeline are the City Loft Mango residences and the Crown Regency Condotel in Panglao Island in Bohol, Crown Regency projects in Tagaytay, and two more towers in Cebu.

PEZA develops 28 ecozonesThe Philippine Economic Zone Authority (PEZA) is developing 28 economic zones (ecozones) nationwide – three are in Visayas, and eight, in Mindanao.

As of September 2009, there were 202 ecozones operating nationwide, of which 66 were manufacturing ecozones; 123 information technology (IT) parks or centers; 9 tourism ecozones; 2 agro-industrial ecozones; and 2 medical tourism parks/centers.

PEZA-registered ecozones enjoy fiscal incentives such as income tax holidays (ITH); tax and duty free importation of raw materials, capital equipment, and spare parts; and exemption from national and local taxes.

Ecozones being developed by PEZA

Visayas• Polambato-BogoEcozone inBogo,Cebu• AmihanWoodlandsTownship inLeyte• EasternVisayasRegionalGrowth

CenterinTaclobanCity

Mindanao• NasipitAgusandelNorteIndustrial

EstateinNasipit,AgusandelNorte• PhilnicoIndustrialEstateinSurigao

delNorte• ShannalyneTechnologicaland

EnvironmentalParkinEsperanza,AgusandelSur

• TubayAgriProcessingCenter inAgusandelNorte• PhilvidecIndustrialEstate-Ecozone

inMisamisOriental• AyaladeZamboangaIndustrialPark

inZamboangaCity• HijoSpecialEcozone inTagumCity,Davao• SamalCasinoResortinSamalCity,

DavaodelNorte

SHIPPING

Hanjin gets new ordersKorean shipbuilder Hanjin Heavy Industries and Construction-Philippines, Inc. (HHIC-Phil., Inc.) will build two cape-size bulk carrier vessels inside its billion-dollar shipbuilding facility in Subic Bay Freeport Zone.

The two 180,000-ton vessels were ordered by Taiwanese shipping company Hsin Chien Marine Co., Ltd. (HCM) and will be due for delivery in September 2011 on a staggered basis.

HHIC-Phil., Inc. constructed the largest oil tanker in the Philippines. It unveiled the 114-K dead weight tonnage (DWT) crude tanker named Leyla K, which is also its first ever oil tanker manufactured in its Philippine shipyard.

The shipbuilder’s Subic location employs 17,000 workforce and has two large dry docks with 2 Goliath cranes each. Its quay wall spans 4 km. while its assembly shop is about 1-km. long.

The firm produces container ships, tankers, and bulk carriers and is gradually expanding to soon construct liquefied natural gas (LNG) carriers; drill ships; floating production, storage, and offloading (FPSO); and marine plants.

P495-M flood control project to rise in CamiguinThe Department of Public Works and Highways (DPWH) will begin constructing a P495-M Flood Disaster Mitigation project in Barangay Hubangon, Mahinog Town, Camiguin Province.

The project involves the construction of two Sabo dams along Pontod River; reconstruction of the damaged Hubangon Bridge; and the enhancement of the road network of its main highway, which is expected to boost economic activity in the island.

The project is part of the Official Development Assistance (ODA) grant aid agreements between the Philippines and Japan that President Gloria Macapagal-Arroyo signed in Tokyo after her official talk with Japanese Prime Minister Taro Aso in June last year.

24 DPWH-ADB-funded bridges completed in Lanao del Norte The Department of Public Works and Highways (DPWH) completed recently the Asian Development Bank (ADB)-contract package 6 project of the ADB Road Improvement Project involving the replacement and retrofitting of 24 bridges along the Iligan-Aurora road in Lanao del Norte.

Funded jointly by the Philippine government and ADB, the P234.6-M project involved the replacement of seven bridges and retrofitting of 17 bridges.

Bridges replaced

“With the completion of the project, it will ensure linkages between municipalities served by these bridges and enhance agricultural trade and immediate delivery of government service, thus, providing a reliable road network connecting Northern and Western Mindanao,” DPWH-ADB Project Management Office Director Estrella Vilar said.

Villar added that the project is expected to boost the aqua-culture and food processing industry in Northern Mindanao as the Iligan-Aurora Road connects to the Zamboanga Peninsula’s mass transportation operation industry.

PLDT, SBMA team up for ICT developmentThe Philippine Long Distance Telephone Co. (PLDT) has teamed up with the Subic Bay Metropolitan Authority (SBMA) to put the freeport at the frontlines of the country’s information and communications technology (ICT) sector.

PLDT Subictel President Dennis Magbatoc said the company had agreed in principle to partner with SBMA in the promotion of the freeport’s emerging IT capabilities to make Subic competitive and in the forefront together with leading ICT hubs like Manila, Cebu, Davao, Laguna, and others.

Magbatoc said the agreement would pave the way for tripartite collaborative projects in the freeport’s ICT industry.

He added that this project would bank on PLDT’s most recent ICT investments in the freeport worth over P40M, which included the fiber optics cable connecting Subic Bay to Manila and the entire Luzon grid and the P20-M Subictel Innovation Laboratory (Innolab) that was unveiled last October 2009.

i-Remit inks pact with Automatic CentreI-Remit, Inc., the largest non-bank Filipino-owned remittance company in the country, has announced a collaborative agreement with Automatic Centre to leverage their

respective strengths and jointly market products and services, targeting the families of overseas Filipino workers (OFWs).

The marketing partnership allows iRemit ShopNPay Visa Card and iRemit Visa Card holders to avail themselves of up to 12-% discount that shall be applied on products bought from any of the branches of Automatic Centre, Blims Fine Furniture, and Sogo Home and Office Center.

“The agreement is not just about extending discounts, but also about emphasizing the importance of giving our clients value for their hard-earned money,” iRemit President and Chief Operating Officer Harris Jacildo said.

1st RP-Kuwait meeting to hasten flow of trade, investmentsThe first Philippine-Kuwait Joint Trade Committee Meeting (JTCM) was held recently to discuss ways to improve trade relations and ease the flow of goods, services, and investments between the two countries.

Minister Ahmad Rashed Al Haroum headed the Kuwaiti delegation while Department of Trade and Industry (DTI) Secretary Peter B. Favila led the Philippine delegation.

DTI Senior Undersecretary Thomas G. Aquino said the bilateral meeting was considered a milestone in the history of bilateral trade and economic relationship between the two countries.

The Philippines expressed its interest for the reduction of authentication fees and the shortening of the five-day authentication period for pertinent trade documents such as commercial invoices.

The country also agreed to formally submit to Kuwait a comparative table that contains the fees charged by other similarly situated countries in the region.

The two countries both agreed to hasten work in connection with the ratification of the Double Taxation Agreement that was signed on 03 November 2009 in Kuwait and to activate the said Agreement as soon as possible.

Issues tackled during the JTCM:• Reduction of the processing time

for visa application for Philippine businesspeople and government officials

• Reduction of the current 15-day clearance time for trade

samples intended for trade fairs, exhibitions, missions, or prospective Philippine clients

in Kuwait • Provision of the necessary

information on the food standards of the Gulf Cooperation Council (GCC), of which Kuwait is a member; and

• Request for assistance in the recognition of the National Halal Accreditation Board of the Philippines (NHABP) and reduction of authentication fees on halal certification imposed

by the Kuwaiti government.

UK to help RP become more competitiveThe British government is helping the Philippines in identifying needed reforms to make the country more competitive as the British Embassy lends its support to an upcoming competitiveness workshop.

“The project is intended to provide a continuing forum for consultations and discussions about reforms needed before and after the upcoming elections to improve the country’s competitiveness,” British Ambassador to Manila Stephen Lillie said.

He said it is essential that the handover from one administration to the next should not lead to a loss of momentum in terms of economic and social reforms.

In the said workshop, experts from the National Economic

PhilvidecIndustrialEstateEconomicZone

inMisamis

• Mago-Ong• Liangan• Kolambogan• Raw-An• Sagadan• Muntan• Kabasagan

Bridges retrofitted • Linamon• Rebucon• Larapan• Kawit• Barongisan• Barogohan• Maigo• Segapod• Kulasihan

• Caromatan• MangaI• Bulod• Maranding• Quidalos• Butadon• Balili• Titunod

Philippine Business Report�0 ��February 20�0

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SEC approves new accounting rules for MSMEsMicro, small, and medium enterprises (MSMEs) are set to adopt simpler accounting measures in reporting their finances to put local standards in line with international regulations.

In addition, the Philippine Financial Reporting Standards (PFRS) for MSMEs approved recently by the Securities and Exchange Commission (SEC) has dropped complex computations not relevant to the sector.

With the adoption of the PFRS, MSMEs now have a “stand-alone standard” that addresses various issues including the objective of financial statements, qualitative characteristics of information contained, and general recognition and measurement principles. Comparative figures, however, must still be presented.

Development Authority (NEDA), Department of Finance (DOF), Department of Trade and Industry (DTI), Philippine Chamber of Commerce and Industry (PCCI), University of the Philippines School of Economics (UPSE), and Asian Development Bank (ADB) will discuss issues and reforms on the following areas:

• Achieving macroeconomic stability;• Improving business environment

and regulation;• Lowering the cost of doing

business;• Coping with climate change; and • Equipping human capital.

Improvements in the said areas are imperative to propel the country’s global competitiveness ranking and are timely as East Asia rebounds from the economic downturn.

The Congressional Planning and Budget Department (CPBD) and the House of Representatives Committee Affairs Department (CAD) have partnered with the University of the Philippines Open University (UPOU) to identify reforms and policies.

SEC General Accountant Chief Gracia Cassals-Diaz said the PFRS for MSMEs, which were adopted from the International Financial Reporting Standards for MSMEs issued by the International Accounting Standards Board, would practically replace the five-year-old local standard based on “generally accepted accounting principles” (GAAP).

Key changes in the PFRS:• Investment properties must be

measured at fair value and not at cost.

• Property, plant, and equipment must be measured at cost less any accumulated depreciation and accumulated impairment losses. There is no option to revalue the property, plant, and equipment assets.

• Intangible assets must be measured at cost less accumulated amortization and accumulated impairment losses. They cannot be revalued.

• For employee benefits, actuarial gains and losses must be recognized in full in the

income statement.• Research and development (R&D)

costs must be expensed as incurred and have a finite

useful life; otherwise, a useful life of 10 years is assumed.

ASEAN officials are hoping the FTA will expand Asia’s trade reach while boosting intra-regional trade that has already been expanding at 20% a year.

China has just overtaken the United States as ASEAN’s third largest trading partner and will overtake Japan and the EU to become “number one” within the first few years of the FTA, ASEAN Economic Community Deputy Director-General Sundram Pushpunathan said.

Under the agreement, China and the six founding ASEAN countries – Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand – are to eliminate barriers to investment and tariffs on 90% of products traded within the region. Later ASEAN members Viet Nam and Cambodia have until 2015 to follow the same.

Next billion mobile users to come from AsiaThe next billion users of mobile devices and services will likely come from Asia, the Mobile Marketing Association (MMA) projected.

The MMA, which released recently its top mobile industry predictions, said Asia, a region that continues to lead the pace of the global mobile growth, will gain roughly one-third of the over 4-B mobile subscribers worldwide.

Growth across all areas of mobile telecommunications – infrastructure, mobile phone subscriptions, mobile Internet, short message service (SMS), or gaming – is happening at an explosive pace all across Asia, as the adoption of mobile communications is outpacing Internet adoption across the region by substantial amount,the MMA said.

Aside from industry growth, the MMA also predicted mobile data use will increase in the Asia Pacific brought by innovative smart devices and killer applications.

Mobile use will also increase with the ongoing proliferation of high data consumption services that include video or peer-to-peer applications, the MMA further said.

Other mobile-based services, such as mobile payment, mobile healthcare, and mobile music will also continue to grow through the Asian population. Mobile application appealing to gamers will also rise, the MMA added.

Asian IT market continue to rebound in 2010Asia, which has fared better than the rest of the world during the financial crisis, is set to grow its information technology (IT) expenditure at 8.8% this year, an increase from 6.4% in 2009.

Research firm Springboard said organizations are expected to focus on extracting greater value from existing IT investments versus significant, new capital expenditure.

“Additionally, they will continue to focus on reducing operational expenditure from both business and IT perspective,” it said.

Data center transformations, IT manageability advancements, and virtualization investments are finally helping “move the needle” downward on the traditionally high and stubborn costs to simply “keep the lights on,” the report said.

However, the study disclosed that in spite of the generally optimistic position of Asia, there are also risks and challenges facing the market this year.

Nevertheless, Springboard concluded that the economic crisis, while being destructive, has also helped drive actions and decisions that have positioned organizations in Asia for a year of growth in 2010.

RP, 2 others get US$800M for energy efficiency projectsThe Philippines and two other Asian countries -Viet Nam and Thailand- will receive a total of US$800M for energy efficiency/renewable energy (RE) programs.

Funding will come from the Clean Technology Fund (CTF) for Asia after endorsement by the implementors governing Climate Investment Funds (CIF). The joint implementors are the African Development Bank (AFDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IADB), International Finance Corp. (IFC), and the World Bank (WB).

The program includes catalyzing private sector investments in energy efficiency and RE through local banks, transmission system upgrading to reduce losses, and supporting RE development and significant urban transport improvements with the help of the ADB and the WB.

Viet Nam, Thailand, and the Philippines formulated their

investment plans, which were reviewed and approved by the joint implementors.

The Philippine Investment Plan will use US$250M in CTF co-financing to support government efforts to maintain or increase the country’s large share of RE and implement the National Environmentally Sustainable Transport Strategy.

The plan prioritizes activities that will catalyze private sector investment in distributed generation through renewable resources, provide investment support and risk mitigation for the private sector’s entry into energy efficiency and cleaner production sectors, promote solar generation with net metering, and introduce Bus Rapid Transit Systems in Cebu and Metro Manila.

Asia-Pacific leads in climate change initiativesThe Asia-Pacific region, excluding Japan, is leading the way in providing goods, products and services focused on tackling climate change, latest findings from the HSBC Climate Change Index, the first comprehensive climate change indicator that started in 2007, revealed.

HSBC launched recently both regional and country climate indices, giving clients for the first time the opportunity to invest in specific elements of global climate change on a selective and focused basis.

These indices, based on the same quantitative framework as the benchmark index, will enable investors and asset locators to track and monitor climate-related investments and the transition from a high to low carbon economy for listed companies on a global, regional, and country basis.

This means clients can now build a climate change portfolio with targeted exposure to one country or region – such as Asia Pacific, which has already risen 78% this year – that may better fit their overall investment strategy and objectives.

HSBC Quant Research for Equities Global Head Joaquin de Lima said that with low long-term interest rates, investors are on the lookout for new growth areas and many governments are keen to play their part by creating a regulatory framework that encourages climate change measures.

“It’s increasingly clear that governments and investors alike are convinced that climate change is both real and a viable business opportunity.

However, as this sophistication has grown, so has the need to offer greater granularity and investment opportunity,” De lima added.

RP joins Asia-Pacific Trustmark AllianceThe Philippines has recently become the newest member of the Asia-Pacific Trustmark Alliance (ATA) joining the ranks of economies with trustmark organizations.

The membership of Qartas Corporation in ATA, which was launched during a signing ceremony held in Tokyo, Japan on 27 November 2009, was witnessed by Department of Trade and Industry E-Commerce Office (DTI-ECO) Director Maria Lourdes A. Yaptinchay.

Qartas Corporation is the owner of the Sure Seal trustmark.

As trust issue on the worldwide web continues to be pervasive, Yaptinchay said there is a growing need for trustmarks on websites to make online transactions more reliable and trustworthy.

In the Philippines, Sure Seal is the first and only trustmark to date, which verifies service for online businesses in the country and certifies a website’s credentials, ensuring that it provides a safe environment for businesses and consumers alike to transact with.

The DTI acknowledges Sure Seal efforts in promoting trust in e-commerce as it is in line with DTI’s mandate to create an enabling environment to further boost the growth of online and offline commerce.

The DTI believes that a trustmark will generate many opportunities and open up possibilities for local businesses and enterprises – whether micro, small, medium, or large – by encouraging them to venture online, thus, enabling them to become active participants in the vast global marketplace.

The CPBD is the House think tank and provides technical service in formulating national economic, fiscal, and social policies. The CAD, on the other hand, provides technical and administrative support services to the standing and special committees of the House of Representatives through its various committees.

ASEAN, China establish free trade areaSoutheast Asia and China established recently the world’s biggest free trade area, liberalizing billions of dollars in goods and investments covering a market of 1.7B consumers.

In the making for eight years, the Association of Southeast Asian Nations-China Free Trade Area (ACFTA) will be at par with the European Union (EU) and the North American Free Trade Area in terms of value and markets.

Philippine Business Report�2

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Interest Rate (%)

0

1

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3

4

5

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Inflation Rate (%) (1994 base year)

44.545

45.546

46.547

47.548

48.5

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Peso per US Dollar Rate

3.33.43.53.63.73.83.9

44.14.2

Nov-09Oct-09Sep-09Aug-09Jul-09Jun-09

Imports (In US $Billion)

33.13.23.33.43.53.63.73.83.9

Nov-09Oct-09Sep-09Aug-09Jul-09Jun-09

Exports (In US $Billion)

158159160161162163164165

Jan-10Dec-09Nov-09Oct-09Sep-09Aug-09

Consumer Price Index(2000 base year)

0

1

2

3

4

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3Q (2008) 4Q (2008) 1Q (2009) 2Q (2009) 3Q (2009) 4Q (2009)

GDP Growth Rate (%)

012345678

3Q (2008) 4Q (2008) 1Q (2009) 2Q (2009) 3Q (2009) 4Q (2009)

GNP Growth Rate (%)

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2010

Philippine Business ReportPhilippine Business Report is published monthly by the Communications and Media Office (CMO), Department of Trade and Industry, 4F Industry and Investments Building, 385 Sen. Gil J. Puyat Avenue, Makati City 1200, Philippines • Phone (+632) 895.3611 • Fax (+632) 895.6487 • To subscribe, e-Mail: publications@dti.gov.ph

economic indicators

February 20�0

Editorial Team: Anne L. Sevilla, Editor-in-Chief • Vic S. Soriano, Assistant Editor • Joe A. Barrera, Cresenciano P. Par, Cyrus Kim D. Bautista, Kia C. Bulawan, Jam A. Hourani, Yhen M. Millena, and Ariel B. Salcedo, Writers • Ren C. Neneria, Design Layout • Myrna V. de los Reyes, Circulation.

Consumer Price Index(2000 base year)

GNP Growth Rate (%) GDP Growth Rate (%)

Imports (In US $Billion)

Inflation Rate (%)(1994 base year) Interest Rate (%)

Exports (In US $Billion)

Peso per US Dollar Rate