1July 2015

Volume 26 No. 07 July 2015

The National Competitiveness Council (NCC) is confident that the Philippines would rank between 65th and 70th overall this year among the 189 countries surveyed by the World Bank-International Finance Corporation’s (WB-IFC) in its “Ease of Doing Business” report.

Department of Trade and Industry (DTI) Secretary Gregory L. Domingo is optimistic that the country’s upward momentum in competitiveness will be sustained.

“The new ranking now puts the Philippines at the middle-third of world rankings. The goal is to be in the top-third of global rankings by 2016,” said Secretary Domingo who is also the NCC Public Sector Chairman.

NCC Private Sector Co-Chairman Guillermo M. Luz said the increase in ranking will be due to the implementation of measures to improve competitiveness specifically on “starting a business.”

Starting a business is the number one of 10 indicators in the survey which presented the Philippines with the biggest challenge.

In the WB-IFC report released in October last year, the Philippines ranked 161st in this particular indicator. Overall, the Philippines ranked 95th.

The expected huge jump in the “starting a business” indicator will be made possible following an agreement among 12 different

government agencies involved in this process to reduce the number of steps to six from 16 and the number of days to eight from 34.

The reduced processes using a unified registration took effect last April in the National Capital Region (NCR) where 80% of the country’s companies do their incorporation.

With this improvement, about 90% of starting a business processes can be done within 24 hours.

This year’s survey is expected to come out in October.

On the same note, the Philippines posted the second biggest rank improvement among Asia-Pacific

Economic Cooperation (APEC) economies in terms of ease of doing business over the last five years based on the WB-IFC’s survey during the 2010 to 2015 period, the Philippine Institute for Development Studies (PIDS) reported.

WB-IFC’s Ease of Doing Business Indicators

q Starting a businessq Dealing with construction permitsq Getting electricityq Registering propertyq Getting creditq Protecting investorsq Paying taxesq Trading across bordersq Enforcing contracts, and q Resolving insolvency

PHL ranking 65th-70th in WB-IFC survey

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INDUSTRYTReNDS

PHL among world’s fastest growing economyThe Philippines is expected to be among the 10 fastest growing economies in the world by 2023 with an annual growth rate of 5.5%, according to the projections of the Center for International Development (CID) released in May 2015.

CID forecasts the Philippines to rank 10th out of the 128 countries, ahead of other emerging markets, such as Turkey (13th), Indonesia (15th), Pakistan (16th), and China (23rd).

CID researchers perceive growth in these emerging markets to continue to outdo the developed countries.

The projection is based on 2013 global trade data and The Atlas of Economic Complexity, an online tool measuring a country’s productive knowledge and forecasting growth rate.

CID is Harvard University’s leading research hub focusing on resolving issues of public policy to generate stable, shared, and sustainable prosperity in developing countries.

PHL, fastest growing manufacturing country in AsiaThe Philippines is Asia’s fastest growing manufacturing country due to its lower input costs, cheap labor, and competitive investment incentives from the government, the global real estate services firm CBRE Asia Pacific study revealed.

“Close coordination between the private and public sectors are positively seen by investors who wish for a more efficient and convenient place of operations,” CBRE Chairman and Chief Executive Officer Rick M. Santos said.

Industrial production is expected to increase by 10.8% year-on-year in 2015 due to rising income levels and the expected 6% increase in private consumption pattern.

“Foreign investors are becoming more bullish on the country’s industrial field, ramped up by the government’s efforts in creating a more profitable environment for operations. This is evidenced by the fast take-up of economic zones launched in the previous quarters and the manufacturing growth rate of 7.5% recorded last year,” CBRE said.

According to Philippine Economic Zone Authority (PEZA), there are 326 economic zones operating nationwide as of end May 2015, housing some of the top manufacturing and industrial names from countries such as Japan and Germany.

Ecozones are also serving as an alternative manufacturing base for electronic and textile production firms from China.

PHL’s key advantages

q Attractive tax and other investment incentives

q Affordable and talented labor poolq Cheap rental rates

Business more bullish in Q2Philippine businessmen are more optimistic of the country’s economy for the second quarter compared to the first quarter of the year, Bangko Sentral ng Pilipinas’ (BSP) Business Expectations Survey (BES) Q2 2015 survey showed.

For the third quarter, however, business confidence slightly slowed down.

Overall Business Confidence Index for 2015 (in%)

Q1 37.8Q2 50.7Q3 48.9

Business confidence index (CI) considers the percentage of firms answering in the affirmative vis-à-vis firms answering in the negative with respect to their views on a given indicator.

The survey revealed an upbeat outlook due to robust consumer demand during the second harvest season, the school graduation and enrolment periods, and the summer season when a high influx

of both local and foreign tourists was recorded.

Sources of Business Optimism

q Robust consumer demand during the second harvest season

q School graduation and enrolment periods

q Summerseasonwithhighinfluxofbothlocal and foreign tourists

q New construction projects by the public and private sectors

q Rehabilitation efforts after the natural calamities of last year

q Increase in orders and new contracts or projects which led to a higher volume

of productionq Expansion of businessesq Launch of new product linesq Rise in investment coinciding with the

recovery in the United States and other export markets

q Continuedconfidenceintheincumbentadministration.

Source: BSP BES Q2 2015

“The country’s strong macroeconomic fundamentals, such as manageable inflation and steady growth of remittances, as well as more favorable external conditions with the recovery of the global markets support the positive business outlook,” the BSP said.

The BES is a quarterly survey of firms drawn at random from the Securities and Exchange Commission’s (SEC) top 7,000 corporations in 2010 and Business World’s Top 1000 Corporations in 2012.

The survey was conducted between April 1 and May 14 among 1,529 companies nationwide.

April export growth estimated at 15.3%United Kingdom (UK)-based Barclays forecasted Philippine April exports to increase by 15.3%, faster than the 1.3% in April 2014 and 2.1% in March 2015.

“Pace of export recovery should slow sequentially, but a low base will support a jump in year-to-year growth,” Barclays said.

March 2015 exports amounted to USD 5.34B in March from USD 5.27B in the same month last

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year, driven by higher exports of coconut oil, machinery and transport equipment, chemicals, metal components, other mineral products, articles of apparel and clothing accessories, and electronic products.

Japan remained the main destination for Philippine commodities during the month, followed by the United States (U.S.), China, Hong Kong, and Singapore.

electronics investments up 48% in 2014Electronics and semiconductor investments jumped almost 50% in 2014, partly attributed to the Philippine Economic Zone Authority’s (PEZA) strategy of incentivizing investments in research and development (R&D) to encourage companies to come up with new and innovative export products.

The electronics and semiconductor industry pumped in a total of P57.56B investments in 2014 or 47.68% over P38.974B in 2013. All four sub-sectors of the industry registered significant increases in investments:

There was substantial increase in investments despite a modest 2-% increase in the number of PEZA registered projects in 2014 to 102 projects from 100 in 2013.

In 2008, PEZA issued Resolution No. 09-123 allowing locators that utilize existing equipment for the manufacture of products with new or enhanced features or application to be entitled to new project status.

This policy, which is also part of the government’s Investment Priorities Plan (IPP), entitles qualified projects to income tax holiday (ITH) on income from the sale of new or enhanced product.

This incentive is on top of the ITH and the 5% gross income tax incentive given to enterprises engaged in export-oriented R&D activities.

PHL exporters can benefit from AeC and eU-GSP+Philippine exporters can fully benefit from the Association of Southeast Asian Nations (ASEAN) economic integration with proper infrastructure, DTI-Industry Development Group (DTI-IDG) Assistant Secretary Ceferino S. Rodolfo said.

The country has complied up to 95% of its commitments to the ASEAN Economic Community (AEC), but will not benefit fully if there are not enough infrastructure for trade expansion, such as air transportation, Rodolfo said.

The Philippines has signed 15 measures that can be implemented at the national levels, two of them on air transportation

product lines. The Philippines is one of 13 countries with access to this export privilege to the EU market.

BOI urges Mindanao investors to align business with IPP 2014-2016The Department of Trade and Industry (DTI), through the Board of Investments (BOI), urges Mindanao investors to align their business with the Investment Priorities Plan (IPP) 2014-2016 and avail of the government’s fiscal and non-fiscal incentives.

The latest version of IPP is a rolling three-year plan, reviewed annually for effective implementation. It is expected to ensure continuity, consistency, and predictability – factors seriously considered by domestic and foreign investors.

Investors should learn the priority areas under the IPP 2014-2016 and review the opportunities before setting up their new business in Mindanao, BOI said.

The IPP 2014-2016 evolved from a one-year to a three-year plan after thorough planning and consultations with the different industry players and stakeholders.

“The new IPP is more comprehensive and inclusive with objectives focused on increasing employment opportunities by revitalizing growth sectors, especially the manufacturing sector,” BOI Governor Lucita P. Reyes said.

The latest IPP is also designed to promote higher value-adding activities and deeper participation by small and medium enterprises (SMEs) in the supply chain and to strengthen participation in global and regional production networks including the ASEAN Economic Community (AEC).

The new IPP has preferred lists of economic activities that, based on industry studies, plans and roadmaps, are strategic or critical to advance a particular

Subsectors 2014 investments 2013 investments % (in billion pesos) (in billion pesos) ChangeqOffice,accounting 6.69 1.36 391 and computing machinery qElectricalmachinery 7.11 3.14 126 and optical instruments qRadio,television 40.08 30.81 36 and communications equipment and apparatus sectorqPrecisionand 3.69 3.67 0.62 instrumentsSource: PEZA

that open up Philippine air zones to airlines from ASEAN countries.

However, Rodolfo observed that the country’s Ninoy Aquino International Airport (NAIA)can only

accommodate a limited number of airplanes.

Issues of domestic competitiveness must be addressed at the national level to enable Philippine exporters to take advantage of the European Union (EU) Generalized Scheme of Preferences Plus (EU-GSP+), he said.

EU-GSP+ gives Philippine exporters zero tariffs on more than 6,000

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industry or improve the product’s value chain, Reyes said.

The 2014-2016 IPP is anchored on the theme: “Industry Development and Inclusive Growth.”

IPP 2014-2016 Preferred Activities

q Manufacturingq Agribusiness and Fisheryq Servicesq Economic and Low-cost Housingq Hospitalsq Energyq Public Infrastructure and Logisticsq Public-Private Partnership (PPP) projects

Palace approves CARS program President Benigno S. Aquino III signed Executive Order (E.O.) 182, or the Comprehensive Automotive Resurgence Strategy (CARS) Program, granting P4.5B in annual tax incentives for six years or a total of P27B (USD 600M) for car manufacturing.

“CARS is designed to build and grow the parts making capability of the auto industry, for without a robust parts making activity, our car making business will remain uncompetitive. The program is about building capabilities and jobs to make our automotive manufacturing industry competitive in ASEAN,” Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said.

The program has specifically identified new investments in automotive manufacturing parts not currently available in the country, like large car body panels, bumpers, instrument panels, head lamps, shock absorbers, plastic fuel tanks, and automotive fabric.

The technology “spill over” is expected to help develop basic support industries for manufacturing, such as casting, forging, machining, and tool and die.

The CARS Program grants two kinds of fiscal incentives:• Production volume incentive

(PVI) – participant manufacturer must be a producer of major components like large plastic

parts assemblies and exceed 100,000 units in production volume. Firms should also manufacture at least 50% of the assembly by weight in case of body shell assembly.

• Fixed investment support (FIS) - requires new investments in the manufacture of parts and

or establishment of shared testing facility, delivery of parts to the participating car manufacturer within the prescribed period, and introduction of the enrolled model to the market using the parts manufactured under

the program.

Program participants must hurdle a minimum production volume of not less than 200,000 units per model or 600,000 units over the six year life of the program.

Incentives will come in the form of Tax Payment Certificate (TPC) to registered and eligible participants. The TPC will be used to defray the tax and duty obligations of the participants to the national government, specifically, excise tax, income tax, import duties, and value added tax.

Incentives can be availed by a registered participant whether they are car assemblers, parts makers, or shared testing facility proponent.

The government expects the incentives to be offset by the inflow of an estimated P27B worth of new investments in parts manufacturing and production of 600,000 units of vehicles.

CARS program is expected to contribute P300B to the economy and transform the Philippines into an automotive manufacturing hub in ASEAN over the medium term.

The program is also expected to generate 200,000 direct workers. Overall, the CARS program is estimated to contribute 1.7% to the country’s gross domestic product (GDP).

This strategy is a result of the Automotive Industry Roadmap, which was jointly formulated by

the private sector and the Board of Investments (BOI).

CARS Program Inter-agency Committeeq Chair, DTI-BOI q Members - Department of Finance (DOF) - Department of Transportation and Communications (DOTC) - Department of Science and Technology (DOST) - National Economic and Development

Authority (NEDA) - Technical Education and Skills

Development Authority (TESDA) - Co-Chairman, Industry Development Council (IDC), and - Co-Chairman, National Competitiveness

Council (NCC)

The BOI will administer the special automotive program.

Upon effectivity, CARS will supersede the existing Motor Vehicle Development Program under E.O. 156 (s. 2002).

Last year, the Philippine car market hit only over 272,000 units and is expected to hit over 300,000 unit sales this year. More than 60% of the country’s total automotive sales have been accounted for by completely built up imported cars.

IDC sees 10% growth in IT spending for 2015IDC Philippines forecasts information technology (IT) spending in the country to grow 10% to USD 7.2B this year, 74% of which will be spent on hardware, thus making the country a hotbed for mobility and social technologies.

“Information and communication technology (ICT) is the business enabler that would allow organizations to achieve business growth through business automation,” IDC Philippines Country Lead Jubert Alberto said.

“The country needs to attract more investments from other Asian and Western economies. To achieve this, everyone from policy makers to business leaders must keep pace with technological advances and consumer-buying trends,” IDC IT Services Head Alon Anthony Rejano said.

5July 2015

TRADe ANDINVeSTMeNTS

Some of IDC’s Perspectives on ICT

q About60%ofchiefinformationofficers(CIOs)anddecisionmakersplan to use ICT more aggressively

to meet business goalsq Progressive large enterprises

managing innovation will form the necessary base for the business-to-business-to-consumers

(B2B2C) model allowing further proliferation of personalized experiences

q Big Data analytics and mobile will continue in the Philippines this year q Adopters will engage customers in a more personal way, deliver

products and services faster, accelerate product process and service innovation, and see greater business resiliency

q Telcos will evolve from being a pure connectivity provider to

becoming a total ICT provider; Proliferation of telco services

will be a critical precursor toward mature adoption of ICT services amonglocalfirms

Japanese investors eye business expansion in PHJapanese investors are keen in putting up new businesses or expanding their operations in the Philippines as a result of President Benigno S. Aquino III’s four-day state visit to Japan in June 2015.

The President, together with some Cabinet members, including Department of Trade and Industry (DTI) Secretary Gregory L. Domingo, met with Japanese businessmen to encourage them to locate their operations in the country.

President Aquino’s delegation was also joined by members of the Philippine business community to underscore his Administration’s determination to lure more investments from Japan.

At the Philippine Investment Forum held at the Otani Hotel in Tokyo, President Aquino assured Japanese

businessmen that investing in the Philippines is a winning proposition.

“The Philippines as an investment destination is more attractive today than at any other point in our history. We can further deepen, or forge partnerships in which all parties benefit,” he said. Japan is the Philippines’ biggest trading partner in 2014 with total trade amounting to USD 19.1B.

President Aquino told Japanese businessmen that the country has eliminated red tape, leveled the playing field, and improved infrastructure.

Japanese firms particulary Kirin Holdings Co. Ltd and Marubeni expressed their interest to expand operations in the country.

Marubeni has a 105-year presence in the Philippines and is exploring new ventures in the country such as the production of commercial vehicles.

MANUFACTURING

P53B allotted for cement firm expansionEagle Cement Corp. (ECC) plans to pour in P53B to build new cement manufacturing facilities in Cebu City and Davao City this year with the capacity to produce 2M tons each.

Aside from the new plants, the company will be adding one more line with a 2M-ton capacity to its existing cement facility in San Ildefonso, Bulacan.

ECC Chairman Ramon S. Ang said the benchmark investment for a cement facility at present is USD 400M for each line with a 2M-ton per year capacity.

ECC is a purely Filipino-owned company.

The firm manufactures and distributes cement under the brands Eagle Cement Advance and Eagle Cement Strongcem.

epson builds P4.7-B plantEpson Philippines Corp. (EPC) is setting up a P4.7-B factory in Batangas, the company’s biggest in the world, to increase its production capacity for inkjet printers and projectors.

EPC Country Manager Toshimitsu Tanaka said the firm is currently producing 6M units of inkjet printers and 1.2M to 1.3M projectors annually.

Tanaka said the new factory is expected to begin commercial operations in the beginning of 2017.

“Construction has started now, but we expect to finish it in the beginning of 2017,” he said.

Philippine labor cost, he said, is stable, enabling the company to predict stable salaries for their factory workers.

“I think the Philippines is one of the most competitive countries in terms of labor costs in the region,” he observed.

In 2008, EPC celebrated its 10th year in the country as a player in the retail segment.

Also, the company launched in 2008 the Epson Solution Center, the first in the Philippines and second in Asia.

In 2010, the company established the 2nd Epson Solution Center in Cebu to serve as the hub for the whole Visayas Region.

They also built in 2012 its third branch in Davao to serve as hub for the whole Mindanao Region.

Moreover, the company completed the P4.5-B expansion of its Lipa manufacturing plant in 2011, which manufactures Epson products distributed to over 20 countries.

Epson plans to have about 20,000 employees when the third plant starts operating in 2017.

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“On top of the current 12,000, we foresee around 6,000 to 8,000 new workers in 2017,” Tanaka said.

Korean audio maker pours in P132MKorean firm Sambon P&E Phils., Corp. is investing P132M for the installation of a manufacturing plant in the country for the production of sound and keypad devices.

The factory will produce earphones, headphone units, and cord wires.

The investment is expected to generate employment opportunities in Pampanga and neighboring provinces in Central Luzon.

The company is targeting to employ a total of 600 workers by the fifth year of its operations.

In January last year, Sambon signed a 25-year lease agreement with Clark Development Corporation (CDC).

Listed with the Korean Securities Dealers Automated Quotations, Sambon is a wholly owned subsidiary company of Sambon Precision and Electronics Co., Ltd.

Aside from South Korea and the Philippines, the company has presence through its plant in China and sales office in Japan.

Lafarge increases cement outputConstruction firm Lafarge Republic Inc. is intensifying its production capacity this year by 1.7M tons as it anticipates an increase in demand of cement from the public, private, and commercial sectors in the coming years.

Lafarge said it plans to commission later this year a new cement mill with a production capacity of 850,000 tons annually at its manufacturing plant in Norzagaray, Bulacan.

The new facility is on top of a new 850,000-ton per year cement mill at its Teresa plant in Rizal commissioned in the first quarter of the year.

“We rose to the challenge posed by the economy’s sustained growth by providing the market with our advanced building materials and solutions,” Lafarge President Renato C. Sunico said.

He said the firm is taking its innovation and sustainability goals a step further through new product offerings.

The company said it has developed Kapit-Balay cement, a special cement variant, to specifically address the need of non-government organizations (NGOs), government agencies, and local government units (LGUs) for low-cost, high-quality cement in their post-Yolanda reconstruction programs.

AGRIBUSINESS AND FISHERY

First Pacific eyes to ship coconut oilFirst Pacific Co., Ltd. is intending to produce 350 metric tons (MT) of coconut oil per day for the export market as it seeks investment opportunities in the agricultural commodities business.

The recently-leased Legaspi Oil Co. Inc. oil milling facility in Davao City is on track for its planned return to commercial operations later this year, First Pacific Associate Director Ray C. Espinosa said.

First Pacific earlier leased the facility of the manufacturer of Minola Cooking oil from the Presidential Commission on Good Government (PCGG).

Legazpi Oil produces Minola Oil products, crude coconut oil, fully refined oil, and copra cake meal.

The plan to export coconut oil venture resulted from the previous intentions by First Pacific to venture into palm oil production in the Philippines.

First Pacific was earlier reported to be looking at a 30,000-ha. farm in Davao Oriental for possible palm oil plantation and production.

ECONOMIC AND LOW-COST HOUSING

P850M set aside for first venture into medium-rise condosMass housing developer 8990 Holdings Inc. is investing P850M for its first venture into constructing medium-rise condominium complex.

The company will construct 12 four-storey buildings to be called Urban Deca Homes Campville at Km 23 East Service Road in Muntinlupa City.

Urban Deca Homes Campville will have a total of 1,024 units, with the first of 12 buildings set for completion and turnover by August this year.

“The project hopes to attract residents south of Manila who are presently renting but aspiring to become primary asset owners. It will also cater to the growing needs of workers of business process outsourcing (BPO) firms in Alabang,” 8990 President and Chief Executive Officer Januario Jesus Atencio III said.

The listed firm said each unit, which measures about 25 sqm. is priced at a range of P1.27M to P1.37M.

Urban Deca Homes Campville is one of nine projects to be launched by 8990 this year.

The nine projects located in the cities of Muntinlupa, Cavite, Cebu, Iloilo, and Davao have a combined value of P4B and are seen to deliver 4,486 housing units upon completion.

ENERGY

P23-B power plant inauguratedThe South Luzon Thermal Corp. (SLTEC) has inaugurated another coal-fired power plant in the Philippines.

7July 2015

The 2x135 megawatt (MW) coal-fired facility, whose first unit started commercial operations last April, is expected to be a significant contributor to power supply in the Luzon grid.

The 50-50 joint venture of Trans-Asia Oil and Energy Development Corp. of the PHINMA Group and AC Energy Holdings Inc. of the Ayala Group of Companies, has poured in a combined investment of P23B for the project.

Completion for the second unit is expected by year-end, which will contribute another 135MW by 2016.

As agreed, SLTEC will operate as a base load plant and will sell its entire capacity to Trans-Asia through a 15-year Power Purchase Agreement.

PTT to erect P121-M stationPTT Philippines Corp. (PTT) will construct its P121-M service station along the Subic-Clark-Tarlac Expressway (SCTEX) which is seen to be completed this year, the Bases Conversion Development Authority (BCDA) said.

BCDA President and CEO Arnel Paciano D. Casanova said the investment will involve the establishment, operations, and maintenance of a gasoline station with amenities.

The amenities of the service area would include among others, rest rooms, parking slots, emergency first-aid station, potable water and lighting system, emergency vehicle repair shop, and convenience stores.

“The service area is expected to be completed by May next year. Once completed, motorists can gas up, rest, and avail of other services they need to travel,” Casanova said.

The 2-ha. PTT service area will be located in Barangay Santiago, Concepcion, Tarlac and at the northbound direction of the Clark-Tarlac segment of SCTEX.

It will be the only available northbound service station that motorists can stop over after they exit the North Luzon Expressway and the Tarlac–Pangasinan–La Union Expressway.

URC opens 46-MW biomass plant in NegrosUniversal Robina Corp (URC) has launched its 46-megawatt (MW) biomass power facility in Negros Occidental, marking the company’s maiden foray into power generation.

The electricity to be generated by the power plant will be partly used by URC for its operations.

The remaining capacity, the firm said, will be applied under the feed-in tariff (FIT) scheme, which means that the output of the biomass plant will be transmitted to the grid at a premium rate over a period of 20 years.

URC allotted P2.52B to install the facility, which will support the company’s sugar milling operations in the province and help meet growing demand for electricity.

The 46-MW plant will use bagasse, a by-product of the company’s sugar mill in Kabankalan City.

URC is the food and beverage arm of JG Summit Holdings, Inc.

Apart from the power plant, URC is also building a USD35-M ethanol distillery plant that will produce some 30M liters of ethanol fuel a year.

The plant will be using blackstrap molasses, another by-product of sugar, which is one way of supporting government efforts to reduce the country’s dependence on imported crude.

Korean firm to install solar plantThe Department of Energy (DOE) has approved the application of

Korean-led firm CEKO Solar Farm Inc. to build a 25-megawatt (MW) facility solar power plant in a 50-ha. lot in Daanbantayan, Cebu City. Based on industry benchmarks, solar power projects cost at least USD 1M per megawatt to build. In October 2014, CEKO Solar signed a memorandum of understanding (MOU) with Daanbantayan’s local government to implement said project.

HOSPITALS

15 more hospitals eyed Metro Pacific Investments Corp. (MPIC) plans to acquire 15 more hospitals to achieve its goal of hitting 5,000 beds.

MPIC Chief Finance Officer David Nicol said the group planned to invest in more hospitals to add some 2,000 beds and expand existing medical facilities by another 700 to 800 beds.

“Each hospital we will acquire will have 100 to 150 beds, so it will take a while to get to 5,000 beds,” Nicol said.

MPIC has a chain of private hospitals with a combined 2,244 beds.

The Metro Pacific Hospital Holdings Inc., MPCI’s hospital unit, plans to acquire two hospitals a year until it hits the additional 2,000-bed target.

MPCI’s hospitals

q Western Mindanao Medical Center, Zambongaq Makati Medical Center, Makati Cityq Asian Hospital & Medical Center,

Muntinlupa Cityq Cardinal Santos Medical Center, San Juanq Our Lady of Lourdes Hospital, Manilaq De Los Santos Medical Center, Quezon Cityq Davao Doctors Hospital, Davao Cityq Riverside Medical Center, Bacolod Cityq Central Luzon Doctors Hospital, Tarlac City

PUBLIC INFRASTRUCTURE AND LOGISTICS

Mindanao gets P100B for 2015 A P100-B budget has been set aside for the major infrastructure

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component of the Mindanao Development Corridors this year, the Mindanao Development Authority (MinDA) said.

The “Corridors,” MinDa said, will need some P625B for the overall completion and implementation.

Part of the total budgetary requirement is P250B for roads, seaports, and airports that are targeted for implementation within the next two years.

MinDA Executive Director Janet M. Lopoz said her group intends to revive the proposal to set up a Mindanao Railway System that will traverse the major cities in the region.

Under the “Corridors” program, Mindanao is divided into three main areas: • Northern Mindanao, covering the Northern Mindanao and

CARAGA Regions• Western Mindanao, with the Zamboanga Peninsula

Region; • South-Central Mindanao,

composed of Davao Region; South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos (SOCCSKSARGEN), and Autonomous Region in Muslim Mindanao (ARMM).

Roads within these different corridors will be integrated to improve the mobility of people and goods.

MinDA also intends to revive the proposal to set up a Mindanao Railway System, first conceptualized during the administration of former President Fidel V. Ramos.

The rail system is envisioned to be circumferential, with six segments that will traverse the major cities in Mindanao.

Each of the three corridors has identified focus areas to spread out different development activities:

• Northern Mindanao - to become the industrial and services center

• Western Mindanao - to become the country’s gateway to the sub-regional grouping of Brunei Indonesia-Malaysia- The Philippines East ASEAN Growth Area (BIMP-EAGA) within the Association of Southeast Asian Nations (ASEAN)• South-Central Mindanao – to be developed as the main food production area, not just for Mindanao but for the rest of the country.

PHL to spend P100B on climate change projectsThe government will invest some P100B for climate change mitigating projects this year and in 2016, the Department of Budget and Management (DBM) said.

Government investments in climate change projects nearly doubled in the last three years to reach P100B, or 4% of the 2015 budget, the DBM said.

On top of that, community organizations at the grassroots level identified about P1.6B worth of related activities.

Climate change mitigation projects include flood control and typhoon-proofing of structures, and the construction of classrooms, barangay centers, bridges, and roads, among others.

It is believed that for every USD 1 spent on climate change resiliency measures, the government will save about USD 4 on rehabilitation.

The Yolanda rehabilitation and reconstruction efforts have, so far, cost the Philippines almost P180B.

The Philippines is one of the countries worldwide considered as most vulnerable to climate change due to its geography or for being an island nation.

All government agencies, the DBM said, are reviewing and, if needed, redesigning infrastructure and production projects to align

with the government’s climate change targets.

ICTSI expanding main Manila portThe International Container Terminal Services Inc. (ICTSI) is expanding the capacity of the Manila International Container Terminal (MICT) after pouring in USD 430M worth of investments over the past several years.

Philippine Ports Authority (PPA) General Manager Juan C. Sta. Ana said ICTSI plans to expand the capacity of MICT by setting up two additional berths.

Sta. Ana said ICTSI intends to install berths 8 and 9 at the MICT.

ICTSI Vice President and Head of Asia Pacific Region Christian R. Gonzalez said ICTSI is injecting USD 75M in fresh investments for the construction of berth 7 after investing over USD 430M to expand the MICT over the past two decades.

Gonzalez said the two additional berths could result in close to 60% in additional capacity on top of the current capacity of 2.5M twenty-foot equivalent units (TEUs).

He said port operators are beefing up their capacities in view of the expected congestion in the ports of Manila by 2024 amid the strong growth in cargo volume.

New Bohol airport seen to open early 2018Construction of the P7-B Panglao Airport in Bohol is seen to be completed by early 2018, the Department of Transportation and Communications (DOTC) said.

The DOTC and winning bidder, joint venture Mitsubishi Corporation and Chiyoda Corporation, conducted a ceremonial signing last May for the new Bohol airport project.

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Detailed engineering design will then be prepared until July 2016. The construction will thereafter commence until July 2020, while operations and maintenance period will be from July 2020 to July 2050.

The CALAX project involves a 35-year contract to finance, build and operate a 47-km., four-lane toll road between Cavite Expressway in Kawit, Cavite and the South Luzon Expressway-Mamplasan Interchange in Biñan, Laguna.

Ayala keen on South Line Railway projectThe Department of Transportation and Communications (DOTC) is preparing to open the bidding for the P170-B South Line Railway project of the Philippine National Railways (PNR).

Ayala Corp., which would partner with Metro Pacific Corp. and San Miguel Corp. (SMC), had expressed interest in participating in the bidding for the project, an over 600-km. line from the PNR station in Tutuban, Manila to Matnog in Sorsogon, passing through Legazpi City.

The DOTC said the construction of the South Line Railway was expected to start early next year, while its commercial operations had been set for 2020.

AVIATION

AirAsia, Canadian firm mull aviation schoolCAE Inc. of Canada and the AirAsia Group, under their joint venture Asian Aviation Center for Excellence (AACE), is planning to put up an aviation school in the country.

The planned Philippine Academy for Aviation Training (PAAT) is seen to set the stage for the Philippines to become an important destination for pilots, cabin crew, and airline workers to gain additional experience, skills and world-class training opportunities, PAAT General Manager Raoul S. Pérez said.

The amount was not disclosed by any of the parties involved.

BANKING RCBC unit expandsRCBC Savings Bank is planning to add 10 more branches and five lending centers in the provinces this year to seize the growth opportunities in the regions.

“Right now, we have 150 branches and 32 lending centers and desks. Most of the expansions will be happening in the provinces,” RCBC President Rommel S. Latinazo said.

RCBC Savings is investing approximately P5M per branch, excluding the license fee. Most of the investments would be in improvements and technology, Latinazo said.

UnionBank to expand branches 10% a yearUnionBank of the Philippines (UnionBank) is planning to grow its branch network across the country by 10% each year until 2020.

This is in line with the bank’s FOCUS 2020 strategy, which aims to grow Union Bank as the third largest Philippine bank by 2020 from its current rank as 7th largest bank in terms of assets.

As of end-2014, UnionBank has a network of 253 branches – 179 UnionBank and 74 City Savings Bank – and 238 automated teller machines (ATM) nationwide.

For the remainder of this year, the bank will open 15 to 20 branches, mostly in urban large-scale developments.

IT-BPM

Infor bares expansion plans On the back of the country’s continuous economic growth and strong business confidence among investors, business software and cloud-solutions provider Infor said they are keen on expanding into the health care and automotive sectors.

The proposed airport will be 10 times bigger than the Tagbilaran Airport with a floor area of around 8,800 sqm, boosting the annual passenger capacity to 1.7M passengers.

The new Bohol airport will replace the current Bohol gateway, the Tagbilaran Airport.

PUBLIC-PRIVATE PARTNERSHIP PROJECTS

LRT 2 extension project commencesThe Light Rail Transit (LRT)-2 extension to Antipolo City started construction last month.

Awarded to D.M. Consunji Inc. (DMCI) last 27 March, the LRT 2 East Extension project involves building a 3.9-km. guideway from Santolan, Pasig City to Masinag, Antipolo City.

The project, which costs P2.27B, includes the construction of the Emerald and Masinag Stations at the Robinsons Place Metro East in Cainta, Rizal (Emerald Station) and Masinag Junction, respectively.

MPIC unit acquires CALAX deal Metro Pacific Investments Corp. (MPIC)-backed MPACALA Holdings, Inc. was awarded the 35-year contract to build, operate, and maintain the planned Cavite-Laguna Expressway (CALAX), the Department of Public Works and Highways (DPWH) said.

MPCALA offered a premium of P27.3B on top of the P35.42-B project cost.

Philippine Business Report10

COUNTRY-TO-COUNTRY

Aboitiz Group joins remittance businessAboitiz Equity Ventures Inc. has joined the remittance business by acquiring 51% interest share in PetNet Inc., Western Union’s biggest agent unit in the Philippines.

Aboitiz Equity bought 2.47M shares in PetNet Inc. The company acquired 1.24M shares equivalent to 25.6% from PetNet shareholders and 1.23M shares equivalent to 25.4% representing subscriptions from the unissued capital stock of the remittance firm.

“PetNet has a large growth and development potential with the continued increase in remittances from OFs [overseas Filipinos] and with a large opportunity to distribute complementary products through an extensive network of outlets,” Aboitiz Equity President and Chief Executive Erramon I. Aboitiz said.

South Africa pushes mutual investment coop with PHLSouth Africa wants to determine the common interest areas and sign a mutual investment promotion and protection agreement before pursuing a full-blown bilateral free trade discussions with the Philippines.

“This is one plausible area of cooperation that we have to

The firm is also beefing up its logistics portfolio in time for the ASEAN Economic Community (AEC) in December 2015.

The company is also looking at further investment for the research and development (R&D) sales, and go-to-market strategy.

REAL ESTATE

eton invests P28B in 5 yearsEton Properties Philippines Inc. is set to spend P28B for residential and commercial projects over the next five years.

The firm allocated P9B for capital expenditures this year, up from last year’s P4.3B, and will be used to develop existing projects and launch new ones.

Eton Properties expansion plans

q A 1ha. mixed-use development in Makati City that will house a high-end residential development,anofficetowercateringtothe business process outsourcing industry, and a boutique mall

qItsfifthbusinessprocessmanagement(BPM)officetowerinthe12-ha.EtonCentris in Quezon City and will pre-developitssixthBPOofficeinOrtigas

qThere-masterplanofthe600-ha. Eton City in Sta. Rosa, Laguna and re-conceptualization of the Aurora Heights

Residences in Quezon Cityq The expansion of Centris Walk in Quezon City

RETAIL

HSSI now open for franchisingHolcim’s retail subsidiary, HuBB Stores and Services, Inc. (HSSI), is already open for franchising.

The company’s retail outlet, HuB Builders Center, is a prime modern community hardware store concept in the Philippines and also the first in its local franchise industry.

“More Filipinos are investing to have their homes built or have repairs done. This provides HuB Builders Center franchisees a steady market for their business,” HSSI General Manager Maribel Sumaria said.

The HSSI has various packages for possible franchisees who will be guided from pre-operations until the commencement of business operations.

SHIPPING

V. Group opens new offices, training facilityMaritime services provider V. Group recently installed its new offices and training facility at the Aseana Two Building in Aseana City, Parañaque.

The inauguration of the new facilities is the biggest venture of the V. Group ever since the company started.

The company focuses on the high-value maritime assets’ outsourced technical management and the provision of a wide range of specialized, technical workforce and commercial services.

It operates in the commercial shipping, cruise, energy, and defense sectors.

V. Group’s new offices has 6,700 sqm over five floors of the Aseana Two Building along Bradco Avenue and employs 270 full-time management and administrative staff.

“These new state of the art offices will increase our capacity to manage and train seafarers with a wide range of skills,” V. Group Philippine Representative Jamie Stewart said.

TELECOM

PLDT acquires Mindanao’s Metro PhonePhilippine Long Distance Telephone Co. (PLDT) has acquired 75% shares of Metro Kidapawan Telephone Corp. (Metro Phone) to service more customers in Mindanao.

“With this acquisition, PLDT will be able to better serve a greater number of customers with its expanding multimedia and digital services that are powered by its unparalleled fiber optic network,” PLDT President Napoleon L. Nazareno said.

COMPANY NOTeS

According to PLDT-Philcom and Metro Phone President Jesus Tanedo, the company is pleased to be able to support Mindanao’s growth and other provinces in the south of the region through services that are backed by PLDT’s expansive network.

11July 2015

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Asia-Pacific Retailers Convention and exhibition 2015 (APRCe 2015)Seven of the top Japanese retailers and retail experts will join the prominent international speakers that will share their retail-related expertise to some 3,000 attendees of the Asia-Pacific Retailers Convention and Exhibition 2015 (APRCE 2015) on 28-30 October 2015 at the SMX Convention Center in Pasay City.

The Philippine Retailers Association (PRA) is the event host for the year. They announced that Japanese executives from Isetan Mitsukoshi, UNY Group, Daiso Industries, Family Mart, Aeon Co., Life Corp., and the Japan Ministry of Economy, Trade and Industry will be among the APRCE 2015 resource speakers.

maximize as we share the same developmental goals as enshrined in South Africa’s Framework Agreement for a Sustainable Mining Industry and the Philippines’ Mining Act of 1995,” Philippine Chamber of Commerce and Industries (PCCI) President Alfredo M. Yao said.

South Africa is considered the wealthiest mining jurisdiction in the world with non-energy mineral wealth estimated at USD 2.5T, while the Philippines is a minerals powerhouse in the world covering an estimated 9M ha with mineral reserves estimated at USD 1.4T.

BCC urges UK SMes to invest in PHLUnited Kingdom’s (UK) independent business network British Chambers of Commerce (BCC) is planning activities that will encourage small and medium enterprises (SMEs) from UK to invest in the Philippines and further improve both countries’ trade relations.

BCC aims to work with the British Chamber of Commerce Philippines (BCCP) in developing this possible venture for the two countries.

BCC targets to organize trade missions to let UK SMEs know the opportunities when they invest in the Philippines.

Also, BCC wants to promote the use of its Export Britain website: www.exportbritain.org.uk/ which would allow businesses to connect with the BCCP and with the network’s 52 accredited chambers in the UK.

“There are a lot of big UK companies already here so actually for those companies, the Philippines is recognized. But for small and medium sized companies, I think they are less conscious of the opportunities,” BCC Director General John Longworth said.

PHL leads in micro-insurance among APeC membersPhilippines has the highest micro-insurance coverage among Asia-Pacific Economic Cooperation (APEC) member economies.

According to Micro-insurance Network Chairman Michael J. McCord, the annual growth of micro-insurance coverage in the country rose to 18.4% based on the number of persons concerned.

As of this year, microinsurance in the Philippines has already covered 28 M individuals.

“Microinsurance does not only enhance our resiliency to disasters, shocks, and crises. I actually think it is a key element to strengthening the economy and making growth sustainable. It is always a win for the economy when the most vulnerable are protected and empowered,” Department of Finance (DOF) Undersecretary Gil S. Beltran said.

“In a way, boosting micro-insurance coverage rates is an effective anti-poverty measure. We minimize vulnerabilities of the poor and enable them to rebuild the pieces of their dreams that crack when disaster hits,” Beltran added.

ASeAN members focused on economic integrationAssociation of Southeast Asian Nations (ASEAN) member economies are consistent in their commitment to push efforts to eliminate trade and investment barriers in the region for they want to implement the regional economic integration by yearend as planned.

Malaysia Trade Minister Dato’ Sri Mustapa Mohamed noted that ASEAN economies have a common goal which is to intensify the trade and investments in the region.

Member economies also plan to make more initiatives to assure that the region will achieve an equitable economic development.

“What the ASEAN targets to achieve is an improved business environment, enhance connectivity and improving trade facilitation,” Mustapa said.

He also noted that Malaysians and Filipinos can improve on their strengths to bring more competitive products and services in the ASEAN region.

Philippine Business Report12

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Peso per US Dollar Rate

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Interest Rate (%)Lending Regular

eCONOMIC INDICATORS

As of 24 August 2015

P u b l i s h e d m o n t h l y b y t h e K n o w l e d g e M a n a g e m e n t a n d I n f o r m a t i o n S e r v i c e , Depa r tmen t o f Trade and Indus t r y, 2F Tr ade a nd I n du s t r y Bu i l d i n g , 3 61 Sen . G i l J . Pu ya t Avenue , Maka t i C i t y 1 200 , Ph i l i p p i n e s • Phone ( + 632 )8 9 5 . 3 6 11 • F a x ( + 6 3 2 ) 8 9 5 . 6 4 8 7 • To s u b s c r i b e , e -Ma i l : p u b l i c a t i o n s@d t i . g o v . p h • O n l i n e : w ww. d t i . g o v . p h

E d i t o r i a l T e a m : P a t r i c i a M a y M . A b e j o / E d i t o r - i n - C h i e f • A l f o n s o M . V a l e n z u e l a / M a n a g i n g E d i t o r •Cresenciano P. Par/Assistant Editor • Jamila Joy H. Raposon, Kristina S. Andaya/Writers •Renaldo C. Neneria/Design Layout •

Philippine Business ReportJuly 2015

As of 24 August 2015

Sources: BangkoSentralngPilipinas(BSP) Philippine Statistics Authority (PSA)

Entered as Third-Class Mail at theMakati Central Post Office

under Permit No. 504valid until 31 December 2015

140.8140.9

141141.1141.2141.3141.4

Jun-15May-15Apr-15Mar-15Feb-15Jan-15

Consumer Price Index(2000 base year)

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4Q (2013)1Q (2014)2Q (2014)3Q (2014)4Q (2014)1Q (2015)

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exports(In USD Billion)

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Imports (In USD Billion)

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